Registration No. 333-207107

 

As filed with the Securities and Exchange Commission on November 16, 2015

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

 

FORM F- 1/A

 

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 

eh āve, Inc.

(Exact name of registrant as specified in its charter)

 

Canada

7371

Not Applicable

(State or jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification No.)

 

250 University Avenue, Suite 200

Toronto, ON M5H 3E5

Canada
(647) 490-5122
(Address, including zip code, and telephone number, including area code of registrant's principal executive offices)

 

Scott Woodrow
250 University Avenue, Suite 200

Toronto, ON M5H 3E5

Canada
( 647 ) 490-5122
(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

Copies to:

 

David Lubin, Esq.
David Lubin & Associates, PLLC
108 S. Franklin Avenue
Valley Stream, New York 11580
Telephone: (516) 887-8200
Facsimile: (516) 887-8250

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement and from time to time after the effective date of this registration statement, as determined by the selling shareholders.

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. x

 

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

 

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

 

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

 

 

 

CALCULATION OF REGISTRATION FEE

 

 Title of Class of Securities to be Registered

Amount to be Registered

Proposed Maximum Offering Price Per Share

Proposed Maximum Aggregate Offering Price

Amount of Registration Fee

Common Shares, no par value

11,002,445

$

0.0409

(1)

$

450,000.00

$

52.29

Common Shares, no par value

7,946,210

$

0.0409

(1)(2)

$

324,999.98

$

37.76

Common Shares, no par value

7,946,210

$

0.0818

(3)

$

649,999.97

$

75.53

Common Shares, no par value

11,002,445

0.0818

(4)

900,000.00

104.58

Total

37,897,310

2,324,999.90

$

270.16 *

___________  

(1)

In accordance with Rule 457(a), the offering price has been arbitrarily determined by us and bears no relationship to assets, earnings or other valuation criteria. No current trading market exists for our common shares. No assurance can be given that the shares offered hereby will have a market value or that they may be sold as this, or any price. The selling shareholders may sell our common shares only at a fixed price of $0.0409 per share until such time, if at all, our shares are quoted on the OTC QB ("OTCQB") and thereafter at prevailing market prices or privately negotiated prices. The fixed price of $0.0409 has been arbitrarily determined as the selling price. There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority ("FINRA"), nor can there be any assurance that such an application for quotation will be approved.

(2)

Represents common shares issuable upon the conversion of our outstanding Notes at a conversion price of $0.0409 per share.

(3)

Represents common shares issuable upon the exercise of warrants by the selling shareholders and calculated pursuant to Rule 457(g) based upon the exercise price of the warrants.

 

 

(4)  

Represents common shares issuable upon the exercise of warrants received in the offering and calculated pursuant to Rule 457(g) based upon the exercise price of the warrants .  

 

* $194.63 of which has been p reviously paid

 

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

 

 
2
 

 

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED

 

PROSPECTUS

 

EHĀVE, INC.

 
37,897,310 Common Shares, consisting of 11,002,445 shares and 11,002,445 shares issuable upon the exercise of warrants being offered and sold directly by us, 7,946,210 shares issuable upon the conversion of our outstanding Notes and 7,946,210 shares issuable upon the exercise of warrants by the selling shareholders

 

This prospectus relates to the offering of a minimum of 6,112,470 and a maximum of 11,002,445 our common shares at a fixed price of $0.0409. Should we be successful in selling all of the shares offered, we will receive $450,000 in proceeds before expenses.

 

All subscriptions received from investors will be pursuant to subscription agreements and will be deposited in an escrow account with David Lubin & Associates, PLLC, who will act as our escrow agent for the offering.

 

We intend for the offering of up to 11,002,445 common shares to be sold by our officers and directors who will not be paid any commissions for such sales. Each investor that purchases common shares in the offering, will also receive a five-year warrant to purchase an equivalent number of common shares, at an exercise price of $0.0818 per share. A minimum of 6,112,470 common shares (or $250,000) must be sold in the offering. The offering period will commence upon the effectiveness of the registration statement of which this prospectus is a part and will terminate on the earlier of (i) 90 days from the date of this prospectus or the date on which all 11,002,445 common shares have been sold, unless extended or earlier terminated by our board of directors in its sole discretion. In the event that 6,112,470 shares are not sold during the offering period, all proceeds from the sale of the shares will be returned to subscribers, without interest or deduction. Subscriptions are irrevocable once made, and funds will only be returned if the subscription is rejected or if 6,112,470 shares offered are not sold prior to the termination of the offering.

 

If the minimum of 6,112,470 shares are sold in the offering, Scott Wood row , our executive officer and a director , would beneficially own 52.90% , Jesse Kaplan, our director, would beneficially own 2.04% and David Stefansky, our director , would beneficially own 8.51% of the then issued and outstanding common shares of our Company.

 

This prospectus also relates to the resale, from time to time, of up to 15,892,420 common shares consisting of (i) 7,946,210 common shares issuable upon the exercise of five-year warrants at an exercise price of $0.0818 per share (the "Warrants") and (ii) 7,946,210 common shares issuable upon the conversion of 4% secured convertible notes at a conversion price of $0.0409 per share (the "Notes") by the selling shareholders identified in this prospectus, which Warrants and Notes were purchased by the selling shareholders in a private offering pursuant to a Securities Purchase Agreement ("Purchase Agreement") between each selling shareholder and ehāve , Inc. (the "Company"), dated July 7, 2015. See the section of this prospectus entitled "Purchase Transaction" for a description of the Purchase Agreement and the section entitled "Selling Shareholders" for additional information about the selling shareholders

 

Such registration does not mean that the selling shareholders will actually offer or sell any of these shares. We will not receive any proceeds from the sales of our common shares by the selling shareholders. We will also not receive any proceeds from the exercise of the Warrants included in this offering to the extent that such Warrants are exercised on a cashless basis according to their terms.

 

The selling shareholders may offer the shares pursuant to this prospectus for resale at a fixed price of $0.0409 per share until such time, if at all, our shares are quoted on the OTC QB and thereafter at prevailing market prices or privately negotiated prices. See "Plan of Distribution" for additional information.

    

Our common shares are not traded on any market or securities exchange. The selling shareholders may sell our common shares only at a fixed price of $0.0409 per share until such time, if at all, as our shares are quoted on the OTCQB and thereafter at prevailing market prices or privately negotiated prices. The fixed price of $0.0409 has been arbitrarily determined as the selling price. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with Financial Industry Regulatory Authority ("FINRA"), for our common shares to be eligible for quotation on the OTCQB. There can be no assurance that a market maker will agree to file the necessary documents with FINRA nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling shareholders.

 

INVESTING IN OUR COMMON SHARES INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CONSIDER CAREFULLY THE SECTION ENTITLED "RISK FACTORS" IN THIS PROSPECTUS BEGINNING ON PAGE 6.

 
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act ("JOBS Act"). As an emerging growth company, we are eligible for certain reduced public company reporting requirements.

 

We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read the entire prospectus and any amendments or supplements carefully before you make your investment decision.

 

Subject to Completion

 

The date of this prospectus is _________, 2015.

 

 
3
 

   

EHĀVE, INC.

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

 

 

Prospectus Summary

 

 

5

 

Risk Factors

 

 

8

 

Identity of Directors, Senior Management and Auditors

 

 

16

 

Capitalization and Indebtedness

 

 

17

 

The Offering

 

 

17

 

Determination of Offering Price

 

 

18

 

Use of Proceeds

 

 

18

 

Dividend Policy

 

 

19

 

Purchase Transaction

 

 

19

 

Selling Shareholders

 

 

24

 

Plan of Distribution

 

 

27

 

Share Capital

 

 

30

 

Material Income Tax Considerations

 

 

33

 

Exchange Controls

 

 

34

 

Interests of Named Experts and Counsel

 

 

35

 

Description of Business

 

 

35

 

Operating and Financial Review and Prospects

 

 

42

 

Foreign Currency Exchange

 

 

45

 

Directors, Senior Management and Employees

 

 

46

 

Security Ownership of Certain Beneficial Owners and Management

 

 

48

 

Certain Relationships and Related Party Transactions

 

 

49

 

Additional Information

 

 

50

 

Expenses of Issuance and Distribution

 

 

50

 

Enforceability of Certain Civil Liabilities and Agent for Service of Process in the United States

 

 

51

 

Indemnification for Securities Act Liabilities

 

 

51

 

Legal Matters

 

 

51

 

Experts

 

 

51

 

Financial Statements

 

F-2

 

 

 
4
 

  

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus contains "forward-looking statements". Forward-looking statements reflect the current view about future events. When used in this prospectus, the words "anticipate," "believe," "estimate," "expect," "future," "intend," "plan," or the negative of these terms and similar expressions, as they relate to us or our management, identify forward-looking statements. Such statements, include, but are not limited to, statements contained in this prospectus relating to our business strategy, our future operating results and liquidity and capital resources outlook. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward–looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees of assurance of future performance. We caution you therefore against relying on any of these forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, our ability to develop and commercialize new and improved products and services; our ability to raise capital to fund continuing operations; a continued decline in general economic conditions nationally and internationally; decreased demand for our products and services; market acceptance of our products and services; our ability to protect our intellectual property rights; the impact of any infringement actions or other litigation brought against us; competition from other providers and products; changes in government regulation; our ability to complete customer transactions and capital raising transactions; and other factors (including the risks contained in the section of this prospectus entitled "Risk Factors") relating to our industry, our operations and results of operations. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

 

Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

PROSPECTUS SUMMARY

 

This summary highlights information contained elsewhere in this prospectus or incorporated by reference in this prospectus. This summary does not contain all of the information that you should consider in making your investment decision. You should read the entire prospectus carefully, especially the discussion regarding the risks of investing in our securities under the heading "Risk Factors" beginning on page 6 of this prospectus and our financial statements and related notes incorporated by reference in this prospectus, before investing in our securities. In this prospectus, the "Company," "we," "us," and "our" refer to ehāve, Inc.

 

Overview

 

We were incorporated on October 31, 2011 in the Province of Ontario, Canada and di d business as Behavioural Neurological Applications and Solutions. Effective November 4, 2015, we changed our name to ehāve, Inc. We are a cognitive software development company with a primary focus on the development of software based assessment and remediation tools for children used in the professional assessment and treatment of cognitive disabilities. In December 2011, we entered into a collaboration with Toronto's Hospital for Sick Children (the "Hospital") to identify the clinical needs, design and processes required to create clinical grade toolsets. In addition to specific tools, we have developed a content delivery and patient data platform, known as Resource Knowledge Information Access ("RKIA") that enables content to be deployed, monitored, analyzed and accessed remotely by clinicians and patients.

 

Our focus is on the child and adolescent mental health markets, with an initial focus on children with ADHD. These markets include the ADHD therapeutics market and the cognitive assessment markets . The therapeutics market size is estimated at $11.5 billion , as of 2013 , as reported by GBI Research in a July 2014 indus try report. The cognitive assessment and training market size is estimated at $2.4 billion in 2015 as reported by Marketsandmarkets Research, a global market research firm, in their Aug ust 2015 indu s try report.

 

 
5
 

   

In the therapeutics market, we have entered into a license agreement with Pear Therapeutics, a US based therapeutics company, developing novel combination therapies referred to as "e-formulations".

 

The cognitive assessment market is dominated by a small number of competitors, the prominent ones being Pearson Education Limited ("Pearson") and Multi Health Systems, Inc.

 

From inception, we have has been funded by a combination of investment capital and grant financing totaling approximately $1,100,000 comprised of approximately $630,000 of grant financing and $470,000 of equity financing. While our strategy of synergies with therapeutics and clinical assessment partners significantly defrays our capital requirements, we hope to continue new product and partner development, enhance existing products, enable software as service revenue through RKIA and conduct independent clinical studies for further promotion as independent products and branding.

 

The Company is currently engaged in clinical trial execution with the Hospital in Toronto. The purpose s of these trials are to (i) improve, modify and extend the functionality of the MegaTeam software (ii) determine the cognitive impact the use of the MegaTeam software has on the target population (iii) establish clinical use protocols for optimization of the use of the MegaTeam software for the target population and, (iv) determine the effectiveness of the MegaTeam software in combination with medicinal therapies for the target population.

 

The MegaTeam software has been designed to augment or supplement existing remediation techniques for children with ADHD. The MegaTeam software is comprised of multiple modules addressing inhibitory control and working memory cognitive functions. The software functionality includes an assessment mechanism, the ability to measure the users cognitive at a point in time in comparison with non-affected populations, as well as a rehabilitation regime that is purported to address the underlying weaknesses in the targeted cognitive functions.

 

The Company intends to provide the MegaTeam software for sale as an independent product to clinicians, as a research tool for measurement of targeted functions, and as a complement to medicinal therapies as a combined therapy, or e-formulation.  

 

Commercialization of our software products is intended to be achieved through both direct and indirect distribution to clinical and research users. Our cognitive assessment and remediation programs can be utilized as independent tools within a battery of broader methods in the provision of mental health care. We intend to make these tools available to our clinical users either through direct access as part of our RKIA mental health informatics platform, direct subscription, or through distribution partners of mental health assessment and remediation tools.

 

We currently have no operating history, no commercialized software applications or products and customers . We have no revenues and need additional cash res ources to maintain our operation s. These factors raise substantial doubt about our ability to continue as a going concern.

 

On May 14, 2015, we effectuated a 100,000:1 forward stock split of our common shares.

 

Our corporate headquarters are located at 250 University Avenue, Suite 200, Toronto, ON M5H 3E5 and our telephone number is (647) 490 -5122.

 

SUMMARY OF THE OFFERING

 

The following is a summary of the shares being offered by this prospectus:

 

Common Shares offered by the Company

Up to (i) 11,002,445 common shares, no par value, at a fixed price of $0.0409 per share and (ii) 1 1,002,445 common shares issuable upon the exercise of warrants at an exercise price of $0.0818 per share being offered by us. A minimum of 6,112,470 common shares must be sold.

Common Shares offered by selling shareholders

Up to 15,892,420 common shares consisting of 7,946,210 shares issuable upon the exercise of Warrants and 7,946,210 shares issuable upon the conversion of the Notes.

Common Shares outstanding prior to the offering

28,072,366 shares (1)

Common Shares to be outstanding after the offering

65,969,676 shares (1)

Use of proceeds

We will not receive any proceeds from the sale of shares of our common shares by the selling shareholders. We will also not receive any proceeds from the exercise of Warrants included in this offering to the extent that such Warrants are exercised on a cashless basis according to their terms.

We intend to use the proceeds received, if any, from the sale of the shares for working capital purposes.

Risk Factors

You should carefully read "Risk Factors" in this prospectus for a discussion of factors that you should consider before deciding to invest in our common shares.

 

The number of common shares outstanding is based on 28,072,366 common shares outstanding as of November 11, 2015 and does not include an aggregate of 8,200,000 common shares issuable upon the exercise of stock options.

 

 
6
 

   

Summary Financial Information

 

The following table sets forth and summarizes certain of the Company's financial information for the years ended December 31, 2014 and 2013 and for the quarterly periods ended June 30, 2015 and 2014. The financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States ("GAAP"), and are expressed in U.S. dollars. This financial information is derived from, and should be read in conjunction with the Company's financial statements, including the notes thereto. The Company's Financial Statements for the years ended December 31, 2014 and 2013 have been audited by Turner, Stone & Company.

 

Selected Financial Information

 

 

 

For the year ended December 31,
2014
(audited)

 

 

For the year ended December 31,
2013
(audited)

 

Operating Revenues

 

 

-

 

 

 

28,206

 

 

 

 

 

 

 

 

 

 

Loss from Operations

 

 

452,828

 

 

 

287,111

 

Net Loss

 

 

380,088

 

 

 

221,631

 

 

 

 

 

 

 

 

 

 

Total Assets

 

 

211,830

 

 

 

102,848

 

Net Assets

 

 

(626,401 )

 

 

(345,654 )

Total Liabilities

 

 

838,231

 

 

 

448,502

 

Working Capital

 

 

(9,980 )

 

 

91,539

 

Share Capital

 

 

21,550

 

 

1_

 

Common Shares Issued

 

 

13,965,424

 

 

 

13,500,000

 

Dividends Declared

 

 

-

 

 

 

-

 

 

Selected Financial Information

 

 

 

For the
six months ended June 30,
2015
(unaudited)

 

 

For the
six months ended June 30,
2014, 2013 (unaudited)

 

Operating Revenues

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Loss from Operations

 

 

133,522

 

 

 

226,119

 

Net Loss

 

 

133,842

 

 

 

166,359

 

 

 

 

 

 

 

 

 

 

Total Assets

 

 

116,774

 

 

 

95,490

 

Net Assets

 

 

(225,121 )

 

 

_(601,980)

 

Total Liabilities

 

 

341,894

 

 

 

697,470

 

Working Capital

 

 

(44,738 )

 

 

(63,090 )

Share Capital

 

 

549,948

 

 

 

1

 

Common Shares Issued

 

 

28,072,366

 

 

 

13,500,000

 

Dividends Declared

 

 

-

 

 

 

-

 

 

 
7
 

  

RISK FACTORS

 

An investment in the Company's common shares involves a high degree of risk. You should carefully consider the risks described below as well as other information provided to you in this prospectus, including information in the section of this document entitled "Forward Looking Statements." There are numerous and varied risks, known and unknown, that may prevent us from achieving our goals. If any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely affected, the value of our common shares could decline, and you may lose all or part of your investment.

 

RISKS RELATED TO OUR BUSINESS AND INDUSTRY

 

Our limited operating history makes evaluating our business and future prospects difficult, and may increase the risk of your investment.

 

We have a very limited operating history on which investors can base an evaluation of our business, operating results and prospects. We have no operating history with respect to commercializing our software applications and products. Consequently, it is difficult to predict our future revenues, if any, and appropriately budget for our expenses, and we have limited insight into trends that may emerge and affect our business.

 

We have only recently begun processes to develop relationships with potential customers and distribution partners. Completion of our cognitive assessment and remediation tools and the further development and commercialization of our products is dependent upon the availability of sufficient funds. This limits our ability to accurately forecast the cost of the development of our products. If the markets and applications of our products do not develop as we expect or develop more slowly than we expect, our business, prospects, financial condition and operating results will be harmed.

 

We have a history of operating losses and expect to continue incurring losses for the foreseeable future.

 

We were incorporated in 2011. We incurred losses from inception through June 30, 2015 of $878,314. We recorded a net loss of $380,088 as of December 31, 2014 and a net loss of $133,842 for the six months ended June 30, 2015. We cannot anticipate when, if ever, our operations will become profitable. We expect to incur significant net losses as we develop and commercialize our products and pursue our business strategy. We intend to invest significantly in our business before we expect cash flow from operations to be adequate to cover our operating expenses. If we are unable to execute our business strategy and grow our business, for any reason, our business, prospects, financial condition and results of operations will be adversely affected.

 

As reflected in the accompanying financial statements for the year ended December 31, 2014, and the six months ended June 30 2015, the Company has no revenues and needs additional cash resources to maintain its operations. These factors raise substantial doubt about our ability to continue as a going concern. The Company's ability to continue as a going concern is dependent on its ability to raise additional capital. We cannot predict when, if ever, we will be successful in raising additional capital and, accordingly, we may be required to cease operations at any time, if we do not have sufficient working capital to pay our operating costs.

 

 
8
 

   

If we are unable to obtain additional funding, our business operations will be harmed.

 

The Company raised $325,000 through a private placement of convertible notes and warrants in July 2015. As a result of this financing, the Company believes that it will have sufficient cash flows to operate for at least the next 12 months. However, the Company anticipates that it will have to raise additional capital to fund research and development and operations over the next 12 months. To the extent that we are required to raise additional funds to acquire research and facilities, and to cover costs of operations, we intend to do so through additional public or private offerings of debt or equity securities. There are currently no commitments or arrangements for other financings. We may be unable to secure such funding when needed in adequate amounts or on acceptable terms, if at all. Any additional equity financing may involve substantial dilution to our then existing shareholders. The inability to raise the additional capital will restrict our ability to develop and conduct business operations.

 

Our independent auditors have expressed their concern as to our ability to continue as a going concern.

 

The Company reported an accumulated deficit of $744,472 and had a stockholders' deficit of $626,401 at December 31, 2014. As a result of our financial condition, we have received a report from our independent registered public accounting firm for our financial statements for the years ended December 31, 2014 and 2013 that includes an explanatory paragraph describing the uncertainty as to our ability to continue as a going concern without the infusion of significant additional capital. At December 31, 2014, the Company had insufficient operating revenues and cash flow to meet its financial obligations. There can be no assurance that management will be successful in implementing its plans. If we are unable to raise additional financing we may cease operations.

 

If we are unable to keep up with rapid technological changes in our field, we will be unable to operate profitably.

 

Our industry is characterized by extensive research efforts and rapid technological progress. If we fail to anticipate or respond adequately to technological developments, our ability to operate profitably could suffer. We cannot assure you that research and discoveries by other companies will not render our software or potential products uneconomical or result in products superior to those we develop or that any products or services we develop will be preferred to any existing or newly-developed products.

 

Many of our potential competitors are better established and have significantly greater resources which may make it difficult for us to compete in the markets in which we intend to sell our products.

 

The market for the products we develop is highly competitive. Many of our potential competitors are well established with larger and better resources, longer relationships with customers and suppliers, greater name recognition and greater financial, technical and marketing resources than we have. Increased competition may result in price reductions, reduced gross margins, loss of market share and loss of licensees, any of which could materially and adversely affect our business, operating results and financial condition. We cannot ensure that prospective competitors will not adopt technologies or business plans similar to ours, or develop products which may be superior to ours or which may prove to be more popular. It is possible that new competitors will emerge and rapidly acquire market share. We cannot ensure that we will be able to compete successfully against future competitors or that the competitive pressures will not materially and adversely affect our business, operating results and financial condition.

 

If we lose any of our key management personnel or consultants, we may not be able to successfully manage our business or achieve our objectives.

 

Our future success depends in large part upon the leadership and performance of our management and consultants. The Company's operations and business strategy are dependent upon the knowledge and business contacts of our executive officers and our consultants. We do not have any employment agreements with management. We have a consulting agreement with Dr. Russell Schachar for clinical advisory and product development services related to our collaboration with the Hospital for the development of our software based treatment for attention deficit and attention deficit and hyperactivity disorder in children. Although, we hope to retain the services of our officer and consultants, if our officer or a consultant should choose to leave us for any reason before we have hired additional personnel, our operations may suffer. If we should lose their services before we are able to engage and retain qualified employees and consultants to execute our business plan, we may not be able to continue to develop our business as quickly or efficiently.

 

In addition, we must be able to attract, train, motivate and retain highly skilled and experienced technical employees in order to successfully develop our business. Qualified technical employees often are in great demand and may be unavailable in the time frame required to satisfy our business requirements. We may not be able to attract and retain sufficient numbers of highly skilled technical employees in the future. The loss of technical personnel or our inability to hire or retain sufficient technical personnel at competitive rates of compensation could impair our ability to successfully grow our business. If we lose the services of any of our personnel, we may not be able to replace them with similarly qualified personnel, which could harm our business.

 

 
9
 

   

Our obligations under the Purchase Agreement are secured by the assets of our Company.

 

Our assets are pledged as collateral to purchasers under the Purchase Agreement. If we fail do make payments under the Purchase Agreement and related documents, the purchasers may foreclose on such assets which would effect on our ability to operate.

 

Developments or assertions by us or against us relating to intellectual property rights could materially impact our business.

 

We have intellectual property rights to the cognitive assessment and rehabilitation software jointly developed with the Hospital pursuant to an exclusive license to such software granted to us under our collaboration agreement with the Hospital .

 

We will attempt to protect proprietary and intellectual property rights to our products through licensing and distribution arrangements although we currently do not have any patents or applications for our products.

 

Litigation may also be necessary in the future to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others or to defend against claims of invalidity. Such litigation could result in substantial costs and the diversion of resources.

 

As we create or adopt new software, we will also face an inherent risk of exposure to the claims of others that we have allegedly violated their intellectual property rights.

 

Our products could infringe on the intellectual property rights of others which may result in costly litigation and, if we do not prevail, could also cause us to pay substantial damages and prohibit us from selling or licensing our products.

 

Third parties may assert infringement or other intellectual property claims against us. We may have to pay substantial damages, including damages for past infringement if it is ultimately determined that our products or technology infringe a third party's proprietary rights. Further, we may be prohibited from selling or providing products before we obtain additional licenses, which, if available at all, may require us to pay substantial royalties or licensing fees. Even if claims are determined to be without merit, defending a lawsuit takes significant time, may be expensive and may divert management's attention from our other business concerns. Any public announcements related to litigation or interference proceedings initiated or threatened against us could cause our business to be harmed and our stock price to decline.

 

If we become a public reporting company we will be subject to extensive financial reporting and related requirements for which our accounting and other management systems and resources may not be adequately prepared.

 

We will become subject to reporting and other obligations under the Securities Exchange Act of 1934, as amended, including the requirements of Section 404 of the Sarbanes-Oxley Act. Section 404 will require us to conduct an annual management assessment of the effectiveness of our internal controls over financial reporting. These reporting and other obligations will place significant demands on our management, administrative, operational and accounting resources. Any failure to maintain effective internal controls could have a negative impact on our ability to manage our business and on our stock price.

 

We may be at risk to accurately report financial results or detect fraud if we fail to maintain an effective system of internal controls.

 

As directed by Section 404 of the Sarbanes-Oxley Act of 2002, the SEC adopted rules requiring public companies to include a report that contains an assessment by management on the Company's internal control over financial reporting in their annual and quarterly reports on Form 10-K and 10-Q. We cannot assure you that significant deficiencies or material weaknesses in our disclosure controls and internal control over financial reporting will not be identified in the future. Also, future changes in our accounting, financial reporting, and regulatory environment may create new areas of risk exposure. Failure to modify our existing control environment accordingly may impair our controls over financial reporting and cause our investors to lose confidence in the reliability of our financial reporting, which may adversely affect our stock price.

 

 
10
 

   

The market for our products is immature and volatile and if it does not develop, or if it develops more slowly than we expect, the growth of our business will be harmed.

 

Software-based systems for mental health is a new and unproven market, and it is uncertain whether it will achieve and sustain demand and market adoption. Our success will depend to a substantial extent on the willingness of customers and healthcare professionals to use our systems, as well as on our ability to demonstrate the value of our software and products to customers and to develop new applications that provide value to customers and users. If customers and users do not perceive the benefits of our products, then our market may not develop at all, or it may develop more slowly than we expect, either of which could significantly adversely affect our operating results. In addition, we have limited insight into trends that might develop and affect our business. We might make errors in predicting and reacting to relevant business, legal and regulatory trends, which could harm our business. If any of these events occur, it could materially adversely affect our business, financial condition or results of operations.

 

If our security measures are breached and unauthorized access to a customer's data are obtained, our products may be perceived as insecure, we may incur significant liabilities, our reputation may be harmed and we could lose sales and customers.

 

Our products involve the storage and transmission of customers' proprietary information, as well as protected health information, or PHI, which is regulated under the Health Insurance Portability and Accountability Act of 1996 and its implementing regulations, collectively HIPAA. Because of the extreme sensitivity of this information, the security features of our product are very important. If our security measures, some of which will be managed by third parties, are breached or fail, unauthorized persons may be able to obtain access to sensitive data, including HIPAA-regulated protected health information. A security breach or failure could result from a variety of circumstances and events, including third-party action, employee negligence or error, malfeasance, computer viruses, attacks by computer hackers, failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, telecommunication failures, user errors, and catastrophic events.

 

If our security measures were to be breached or fail, our reputation could be severely damaged, adversely affecting customer or investor confidence, customers may curtail their use of or stop using our products and our business may suffer. In addition, we could face litigation, damages for contract breach, penalties and regulatory actions for violation of HIPAA and significant costs for remediation and for measures to prevent future occurrences. In addition, any potential security breach could result in increased costs associated with liability for stolen assets or information, repairing system damage that may have been caused by such breaches, incentives offered to customers or other business partners in an effort to maintain the business relationships after a breach and implementing measures to prevent future occurrences, including organizational changes, deploying additional personnel and protection technologies, training employees and engaging third-party experts and consultants. While we maintain insurance covering certain security and privacy damages and claim expenses we may not carry insurance or maintain coverage sufficient to compensate for all liability and in any event, insurance coverage would not address the reputational damage that could result from a security incident.

 

We plan to outsource important aspects of the storage and transmission of customer information, and thus rely on third parties to manage functions that have material cyber-security risks. These outsourced functions include services such as software design and product development, software engineering, database consulting, data-center security, IT, network security and Web application firewall services. We attempt to address these risks by requiring outsourcing subcontractors who handle customer information to confirm compliance with HIPAA and to provide indemnification. However, we cannot assure you that these measures will adequately protect us from the risks associated with the storage and transmission of customers proprietary and protected health information.

 

We may experience cyber-security and other breach incidents that may remain undetected for an extended period. Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against us, we may be unable to anticipate these techniques or to implement adequate preventive measures. In addition, in the event that our customers authorize or enable third parties to access their data or the data of their employees on our systems, we cannot ensure the complete integrity or security of such data in our systems as we would not control access. If an actual or perceived breach of our security occurs, or if we are unable to effectively resolve such breaches in a timely manner, the market perception of the effectiveness of our security measures could be harmed and we could lose sales and customers.

 

 
11
 

   

If we fail to comply with applicable health information privacy and security laws and other state and federal privacy and security laws, we may be subject to significant liabilities, reputational harm and other negative consequences, including decreasing the willingness of current and potential customers to work with us.

 

Once our products are deployed, we are subject to data privacy and security regulation by both the federal government and the states in which we conduct our business. HIPAA established uniform federal standards for certain "covered entities," which include health care providers and health plans, governing the conduct of specified electronic health care transactions and protecting the security and privacy of protected health information, or PHI. The Health Information Technology for Economic and Clinical Health Act, or HITECH, which became effective on February 17, 2010, makes HIPAA's privacy and security standards directly applicable to "business associates," which are independent contractors or agents of covered entities that create, receive, maintain, or transmit PHI in connection with providing a service for or on behalf of a covered entity. HITECH also increased the civil and criminal penalties that may be imposed against covered entities, business associates and other persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce HIPAA's requirements and seek attorney's fees and costs associated with pursuing federal civil actions.

 

Our proprietary software may not operate properly, which could damage our reputation, give rise to claims against us or divert application of our resources from other purposes, any of which could harm our business and operating results.

 

Proprietary software development is time-consuming, expensive and complex, and may involve unforeseen difficulties. We may encounter technical obstacles, and it is possible that we discover additional problems that prevent our proprietary applications from operating properly. We are currently implementing software with respect to a number of new applications and services. If our software does not function reliably or fails to achieve client expectations in terms of performance, clients could assert liability claims against us or attempt to cancel their contracts with us. This could damage our reputation and impair our ability to attract or maintain clients.

 

Moreover, data services are complex as those we offer have in the past contained, and may in the future develop or contain, undetected defects or errors. Material performance problems, defects or errors in our existing or new software and applications and services may arise in the future and may result from interface of our offering with systems and data that we did not develop and the function of which is outside of our control or undetected in our testing. These defects and errors and any failure by us to identify and address them could result in loss of revenue or market share, diversion of development resources, injury to our reputation and increased service and maintenance costs. The costs incurred in correcting any defects or errors may be substantial and could adversely affect our operating results.

 

We depend on data centers operated by third parties for our products, and any disruption in the operation of these facilities could adversely affect our business.

 

We plan to provide our products through a third-party data center. While we will control and have access to our servers and all of the components of our network that are located in our external data centers, we do not control the operation of these facilities. The owners of our data centers have no obligation to renew agreements with us on commercially reasonable terms, or at all. If we are unable to renew any such agreements we may enter into on commercially reasonable terms, or if our data center operator is acquired, we may be required to transfer our servers and other infrastructure to new data center facilities, and we may incur significant costs and possible service interruption in connection with doing so.

 

Problems faced by our third-party data center locations could adversely affect the experience of our customers. The operators of the data centers could decide to close their facilities without adequate notice. In addition, any financial difficulties, such as bankruptcy, faced by the operators of the data centers or any of the service providers with whom we or they contract may have negative effects on our business, the nature and extent of which are difficult to predict. Additionally, if our data centers are unable to keep up with our growing needs for capacity, this could have an adverse effect on our business. For example, a rapid expansion of our business could affect the service levels at our data centers or cause such data centers and systems to fail. Any changes in third-party service levels at our data centers or any disruptions or other performance problems with our products could adversely affect our reputation or result in lengthy interruptions in our services. Interruptions in our services might reduce our revenue, cause us to issue refunds to customers for prepaid and unused subscriptions, subject us to potential liability or adversely affect our renewal rates.

 

 
12
 

   

If currency exchange rates fluctuate substantially in the future, the results of our operations, which are reported in U.S. dollars, could be adversely affected.

 

As our head office and operations are primarily based in Canada, we become more exposed to the effects of fluctuations in currency exchange rates. We incur expenses for employee compensation and other operating expenses in Canadian dollars. Fluctuations in the exchange rates between the U.S. dollar and the Canadian dollar could result in the dollar equivalent of such expenses being higher. This could have a negative impact on our reported results of operations. Although we may in the future decide to undertake foreign exchange hedging transactions to cover a portion of our foreign currency exchange exposure, we currently do not hedge our exposure to foreign currency exchange risks.

 

We may not be in compliance with rules and regulations of the U.S. Food and Drug Administration (the "FDA") should they become applicable to any products we develop in the future.

 

While our products are not currently regulated by the FDA, the FDA may decide to regulate our products in the future. The use of forms and tools for the measurement and assessment of behavioral and cognitive abilities has been derived primarily from academic research in the areas of cognitive psychology and cognitive neuroscience. These methodologies are currently not classified as medical devices by the FDA . With the advent of brain games, games purporting to increase intelligence or cognitive function, claims regarding efficacy and impact are currently unregulated and not subject to clinical processes to determine their accuracy or validity. Terminology such as "neuroplasticity", "attention" and "working memory" have become ubiquitous as the "brain game" market has grown. Current clinical practice refers to the use of cognitive software for the measurement of deficits as an "assessment", and the use of software tools as rehabilitation methods as "remediation". While we make all efforts to conduct our activities and clinical trials as if we are a regulated entity, there is no guarantee that our methods and procedures will satisfy regulatory requirements, should they exist in the future. Any future regulation could subject us to potential liability if we were deemed to be non-compliant with such rules and regulations. The Company hopes to develop and study our products with the purpose of providing clinical practice in the form of a diagnostic and therapeutic capacity. As such, claims and uses of that nature would predicate the regulatory approval of the FDA under the 510(k) Class I or Class II device.

 

RISKS ASSOCIATED WITH OUR COMMON SHARES AND COMPANY

 

The issuance of shares upon conversion of the Notes and exercise of the Warrants and options will cause immediate and substantial dilution to our existing shareholders.

 

As of November 11, 2015, there are currently 7,946,210 common shares issuable upon the conversion of the Notes, options to purchase an aggregate of 8,200,000 common shares and warrants to purchase an aggregate of 7,946,210 common shares outstanding. The issuance of shares upon conversion of the Notes, and exercise of warrants and options will result in substantial dilution to the interests of other shareholders since the security holders may ultimately convert or exercise their securities and sell the full amount issuable upon conversion or exercise.

 

Our common shares are subject to the "penny stock" rules of the SEC and we have no established market for our securities, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

 

The SEC 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: (i) that a broker or dealer approve a person's account for transactions in penny stocks; and (ii) 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. In order to approve a person's account for transactions in penny stocks, the broker or dealer must: (i) obtain financial information and investment experience objectives of the person; and (ii) 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.

 

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: (i) sets forth the basis on which the broker or dealer made the suitability determination; and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

 

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.

 

 
13
 

   

We are a "foreign private issuer", and you may not have access to the information you could obtain about us if we were not a "foreign private issuer".

 

We are considered a "foreign private issuer" under the Securities Act of 1933, as amended. As a foreign private issuer we will not have to file quarterly reports with the SEC nor will our directors, officers and 10% stockholders be subject to Section 16(b) of the Exchange Act. As a foreign private issuer we will not be subject to the proxy rules of Section 14 of the Exchange Act. Furthermore, Regulation FD does not apply to non-U.S. companies and will not apply to us. Accordingly, you may not be able to obtain information about us as you could obtain if we were not a "foreign private issuer".

 

Because the majority of our assets and of our officers and directors are located outside the United States, it may be difficult for an investor to enforce within the United States any judgments obtained against us or any of our officers and directors.

 

All of our assets are presently located outside of the United States and we do not currently maintain a permanent place of business within the United States. In addition, some of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons' assets are located outside the United States. As a result, it may be difficult for an investor to effect service of process or enforce within the United States any judgments obtained against us or our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. In addition, there is uncertainty as to whether the courts of Canada would recognize or enforce judgments of United States courts obtained against us or our directors and officers predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. There is even uncertainty as to whether the Canadian courts would have jurisdiction to hear original actions brought in Canada against us or our directors and officers predicated upon the securities laws of the United States or any state thereof.

 

Our obligations under the Pu r chase Agreement are secured by the assets of our Company.

 

The holders of our Notes have a senior security interest in all of o ur assets . If we fail do make payments under the Purchase Agreement and related documents, the note holders may foreclose on such assets which would have a substantially adverse effect on our ability to operate.

 

Because we do not intend to pay any cash dividends on our common shares, our shareholders will not be able to receive a return on their shares unless they sell them .

 

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 shares in the foreseeable future. Unless we pay dividends, our shareholders will not be able to receive a return on their shares unless they sell them at a price higher than that which they initially paid for such shares.

 

The market price of our common shares is subject to fluctuation.

 

The market prices of our shares may fluctuate significantly in response to factors, some of which are beyond our control, including:

 

The announcement of new products by our competitors

The release of new products by our competitors

Developments in our industry or target markets

General market conditions including factors unrelated to our operating performance

 

Recently, the stock market in general has experienced extreme price and volume fluctuations. Continued market fluctuations could result in extreme market volatility in the price of our common shares which could cause a decline in the value of our shares.

 

 
14
 

   

Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our shareholders have limited protections against interested director transactions, conflicts of interest and similar matters.

 

The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York Stock Exchange, the Amex Equities Exchanges and NASDAQ, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities which are listed on those exchanges or the NASAQ. Because we will not be seeking to be listed on any of the exchanges, we will not be presently required to comply with many of the corporate governance provisions.

 

Because our directors are not independent, we do not currently have independent audit or compensation committees. As a result, the directors have the ability, among other things, to determine their own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our shareholders without protections against interested director transactions, conflicts of interest and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations.

 

Our officer and directors own a substantial amount of our common shares and, therefore, exercise significant control over our corporate governance and affairs which may result in their taking actions with which other shareholders do not agree.

 

Our executive officer and directors and their affiliates control approximately 68.66% of our outstanding common shares. These shareholders, if they act together, may be able to exercise substantial influence over the outcome of all corporate actions requiring approval of our shareholders, including the election of directors and approval of significant corporate transactions, which may result in corporate action with which other shareholders do not agree. This concentration of ownership may also have the effect of delaying or preventing a change in control which might be in other shareholders' best interest but which might negatively affect the market price of our common shares.

 

Our authorized capital consists of an unlimited number of shares of one class designated as common shares. 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 authorizes the issuance of an unlimited number of our common shares, no par value, of which 28,072,366 shares are currently issued and outstanding. The future issuance of common shares may result in substantial dilution in the percentage of our common shares held by our then existing shareholders. We may value any common shares issued in the future on an arbitrary basis. The issuance of common shares 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 may have an adverse effect on any trading market of our common shares.

 

Offers or availability for sale of a substantial number of shares of our common shares may cause the price of our common shares to decline.

 

If our shareholders sell substantial amounts of our common shares in the public market, including shares issued in the offering upon the effectiveness of the registration statement of which this prospectus forms a part, or upon the expiration of any statutory holding period, under Rule 144, or upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as an "overhang" and in anticipation of which the market price of our common shares could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

 

 
15
 

   

We qualify as an "emerging growth company" under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements.

 

For so long as we are an emerging growth company, we will not be required to:

 

have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

submit certain executive compensation matters to shareholder advisory votes, such as "say-on-pay" and "say-on-frequency;" and

disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive's compensation to median employee compensation.

 

We will remain an "emerging growth company" for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

 

Until such time, however, we cannot predict if investors will find our common shares less attractive because we may rely on these exemptions. If some investors find our common shares less attractive as a result, there may be a less active trading market for our common shares and our share price may be more volatile.

 

Since we have elected under Section 107 of the JOBS Act to use the extended transition period with respect to complying with new or revised accounting standards, our financial statements may not be comparable to companies that comply with public company effective dates making it more difficult for an investor to compare our results with other public companies.

 

Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 102(b)(2)(B) of the Act for complying with new or revised accounting standards. In other words, as an emerging growth company we can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

 

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND AUDITORS

 

Set forth below is the name and business address of the Company's directors, senior management, and auditors.

 

Directors and Senior Management. Our board of directors consists of Scott L. Woodrow, David Stefansky and Jesse Kaplan. Our sole officer is Scott L. Woodrow, who is our President and Chief Executive Officer. The business address of our officers and directors is c/o ehāve, Inc., 250 University Avenue, Suite 200, Toronto, ON M5H 3E5.

 

Auditors. Our auditors are Turner, Stone & Company, 12700 Park Central Drive, Suite 1400, Dallas, Texas 75251.

 

 
16
 

   

CAPITALIZATION AND INDEBTEDNESS

 

The following table sets forth our capitalization as of December 31, 2014 and June 30, 2015. You should read this table in conjunction with ''Operating and Financial Review and Prospects'' and our financial statements and the notes thereto, included elsewhere in this prospectus. Amounts below are presented in accordance with U.S. GAAP and are stated in US dollars.

 

 

 

December 31, 2014 (audited)

 

 

June 30, 2015(unaudited)

 

 

 

Number of Securities

 

 

Amount

 

 

Number of Securities

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

 

 

$ 616,421

 

 

 

 

 

 

0

 

Common shares , no par value per share; unlimited authorized;

 

 

13,965,424

 

 

 

 

 

 

 

28,072,366

 

 

 

 

 

Total shareholders' equity (deficit)

 

 

 

 

 

($626,401

 

 

 

 

 

 

 

 

 

Other than its outstanding convertible loan agreements, and the repayable amounts owing under its development grant with the CIIRDF described in the Description of Business section of this prospectus, the Company has no debt. As of December 31, 2014 we had $160,513 in accounts payable and $221,810 in accrued liabilities. As of June 30, 2015 we had $150,948 in accounts payable and $161,512 in accrued liabilities, all of which is current and unsecured.

 

The information set forth in the foregoing table excludes 7,946,210 common shares issuable upon the exercise of the Warrants at an exercise price of approximately $0.0818 per share, 7,946,210 common shares issuable upon the conversion of the Notes at a conversion price of $0.0409 and 8,200,000 common shares issuable upon the exercise of stock options at an exercise price of $0.00001 per share.

 

THE OFFERING

 

This prospectus relates to (i) the offering of a minimum of 6,112,470 common shares and a maximum of 11,002,470 common shares at a fixed price of $0.0409 ( Each investor that purchases common shares in the offering, will also receive a five-year warrant to purchase an equivalent number of common shares, at an exercise price of $0.0818 per share .) , and (ii) the resale, from time to time, of up to 15,892,420 common shares consisting of (a) 7,946,210 shares issuable upon the exercise of five-year warrants at an exercise price of $0.0818 per share and (b) 7946,210 shares issuable upon the conversion of the Notes at a conversion price of $0.0409 per share by the selling shareholders identified in this prospectus, which shares were purchased by the selling shareholders in a private offering pursuant to the Purchase Agreement between each selling stockholder and the Company. See the section of this prospectus entitled "Purchase Transaction" for a description of the Purchase Agreement and the section entitled "Selling Shareholders" for additional information about the selling shareholders. Each issuance was made in reliance upon an exemption from registration provided under Section 4(2) of the Securities Act of 1933, as amended.

 

We intend to use any such proceeds received in the offering for working capital purposes. We have agreed to bear the expenses relating to the registration of the shares for the selling shareholders.

 

The offering period will commence upon the effectiveness of the registration statement of which this prospectus is a part and will terminate on the earlier of (i) 90 days from the date of this prospectus or the date on which all 11,002,445 common shares have been sold, unless extended or earlier terminated by our board of directors in its sole discretion. In the event that 6,112,470 shares are not sold during the offering period, all proceeds from the sale of the shares will be returned to subscribers, without interest or deduction. Subscriptions are irrevocable once made, and funds will only be returned if the subscription is rejected or if 6,112,470 shares offered are not sold prior to the termination of the offering.

 

 
17
 

   

DETERMINATION OF OFFERING PRICE

 

The offering price of the shares has been determined arbitrarily by us. The price does not bear any relationship to our assets, book value, earnings, or other established criteria for valuing a privately held company. In determining the number of shares to be offered and the offering price, we took into consideration our cash on hand and the amount of money we would need to implement our business plan. Because we have no significant operating history and have not generated any material revenues to date, the price of our common shares is not based on past earnings, nor is the price of our common shares indicative of the current market value of the assets owned by us. No valuation or appraisal has been prepared for our business and potential business expansion. Our common shares are presently not traded on any market or securities exchange. Accordingly, the offering price should not be considered an indication of the actual value of our common shares.

 

USE OF PROCEEDS

 

Our offering is being made on a self-underwritten basis. The offering price per share is $0.0409. A minimum of 6,112,470 common shares, or $250,000 must be sold, in the offering and we are offering up to a maximum of 11,002,445 common shares, or $450,000.

 

The following table sets forth the uses of proceeds assuming the sale of the 6,112,470 minimum number of shares and the 11,002,445 maximum number of shares offered for sale. There is no assurance that we will raise the full $450,000 being offered.

 

 

 

$ 250,000

 

 

$ 450,000

 

 

 

 

 

 

 

 

 

 

Legal and accounting fees

 

$ 60,000

 

 

$ 60,000

 

Human resources

 

 

 

 

 

 

 

 

Clinical

 

 

50,000

 

 

 

85,000

 

Software development

 

 

70,000

 

 

 

150,000

 

Business development

 

 

60,000

 

 

 

130,000

 

Rent and Overhead

 

 

10,000

 

 

 

25,000

 

 

The above amounts are estimated costs. Net proceeds will be used for working capital purposes.

 

We will not receive any proceeds from the sales of our common shares by the selling shareholders. We will also not receive any proceeds from the exercise of the Warrants included in this offering to the extent that such Warrants are exercised on a cashless basis according to their terms.

 

We have agreed to bear the expenses relating to the registration of the shares for the selling shareholders.

 

 
18
 

 

DIVIDEND POLICY

 

We have not declared or paid dividends on our common shares and we do not anticipate paying dividends in the foreseeable future. Declaration or payment of dividends, if any, in the future, will be at the discretion of our board of directors and will depend on our then current financial condition, results of operations, capital requirements and other factors deemed relevant by the board of directors. There are no contractual restrictions on our ability to declare or pay dividends.

 

PURCHASE TRANSACTION

 

Purchase Agreement

 

On July 7, 2015, we entered into the Purchase Agreement with the selling shareholders pursuant to which we agreed to sell a minimum of $320,000 and a maximum of $770,000 of Notes and Warrants pursuant to Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated thereunder. An aggregate of $325,000 of Notes and Warrants was sold, representing an aggregate of 7,946,210 common shares issuable upon the conversion of the Notes and an aggregate of 7,946,210 issuable upon the exercise of the Warrants which are being offered pursuant to this prospectus. The proceeds received by us under the Purchase Agreement are expected to be used primarily for human resources (clinical, software development, business development and legal and accounting expenses and general corporate purposes as described further in this prospectus.

 

If the maximum amount of Notes are not sold and within 180 days of July 7, 2015, and a registration statement on Form F-1 is declared effective by the SEC and our common shares are listed or quoted on a trading market (a "Going Public Event") a subsequent closing will occur within 10 days of the Going Public Event ("Subsequent Closing") entitling each purchaser in the initial closing to purchase common shares in a pro rata amount (based upon such purchaser's initial purchase) of the difference between the amount sold in the initial closing and the maximum of $770,000, up to $250,000.

 

Under the Purchase Agreement, if the Company fails to timely remove restrictive legends or convert shares underlying the Notes in accordance with the terms of the Purchase Agreement, a purchaser, the Company is required to pay liquidated damages in the amount of $10 per trading day for each $1,000 of conversion shares or warrant shares delivered for removal of the restrictive legend or conversion.

 

If the Company fails to deliver Notes, Warrants, common shares issuable thereunder or common shares in connection with a Subsequent Closing as required pursuant to the Purchase Agreement or the Note, and the Purchaser buys common shares to deliver in satisfaction of a sale by such purchaser of common shares which the purchaser was entitled to receive in unlegended form from the Company, the Company is required to pay liquidated damages, in cash, in the amount by which (A) the purchaser's purchase price (including brokerage commissions, if any) for the shares so purchased exceeds (B) the aggregate purchase price of the shares delivered to the Company for reissuance as unlegended shares or as are required to be delivered pursuant to the Note, as the case may be, together with interest thereon at a rate of 15% per annum accruing until paid in full.

 

At any time commencing on the occurrence of a Going Public Event while the Notes and Warrants are outstanding, the Company fails to satisfy the current public information requirement under Rule 144(c) (a "Public Information Failure") the Company will be required to pay liquidated damages, in cash, an amount equal to 1% of the aggregate principal amount of Notes and accrued interest thereon on the day of a Public Information Failure and on every 30th day thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such public information is no longer required for the purchasers to transfer the shares pursuant to Rule 144. If the Company fails to timely make such payments in accordance with the terms of the Purchase Agreement, such payments will bear interest at the rate of 1.5% per month until paid in full.

 

 
19
 

   

While the Notes and Warrants are outstanding, without the prior written approval of the purchasers holding at least a majority of the then outstanding securities purchased under the Purchase Agreement, the Company may not enter into any equity line of credit or similar agreement, or issue any common stock, floating or variable priced equity linked instruments or any of the foregoing or equity with price reset rights or issue any equity or common share equivalents (subject to adjustment for stock splits, pro rata equity distributions, dividends, and recapitalizations). The Company must also maintain its property, insurance coverage and corporate existence during such time.

 

The Purchase Agreement also requires that on or before 180 days after July 7, 2015, (i) a registration statement on Form F-1 registering the underlying shares held by the selling shareholders will be declared effective by the SEC, and (ii) its common shares will be listed for trading or quotation.

 

Until the occurrence of a Going Public Event, the Company will not incur an indebtedness without the consent of the purchasers holding a majority of the then outstanding securities purchased under the Purchase Agreement.

 

While the Notes and Warrants are outstanding, the board of directors of the Company will consist of no more than three members, one of which will be appointed by a majority of the then outstanding securities purchased under the Purchase Agreement.

 

While the Notes and Warrants are outstanding, upon any proposed subsequent financing by the issuance by the Company of common shares or common share equivalents, other than (i) a rights offering to all holders of our common shares or (ii) an Exempt Issuance (as such term is defined in the Purchase Agreement), the purchasers have the right, in accordance with the procedures set forth in the Purchase Agreement, to participate in such subsequent financing, pro rata to each other purchaser in proportion to their subscription amounts on the same terms, conditions and price provided for in the subsequent financing, unless the subsequent financing is an underwritten public offering.

 

From and after the occurrence of a Going Public Event, the Company may not effect any exercise of rightsgrantedto a purchaser in a subsequent financing to the extent that after giving effect to such exercise, the purchaser (together with the purchaser's affiliates, and any others acting as a group together with the purchaser or any of the purchaser's affiliates), would beneficially own in excess of4.99% of the common shares outstanding immediately after giving effect to such exercise, or would beneficially own in excess of 9.99% upon not less than 61 days' prior notice to the Company ("Ownership Limitation").

 

Notes

 

In connection with the Purchase Agreement, on July 7, 2015, we issued an aggregate of $325,000 principal amount of Notes to seven investors which Notes mature on July 7, 2017. The Notes are secured by the assets of the Company pursuant to a security agreement, dated July 7, 2015, between the Company and Jesse Kaplan, as collateral agent for the investors. The Notes accrue interest, compounded monthly, at the rate of 4%, which interest is payable on each January 1st and July 1st during the term of the Note, commencing January 1, 2016. The Notes are convertible, in whole or in part, into common shares at a conversion price of $0.0409 per share, subject to reduction to $0.01 after one year from issuance if a Going Public Event has not occurred. The conversion price is also subject to adjustment in accordance with the Notes in the event the Company pays a stock dividend or makes a distribution in common shares, or subdivides, combines or re-classifies its shares.

 

If the Company fails to timely deliver shares issuable upon conversion of the Notes in accordance with the terms of the Note, the holder is entitled to liquidated damages in the amount of $10 per business day for each $1,000 of Notes converted until delivered.

 

 
20
 

   

If the Company fails to timely deliver conversion shares in accordance with the terms of the Note and the holder is required to purchase common shares to deliver in satisfaction of a sale by the holder of the conversion shares which the holder was entitled to receive upon conversion, the Company must pay in cash to the holder the amount by which (x) the holder's purchase price (including any brokerage commissions) for the common shares so purchased exceeds (y) the product of (1) the aggregate number of common shares that the holder was entitled to receive upon conversion multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and at the option of the holder, either reissue (if surrendered) the Note in a principal amount equal to the principal amount of the attempted conversion (in which case such conversion shall be deemed rescinded) or deliver to the holder the number of common shares that would have been issued if the Company had timely complied with its delivery requirements under the Note.

 

The Company is required to, at all times, reserve not less than 150% of the aggregate number of common shares issuable upon the conversionof the then outstanding principal amount of the Note and accrued interest through the maturity date of the Note.

 

From and after the occurrence of a Going Public Event, the Company may not effect any conversion of the Note, and a holder may not convert any portion of the Note, to the extent that after giving effect to the conversion, the holder (together with the holder's affiliates, and any others acting as a group together with the holder or any of the holder's affiliates) would exceed the Ownership Limitation described above.

 

If, at any time while the Notes are outstanding, the Company makes subsequent equity sales or sells or grants any option to purchase or to reprice, or otherwise disposes of or issues common shares entitling a third party to acquire common shares at a price per share that is lower than the then conversion price, the conversion price will be reduced (except with respect to certain Exempt Issuances as defined in the Purchase Agreement) to such lower price.

 

If the Company makes any subsequent rights offerings and grants, issues or sells any common share equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of common shares (the "Purchase Rights"), the holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the holder could have acquired if the holder had held the number of common shares acquirable upon complete conversion of the Note provided, to the extent that the holder's right to participate in any such Purchase Right would result in the holder exceeding the Ownership Limitation described above, the holder will not be entitled to participate in such Purchase Right to such extent and such Purchase Right shall be held in abeyance until such time, if ever, as its right thereto would not result in exceeding such Ownership Limitation.

 

If, at any time while the Note is outstanding, the Company engages in any Fundamental Transaction, as described in the Note, including any merger or consolidation, sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets, purchase offer, tender offer or exchange offer, any reclassification, reorganization or recapitalization or any compulsory share exchange, stock or share purchase agreement or other business combination, then, upon any subsequent conversion of the Note, the holder has the right to receive for each conversion share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the number of common shares of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration receivable as a result of such Fundamental Transaction.

 

Provided certain conditions are met, including the effectiveness of a registration statement and the listing and trading of the common shares on a trading market, unless waived by the holder of a majority of the holders of the outstanding Notes, the outstanding principal amount and any accrued interest thereon will mandatorily convert into common shares upon the occurrence of the Going Public Event at the then applicable conversion price, provided a Subsequent Closing occurs.

 

For so long as the Note is outstanding, except in connection with an Exempt Issuance, the holder may participate in any offering of the Company's common shares on the same terms and conditions as any other subscriber, investor or participant in such offering and apply all or some of the amounts outstanding on the Note as payment for the securities to be acquired pursuant to such offering.

 

As long as the Notes are outstanding, other than with the consent of the holders of at least 51% of principal amount of the then outstanding Notes, the Company may not (a) other than for certain permitted indebtedness, as described in the Notes, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness;(b) other than for certain permitted liens as described in the Notes, enter into, create, incur, assume or suffer to exist any liens or encumbrances on any of its property or assets or interest therein or income or profits therefrom; (c) amend its charter documents, in any manner that materially and adversely affects any rights of the holders; (d) repay, repurchase or offer to repay, repurchase or otherwise acquire any of its common shares; (e) redeem, defease, repurchase, repay or make any payments in respect of, any indebtedness; (f) pay cash dividends or distributions on any of its equity securities; (g) enter into any transaction with any affiliate which would be required to be disclosed in any public filing with the SEC, unless on an arm's-length basis and approved by a majority of the Company's disinterested directors; or (h) enter into any agreement with respect to any of the foregoing.

 

 
21
 

   

The following constitute Events of Default under the Note:

 

(i)

default in the payment of the principal, interest or liquidated damages and other amounts owing on any Note, when due and payable and not cured in accordance with the Note;

(ii)

fail to observe or perform any other covenant or agreement in the Notes not cured within the earlier of 10 business days (A) after notice of such failure and (B) after the Company has become or should have become aware of such failure;

(iii)

default or event of default (subject to any grace or cure period) under any related transaction documents or other material agreement, lease, document or instrument to which the Company is obligated;

(iv)

any representation or warranty made in the Note or any related transaction documents, or statement, report, financial statement or certificate that is untrue in any material respect;

(v)

the Company is subject to a Bankruptcy Event as defined in the Note;

(vi)

the Company defaults on any of its obligations under any Indebtedness as such term is defined in the Note;

(vii)

a change of control or Fundamental Transaction occurs or the Company agrees to sell or dispose of in excess of 30% of its assets;

(viii)

subsequent to a Going Public Event, the Company does not meet the current public information requirements under Rule 144;

(ix)

The Company fails to timely deliver shares in accordance with the terms of the Note;

(x)

any person breaches any lockup agreement delivered pursuant to the Purchase Agreement;

 

(xi)

any monetary judgment, writ or similar final process entered or filed against the Company, its property or assets for more than $50,000 that remains unvacated, unbonded or unstayed for 45 days;

(xii)

any dissolution, liquidation or winding up by the Company of a substantial portion of its business;

(xiii)

cessation of operations by the Company;

(xiv)

failure of the Company to maintain any material intellectual property rights, personal, real property, equipment, leases or other assets necessary to conduct its business, not cured with twenty days after written notice thereof;

(xv)

subsequent to 120 days after a Going Public Event, an event resulting in the common shares not being listed or quoted or notification from a trading market that the Company is not in compliance with the conditions for such continued quotation and such non-compliance continues for twenty days;

(xvi)

a SEC or judicial stop trade order or suspension;

(xvii)

failure by the Company to notify a holder of any material event of which the Company is obligated to notify the holder pursuant to the terms of the Note or other transaction documents;

(xviii)

a default by the Company of a material term, covenant, warranty or undertaking of any other agreement to which the Company and Holder are parties, or the occurrence of an event of default under any such other agreement which is not cured after any required notice and/or cure period;

(xix)

the occurrence of an Event of Default under any other Note; or

(xx)

any material provision of any transaction document ceases to be valid, binding or enforceable against the Company, or the validity or enforceability is contested by the Company, or a proceeding shall be commenced by the Company or any governmental authority seeking to establish the invalidity or unenforceability thereof, or the Company denies in writing that it has any liability or obligation purported to be created under any transaction document.

 

 
22
 

  

Upon an Event of Default, at the holder's option, liquidated damages and other amounts owing shall become immediately due and payable (up to the outstanding principal amount of the Note) in cash at a rate equal to the sum of (a) 125% of the outstanding principal amount of the Note and (b) all other amounts, costs, expenses and liquidated damages due on the Note. Commencing on the maturity date of the Note and five days after the occurrence of an Event of Default, interest on the Note shall accrue at the lesser of 15% per annum or the maximum rate permitted under applicable law.

 

Warrants

 

In connection with the Purchase Agreement, on July 7, 2015, we issued Warrants to purchase an aggregate of 7,946,210 common shares at an exercise price of $0.0818 per share to seven investors for five years from the date of issuance. The Warrants may be exercised on a cashless basis, commencing six months from the date of issuance at a price determined based upon the volume weighted average price of the Company's common shares on the day before the date of exercise. In addition, the Warrant will be automatically exercised via cashless exercise on its expiration date.

 

If the Company fails to timely deliver common shares issuable pursuant to a Warrant exercise and if after such date the holder is required to purchase common shares to deliver in satisfaction of a sale by the holder of the warrant shares which the Holder anticipated receiving upon such exercise, the Company shall (A) pay in cash to the holder the amount by which (x) the holder's purchase price (including brokerage commissions, if any) for the common shares so purchased exceeds (y) the amount obtained by multiplying (1) the number of warrant shares that the Company was required to deliver to the holder in connection with the exercise (2) the price at which the sell order giving rise to such purchase obligation was executed, and at the option of the holder, either reinstate the portion of the Warrant and equivalent number of warrant shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the holder the number of common shares that would have been issued had the Company timely complied with its exercise and delivery obligations.

 

The Company shall not effect any exercise of the Warrant, and a holder shall not have the right to exercise any portion of the Warrant, to the extent that after giving effect to such exercise, the holder (together with the holder's affiliates, and others Persons acting as a group together with the holder or any of the holder's affiliates) would beneficially own in excess of the Ownership Limitation.

 

The number of shares issuable upon the exercise of the Warrant is subject to adjustment in accordance with the terms of the Warrant in the event the Company pays a stock dividend or makes a distribution in common shares, or subdivides, combines or re-classifies its shares.

 

If, at any time while the Warrant is outstanding, the Company makes subsequent equity sales or sells or grants any option to purchase or to reprice, or otherwise disposes of or issues common shares entitling a third party to acquire common shares at a price per share that is lower than the exercise price of the Warrant, the exercise price will be reduced (except with respect to certain Exempt Issuances as defined in the Purchase Agreement) to such lower price and the number of warrant shares issuable will be increased such that the aggregate exercise price payable, after taking into account the decrease in the exercise price, will equal the aggregate exercise price prior to such adjustment.

 

If the Company makes any subsequent rights offerings and grants, issues or sells any Purchase Rights, the holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the holder could have acquired if the holder had held the number of common shares acquirable upon complete exercise of the Warrant provided, to the extent that the holder's right to participate in any such Purchase Right would result in the holder exceeding the Ownership Limitation, the holder will not be entitled to participate in such Purchase Right to such extent and such Purchase Right shall be held in abeyance until such time, if ever, as its right thereto would not result in exceeding such Ownership Limitation.

 

If the Company declares or makes any dividend or other distribution of its assets (or rights to acquire its assets) to holders of common shares (a "Distribution"), at any time after the issuance of the Warrant, the holder is entitled to participate in such Distribution to the same extent that the holder would have participated therein if the holder had held the number of common shares acquirable upon complete exercise of the Warrant provided, the holder will not be entitled to participate in such Distribution in excess of its Ownership Limitation and the portion of such Distribution in excess will be held in abeyance until such time, if ever, as its right thereto would not result in the holder exceeding the Ownership Limitation.

 

 
23
 

   

If, at any time while the Warrant is outstanding, the Company engages in a Fundamental Transaction, as described in the Warrant, including any merger or consolidation, sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets, purchase offer, tender offer or exchange offer, any reclassification, reorganization or recapitalization or any compulsory share exchange, stock or share purchase agreement or other business combination, then, upon any subsequent conversion of the Note, the holder has the right to receive for each conversion share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the number of common shares of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration receivable as a result of such Fundamental Transaction, upon any subsequent conversion of the Warrant, the holder has the right to receive for each warrant share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, the number of common shares of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration receivable as a result of such Fundamental Transaction.

 

Registration Rights Agreement

 

In connection with the Purchase Agreement, we entered into a registration rights agreement, dated July 7, 2015, with each of the selling shareholders ("Registration Rights Agreement") pursuant to which we are required to file a registration statement covering the resale of "registrable securities" held by the selling shareholders on Form F-1 with the SEC no later than 75 days after the closing of the sale of the Notes and Warrants and have such registration statement declared effective by the SEC no later than 75 days from the date of filing. Registrable securities as defined in the Registration Agreement, includes common shares issuable upon conversion of the Notes, in connection with any anti-dilution provisions, upon exercise of the Warrants, upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing, or the common shares issuable in connection with a Subsequent Closing). The Company must maintain the effectiveness of the Registration Statement until all registrable securities are sold or, commencing 36 months after the issuance of the Notes and Warrants, may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144.

 

If the registration statement is not timely filed with the SEC, the Company fails to file a timely acceleration request or respond to SEC comments or the registration statement is not declared effective within 75 days of filing, or after the effectiveness, the registration statement does not remain effective or the selling shareholders are not permitted to use the prospectus to resell such registrable securities for more than fifteen days or more than an aggregate of thirty days during any 12-month period, on each such occurrence and each month thereafter until cured, the Company is required to pay liquidated damages, in cash equal to 2% of the aggregate purchase price paid for the registrable securities . If the Company fails to pay any such liquidated damages within seven days, the Company will be required to pay interest thereon at a rate of 15% per annum.

 

SELLING SHAREHOLDERS

 

This prospectus relates to the resale by the selling shareholders of up to 15,892,420 common shares being offered by this prospectus, all of which are being registered for sale for the accounts of the selling shareholders and include the following: (a) 7,946,210 common shares issuable upon the exercise of the Warrants issued pursuant to the Purchase Agreement and (b) 7,946,210 common shares issuable upon the conversion of the Notes.

 

We are filing the registration statement of which this prospectus forms a part pursuant to the provisions of the Purchase Agreement and Registration Agreement, which we entered into with the selling shareholders, in which we agreed to provide certain registration rights with respect to sales by the selling shareholders of the common shares that may be issued upon the exercise of the Warrants and conversion of the Notes by the selling shareholders.

 

The issuances were exempt under the registration provisions of the Securities Act. The aggregate purchase price for the Notes and Warrants was $325,000, which was paid in cash.

 

The selling shareholders, may, from time to time, offer and sell pursuant to this prospectus any or all of the shares referred to above, The selling shareholders may also sell, transfer or otherwise dispose of all or a portion of their shares in transactions exempt from the registration requirements of the Securities Act. We may from time to time include additional selling shareholders in supplements or amendments to this prospectus.

 

The selling shareholders may sell some, all or none of its shares. We do not know how long the selling shareholders will hold the shares before selling them, and we currently have no agreements, arrangements or understandings with the selling shareholders regarding the sale of any of the shares.

 

 
24
 

   

The following table sets forth the shares beneficially owned, as of November 11, 2015, by the selling shareholders prior to the offering contemplated by this prospectus, the number of shares that the selling shareholders may offer and sell from time to time under this prospectus and the number of shares which the selling shareholders would own beneficially if all such offered shares are sold.

 

Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the SEC under the Exchange Act. The percentage of shares beneficially owned prior to the offering is based on 28,072,366 common shares outstanding as of November 11 , 2015.

 

None of the selling shareholders are a registered broker-dealer or an affiliate of a registered broker-dealer. None of the selling shareholders or any of their respective affiliates have held a position or office or had any other material relationship with us or any of our predecessors or affiliates within the past three years except that David Stefansky became a director of the Company on July 7, 2015 and Jesse Kaplan, a director of the Company since July 7, 2015 is the President of Rocfrim Inc. The selling shareholders have acquired their shares solely for investment and not with a view to or for resale or distribution of such securities.

 

Name of Selling Shareholders

 

Beneficial Ownership Before the Offering

 

 

Common Shares Included in Prospectus

 

 

Beneficial Ownership After the Offering

 

 

Percentage of Ownership After the Offering**

 

 

 

 

 

 

 

 

 

 

 

 

 

 

David Stefansky

156 Beach 9 th Street, Apt. 7A

Far Rockaway, New York 11691 

 

 

3,178,484 (1)

 

 

3,178,484 (1)

 

 

0

 

 

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long Side Ventures LLC(2)

1800 South Ocean Drive, PH2

Hallandale Beach, Florida 33009

 

 

1,589,242 (3)

 

 

1,589,242 (3)

 

 

0

 

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

R&T Sports Marketing Inc.(4)

15440 SW 82 Avenue

Palmetto Bay, Florida 33157

 

 

1,589,242 (3)

 

 

1,589,242 (3)

 

 

0

 

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rocfrim Inc.(5)

3625 Dufferin Street, Suite 409

Toronto, Ontario M3K1N4

 

 

3,178,484 (1)

 

 

3,178,484 (1)

 

 

0

 

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Plazacorp Investments Limited (6)

10 Wanless Avenue, Suite 201

Toronto, Ontario M4N1V6

 

 

3,178,484 (1)

 

 

3,178,484 (1)

 

 

0

 

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taconic Group(7)

1835 NE Miami Gardens Drive, #272

North Miami Beach, Florida 33179

 

 

1,589,242 (3)

 

 

1,589,242 (3)

 

 

0

 

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summit Trading Ltd.(8)

904 Silver Spur Road, #257

Rolling Hills Estate, California 90274

 

 

1,589,242 (3)

 

 

1,589,242 (3)

 

 

0

 

 

*

 

_______________

* less than 1%  

** Based on 28,072,366 outstanding common shares as of November 11, 2015.

 

 
25
 

   

(1)

Includes (i)  1,589,242 common shares upon the exercise of warrants at $0.0818 per share and (ii)  1,589,242 common shares issuable upon the conversion of the Notes.

(2)

Benjamin Kaplan, the Manager of Long Side Ventures LLC ("Long Side") has sole voting and dispositive power over shares held by Long Side.

(3)

Includes (i) 794,621 common shares of issuable upon the exercise of warrants at $0.0818 per share and 794,621 common shares issuable upon the conversion of the Notes

(4)

Daniel Kaplan, President of R &T Marketing Inc. ("R&T") has sole voting and dispositive power over shares held by R&T.

(5)

Jesse Kaplan, President of Rocfrim Inc. ("Rocfrim") has sole voting and dispositive power over shares held by Rocfrim.

(6)

Sruli Weinrib, Vice President of Equity Investments of Plazacorp Investments Limited ("Plazacorp") has sole voting and dispositive power over shares held byPlazacorp.

(7)

Robert Grinberg, Manager of Taconic Group ("Taconic") has sole voting and dispositive power over shares held by Taconic.

(8)

Daryl Orenge, attorney in fact for Summit Trading Ltd. ("Summit") has sole voting and dispositive power over shares held by Summit.

 

We may require the selling shareholders to suspend the sales of the securities offered by this prospectus upon the occurrence of any event that makes any statement in this prospectus, or the related registration statement, untrue in any material respect, or that requires the changing of statements in these documents in order to make statements in those documents not misleading. We will file a post-effective amendment to this registration statement to reflect any material changes to this prospectus.

  

Effect of Sales on Our Shareholders

 

All common shares that are covered by this prospectus are expected to be freely tradable. The sale of a significant amount of shares registered in this offering at any given time could cause the market price of our common shares to decline and to be highly volatile. The selling shareholders may ultimately acquire all, some or none of the common shares exercisable pursuant to their issued and outstanding warrants or convertible pursuant to the Notes registered in this offering. After they have acquired such shares, they may sell all, some or none of such shares.

 

Issuances of our common shares to the selling shareholders upon exercise of their warrants or conversion of their Notes stock will not affect the rights or privileges of our existing shareholders, except that the economic and voting interests of our existing shareholders will be diluted as a result of any such issuances. Although the number of common shares that our existing shareholders own will not decrease, the shares owned by our existing shareholders will represent a smaller percentage of our total outstanding shares after any such issuances.

 

DILUTION

 

If you invest in our common shares in this offering, your ownership interest will be diluted to the extent of the difference between the public offering price per share of our common shares and the pro forma net tangible book value per share of our common shares immediately after this offering. Net tangible book value dilution per share to new investors represents the difference between the amount per share paid by purchasers of common shares in this offering and the pro forma as adjusted net tangible book value per share of the common shares immediately after completion of this offering.

 

Our historical net tangible book value per share is determined by dividing our total tangible assets less our total liabilities by the number of common shares outstanding. Our historical net tangible book value at June 30, 2015 was $(341,984), or $(0.012) per share.

 

 
26
 

   

After giving effect to the sale of 11,002,445 common shares by us at the public offering price of $0.0409 per share, which fixed price of $0.0409 has been arbitrarily determined as the selling price, and after deducting estimated offering expenses payable by us, our pro forma net tangible book value at June 30, 2015 would have been approximately $ 48,016 , or $0. 0012 per share. This would represent an immediate increase in the net tangible book value of $0. 0051 per share to existing shareholders and an immediate dilution of $0. 0397 per share to investors in this offering.

 

The following table illustrates this dilution:

 

Assumed public offering price per share

 

 

0.0409

 

Historical net tangible book value per share at June 30, 2015

 

$ (0.0039 )

Increase in pro forma net tangible book value per share attributable to new investors in this offering

 

 

0.0051

 

Pro forma net tangible book value per share immediately after this offering

 

 

0.0012

 

 

 

 

 

 

Dilution in pro forma net tangible book value per share to new investors in this offering

 

$ 0.0397

 

 

Scott W oodrow, our President, Chief Executive Officer and a director acquired founder shares in October 2011 for a nominal cost as compared to the offering price of $0.0409 per share.

 

On each of January 20, 2014 and March 25, 2014, Mr. Woodrow and an affiliated entity were issued shares under a convertible loan at , $0. 0 409, the same price per share as the offering price .

 

On March 3, 2014, Rocpart, an entity over which Jesse Kaplan, a director of our company has sole voting and dispositive p o wer , was issued shares under a convertible loan at , $0.0409, the same price per share as the offering price.

 

PLAN OF DISTRIBUTION

 

We have 28,072,366 common shares issued and outstanding as of the date of this prospectus. We are offering up to 11,002,445 common shares for sale at the price of $0.0409 per share. Each investor that purchases common shares in the offering, will also receive a five-year warrant to purchase an equivalent number of common shares, at an exercise price of $0.0818 per share . The selling price for the shares has been arbitrarily determined by us and bears no relationship to assets, earnings or other valuation criteria. No current trading market exists for our common shares. No assurance can be given that the shares offered will have a market value or that they may be sold as this, or any price. The selling shareholders may sell our common shares only at a fixed price of $0.0409 per share until such time, if at all, our shares are quoted on the Over the Counter QB ("OTCQB") and thereafter at prevailing market prices or privately negotiated prices. After the date of this prospectus, we expect to have an application filed with the Financial Industry Regulatory Authority the ("FINRA"), for our common shares to be quoted on the OTCQB. There can be no assurance that a market maker will agree to file the necessary documents with nor can there be any assurance that such an application for quotation will be approved.

 

We will sell the common shares and do not plan to use underwriters or pay any commissions. There is no plan or arrangement to enter into any agreements to sell the common shares with a broker or dealer. Our officers and directors will be selling our common shares using our best efforts and no one has agreed to buy any of our common shares. This prospectus permits our officers and director to sell the common shares directly to the public, with no commission or other remuneration payable to them for any common shares they may sell. The common shares sold by us may be sold in one or more transactions at a fixed price of $0.0409 per share.

 

A minimum of 6,112,470 common shares must be sold, or a minimum of $250,000 must be raised. The offering period will commence upon the effectiveness of the registration statement of which this prospectus is a part and will terminate on the earlier of (i) 90 days from the date of this prospectus or the date on which all 11,002,445 common shares have been sold, unless extended or earlier terminated by our board of directors in its sole discretion. In the event that 6,112,470 shares are not sold during the offering period, all proceeds from the sale of the shares will be returned to subscribers, without interest or deduction. Subscriptions are irrevocable once made, and funds will only be returned if the subscription is rejected or if 6,112,470 shares are not sold prior to the termination of the offering.

 

All subscriptions received from investors will be pursuant to subscription agreements and will be deposited in an escrow account with David Lubin & Associates, PLLC, who will act as our escrow agent for the offering.

 

We have the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. All monies from rejected subscriptions will be returned to the subscriber, without interest or deduction.

 

 
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Each selling shareholder of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the OTCQB or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A selling shareholder may use any one or more of the following methods when selling securities:

 

·

to or through underwriters or broker-dealers;

·

ordinary brokerage transactions and transactions in which the broker dealer solicits purchasers;

·

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

·

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

·

an exchange distribution in accordance with the rules of the applicable exchange;

·

privately negotiated transactions;

·

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

·

in transactions through broker dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security;

·

through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

·

a combination of any such methods of sale; or

·

any other method permitted pursuant to applicable law.

 

The selling shareholders may also sell securities under Rule 144 under the Securities Act of 1933, as amended, if available, rather than under this prospectus.

 

Broker dealers engaged by the selling shareholders may arrange for other brokers dealers to participate in sales. Broker dealers may receive commissions or discounts from the selling shareholders (or, if any broker dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.

 

In connection with the sale of the securities or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The selling shareholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The selling shareholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

 

 
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The selling shareholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each selling shareholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed 8%.

 

The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities for itself and selling shareholders. The Company has agreed to indemnify the selling shareholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

 

Because selling shareholders may be deemed to be "underwriters" within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. The selling shareholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale securities by the selling shareholders.

 

We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the selling shareholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

 

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling shareholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of common shares by the selling shareholders or any other person. We will make copies of this prospectus available to the selling shareholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).

 

Penny Stock Rules

 

Our common shares are subject to the "penny stock" rules of the Securities Exchange Act of 1934 and various rules under this Act. In general terms, "penny stock" is defined as any equity security that has a market price less than $5.00 per share, subject to certain exceptions. The rules provide that any equity security is considered to be a penny stock unless that security is registered and traded on a national securities exchange meeting specified criteria set by the SEC, authorized for quotation from the NASDAQ stock market, issued by a registered investment company, and excluded from the definition on the basis of price (at least $5.00 per share), or based on the issuer's net tangible assets or revenues. In the last case, the issuer's net tangible assets must exceed $3,000,000 if in continuous operation for at least three years or $5,000,000 if in operation for less than three years, or the issuer's average revenues for each of the past three years must exceed $6,000,000.

 

Trading in shares of penny stock is subject to additional sales practice requirements for broker-dealers who sell penny stocks to persons other than established customers and accredited investors. Accredited investors, in general, include individuals with assets in excess of $1,000,000 or annual income exceeding $200,000 (or $300,000 together with their spouse), and certain institutional investors. For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of the security and must have received the purchaser's written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the security. Finally, monthly statements must be sent disclosing recent price information for the penny stocks. These rules may restrict the ability of broker-dealers to trade or maintain a market in our common shares, to the extent it is penny stock, and may affect the ability of shareholders to sell their shares.

 

 
29
 

   

SHARE CAPITAL

 

Transfer Agent

 

The Company currently has no transfer agent and is responsible for its record-keeping and administrative functions in connection with the common shares and stock warrants.

 

Admission to Quotation on the OTC Bulletin Board

 

We intend to have our common stock be quoted on the OTCQB. If our securities are not quoted on the OTCQB, a security holder may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of our securities. The OTCQB differs from national and regional stock exchanges in that it

 

(1)

is not situated in a single location but operates through communication of bids, offers and confirmations between broker-dealers, and

(2)

securities admitted to quotation are offered by one or more Broker-dealers rather than the "specialist" common to stock exchanges.

 

To qualify for quotation on the OTCQB, an equity security must have one registered broker-dealer, known as the market maker, willing to list bid or sale quotations and to sponsor the company listing. If it meets the qualifications for trading securities on the OTCQB our securities will trade on the OTCQB until a future time, if at all, that we apply and qualify for quotation or listing on another exchange Our shares may not now and may never qualify for quotation on the OTCQB or be accepted for listing on any other exchange.

 

Articles of Incorporation and Bylaws

 

The Company's Articles of Incorporation were filed with the Director under the Canada Business Corporations Act (Ontario) ("OBCA") on October 31, 2011. The Company's Ontario corporation number is 2304101. The Company's Articles of Incorporation do not contain and are not required to contain a description of our object and purposes. There is no restriction contained in our Articles of Incorporation on the business that we may carry on.

 

On November 30, 2011, the Company filed Articles of Amendment to set forth the rights and conditions of its common shares and to create an unlimited number of non-voting common shares and to set forth the rights and conditions of such non-voting common shares. On May 14, 2015, the Company filed Articles of Amendment to change the 135 issued and outstanding common shares into 13,500,000 common shares on a 100,000 for 1 basis. On June 26, 2015, the Company filed Articles of Amendment to eliminate the restrictions on share transfer, issuance or ownership set forth in Section 8 of the Certificate of Incorporation.

 

Power to Vote on Matters in Which a Director is Materially Interested . Our Bylaws state that a director must disclose to us, in accordance with the provisions of the CBCA, the nature and extent of an interest that the director has in a material contract or material transaction, whether made or proposed, with us, if the director is a party to the contract or transaction, is a director or an officer or an individual acting in a similar capacity of a party to the contract or transaction, or has a material interest in a party to the contract or transaction. A director required to make such a disclosure is not entitled to vote on any directors' resolution to approve that contract or transaction, except as provided for in the CBCA.

 

Directors' Power to Determine the Remuneration of Directors . The CBCA provides that the remuneration of our directors, if any, may be determined by our directors subject to our amended Certificate of Incorporation and by-laws. Our Bylaws permit the board of directors to fix director compensation.

 

Borrowing powers of our Directors. Our Articles of Incorporation provide that, if authorized by our directors, we may: (i) borrow money upon our credit; (ii) issue, sell or pledge debt obligations of the Company; or (iii) charge, mortgage, hypothecate or pledge all or any currently owned or subsequently acquired real or personal, movable or immovable property of the Company, including book debts, rights, powers, franchises and undertaking, to secure any debt obligations or any money borrowed, or other debt or liability of the Company.

 

 
30
 

   

Retirement or Non-Retirement of Directors under an Age Limit Requirement . Neither our amended Certificate of Incorporation, our Bylaws nor the CBCA impose any mandatory age-related retirement or non-retirement requirement for our directors.

 

Number of Shares Required to be Owned by a Director . Neither our amended Certificate of Incorporation, our Bylaws nor the CBCA provide that a director is required to hold any of our shares as a qualification for holding his office.

 

Action Necessary to Change the Rights of Holders of Our Common Shares

 

Under the OBCA, our shareholders can authorize the alteration of our amended Articles to create or vary any special rights or restrictions attached to our common shares by passing a special resolution. However, a right or special right attached to any class or series of shares may not be prejudiced or interfered with unless the shareholders holding shares of that class or series to which the right or special right is attached consent by a separate special resolution. A special resolution means a resolution passed by: (a) a majority of not less than two-thirds of the votes cast by the applicable class or series of shareholders who vote in person or by proxy at a meeting, or (b) a resolution consented to in writing by all of the shareholders entitled to vote holding the applicable class or series of shares.

 

Shareholder Meetings

 

We must hold an annual meeting of our shareholders at least once every year at a time and place determined by our board of directors, provided that the meeting must not be held later than 15 months after the preceding annual meeting. A meeting of our shareholders may be held within or outside of Ontario as our directors determine. Our directors may, at any time, call a meeting of our shareholders.

 

A notice to convene a meeting, specifying the date, time and location of the meeting, and, where a meeting is to consider special business (which is any business other than the consideration of the financial statements, auditor's report, election of directors or the re-appointment of the current auditor), the general nature of the special business, must be sent to shareholders, to each director and the auditor not less than 10 and not more than 50 days prior to the meeting. Under the OBCA, shareholders entitled to notice of a meeting may waive or reduce the period of notice for that meeting. The accidental omission to send notice of any meeting of shareholders to, or the non-receipt of any notice by, any person entitled to notice does not invalidate any proceedings at that meeting.

 

Our Bylaws provide that a quorum of shareholders is the holders of at least a majority of the shares entitled to vote at the meeting, present in person or represented by proxy. If a quorum is not present at the opening of the meeting, the Chairman with the consent of the shareholders present may adjourn the meeting.

 

Our directors, our auditor and any other persons invited by our chairman with the consent of those at the meeting are entitled to attend at any meeting of our shareholders but will not be counted in the quorum or be entitled to vote at the meeting unless he or she is a shareholder or proxyholder entitled to vote at the meeting.

 

The holders of the Company's voting common shares are entitled to receive notice of, and attend and vote at all meetings of shareholders. The holders of the Company's non-voting common shares are not entitled to receive notice of, and attend and vote at all meetings of shareholders, except that they are entitled to notice of a shareholder meeting called for the purpose of the Company's dissolution or sale, lease or exchange of all or substantially all of its property.

 

The holders of the voting common shares and non-voting common shares are entitled to dividends as the board of directors in its sole discretion may declare for such voting and/or non-voting shares. Upon dissolution and winding-up of the Company, the voting and non-voting shares are entitled to receive the remaining assets of the Company, pari passu with all of the holders of common shares.

 

 
31
 

   

Pursuant to Section 7.06 of the Company's By-laws, and subject to OBCA, the quorum at meetings of the Company's shareholders shall be constituted by the presence of a majority of shareholders entitled to vote at any such meeting present in person or by proxy.

 

There are no limitations on the rights of non-resident or foreign shareholders to hold or exercise voting rights on the securities of the Company imposed by foreign law or by the Articles of Incorporation or any other constituent document of the Company.

 

Change of Control

 

Our Articles of Incorporation and Bylaws do not contain any change of control limitations with respect to a merger, acquisition or corporate restructuring that involves us.

 

Although applicable securities laws regarding shareholder ownership by certain persons require disclosure, our Articles of Incorporation do not provide for any ownership threshold above which shareholder ownership must be disclosed.

 

The following description of our capital stock is a summary and is qualified in its entirety by the provisions of our Articles of Incorporation, as amended, and Bylaws, which have been filed as an exhibit to our registration statement of which this prospectus is a part.

 

Common Shares

 

We are authorized to issue an unlimited number of common shares, no par value. As of June 30, 2015 and November 11, 2015, 28,072,366 common shares were issued and outstanding.

 

We have voting and non-voting common shares.

 

Each holder of shares of our voting common shares is entitled to one vote for each share held of record on all matters submitted to the vote of shareholders, including the election of directors. The holders of common shares have no preemptive, conversion, subscription or cumulative voting rights. There is no provision in our articles of incorporation or bylaws that would delay, defer or prevent a change in control of our company. The holders of our non-voting common shares are not entitled to vote on matters presented to shareholders.

 

Preferred Shares

 

We are not authorized to issue preferred shares.

 

Warrants

 

Pursuant to the Purchase Agreement we issued immediately exercisable five-year warrants to purchase an aggregate of 7,946,210 common shares at an exercise price of $0.0818, subject to adjustment as provided in the Warrants. The Warrants are exercisable on a cashless basis.

 

Options

 

As of November 11 , 2015, we have granted options to purchase (i) an aggregate of 5,900,000 common shares at an exercise price of $ 0.0001 per share, which are immediately exercisable and (ii) and aggregate of 2,300,000 common shares at an exercise price of 50% of the market value on the date of exercise, of which 2,025,000 are currently exercisable.

 

 
32
 

   

Lockups

 

In connection with the Purchase Agreement, the current shareholders of the Company holding an aggregate of 28,072,366 common shares are subject to lock-up agreements, dated July 7, 2015. Under the lock-up agreements, such shareholders agreed not to sell, pledge, grant any right or in any way transfer any of the Company's securities held by them for a period of 12 months after a Going Public Event, except that such prohibition does not apply to transfers to the selling shareholders (pro rata to their then common share ownership), gifts, transfer to a trust for the benefit of an immediate family member or to an Internal Revenue Code recognized charitable organization.

 

History of Share Capital

 

Upon our incorporation on October 31, 2011, we issued 135 common shares at $1.00 per share to companies controlled by our founders, Scott Woodrow and Leopold Grunwald.

 

In 2013 and 2014 we entered into convertible loan agreements with eleven investors, pursuant to which such investors loaned us an aggregate of $490,000. All of the loans were converted into an aggregate of 13,176,094 common shares on December 15, 2014.

 

On July 7, 2015, we entered into the Purchase Agreement with the selling shareholders pursuant to which we agreed to sell a minimum of $320,000 and a maximum of $770,000 of Notes and Warrants pursuant to Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated thereunder. An aggregate of $325,000 of Notes and Warrants was sold, representing an aggregate of 7,946,210 common shares issuable upon the conversion of the Notes and an aggregate of 7,946,210 issuable upon the exercise of the Warrants.

 

MATERIAL INCOME TAX CONSIDERATIONS

 

The following summarizes the material Canadian federal income tax considerations generally applicable to the holding and disposition of the Company's common shares by a holder who acquires such common shares as beneficial owner pursuant to this offering (in this summary, a "Non-Canadian Holder") and who, for the purposes of the Income Tax Act (Canada)and the Income Tax Regulations (collectively the "Tax Act") and at all relevant times, (i) is not, and is not deemed to be, resident in Canada, (ii) deals at arm's length with, and is not affiliated with, the Company and, (iii) holds such common shares as capital property and does not use or hold, and is not deemed to use or hold, the common shares in the course of carrying on, or otherwise in connection with, a business in Canada. Special rules which are not discussed in this summary apply to a Non-Canadian Holder that is an insurer carrying on an insurance business in Canada and elsewhere.

 

This summary is based on the current provisions of the Tax Act, the Canada-United States Tax Convention (1980), as amended (the "Treaty"), all proposed amendments to the Tax Act and the Treaty publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof, and our understanding of the current published administrative practices of the Canada Revenue Agency. It has been assumed that all such proposed amendments will be enacted as proposed and that there will be no other relevant change in any governing law or administrative practice, whether by legislative, administrative or judicial action, although no assurances can be given in this respect.

 

The summary does not take into account Canadian provincial, U.S. federal, state or other foreign income tax law or practice.

 

This summary is not applicable to: (i) a Non-Canadian Holder that is a "financial institution" as defined in the Tax Act for the purposes of the "mark-to-market property" rules; (ii) a "specified financial institution" as defined in the Tax Act; (iii) a Non-Canadian Holder an interest in which is a "tax shelter investment" as defined in the Tax Act; (iv) a Non-Canadian Holder to whom the "functional currency" reporting rules in the Tax Act apply; (v) a Non-Canadian Holder that is a foreign affiliate (as defined in the Tax Act) of a taxpayer resident in Canada; (vi) a Non-Canadian Holder that has entered into or will enter into a "derivative forward agreement" or a "synthetic disposition arrangement", as those terms are defined in the Tax Act, with respect to the common shares of the Company; or (vii) a Non-Canadian Holder who acquired their common shares pursuant to the exercise of an employee stock option.

 

 
33
 

   

Subject to certain exceptions that are not discussed in this summary, for the purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of common shares must be determined in Canadian dollars based on the rate of exchange quoted by the Bank of Canada at noon on the date such amount first arose or such other rate of exchange as may be acceptable to the Canada Revenue Agency.

 

This summary is of a general nature only and is not, and is not intended to be, legal or tax advice to any particular holder. This summary is not exhaustive of all Canadian federal income tax considerations. Accordingly, prospective purchasers of common shares should consult their own tax advisors having regard to their own particular circumstances.

 

Dividends

 

Dividends paid or credited on the common shares or deemed to be paid or credited on the common shares to a Non-Canadian Holder will be subject to Canadian withholding tax at the rate of 25%, subject to any reduction in the rate of withholding to which the Non-Canadian Holder is entitled under any applicable income tax convention between Canada and the country in which the Non-Canadian Holder is resident. For example, under the Canada-U.S. Tax Treaty, where dividends on the common shares are considered to be paid to or derived by a Non-Canadian Holder that is a beneficial owner of the dividends and is a U.S. resident for the purposes of, and is entitled to benefits of, the Canada-U.S. Tax Treaty, the applicable rate of Canadian withholding tax is generally reduced to 15% (or 5% if the Non-Resident Holder is a company which owns at least 10% of the voting stock of the Company).

 

Dispositions

 

A Non-Canadian Holder will not be subject to tax under the Canadian Tax Act on any capital gain realized on a disposition or deemed disposition of a common share, unless the common shares are "taxable Canadian property" to the Non-Canadian Holder for purposes of the Canadian Tax Act and the Non-Canadian Holder is not entitled to relief under an applicable income tax convention between Canada and the country in which the Non-Canadian Holder is resident .

 

Generally, the common shares will not constitute "taxable Canadian property" to a Non-Canadian Holder at a particular time unless at any time during the 60 month period immediately preceding the disposition, more than 50% of the fair market value of the common shares was derived, directly or indirectly, from one or any combination of: (i) real or immoveable property situated in Canada, (ii) "Canadian resource properties" (as defined in the Canadian Tax Act), (iii) "timber resource properties" (as defined in the Canadian Tax Act), and (iv) options in respect of, or interests in, or for civil law rights in, property in any of the foregoing whether or not the property exists. Notwithstanding the foregoing, in certain circumstances set out in the Canadian Tax Act, common shares could be deemed to be "taxable Canadian property". Non-Canadian Holders whose common shares may constitute "taxable Canadian property" should consult their own tax advisors.

 

EXCHANGE CONTROLS

 

There are no government laws, decrees or regulations in Canada which restrict the export or import of capital or, subject to the following sentence, which affect the remittance of dividends or other payments by us to nonresident holders of our common shares, other than withholding tax requirements.

 

There are currently no limitations of general application imposed by Canadian federal or provincial laws on the rights of non-residents of Canada to hold or vote our common shares. There are also no such limitations imposed by the Company's Articles of Incorporation with respect to our common shares. There are, however, certain requirements on the acquisition of control of the Company by non-residents of Canada. The Investment Canada Act requires notification to and, in certain cases, advance review and approval by, the government of Canada, of the acquisition by a "non-Canadian" of "control" of a "Canadian business", all as defined in the Investment Canada

 

Act. Generally speaking, in order for an acquisition of control to be subject to advance review and approval, the enterprise value of the Canadian business being acquired must meet or exceed certain monetary thresholds. It is also possible for the government of Canada to initiate a review on the basis of national security regarding investments of any size.

 

 
34
 

   

In the context of the acquisition of control of a publicly traded company, as a general matter enterprise value is based on market capitalization plus liabilities minus cash and cash equivalents. Important exceptions apply if the acquiror is a state-owned enterprise or if the acquiror is from a non-world trade organization member state or if the target Canadian business engages in a "cultural business" as defined in the Investment Canada Act.

 

INTEREST OF NAMED EXPERTS AND COUNSEL

 

No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common shares was employed on a contingency basis or had, or is to receive, in connection with the offering, a substantial interest, directly or indirectly, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its affiliates as a promoter, managing or principal underwriter, voting trustee, director, officer or employee.

 

  DESCRIPTION OF BUSINESS

 

History and Overview of the Company

 

We were incorporated on October 31, 2011 in the Province of Ontario, Canada and di d business as Behavioural Neurological Applications and Solutions. Effective November 4 , 2015, we changed our name to ehāve, Inc. We are a cognitive software development company with a primary focus on the development of software based assessment and remediation tools for children used in the professional assessment and treatment of cognitive disabilities.

 

In December 2011, we entered into collaboration with the Hospital to identify the clinical needs, design and processes required to create clinical grade toolsets. In addition to specific tools, we have developed a content delivery and patient data platform, RKIA, that enables content to be deployed, monitored, analyzed and accessed remotely by clinicians and patients.

 

Our focus is on the child and adolescent mental health markets, with an initial focus on children with ADHD. These markets include the ADHD therapeutics market and the cognitive assessment markets .

 

The therapeutics market size is estimated at $11.5 billion , as of 2013 , as reported by GBI Research in a July 2014 industry report. The cognitive assessment and training market size is estimated at $2.4 billion in 2015 as reported byMarketsandmarkets Research, a global market research firm, in their August 2015 industry report.

 

In the therapeutics market, we have entered into a license agreement with Pear Therapeutics, a US based therapeutics company, developing novel combination therapies referred to as "e-formulations".

 

The cognitive assessment market is dominated by a small number of competitors, the prominent ones being Pearson Education Limited ("Pearson") and Multi Health Systems, Inc.

 

Based upon the Hospital's research which identified the cognitive functions of attention and inhibitory control as priority cognitive deficits found in children with ADHD as well as being common comorbidities in many other cognitive illnesses in children, we currently intend to include cognitive illnesses and occurrences such as anxiety, depression, OCD, mTBI and chemotherapy induced cognitive deficit in our future development efforts.

 

From inception, we have has been funded by a combination of capital and grant financing totaling approximately $1,100,000 comprised of $630,000 of grant financing and $470,000 of equity financing. While our strategy of synergies with therapeutics and clinical assessment partners significantly defrays our capital requirements, we hope to continue new product and partner development, enhance existing products, enable software as service revenue through RKIA and conduct independent clinical studies for further promotion as independent products and branding and conduct independent clinical studies for further promotion as independent products and branding.

 

Commercialization of our software products is intended to be achieved through both direct and indirect distribution to clinical and research users. Our cognitive assessment and remediation programs can be utilized as independent tools within a battery of broader methods in the provision of mental health care. We intend to make these tools available to our clinical users either through direct access as part of our RKIA mental health informatics platform, direct subscription, or through distribution partners of mental health assessment and remediation tools.

 

 
35
 

   

On May 14, 2015, we effectuated a 100,000:1 forward stock split of our common shares.

 

Since January 2012, the Company's activities were principally related to research and development expenditures. The Company did not make any material capital expenditures or divestitures since January 2012.

 

Material Agreements

 

We entered into a collaboration agreement, dated December 8, 2011, with the Ontario Brain Institute ("OBI") and the Hospital pursuant to which we collaborated with the Hospital to develop the Company's intellectual property which is jointly owned by the Hospital and the Company. As of December 31, 2014, the Company fulfilled its requisite collaborations under the agreement. Under the agreement, the Hospital granted the Company an option for the exclusive worldwide, perpetual, royalty-bearing license to the Hospital's interest in such intellectual property at a royalty of 5% of net revenues, to be reduced to 2.5% after the Hospital has received CAD$1,000,000 in royalties for the related ADHD cognitive assessment and remediation products. On July 3, 2014, by notice of option exercise, the Company exercised its option to such exclusive license . Upon receiving CAD$1,000,000 in royalties, the Hospital agree to assign its rights in the intellectual property developed in collaboration with the Company to the Company but will retain a perpetual, non-exclusive license to use such intellectual property for non-commercial and clinical purposes. Pursuant to an amendment to the collaboration agreement, effective January 1, 2014, all intellectual property rights in the developed software belong to the Hospital .

 

Also on December 8, 2011, we entered into a Memorandum of Understanding with the Hospital to collaborate on the development of a protocol for the development of a software based treatment program for children with ADD/ADHD to be funded through the OBI and the Federal Economic Development Agency for Southern Ontario. The Company is currently negotiating a definitive agreement with the Hospital.

 

On June 1, 2012, we entered into a four-year consulting agreement with Dr. Russell Schachar to provide clinical advisory and product development services in connection with the development of our software based treatment for ADD/ADHD with the Hospital. As compensation for such services, we agreed to pay Dr. Schachar an annual consulting fee of $60,000 and five-year stock options to purchase an aggregate of 2,300,000 of our common shares at an exercise price of 50% of the market value on the date of exercise, of which 1,350,000 shares subject to the option vested on June 1, 2014, 675,000 shares vested on June 1, 2015 and 675,000 shares will vest on June 1, 2016. The options have a cashless exercise provision. If the Company terminates the agreement except for cause, a material breach or the Company's bankruptcy, Dr. Schachar is entitled to a lump sum severance payment of $60,000.

 

The agreement contains a confidentiality provision that survives termination of the agreement for one year and a non-competition agreement by Dr. Schachar during the term of the agreement and for 12 months thereafter.

 

On February 19, 2014, we entered into a consulting agreement with Sticky Brain Studios ("SBS") under which SBS will provide technology development and production services of interactive digital memory (the "Game") for use by us and our clients and for eventual commercialization. The Game, source code and related intellectual property will be owned exclusively by us. We will pay SBS up to $250,000 for its services in accordance with a payment schedule in the agreement based upon delivery of software product related milestones. Under the agreement, the Company will supply end users with Tier 1 support and SBS will supply Tier 2 support. SBS will be entitled to a maintenance and support fee of 5% of net sales of the Game. The Company may terminate the agreement at any time upon 10 days' notice.

 

On December 9, 2014, we entered into a software license agreement with Pear Therapeutics, Inc. ("Pear") pursuant to which we will provide Pear with a world-wide, non-transferable perpetual license to the Company's products for Pear to create, commercialize, distribute and sublicense a combination product using our Megateam software applications for treating mental health conditions including ADHD. The license will be exclusive with respect to a combination product subject to Pear obtaining rights to sell with an acceptable drug and non-exclusive with respect to any other rights. Pear will pay us a royalty of 2.5% of any net revenues from the license of our products, to be paid quarterly. We may terminate the agreement if Pear has not paid us $4,000,000 in annual royalties for each of 2022, 2023 and 2024 and Pear has not obtained regulatory approvals to commercialize combination products and integrated products (our software imbedded within the source code of Pear branded products) within eight years. Either party may terminate the agreement for a material breach by the other after notice and a 30-day cure period. Pear may terminate the agreement upon a change of control of the Company, the Company becoming insolvent or upon 60 days' prior written notice.

 

 
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The Company received an aggregate of CDN$225,000 in a funding grant under a cooperation and project funding agreement entered into on June 7, 2012 with the Canada-Israel Industrial Research and Development Foundation ("CIIRDF"). The purpose of the grant was to fund the Company's development of a cognitive assessment and treatment platform for childhood attention deficit disorder and attention hyperactivity disorder. Under the terms of the grant, CIIRDF would fund up to CDN$300,000. The development grant of $225,000 is repayable to CIIRDF based upon 2.5% of annual gross sales derived from the sale, leasing or commercialization of the products developed up to a maximum of the amount grant. . To date, no collaboration was performed nor was any intellectual property developed under the agreement.

 

Products

 

We are creating a mental health data platform that integrates with our proprietary and third-party assessment and therapeutic digital applications. . Our product focus is based on three tiers of activities: (1) Creation of clinically validated digital assessment and rehabilitation software that is engaging for the patient (2) Adaptation of third-party clinically validated digital assessment and rehabilitation software for enhanced patient engagement and data modeling (3) Creation of an advanced mental health informatics and digital application delivery platform.

 

MegaTeam Digital Assessment and Rehabilitation Applications

 

Our assessment and rehabilitation products are built on established methodologies for the measurement of cognitive abilities in populations with ADHD. Methodologies commonly used today involve repetitive performance of tasks using digital interface. These tasks are repeatedly administered to the patient in order to obtain accurate measures. Many of the assessments used today had been developed using programming methodologies whereby the task is simply exhibited on screen and the patient is instructed to respond to stimuli. Our research has found that patients, in particular those with symptoms of ADHD, have difficulty completing the necessary regiment of tasks due to lack of engagement. Additionally, these tasks are often administered in a clinical setting, often resulting in extended time in clinical settings for the patient and their accompanying parent or guardian. Our products have been developed to address these primary concerns as well as to enable a breadth of cognitive tasks to be assessed and an individualized cognitive rehabilitation program to be administered remotely.

 

The MegaTeam applications involve the imbedding of cognitive assessment and rehabilitation tasks within an engaging video game environment. MegaTeam was designed and programmed with the intention of providing comparable engagement to video game play. In the design, narrative and programming of our MegaTeam game we utilize experts in children's digital content and programming. A significant part of the MegaTeam development involved assessing user engagement and consultation on characters, narrative and graphic design.

 

MegaTeam applications have been designed for deployment on multiple digital interfaces including PC, Mac, Android and iOS systems. Our applications may be used in a clinic or a patient's home or remotely, provided there is an adequate data connection.

 

Developed MegaTeam products include: (1) Stop Signal Reaction Time Assessment (2) N Back Assessment (3) Inhibitory Control Rehabilitation (4) and Working Memory Rehabilitation. We are planning the development of a broader suite of cognitive tasks and rehabilitation mechanisms in order to increase the addressable mental health indications.

 

Third-party Contract Services

 

We believe that we have the expertise of understanding the complexities of mental health measurement and rehabilitation methodologies along with game design and programming. Researchers and developers of digital applications for mental health may recognize the advantage of engaged users, but lack the expertise in game based translation. We intend to market ourselves to researchers and developers to enhance their digital applications as a fee based service. We are working closely with mental health research networks to avail our existing MegaTeam tools as well as our programming expertise to enhance and commercialize new products and services.

 

 
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Right Data

 

Our goal is rooted not in "big data", but in "right data". While healthcare datasets may quickly become large and complex, we believe that there is a tendency to try to collect anything and everything, and hope that the analytics will derive conclusions. We believe that multiple data sets may provide inconsistencies in the type and quality of data being collected, effectively rendering the combined data incompatible and unusable.

 

Our strategy is to be more prescriptive on what is being collected. We believe in defining a patient- centered ontology for leading behavioral science diseases and conditions that is based on a minimum critical clinical data set. In other words, rather than collecting anything, we collect specific data elements that are critical on a per disease/condition basis.

 

The data categories can be broadly defined as: demographics, clinical tests, diagnosis, treatment, clinician reported outcomes and patient reported outcomes. We work with clinicians and researchers in each of our target diseases/conditions to define the specific data elements in each of these categories.

 

With the definition of the data sets as the basis, we have created a platform that integrates our own, as well as third party, digital applications for clinicians, patients and researchers. We believe that each of these applications is carefully selected to deliver high impact experiences, and when integrated to our platform, are mapped to our data sets.

 

Quality Data

 

While we believe that right data gives the platform focus and ensures that it does not become unwieldly, the quality of the data is imperative. Like other complex data environments, healthcare data integrity may suffer from a common Garbage-in Garbage-out ("GIGO"). The applications that are integrated are specifically curated so that they prevent GIGO and allow clinicians, patients and researchers to interact with high quality data which we may rely.

 

We believe that for behavioral sciences, one of the key challenges with right data and its quality is that the data structures are not necessarily structured/synoptic. There are many surveys, or textual documentation that we believe do not lend themselves well to a data environment - thus ensuring high quality data can become difficult. By working with clinicians and researchers, we are able to define what the right data elements are, and by doing so, we believe, have a chance of making it high quality.

 

Outcome Data

 

We have learned from other health care institutions that outcome data based on high quality clinical, diagnosis and treatment data can be relied upon to inform treatment. We believe that outcome data in healthcare, and in particular behavioral sciences, has been missing, unstructured or incomplete. The lack of reliable outcome data limits the value of large data sets. We believe that our platform solves this problem by providing the platform and applications that allow for consistent outcome capture by clinicians.

 

The applications that we integrate capture outcomes from a patient's perspective. These patient reported outcomes can be automated via sensors or manual via applications and are part of the data set definition.

 

With use as our data sets grow in magnitude; we hope that our platform will be the definitive source of high quality clinical and outcome data for behavioral sciences that will be used by clinicians, researchers, health care systems and industry partners to improve outcomes. We hope to accomplish this by the creation and integration of carefully chosen applications.

 

 
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Applications

 

Our data platform provides the facilities for applications that clinicians, researchers and patients use to receive and contribute data. The applications can be as simple as forms that are filled out or surveys that are responded to, or as complex as digital therapeutics. These are curated on a per disease/condition basis. The applications used for ADHD for boys aged 7 to 10 will differ than the applications used for OCD for girls aged 16+.

 

The central application on the platform is a Patient Management Application ("PMA") which allows clinicians to manage patients, view data within the data sets and assign applications to patients or their parents. They assign applications from an App Store concept, where they see the best clinical data, diagnosis, therapeutic and outcome applications available and can choose the one that is most appropriate for their patient. The applications are ranked in terms of value (our rating), rating (from other users) and use, and can have a fee associated with it.

 

Market

 

Attention Deficit and Hyperactivity Disorder ("ADHD")

 

Our primary market focus has been the child and adolescent ADHD market, due to its prevalence, market size and market gap in non-pharmacological interventions.

 

Attention Deficit Hyperactivity Disorder ("ADHD") is a childhood onset clinical disorder of inattention, hyperactivity, and impulsivity (DSM-IV-TR). Behavioral hyperactivity in children with ADHD generally decreases with age, however, attentional and inhibitory problems frequently continue into adulthood. ADHD is pervasive, impairing, and cognitively based which may coexist with other childhood onset disorders ) such as Oppositional Defiant Disorder , learning disabilities , anxiety disorders , and Conduct Disorder Children with Autism Spectrum Disorder may also display symptoms consistent with those of ADHD. Children with ADHD are at risk of developing antisocial behavior; may be susceptible to substance experimentation and may display lower reading and math achievement scores. The cost of providing educational resources and social care to children with ADHD may be substantial Distracted and impulsive behavior may place a high demand on health care, judicial, and special education services. For these reasons, clinicians, researchers, as well as the affected families search for treatments that may intervene and alter the developmental trajectory of ADHD.

 

The current treatments available for children with ADHD can be classified as pharmacological or behavioral/cognitive. The pharmacological agents most often used in the treatment of ADHD are stimulant medications. Although stimulant medications help remediate some of the symptoms associated with ADHD, we believe based upon review of research studies the benefits are limited and do not persist after discontinuation of medication.. The non-pharmacological interventions can be separated into parent training, behavioral interventions and cognitive behavioral interventions. These interventions target specific skills and gains in performance may not generalize to other skills or abilities. Similarly to stimulant medications, the benefits may last only as long as the intervention is active. These interventions include such programs as token contingency reward systems, communication training to help resolve conflicts between parents and adolescents, and cognitive restructuring (i.e. recognizing unhelpful thought processes and modifying them). There are also behavioral interventions that focus on the classroom environment; for example, seating the child close to the teacher so that the teacher can provide prompts and reminders. This type of intervention does not treat the child's deficit(s) but aims to reduce the effects of those deficits on learning.

 

In general, behavioral interventions target parents or the classroom environment rather than the patients and in many cases they do not remediate academic difficulties and the benefits are limited and transient. Furthermore, although, many theories define ADHD as a disorder of executive functions (our cognitive management system), we believe this field is currently lacking an evidence-based intervention which directly tackles the cognitive deficits in ADHD. For these reasons, we believe that cognitive training will be welcomed as an alternative intervention. Cognitive training can directly target the cognitive deficits in ADHD, has the potential to be more accessible (train at home), we believe appears to produce performance gains that generalize and that benefits have been shown to persist following the completion of the training and reinforce academic achievement. 

 

 
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Psychological Assessment and Digital Tools

 

We believe that the overall youth mental health market continues to increase at a rapid rate – with special education requirements in particular growing exponentially year over year in North America. In many jurisdictions, special education is delivered based on a psycho-educational assessment that forms the basis of an Individualized Education Plan for the student.

 

The cognitive assessment and training market can be segmented by type of products: pen and paper-based assessment, hosted assessment and training tools, and innovative medical instruments and biometrics.

 

We believe that solution providers that currently provide paper based and digital assessments such as Pearson Assessments Canada Inc. ("Pearson"), and Multi Health Systems Inc. ("MHS") and other competitors are expected to continue to leverage opportunities across multiple regions by providing innovative cognitive assessment and training solutions. We believe that end customers, medical practitioners, and educational professionals will remain the major market for cognitive assessment and training solutions. The dominant players in the child and adolescent mental health remain Pearson and MHS, while others serve the mature and geriatric adult populations and research tools markets. Lumosity and similar companies are not clinical tools and relate generally to "brain fitness" for self-assessed and non-prescribed users.

 

The cognitive assessment and training market is estimated to grow from $1.7 billion in 2013 to $5.7 billion in 2018, at a compound annual growth rate of 27.3% from 2013 to 2018 according to Marketsandmarkets Research, a global market research firm. Mental health professionals are currently the largest contributor for cognitive assessment and training solutions. In terms of regions, we believe that North America is expected to be the biggest market in terms of revenue contribution, while the Asia Pacific region is expected to experience increased market traction, in due course.

 

Product Differentiation

 

We strive to provide the best tools and resources for today's populations. Many of the incumbent products have been developed and validated in their academic form which we believe lack a feel for today's clients and practitioners. As with other areas of therapeutic care, there is a drive for real time, data rich tools that enable individual treatment and ongoing monitoring. A significant portion of the existing market for cognitive assessment and therapy relies upon paper based tools and checklists that have little or no connected monitoring capacity or real time progress reporting. As such, we have developed products with the following key values: (1) user engagement (2) data rich (3) clinically validated (4) multi-screen and mobile deployment.

 

Our assessment products are derived from designs and methods clinically studied at the Hospital. Our plans include the study of our derived products and cognitive rehabilitation software through clinical studies led by the Hospital. These studies include multiple phases from pilot studies through affected population studies and allow the measurement, using various criteria and techniques, of the effect of our cognitive rehabilitation program on target populations.

 

Our review of incumbent tools and consultations with clinical psychologists has shown significant user malaise relating to compliance. In contrast, feedback from users and clinical psychologists of our MegaTeam product identified strong user engagement and thereby we believe, stronger capacity for training compliance. Our tools have been developed on Unity, a , a common game development platform that can be used on most fixed and mobile devices, enabling the expansion of narrative and the adaptation of new character and game environments to maintain long-term engagement of product differentiation. The underlying cognitive tools and data remain unchanged as the "skin" is adapted for future versions and client profiles.

 

Competition

 

We anticipate that the principal markets in which our products will compete will initially include North America. Thereafter, we hope to expand to Asia. Currently, there are no regulatory requirements on the use of products in clinical or research areas in these markets.

 

 
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Intellectual Property

 

Our success depends in part on our ability to protect our technology and intellectual property. To accomplish this, we rely on a combination of trade secrets, copyright laws, trademarks, intellectual property licenses and other contractual rights to establish and protect our proprietary rights.

 

Our success will likely depend upon our ability to preserve our proprietary software and operate without infringing the proprietary rights of other parties. However, we may also rely on certain proprietary technologies and know-how that are not patentable.

 

We strive to protect such proprietary information, in part, by the use of confidentiality agreements with our consultants and collaborators.

 

We do not own or license any patents. However, we have an exclusive software license under our Collaboration Agreement with the Hospital.

 

Properties

 

The Company rents approximately office space under a six - month lease that commenced on November 1, 2015 for a monthly rent of approximately $3,000. After the initial lease term the lease is renewable on a month-to-month basis. We believe that currently this space is adequate. We do not have any policies regarding investments in real estate, securities or other forms of property.

 

Legal Proceedings

 

From time to time, we may become involved in legal or regulatory proceedings arising in the ordinary course of our business. We are not currently a party to any material litigation or regulatory proceeding and we are not aware of any pending or threatened litigation or regulatory proceeding against us that could have a material adverse effect on our business, operating results, financial condition or cash flows.

 

Plan of Operations

  

Our plan of operations over the next twelve months involves establishing clinical efficacy of ADHD remediation programs, expanding assessment and remediation content through in-licensing and development and continuing to build our mental health informatics platform.

 

The Company intends to commercialize its products commencing with the proliferation among mental health researchers in which the Company is already engaged. It is expected that this will commence subsequent to clinical trials being undertaken over the next 4-8 months, thereby activating this commercial activity by June 2016. Through reference of the Company products in published research, the Company hopes to expand its user population to the broader research community. If and when further publications reference the Company's products, the Company hopes to sell the product to new will expand the product use to new hospitals and clinical networks . Th e Company hopes to replicate this process and expand its developed products.

 

In addition to developed products, such as the MegaTeam software, the Company is seeking to license new ready for sale software tools for cognitive assessment which will be available for distribution among the Company's research network subsequent to integration and branding of the products during the second quarter of 2016, thereby making these products available for commercial sale during the second half of 2016.

 

The commercialization of the Company's products are depend e nt on the ability to achieve meaningful clinical results and positive feedback from researchers within their respective clinical trials. In the event that the products require adjustment or further development, commercialization of the products may be delayed in order to conduct such activities and re-perform necessary clinical trials.

 

A portion of the proceeds from this offering, if any, will be utilized to expand the existing team of computer programmers and mental health experts. We are currently involved in multiple clinical trial networks through the network of trials and clinics associated with the Hospital. We hope to conduct pilot studies and clinical studies to validate the efficacy and accuracy of our products. Our license with Pear includes the co-payment of clinical validation work related to the combination of our product with medicinal therapies.

 

Our plan of operations involves continued expansion of our menu of content as well as the population of data within our mental health informatics platform. We hope to raise additional funds by the sale of our equity or debt securities to expand our clinical and software team or to acquire entities that provide content, technology and market share related to our strategy.

 

We anticipate that research and development for the next 6 months will include conducting pilot and clinical studies on cognitive assessment and rehabilitation tools and amending the software for improvements derived therefrom and populating our mental health informatics platform with related clinical content and process related to extracting, organizing and analyzing data therefrom.

 

We currently anticipate hiring five employees to replace contract service providers for software development and clinical research in the next 6 months, subject to sufficient resources.

 

We have not generated any revenues to date other than approximately $30,000 of service revenue in 2013 which consisted of consulting fees to assist in establishing the criteria for procurement of evidence based methodologies utilized in the assessment and delivery of special education.

 

 
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We have developed and hope to commercialize cognitive software based assessment and remediation tools for children used in the professional assessment and treatment of cognitive disabilities. In December 2011, we into collaborated with the Hospital to identify the clinical needs, design and processes required to create clinical grade toolsets. We have also developed a content delivery and patient data platform, RKIA, that enables both our own and third party content to be deployed, monitored, analyzed and accessed remotely by clinicians and patients.

 

Our focus is on the child and adolescent mental health markets, with an initial focus on children with ADHD. In the therapeutics market, we have entered into a license agreement with Pear for the development of combination therapies referred to as "e-formulations". We are in discussions with Pearson to collaborate on the combination of its products and joint distribution.

 

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

 

The following discussion and analysis of our financial condition and results of operations is based upon and should be read together with our financial statements and the related notes and the other financial information included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results, performance and achievements could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed elsewhere in this prospectus, particularly under "Risk Factors." See "Cautionary Note Regarding Forward-Looking Statements." Our financial statements have been prepared in accordance with U.S. GAAP.

 

Overview

 

We are a cognitive software development company with a primary focus on the development of software based assessment and remediation tools for children used in the professional assessment and treatment of cognitive disabilities. We have entered into a collaboration with Toronto's Hospital for Sick Children to identify the clinical needs, design and processes required to create clinical grade toolsets. In addition to specific tools, we have developed a content delivery and patient data platform, known as RKIA that enables both our own and third party content to be deployed, monitored, analyzed and accessed remotely by clinicians and patients.

 

We qualify as an "emerging growth company" under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:

 

-

have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

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comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

-

submit certain executive compensation matters to shareholder advisory votes, such as "say-on-pay" and "say-on-frequency;" and

-

disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO's compensation to median employee compensation.

 

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

 

We will remain an "emerging growth company" for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.  

 

 
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Results of Operations

 

Operating Results

 

Years Ended December 31, 2014 and December 31, 2013

 

Revenues

 

The Company had no revenues during the year ended December 31, 2014 and revenues of $28,206 in the year ended December 31, 2013 which were generated from consulting services to educational institutions.

 

Operating Expenses

 

Total operating expenses for the year ended December 31, 2014 were $452,828, which consisted of salaries of $175,109, rent of $17,525, professional fees of $62,655, insurance expenses of $4,750, travel expenses of $4,379, software development of $173,191 and general and administrative expenses of $15,219. Total operating expenses for the year ended December 31, 2013 were $315,317, which consisted of salaries of $166,055, rent of $13,392, professional fees of $98,865, insurance expenses of $2,936, travel expenses of $1,952 and general and administrative expenses of $32,117.

 

Net Loss

 

Net loss for the year ended December 31, 2014 was $380,088 as compared to a net loss of $221,631 in 2013.

 

Six Months Ended June 30, 2015 and June 30, 2014

 

Revenues

 

The Company had no revenues for the six months ended June 30, 2015 and 2014.

 

Operating Expenses

 

Total operating expenses for the six months ended June 30, 2015 were $133,522, which consisted of salaries of $87,035, rent of $7,108, professional fees of $34,051, insurance expenses of $2,078, travel expenses of $567 and general and administrative expenses of $2,683. Total operating expenses for the year ended December 31, 2013 were $226,119, which consisted of salaries of $10,021, rent of $27,347, professional fees of $2,188, insurance expenses of $2,188, travel expenses of $4,034, software development of $79,762 and general and administrative expenses of $5,241.

 

Net Loss

 

Net loss for the six months ended June 30, 2015 was $133,842 as compared to a net loss of $166,359 for the six months ended June 30, 2014.

 

 
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Liquidity and Capital Resources

 

In 2013 and 2014 we entered into convertible loan agreements with investors, including our President and Chief Executive Officer, and affiliates of his, and a former director, pursuant to which such investors loaned us an aggregate of CDN$490,000. All of the loans were converted into an aggregate of 13,176,094 common shares on December 15, 2014.

 

We received approximately CDN$491,000 in grants in connection with our collaboration with the Hospital and CDN$250,000 from CIIRDF. In addition, we received aggregate gross proceeds of CDN$490,000 pursuant to our convertible loan and an aggregate of CDN$75,000 from the sale of equity securities in December 2014 and March 2015.

 

On July 7, 2015, we closed a private placement offering with seven investors for the sale of $325,000 principal amount of Notes and Warrants to purchase an aggregate of 7,946,210 common shares. Such proceeds are sufficient to enable us to continue our operations for the next 12 months based on current plans. If additional cash from the offering is not raised, the Company will need to reduce its cash burn to last 12 months by focusing its efforts on existing products only, leveraging research funding to conduct initial clinical studies on efficacy and postponing the development of the mental health informatics platform and integration and development of new techniques for assessment and rehabilitation.

 

We had cash of $1,748 as of June 30, 2015. We had no commitments for capital expenditures as of December 31, 2014 and June 30, 2015. For the six months ended June 30, 2015 our total operating expenses were $133,522.

 

At June 30, 2015 we had a working capital deficit of $44,738. Current cash on hand is sufficient for our present operations for the next six months.

 

We anticipate that in the future we will require additional funding to acquire research and facilities and for operating costs and we anticipate that such funding will be in the form of equity or debt financing. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our equity or debt to fund the development of our business and to commercialize our products or that any such financing would be on terms favorable to us. Any future financing may involve substantial dilution to existing investors. We do not have any arrangements in place for any future financings, except for the sale of up to an additional $395,000 of common shares as provided in the SPA with the purchasers listed therein.

 

Research and Development

 

In December, 2011, we entered into a collaboration agreement with the OBI and the Hospital. Our collaboration involved research, design, programming and testing a software based cognitive assessment and remediation program. Under the terms of the agreement, primary research and testing processes were undertaken by Hospital, while we were primarily responsible for designing the game play environment, programming and data tools. In March 2014, we completed the development milestones associated with the collaboration. Since March 2014, we have continued to expand the capacity, methods and testing associated with our software. Additionally, in March 2013, we commenced development of RKIA, our mental health informatics platform. This platform will be utilized to host and distribute tools and content developed by us as well as third-party content used in the treatment of mental illnesses.

 

Ongoing research and development is critical to our success. We seek to engage with reputable research and clinical institutions to access and assist tools and methods developed. We hope to finance our research and development with government and research grants and internal funds.

 

Since 2012, we have spent the following amounts on research and development activities: 2012: $97,086 2013: $272,845.18 2014: $415,248.50.

 

 
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Off Balance Sheet Arrangements

 

We do not have any off balance sheet arrangements.

 

Contractual Obligations

 

We do not have any contractual obligations for long-term debt obligations, capital (finance) lease obligations, operating obligations, purchase obligations or other long-term obligation on the balance sheet.

 

Going Concern

 

Our financial statements have been prepared assuming that we will continue as a going concern. It contemplates that assets will be realized and liabilities and commitments satisfied in the normal course of business. We have incurred net losses of $744,472 for the period from October 31, 2011 (inception) to December 31, 2014 and have an accumulated deficit of $744,472 and had a stockholders' deficit of $626,401 at December 31, 2014. Therefore, there is substantial doubt about our ability to continue operations in the future as a going concern without a significant infusion of capital. At December 31, 2014, the Company had insufficient operating revenues and cash flow to meet its financial obligations.

 

Quantitative and Qualitative Disclosures about Market Risk

 

Foreign Currency Exchange Risk

 

Our exposure to foreign exchange risk is primarily related to fluctuations between the Canadian dollar and the United States dollar. We are exposed to foreign exchange fluctuations on the revaluation of foreign currency assets and liabilities. We maintain working capital in both US and Canadian dollars sufficient for expenditures in their related currencies.

 

Interest Rate Sensitivity

 

We had cash totaling $5,959 as of June 30, 2015. The cash is held for working capital purposes. Our investments are made for capital preservation purposes. We do not enter into investments for trading or speculative purposes.

 

We are not subject to interest rate sensitivity. We do not have holdings subject to interest rates. All cash is held in cash accounts with minimal interest.

 

Recently Issued Accounting Pronouncements Applicable to the U.S.

 

In August, 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40) , which now requires management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date the financial statements are issued. If conditions or events raise substantial doubt about an entity's ability to continue as a going concern, and substantial doubt is not alleviated after consideration of management's plans, additional disclosures are required. The amendments in this update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. These requirements were previously included within auditing standards and federal securities law, but are now included within U.S. GAAP. We have evaluated our disclosures regarding our ability to continue as a going concern and concluded that we are in compliance with the disclosure requirements. 

 

In June, 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic 915) – Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation, which eliminates the concept of a development stage entity ("DSE") from current accounting guidance. We have elected early adoption of this standard, which eliminates the designation of DSEs and the requirement to disclose results of operations and cash flows since inception. 

 

We have evaluated the other recent accounting pronouncements through ASU 2015-02 and believe that none of them will have a material effect on our consolidated financial statements. 

 

 
45
 

 

DIRECTORS, SENIOR MANAGEMENT, AND EMPLOYEES

 

Directors and Senior Management

 

The following table sets forth the names, ages and positions of our current board members and executive officers:

 

Name

Age

Position(s)

Scott L. Woodrow

43

President and Chief Executive Officer and Director

David Stefansky

43

Director

Jesse Kaplan

33

Director

 

The business address of our officers and directors is c/o ehāve , Inc., 250 University Avenue, Suite 200, Toronto, ON M5H 3E5.

 

Our directors are elected for a term of one year and serve until such director's successor is duly elected and qualified. Our executive officer serves at the pleasure of the Board. None of our directors have any family relationships with any of our other directors or executive officer.

 

We are not aware of any arrangement or understandings with major shareholders, customers, suppliers or others pursuant to which our officer or directors were selected as a director or officer.

 

Background Information

 

Set forth below is a summary description of the principal occupation and business experience of each of our directors and executive officers for at least the last five years.

 

Scott L. Woodrow founded and has been our President and Chief Executive Officer and a director since October 2011. Mr . Woodrow was Managing Partner of Lions Peak International Innovation Fund, LP, a Canadian investment fund investing in Israeli hi-tech companies from 2007 to 2013. In 2007, Mr. Woodrow formed Lions Peak Capital Corporation, as General Partner of the Lions Peak Innovation Fund, LP. 2110345 Ontario Inc. is a shareholder of Lions Peak Capital Corporation. 2110345 Ontario Inc. is an investment holding company. Mr. Woodrow has also provided consulting services to healthcare research facilities and companies since 2013. From 2007 through 2013, Mr. Woodrow was a director of P-Cure Ltd., a medical device company developing patient positioning and planning systems for radiation therapy for cancer. From 1998-2005, Mr. Woodrow was employed by Ernst & Young, LLP in Toronto, Canada. His primary client base includ ed venture capital firms and their venture backed portfolio companies. Mr. Woodrow served clients primarily in Canada and in Israel and was a designated individual for clients originating in Israel. After leaving Ernst & Young, LLP in 2005, Mr. Woodrow continued advisory services to venture firms and venture backed companies through NView Management Inc.

 

David Stefansky has been a director since July 7, 2015. Mr. Stefansky is a founder, principal and managing partner of Betzalel Capital Partners, LLC ("Betzalel") a merchant bank that provides capital formation and strategic advisory services to mid-market private and small to mid-cap public companies in the healthcare, life sciences, and technology sectors since 2013. Prior to forming Bezalel, Mr. Stefansky was a founder and principal of Harborview Capital Advisors, LLC, a New York-based private equity firm ("Haborview") from 2004 to 2013. Prior to Harborview, Mr. Stefansky worked as an investment banker at Vfinance Investments Inc. where he was responsible for the execution of public offerings and private placements as well as mergers and acquisitions.

 

Jesse Kaplan has been a director since July 7, 2015. Mr. Kaplan has been president of Rocfrim Inc., a private investment company since 2010. Mr. Kaplan, CFA, has been a member of First Republic Capital, a Toronto based investment bank focused on raising capital for small cap public companies, since 2014. Mr. Kaplan was previously a partner at Plaza Ventures, a Toronto based venture capital firm company, from 2010-2013. His career has focused on advising and investing in early stage growth companies. This has included extensive work helping companies through the process of going public in both Canada and the United States. Jesse was previously a senior analyst at Harborview Advisors LLC, a New York based investment firm, from 2007 to 2009 and Palladium Capital Advisors, LLC, a NASD member investment bank, from 2005 to 2006. Mr. Kaplan has served on the boards of various public and private companies in Canada. Mr. Kaplan holds a Bachelor of Commerce degree from the University of Toronto.

 

 
46
 

   

Involvement in Certain Legal Proceedings

 

We are not aware of any material legal proceedings that have occurred within the past ten years concerning any director, director nominee, or control person which involved a criminal conviction, a pending criminal proceeding, a pending or concluded administrative or civil proceeding limiting one's participation in the securities or banking industries, or a finding of securities or commodities law violations.

 

Executive Compensation.

 

For the Company's fiscal year ended December 31, 2014, we paid Mr. Woodrow salary in the amount of $175,109and reimbursed him for automobile expenses of $4,208.

 

The Company does not have any pension, retirement or similar benefit plans or any long-term compensation or stock option plans.

 

The Company does not have service contracts with its directors providing for benefits upon termination of employment.

 

We do not maintain key-man life insurance for any of our executive officers or directors.

 

Compensation of Directors

 

No director received any type of compensation from our company for serving as such. No arrangements are presently in place regarding compensation to directors for their services as directors.

 

Auditors

 

Turner, Stone & Company ("Turner"), with an address of 12700 Park Central Drive, Suite 1400, Dallas, Texas 75251 audited the Company's financial statements for the years ended December 31, 2013 and December 31, 2014. Turner is a member of the American Institute of Certified Public Accountants and is registered with the Public Company Accounting Oversight Board ("PCAOB") in the United States.

 

We do not currently have a Code of Ethics applicable to our principal executive, financial and accounting officers. We do not have an audit committee or nominating committee.

 

Potential Conflicts of Interest

 

Since our directors work for other companies, there exists the possibility of conflicts of interest between us, our directors and such other companies. For example, a director may locate a corporate opportunity and present it to another company before presenting it to us. Our directors have been made aware that under certain situations the business opportunity must first be offered to us, depending on the circumstances in which he became aware of the opportunity, the significance of the opportunity to us and whether we should reasonably expect him to make the opportunity available to us. If the situation results in our directors being interested in the matter, the interest will be disclosed to the other board members who shall approve or disapprove of the action. Furthermore, our directors will keep in confidence all confidential information about us. The Company is not aware of any current or potential conflicts of interest with any of our executives or directors.

 

Employees

 

As of December 31, 2014, and currently, we have one employee who is also our sole officer. We do not foresee any significant changes in the number of employees or consultants we will have over the next twelve months, unless and until we become a public reporting company and the development of our business demands it.

 

 
47
 

   

Employment Agreements

 

We have no employment agreements.

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table lists, as of November 11, 2015, the number of common shares beneficially owned by (i) each person, entity or group (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) known to the Company to be the beneficial owner of more than 5% of the outstanding common shares; (ii) each of our executive officers and directors (iii) all officers and directors as a group. Information relating to beneficial ownership of common shares by our principal shareholders and management is based upon information furnished by each person using "beneficial ownership" concepts under the rules of the SEC. Under these rules, a person is deemed to be a beneficial owner of a security if that person directly or indirectly has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to dispose or direct the disposition of the security or has the right to receive the economic benefit of ownership of such security . The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the SEC rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary interest. Except as noted below, each person has sole voting and investment power with respect to the shares beneficially owned and each stockholder's address is c/o ehāve, Inc., 250 University Avenue, Suite 200, Toronto, ON M5H 3E5.

 

The percentages below are calculated based on 28,072,366 common shares issued and outstanding on November 11, 2015.

 

Name of Beneficial Owner

 

Number of

Shares

Beneficially

Owned

 

 

Percentage 

 

 

 

 

 

 

 

 

5% or Greater Shareholders

2110345 Ontario Inc.(1)

 

 

9,153,269

 

 

 

32.60 %
 

 

 

 

 

 

 

 

 

NView Management Inc.(2)

 

 

5,363,760

 

 

 

19.10 %
 

 

 

 

 

 

 

 

 

Romema Holdings Inc.(3)

 

 

5,000,000

 

 

 

17.81 %
 

 

 

 

 

 

 

 

 

Directors and executive officers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Scott Woodrow

 

 

19,777,241 (4)

 

 

63.24 %
 

 

 

 

 

 

 

 

 

David Stefansky

 

 

3,178,484 (5)

 

 

10.17 %
 

 

 

 

 

 

 

 

 

Jesse Kaplan

 

 

697,248 (6)

 

 

2.48 %

All officers and directors as a group (3 persons)

 

 

23,652,973 (4)(5)(6)

 

 

68.66 %

____________   

(1)

Scott Woodrow, President of 2110345 Ontario Inc. ("2110345 Ontario"), has sole voting and dispositive power over shares held by 21 10345 Ontario.

(2)

Scott Woodrow, President of NView Management Inc. ("NView"), has sole voting and dispositive power over shares held by NView. NView owns 100% of the voting shares of 2110345 Ontario.

(3)

Leopold Grunwald, director of Romema Holdings Inc.("Romema") has sole voting and dispositive power over shares held by Romema

(4)

Includes (i) a currently exercisable option to purchase 3,200,000 common shares at an exercise price of $0.0001 per share, and (ii) shares held by 2110345 Ontario and NView over which Mr. Woodrow has sole voting and dispositive power.

(5)

Represents (i) 1,589,242 shares issuable upon the conversion of a Note and (ii) 1,589,242 shares issuable upon the exercise of a Warrant.

(6)

Represents shares held by Rocpart Inc. ("Rocpart") over which Mr. Kaplan, as President of Rocpart has sole voting and dispositive power.

 

 
48
 

 

Our major shareholders do not have voting rights that differ from the other holders of our voting common shares.

 

As of November 11, 2015, none of our outstanding common shares were held by shareholders of record in the United States. We are not aware of any arrangement that may at a subsequent date, result in a change of control of our company. Each selling shareholder named above acquired its shares in offerings that were exempted from registration under the Securities Act because such offerings involved either private placements or offshore sales to non-U.S. persons.

 

There was no significant change in percentage ownership during the last three years. The issuance of 13,176,093 common shares in 2013 and 2014 under the Convertible Loan Agreement was to Scott Woodrow and his affiliates and did not result in a significant change in majority ownership of the Company's common shares.

 

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 

Certain Relationships and Related Transactions

 

Other than the transactions described below, since January 1, 2012, there were no related party transactions.

 

We paid NView management fees of $67,086 and $24,899 in 2012 and 2013, respectively, for services provided to us. Mr. Woodrow, our President, Chief Executive Officer and a director, is the President and holds all of the voting shares of NView.

 

On December 31, 2013, we issued a ten-year immediately exercisable option to purchase 32 common shares at an exercise price of $1.00 (3,200,000 shares at an exercise price of $0.0001 per share on a post spit basis) to Scott Woodrow.

 

On each of January 20, 2014 and March 25, 2014, we entered into a convertible loan agreement with NView pursuant to which NView agreed to loan us $20,000 and $50,000, respectively The loan accrued interest at 18% and was converted into an aggregate of 1,863,760 common shares on December 15, 2014. Mr. Woodrow, our President, Chief Executive Officer and a director, is the President and holds all of the voting shares of NView.

 

On March 3, 2014, we entered into a convertible loan agreement with 2110345 Ontario pursuant to which 2110345 Ontario agreed to loan us $140,000. The loan accrued interest at 18% and was converted into an aggregate of 4,153,269 common shares on December 15, 2014. Mr. Woodrow, our President, Chief Executive Officer and a director, is the President of 2110345 Ontario which is 100% owned by NView.

 

On October 31, 2014, we entered into a convertible loan agreement with Scott Woodrow, our President, Chief Executive Officer and a director, pursuant to which Mr. Woodrow agreed to loan us $90,000. The loan accrued interest at 18% and was converted into an aggregate of 2,060,212 common shares on December 15, 2014.

 

On each of March 3, 2014 and March 11, 2014, we entered into a convertible loan agreement with Leopold Grunwald, a former director of our company, pursuant to which Mr. Grunwald agreed to loan us an aggregate of $20,000. The loan accrued interest at 18% and was converted into an aggregate of 532,413 common shares on December 15, 2014.

  

On March 3, 2014, we entered into a convertible loan agreement with Rocpart, pursuant to which Rocpart agreed to loan us $25,000. The loan accrued interest at 18% and was converted into 697,248 common shares on December 15, 2014. Jesse Kaplan, a director of our company, is President and a director of Rocpart and has sole voting and dispositive power over shares held by Rocpart.

 

Jesse Kaplan, a director of the Company is a party to and acted as collateral agent under the General Security Agreement, dated July 7, 2015, between Jesse Kaplan, as Collateral Agent and the Company.

 

 
49
 

   

EXPENSES OF ISSUANCE AND DISTRIBUTION

 

We have agreed to pay all expenses incident to the offering and sale of the shares being registered other than any commissions and discounts of underwriters, dealers or agents and any transfer taxes, which shall be borne by the selling shareholders. The expenses which we are paying are set forth in the following table. All of the amounts shown are estimates except the SEC registration fee.

 

SEC filing fee

$

270.16

Legal fees and expenses

$

30,000

*

Accounting fees and expenses

$

30,000

*

Total

$

60,165.58

  _____________
*Estimated

 

ADDITIONAL INFORMATION

 

Foreign Private Issuer

 

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, as applicable to foreign private issuers. Accordingly, we have filed a registration statement on Form F-1 under the Securities Act of 1933, as amended, relating to the common shares being offered by this prospectus, and reference is made to such registration statement. This prospectus constitutes the prospectus of ehāve, Inc. filed as part of the registration statement, and it does not contain all information in the registration statement, as certain portions have been omitted in accordance with the rules and regulations of the Securities and Exchange Commission.

 

We are subject to the informational requirements of the Securities Exchange Act of 1934 , as amended, which requires us to file reportsand other information applicable to foreign private issuers with the Securities and Exchange Commission. Such reports and other information may be inspected at public reference facilities of the SEC at 100 F Street NE, Washington D.C. 20549. Copies of such material can be obtained from the Public Reference Section of the SEC at 100 F Street NE, Washington, D.C. 20549 at prescribed rates. Because we file documents electronically with the SEC, you may also obtain this information by visiting the SEC's Internet website at http://www.sec.gov.

 

As a "foreign private issuer," we are exempt from the rules under the Exchange Act prescribing certain disclosure and procedural requirements for proxy solicitations. Also, our officers, directors and principal shareholders are exempt from the reporting and "short-swing" profit recovery provisions contained in Section 16 of the Exchange Act and the rules thereunder, with respect to their purchases and sales of securities. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as United States companies whose securities are registered under the Exchange Act.

 

We furnish our stockholders with annual reports containing audited financial statements. You may request, at no cost, a copy of any documents incorporated by reference herein, excluding all exhibits, unless we have specifically incorporated by reference an exhibit, by writing us at: ehāve, Inc., 250 University Avenue , Suite 200, Toronto, ON M5H 3E5, or telephoning (647) 490- 5122.

 

 
50
 

 

ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES AND
AGENT FOR SERVICE OF PROCESS IN THE UNITED STATES

 

We are incorporated in Canada, our executive officer and two of our directors are nonresidents of the United States, and a substantial portion of our assets and of such persons are located outside the United States. For further information regarding enforceability of civil liabilities against the Company and certain other persons, see " Risk Factors—Because we are organized under the Canada Business Corporations Act, enforceability of civil liabilities against us or our officer or directors may be difficult or impossible from outside the jurisdiction of Canada ."

 

INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

 

Our By-laws provide to the fullest extent permitted by the CBCA, our directors or officers, former directors and officers, and persons who act at our request as a director or officer of a body corporate of which we are a shareholder or creditor shall be indemnified by us.

 

Under the OBCA, we may indemnify our current or former directors or officers or another individual who acts or acted at our request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of his or her association with us or another entity. However, indemnification is prohibited under the OBCA unless the individual:

 

·

acted honestly and in good faith with a view to our best interests, or the best interests of the other entity for which the individual acted as director or officer or in a similar capacity at our request; and

·

in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that his or her conduct was lawful.

 

Our By-laws require us to indemnify each of our current or former directors or officers and each individual who acts or acted at our request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including, without limitation, an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, or other proceeding in which the individual is involved because of his or her association with us or another entity.

 

Our By-laws authorize us to purchase and maintain insurance for the benefit of each of our current or former directors or officers and each person who acts or acted at our request as a director or officer, or an individual acting in a similar capacity, of another entity.

 

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to such directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

 

LEGAL MATTERS

 

Dentons Canada LLP has opined on the validity of the shares being offered hereby.

 

EXPERTS

 

The financial statements included in this prospectus and in the registration statement for the fiscal years ended December 31, 2014 and December 31, 2013 have been audited by Turner, Stone & Company, an independent registered public accounting firm and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.

 

 
51
 

 

PART II

 

INFORMATION NOT REQUIRED IN PROSPECTUS

 
Item 6. Indemnification of Directors and Officers

 

Our By-laws provide that to the fullest extent permitted by the OBCA, the Company shall indemnify a director or officer of the Company, a former director or officer of the Company, or a person who acts or has acted at the Company's request as a director or officer of a body corporate of which we are a shareholder or creditor.

 

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and control persons pursuant to the foregoing provisions or otherwise, we have been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy, and is, therefore, unenforceable.

 

Item 7. Recent Sales of Unregistered Securities

 

During the past three years, the Company sold the following securities which were not registered under the Securities Act of 1933, as amended.

 

In 2013 and 2014 we entered into convertible loan agreements with eleven investors, pursuant to which such investors loaned us an aggregate of $490,000. All of the loans accrued interest at 18% and were converted into an aggregate of 13,176,093 common shares on May 15, 2015 with an aggregate conversion value of CDN$561,109.

 

On May 15, 2015, we sold an aggregate of 930,848 shares for gross proceeds of CDN$50,000 in a private offering to accredited investors.

 

Since t he above transactions involved non-U.S. persons not citizens or residents of the United States , we believe that such transactions are exempt from the registration requirements of the Securities Act of 1933 pur suant to Section 4(2) of such Act and Reg ulation S thereunder.

 

On July 7, 2015, we entered into the Purchase Agreement with the selling shareholders pursuant to which we agreed to sell a minimum of $320,000 and a maximum of $770,000 of Notes and Warrants pursuant to Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated thereunder. An aggregate of $325,000 of Notes and Warrants was sold, representing an aggregate of 7,946,210 common shares issuable upon the conversion of the Notes and an aggregate of 7,946,210 issuable upon the exercise of the Warrants. The purchasers of the securities represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were placed upon the share certificates .

 

None of the above issuances involved any underwriters, underwriting discounts or commissions, or any public offering . . All recipients had adequate access, through their relationships with us, to information about us.

 

 
52
 

   

Item 8. Exhibits and Financial Statement Schedules

 

Exhibit

Number

Description

3.1

Articles of Incorporation

3.2

Articles of Amendment to the Articles of Incorporation dated November 30, 2011

3.3

Articles of Amendment to the Articles of Incorporation dated May 13, 2015

3.4

Articles of Amendment to the Articles of Incorporation dated June 26, 2015

3.5

Bylaws (1)

3.6

Articles of Amendment to the Articles of Incorporation dated November 4 , 2015

5.1**

Opinion of Dentons Canada LLP

10.1

Form of Convertible Loan Agreement (1)

10.2

Securities Purchase Agreement, dated July 7, 2015, between the Company and the purchasers identified therein (1)

10.3

Form of Secured Convertible Note, dated July 7, 2015 (1)

10.4

Form of Common Stock Purchase Warrant, dated July 7, 2015 (1)

10.5

Registration Rights Agreement, dated July 7, 2015, between the Company and the purchasers identified therein (1)

10.6

General Security Agreement, dated July 7, 2015, between Jesse Kaplan, as Collateral Agent and the Company (1)

10.7

Escrow Agreement, dated July 7, 2015, between the Company, the purchasers identified therein and Grushko & Mittman, P.C.

10.8

Form of Lock Up Agreement (1)

10.9

License Agreement, dated April 24, 2015, between the Company and The Governing Counsel of the University of Toronto

10.10

Consulting Agreement, dated February 19, 2014, between the Company and Sticky Brain Studios (1)

10.11

Consulting Agreement, dated June 1, 2012, between the Company and Russell Schachar

10.12

Cooperation and Project Funding Agreement, dated June 7, 2012, between the Company and Canada-Israel Industrial Research and Development Foundation

10.13

Memoradum of Understanding, dated December 8, 2011, between the Company and Hospital for Sick Children, as amended

10.14

Collaboration Agreement, dated December 8, 2011 , between the Company, the Ontario Brain Institute, and the Hospital for Sick Children

10.15

Stock Option Agreement, dated December 31, 2013, between the Company and Scott Woodrow (1)

10.16

Stock Option Agreement, dated June 1, 2013, between the Company and Neil Closner (1)

10.17

Stock Option Agreement, dated June 1, 2012, between the Company and Russell Schachar (1)

10.18 

Software License Agreement, dated December 9, 2014, between the Company and Pear Therapeutics, Inc .

10.19

Form of Subscription Agreement

10.20

Escrow Agreement with David Lubin & Associates, PLLC , as escrow agent

10.21

Office Suite License and Services Agreement, effective November 1, 2015, between iQ Univeristy LP and the Company

10.22

Amendment to Collaboration Agreement, dated January 1, 2014, between the Company, the Ontario Brain Institute, and the Hospital for Sick Children

23.1

Consent of Independent Registered Public Accounting Firm

23.2

Consent of Dentons Canada LLP (included in Exhibit 5.1)

 

101.INS

XBRL Instance Document*

101.SCH

XBRL Taxonomy Extension Schema Document*

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document*

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document*

101.LAB

XBRL Taxonomy Extension Label Linkbase Document*

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document*

____________   

 ** To be filed    

(1)

Incorporated by reference to the corresponding exhibit to the Company's Registration Statement on Form F-1 filed with the SEC on September 24, 2015.

 

 
53
 

   

Item 9. Undertakings

 

The undersigned Company hereby undertakes:

 

(a)(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

i.

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

 

ii.

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

 

iii.

To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

 
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

 

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

 

(4) To file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F at the start of any delayed offering or throughout a continuous offering.

 

(5) That, for the purpose of determining liability of the Company under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned Company undertakes that in a primary offering of securities of the undersigned Company pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Company will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

 

(i)

Any preliminary prospectus or prospectus of the undersigned Company relating to the offering required to be filed pursuant to Rule 424;

 

(ii)

Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Company or used or referred to by the undersigned Company;

 

(iii)

The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Company or its securities provided by or on behalf of the undersigned Company; and

 

(iv)

Any other communication that is an offer in the offering made by the undersigned Company to the purchaser.

 

(6) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, if the Company is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

 

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

 

 
54
 

   

SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Toronto, Ontario, Canada, on November 16 , 2015.

 

ehāve , Inc.

 

By:

/s/ Scott L. Woodrow

Scott L. Woodrow

President and Chief Executive Officer

(Principal Executive Officer, Principal Financial Officer and
Principal Accounting Officer)

 

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

 

November 16 , 2015

By:

/s/ Scott L. Woodrow

Scott L. Woodrow

President and Chief Executive Officer

(Principal Executive Officer, Principal Financial Officer and
Principal Accounting Officer)

 

November 16 , 2015

By:

/s/ David Stefansky

David Stefansky

 

November 16 , 2015

By:

/s/ Jesse Kaplan

Jesse Kaplan

Director

 

 
55
 

 

Report of Independent Registered Public Accounting Firm

 

The Board of Directors and Stockholders  

2304101 Ontario, Inc. o/a Behavioural  

Neurological Applications and Solutions  

Toronto, Ontario

 

We have audited the accompanying balance sheets of Behavioural Neurological Applications and Solutions (the "Company"), as of December 31, 2014 and 2013, and the related statements of operations, stockholders' deficit, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

 

We conducted our audit in accordance with 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Behavioural Neurological Applications and Solutions as of December 31, 2014 and 2013, and the results of its operations and cash flows for the years then ended, 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 2 to the financial statements, the Company requires a substantial amount of additional financing to fund product development and continue operations, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ Turner, Stone & Company, L.L.P.  

Certified Public Accountants  

Dallas, Texas  

September 17, 2015

 

 
F-1
 

 

 

2304101 ONTARIO INC.

O/A BEHAVIOURAL NEUROLOGICAL APPLICATIONS AND SOLUTIONS

BALANCE SHEETS

December 31, 2014 and December 31, 2013

 

 

 

2014

 

 

2013

 

 

 

$

 

 

$

 

ASSETS 

 

 

 

 

 

 

Current Assets 

 

 

 

 

 

 

Cash 

 

 

596

 

 

 

12,324

 

Other receivables

 

 

5,658

 

 

 

1,698

 

Prepaid expenses

 

 

4,469

 

 

 

4,513

 

Refundable taxes receivable

 

 

192,337

 

 

 

84,313

 

Advances to related parties (Note 4)

 

 

8,770

 

 

 

-

 

Total current assets 

 

 

211,830

 

 

 

102,848

 

TOTAL ASSETS 

 

 

211,830

 

 

 

102,848

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT 

 

 

 

 

 

 

 

 

Current Liabilities 

 

 

 

 

 

 

 

 

Accounts payable 

 

 

160,513

 

 

 

334

 

Accrued interest on convertible notes

 

 

61,297

 

 

 

10,975

 

Total current liabilities

 

 

221,810

 

 

 

11,309

 

Long term liabilities

 

 

 

 

 

 

 

 

Development grant

 

 

193,950

 

 

 

211,545

 

Convertible notes

 

 

422,471

 

 

 

225,648

 

Total long term liabilities

 

 

616,421

 

 

 

437,193

 

Total Liabilities

 

 

838,231

 

 

 

448,502

 

Commitments (note 9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, no par value, unlimited authorized, 13,965,424 issued and outstanding (2013 – 13,500,000 issued and outstanding)

 

 

21,550

 

 

 

1

 

Accumulated deficit 

 

 

(744,472 )

 

 

(364,384 )

Accumulated other comprehensive income

 

 

96,521

 

 

 

18,729

 

Total stockholders' deficit 

 

 

(626,401 )

 

 

(345,654 )

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT 

 

 

211,830

 

 

 

102,848

 

 

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

 

 
F-2
 

 

2304101 ONTARIO INC.

O/A BEHAVIOURAL NEUROLOGICAL APPLICATIONS AND SOLUTIONS

STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS

FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013

   

 

 

For the years ended
December 31,

 

 

 

2014

 

 

2013

 

 

 

$

 

 

$

 

Revenue 

 

 

-

 

 

 

28,206

 

 

 

 

 

 

 

 

 

 

Operating Expenses 

 

 

 

 

 

 

 

 

Salaries

 

 

175,109

 

 

 

166,055

 

Rent

 

 

17,525

 

 

 

13,392

 

Professional fees 

 

 

62,655

 

 

 

98,865

 

Insurance

 

 

4,750

 

 

 

2,936

 

Travel 

 

 

4,379

 

 

 

1,952

 

Software development

 

 

173,191

 

 

 

-

 

General and administrative 

 

 

15,219

 

 

 

32,117

 

Total operating expenses 

 

 

452,828

 

 

 

315,317

 

Operating Loss

 

 

(452,828 )

 

 

(287,111 )
 

 

 

 

 

 

 

 

 

Other expenses

 

 

 

 

 

 

 

 

Interest and bank charges, net 

 

 

(511 )

 

 

(7,498 )

Interest on convertible notes

 

 

(58,822 )

 

 

(11,334 )

Total other expenses

 

 

(59,333 )

 

 

(18,832 )

Loss before taxes

 

 

(512,161 )

 

 

(305,943 )

Less: Refundable taxes

 

 

132,073

 

 

 

84,312

 

Net loss

 

 

(380,088 )

 

 

(221,631 )

Other Comprehensive income

 

 

 

 

 

 

 

 

 Foreign exchange translation adjustment

 

 

77,792

 

 

 

19,628

 

Total other comprehensive income

 

 

77,792

 

 

 

19,628

 

Comprehensive loss

 

 

(302,296 )

 

 

(202,003 )

 

 

 

 

 

 

 

 

 

Weighted average shares used to compute net loss per share

 

 

 13,538,785

 

 

 

 13,500,000

 

Net loss per share

 

 (0.022)

 

 

 (0.015)

 

 

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

 

 
F-3
 

 

2304101 ONTARIO INC.

O/A BEHAVIOURAL NEUROLOGICAL APPLICATIONS AND SOLUTIONS

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED

DECEMBER 31, 2014 AND 2013

 

 

 

2014

 

 

2013

 

 

 

$

 

 

$

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Comprehensive loss 

 

 

(302,296 )

 

 

(202,003 )

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities: 

 

 

 

 

 

 

 

 

Other receivables

 

 

(3,960 )

 

 

2,216

 

Prepaid expenses and deposits

 

 

44

 

 

 

(1,474 )

Accounts payable 

 

 

160,179

 

 

 

(3,071 )

Accrued interest on convertible notes

 

 

50,322

 

 

 

10,975

 

Advances to related parties 

 

 

(8,770 )

 

 

3,517

 

Refundable taxes receivable

 

 

(108,024 )

 

 

(84,313 )

Net cash used in operating activities 

 

 

(212,505 )

 

 

(274,153 )

CASH FLOWS FROM FINANCING ACTIVITIES 

 

 

 

 

 

 

 

 

Proceeds from convertible note

 

 

196,823

 

 

 

225,648

 

Proceeds from sale of common stock 

 

 

21,549

 

 

 

-

 

Increase (decrease) in development grant

 

 

(17,595 )

 

 

60,780

 

Net cash provided by financing activities 

 

 

200,777

 

 

 

286,428

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash 

 

 

(11,728 )

 

 

12,275

 

Cash, beginning of year

 

 

12,324

 

 

 

49

 

Cash, end of year 

 

 

596

 

 

 

12,324

 

 

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

 

 
F-4
 

 

2304101 ONTARIO INC.

O/A BEHAVIOURAL NEUROLOGICAL APPLICATIONS AND SOLUTIONS

STATEMENT OF STOCKHOLDERS' DEFICIT

 

Commons tock

Accumulated

Accumulated Other Comprehensive

Total

Stockholders'

Shares

Amount

 deficit

Income (Loss)

deficit

Balance December 31, 2012

135

$

1

$

(142,753

)

$

(899

)

$

(143,651

)

Effect of 1 for 100,000 stock split on May 14, 2015

13,499,865

-

As restated, December 31, 2012

13,500,000

1

(142,753

)

(899

)

(143,651

)

Net loss

(221,631

)

(221,631

)

Foreign exchange translation

19,628

19,628

Balance December 31, 2013

13,500,000

1

(364,384

)

18,729

(345,654

)

Issuance of shares for cash

465,424

21,549

21,549

Net loss

(380,088

)

(380,088

)

Foreign exchange translation

77,792

77,792

Balance December 31, 2014

13,965,424

$

21,550

$

(744,472

)

$

96,521

$

(626,401

)

 

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

 

 
F-5
 

 

2304101 ONTARIO INC.
O/A BEHAVIOURAL NEUROLOGICAL APPLICATIONS AND SOLUTIONS

NOTES TO FINANCIAL STATEMENTS

 

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

A. Organization and General Description of Business

 

Behavioural Neurological Applications and Solutions ("We" or "the Company"), was incorporated under the laws of the Province of Ontario on October 31 2011.

 

The Company is a cognitive software development company with a primary focus on the development of software based assessment and remediation software for children used in the professional assessment and treatment of cognitive disabilities. The Company entered into a collaboration with Toronto's Hospital for Sick Children ["SickKids"]to identify the clinical needs, design and processes required to create clinical grade toolsets. In addition to specific applications, the Company has developed a content delivery and patient data platform that enables both its own and third party content to be deployed, monitored, analyzed and accessed remotely by clinicians and patients.

 

B. 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 U.S. dollars. The Company's fiscal year end is December 31.

 

The Company qualifies as an "emerging growth company" as defined in Section 101 of the Jumpstart our Business Startups Act ("JOBS Act") as we do not have more than $1,000,000,000 in annual gross revenue and did not have such amount as of December 31, 2014, our last fiscal year. We are electing to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.

 

Revenue Recognition

 

The following criteria must be met in determining whether revenue may be recorded: (1) persuasive evidence of a contract exists; (2) software has been delivered and/or services have been provided; (3) the price is fixed or determinable; and (4) collection is reasonably assured.

 

Revenue is recorded as the software is delivered and/or services are provided based on the relative fair value of each element. Unbilled receivables are created when services are performed or software is delivered and revenue is recognized in advance of billings. Deferred revenue is created when billing occurs in advance of performing services or when all revenue recognition criteria have not been met.

 

We generate revenue from the following sources: (1) Software revenue, (2) Software as a Service ["SaaS"], and (3) Services revenue.

 

Software Revenue : Our Software revenue is comprised of traditional software license fees, maintenance and support fees, and fees from the resale of third-party software licenses. These software license fees include term licenses, perpetual licenses and rental fees. Maintenance and support are generally offered under annual or multi-year terms and are billed either monthly or annually in advance. Our maintenance and support provides customers with periodic technology updates and interactive support related to our software. Maintenance and support revenue is recognized ratably over the stated term.

 

Services Revenue : Our services offerings help customers to install, optimize and integrate the Company's software into their computing environment. For fixed-fee professional services contracts, revenue is recorded based upon proportional performance, measured by the actual number of hours incurred divided by the total estimated number of hours for the project. Changes in the estimated costs or hours to complete the contract, and losses, if any, are reflected in the period during which the change or loss becomes known. The Company also provides professional services on a time and materials basis, recognized monthly based upon hours incurred to date. In all cases, contract milestones, project risk profile and refund provisions are taken into consideration.

 

 
F-6
 

   

Foreign Currency Translation

 

The functional currency of the Company's foreign operations is generally the local currency of the country in which the operation is located. All assets and liabilities are translated into U.S. dollars using exchange rates in effect at the balance sheet date. Revenue and expenses are translated using average exchange rates during the period. Increases and decreases in net assets resulting from currency translation are reflected in stockholders' deficit as a component of accumulated other comprehensive income (loss).

 

Software Products and Research and Development

 

Software development costs are expensed as incurred and consist primarily of design and development costs of new products, and significant enhancements to existing products incurred before the establishment of technological feasibility. Costs incurred subsequent to technological feasibility of new and enhanced products, costs incurred to purchase or to create and implement internal-use software, and software obtained through business acquisitions are capitalized. Such costs are amortized over the estimated useful lives of the related products, using the straight-line method.

 

Income Taxes

 

Income tax expense is based on income before income taxes, and is accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. 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 income in the period that includes the enactment date. Valuation allowances are recorded when it is not more likely than not that a deferred tax asset will not be realized. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Considerable judgment is required in assessing and estimating these amounts and the difference between the actual outcome of these future tax consequences and the estimates made could have a material impact on the operating results. To the extent that new information becomes available which causes the Company to change its judgment regarding the adequacy of existing tax liabilities, such changes to tax liabilities will impact income tax expense in the period in which such determination is made. The Company records interest and penalties related to unrecognized tax benefits in income tax expense.

 

The Company makes claims for Scientific Research and Experimental Development ("SRED") expenditures which are included in refundable taxes receivable. Judgment is required in the determination of qualifying expenses. The final determination of qualifying expenses is not known until acceptance by tax authorities. The Company's SRED credits are recorded on the balance sheet after review of the relevant accounting pronouncements and recorded as refundable taxes receivable once acceptance by tax authorities has occurred.

 

Cost of Sales and Direct Operating Expenses

 

Cost of sales and direct operating expenses represents the cost of providing the Company's software and services offerings to customers and excludes depreciation, amortization and the cost of maintenance.

 

Recent Pronouncements

 

During the years December 31, 2014 and 2013 and through September 17, 2015 there were several new accounting pronouncements issued by the Financial Accounting Standards Board (FASB). Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company's financial statements.

 

 
F-7
 

  

C. Risks and Uncertainties

 

Business Risk

 

The Company is in its early stages and relies on third-party contractors for the research and development activities related to its products. Should the agreements with the Company's contractors terminate, the Company may experience disruption in is research and development activities until such time replacements can be contracted or hired.

 

Foreign Currency Risk

 

The Company is exposed to fluctuations in the exchange rate between the United States dollar and the Canadian dollar. The Company's continued financing activities are primarily in United States dollars while the Company's expenditures are primarily in Canadian dollars. Should the exchange rate between the Canadian dollar and the United States dollar fluctuate, the Company may be exposed to resource constraints.

 

2. GOING CONCERN

 

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate the continuation of the Company as a going concern. The Company reported an accumulated deficit of $744,472 and had a comprehensive loss of $302,296 for the year ended December 31, 2014.

 

In view of the matters described, there is substantial doubt as to the Company's ability to continue as a going concern without a significant infusion of capital. At December 31, 2014, the Company had insufficient operating revenues and cash flow to meet its financial obligations. There can be no assurance that management will be successful in implementing its plans. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

The Company raised $325,000 through a private placement for convertible notes subsequent to the year end (see note 10). As a result of this funding, the Company is expected to have sufficient cash flows to operate for at least the next 12 months. See subsequent events note. Notwithstanding, we anticipate that we will have to raise additional capital to fund research and development and operations over the next 12 months. To the extent that we are required to raise additional funds and to cover costs of operations, we intend to do so through additional public or private offerings of debt or equity securities. There are no commitments or arrangements for other offerings in place, other than those described in the subsequent events note, no guaranties that any other such financings would be forthcoming, or as to the terms of any such financings. Any future financing may involve substantial dilution to existing investors.

 

3. FAIR VALUE MEASUREMENTS AND DISCLOSURES

 

ASC Topic 820,  Fair Value Measurement , establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Refundable taxes, accounts payable, development grant and convertible notes are all stated at book value due to the term and nature of such items.

 

 
F-8
 

   

4. RELATED PARTY TRANSACTIONS

 

At December 31, 2014, a total of $8,770 (December 31, 2013: $- ) in advances was due from Scott Woodrow, the Chief Executive Officer of the Company. The loan amounts due are non-interest bearing, unsecured and have no specified terms of repayment.

 

At December 31, 2014, the principal amounts of Convertible Notes to related parties were as follows:

 

Related Party

Position

Amount

Scott L Woodrow

CEO and Director

$

77,580

2110345 Ontario Inc.

Shareholder, company controlled by CEO

120,680

NView Management Inc.

Shareholder, company controlled by CEO

60,340

Leopold E Grunwald

Director

17,240

$

275,840

 

At December 31, 2013, the principal amounts of Convertible Notes to related parties were as follows:

 

Related Party

Position

Amount

2110345 Ontario Inc.

Shareholder, company controlled by CEO

$

131,628

 

For the year ended December 31, 2014, the following related party compensation was recorded:

 

Related Party

Position

Amount

Scott L Woodrow

CEO and Director

$

175,109

 

For the year ended December 31, 2013, the following related party compensation was recorded:

 

Related Party

Position

Amount

Scott L Woodrow

CEO and Director

$

166,054

NView Management Inc.

Shareholder, company controlled by CEO

24,175

 

See Note 6- Stock Based Compensation for details of stock issuances to director and officers for services rendered.

 

 
F-9
 

   

5. CONVERTIBLE NOTES

 

As at December 31, 2014, a total of $422,471 (December 31, 2013: $225,648) of convertible notes were outstanding. Convertible notes bear interest at a rate of 18% per annum and are convertible into common stock at a 25% discount to the issue price of a qualified financing. On December 15, 2014, the Company entered into a qualified financing at a price CDN$0.0537 per share. Total interest and principal of notes outstanding at December 31, 2014 was CDN$561,109 which resulted in the issuance of 13,176,093 common shares on May 15, 2015.

 

6. STOCK BASED COMPENSATION

 

Under the terms of the Company's consulting agreement with Dr. Russell Schachar, Dr. Schachar received a grant of stock options to purchase up to 2,300,000 shares of the Company's common stock in accordance with the following vesting schedule:

 

a.

1,300,000 of the Option Shares shall vest on June 1, 2014

b.

600,000 of the Option Shares shall vest on June 1, 2015

c.

400,000 of the Option Shares shall vest on June 1, 2016.

 

The options allow for the purchase of common shares at an exercise price of equivalent to 50% of the market value of the common stock at the date of exercise. The options expire on June 1, 2024.

 

Under the terms of the Company's consulting agreement with Neil Closner, Mr. Closner received a grant of stock options to purchase up to 2,700,000 shares of the Company's common stock. The options granted were fully vested as of the grant date of June 1, 2013. The options allow for the purchase of common shares at an exercise price of CDN$0.00001and expire 10 years from the issuance date.

 

Under the terms of the Company's compensation agreement with Mr. Scott Woodrow, Mr. Woodrow received a grant of stock options to purchase up to 3,200,000 shares of the Company's common stock. The options granted were fully vested as of the grant date of December 31, 2013. The options allow for the purchase of common shares at an exercise price of CDN$0.00001 and expire 10 years from the issuance date. Mr. Woodrow is the CEO and Director of the Company.

 

No compensation expense was recorded in connection with the above options as such amount was deemed immaterial.

 

Summary Stock Compensation Table

 

The following table sets forth the Company's paid or accrued stock compensation expense to its officers, directors, employees and contractors.

 

Stock Awards

Stock Options
Awards

Non-Vested
Stock Awards

Securities Underlying Non-Vested Stock

Total

Year ended December 31, 2013

$

-

$

-

$

-

-

$

-

Year ended December 31, 2014

$

-

$

-

$

-

5,500,000

$

-

 

 
F-10
 

  

A Summary of the status of the Company's option grants as of December 31, 2014 and 2013 and the changes during the periods ten ended is presented below:

 

Shares

Weighted-Average Exercise Price

Weighted Average Remaining Contractual Term

(in Years)

Aggregate
Intrinsic
Value

Outstanding December 31, 2012

2,300,000

$

0

7.5

$

-

Granted

5,900,000

-

Exercised

-

0

8.5

-

Forfeited

-

-

-

-

Outstanding December 31, 2013

8,200,000

$

0

8.5

-

Granted

-

-

-

-

Exercised

-

-

-

-

Forfeited

-

-

-

-

Outstanding December 31, 2014

8,200,000

$

-

8.5

$

-

 

The weighted average fair value at the grant date for options during the years ended December 31, 2014 and 2013 was estimated using the Black-Scholes option valuation model with the following inputs:

 

Average expected life in years

10

Average risk-free interest rate

2.00

%

Average volatility

100

%

Dividend yield

0

%

 

Risk-free interest rates for the options were taken from the Daily Federal Yield Curve Rates on the grant dates for the expected life of the options as published by the Federal Reserve. The expected volatility was based on historical data and other relevant factors such as capital structure and the nature of the Company as a development stage company.

 

In calculating the expected life of stock options, the Company determines the amount of time from grant date to contractual term date for vested options. In developing the expected life assumption, all amounts of time are weighted by the number of underlying options.

 

 
F-11
 

   

A summary of the status of the Company' vested and non-vested option grants at December 31, 2014 and the weighted average grant date fair value is presented below:

 

Shares

Weighted Average Grant Date

Fair Value per Share

Weighted Average Grant Date

Fair Value

Vested

7,200,000

$

0.00

$

0

Non-vested

1,000,000

0.00

$

0

Total

8,200,000

$

0.00

$

0

 

7. DEVELOPMENT GRANT

 

On June 7, 2012, the Company entered into a project funding agreement with the Canada-Israel Research and Development Foundation ("CIIRDF"). The purpose of the grant was to fund the Company's activities related to the development of a cognitive assessment and treatment platform for childhood attention deficit disorder and attention hyperactivity disorder (the "Development"). Under the terms of the grant, CIIRDF would fund up to CDN$300,000 of development activities related to the Development. The grant is repayable to CIIRDF based on 2.5% of annual gross sales related to products developed from the Development. The Company received CDN$225,000 from CIIRDF to fund the Development.

 

8. INCOME TAXES

 

The Company computes income taxes using the asset and liability approach. The Company currently has no issue that creates timing differences that would mandate a deferred tax expense. Due to the uncertainty as to the utilization of net operating loss carryforwards, a valuation allowance has been made to the extent of any tax benefit that net operating losses may generate. No provision for income has been recorded for the years ended December 31, 2014 and December 31, 2013 due to the Company's net operating loss carryforward from prior years.

 

The Company is entitled to refundable SRED tax credits for qualifying research and development activities performed in Canada. The Company recognizes the benefit of its SRED tax credits when there is reasonable assurance that they will be realized. During the year ended December 31, 2014, the Company claimed $132,073 (2013 - $84,312) of SRED tax credits. Subsequent to December 31, 2014, the Company received SRED tax credits for $132,073 and $84,312. Consequently, the Company has recorded the related SRED tax credits in the year in which the underlying expenditures occurred.

 

The Company's expected income tax rate for 2014 is 15.5% (2013 - 15.5%). The Company has net operating losses totaling CDN$428,042 (2013 - $CDN$241,351) that can be carried forward over 20 years.

 

 
F-12
 

   

Deferred Income Taxes

 

Deferred income taxes primarily represent the net effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. The components of the Company's deferred taxes are as follows:

 

2014

2013

Deferred tax assets (liabilities):

Net operating loss carryforward

$

66,346

$

37,409

Total deferred tax assets

66,346

37,409

Valuation Allowance

(66,346

)

(37,409

)

Net Deferred tax assets

$

-

$

-

 

9. COMMITMENTS

 

On December 8, 2011 the Company entered into a Collaboration Agreement between The Hospital for Sick Children ("SickKids") and the Ontario Brain Institute ("OBI"). Under the terms of the Collaboration Agreement, the OBI agreed to fund SickKids activities related to the development of a software based treatment program for Attention Deficit and Hyperactivity Disorder in children (the "Project"). Funding of SickKids by the OBI was based on a Project budget of CDN$491,204 in which the Company was to contribute at least the same financial commitments for its own activities under the Project. During the Project period from December 8, 2011 to March 31, 2014, the Company contributed approximately CDN$540,000 consisting of CDN$437,400 of salaries and consulting fees, CDN$50,000 of software development and CDN$53,000 of equipment, supplies and overhead. Under the terms of the Collaboration Agreement, Project activities were to be substantially completed by March 31, 2014. Under the terms of the Collaboration Agreement, the Company is obligated to pay SickKids a minimum royalty on Project intellectual property of the amount of the Development Grant CDN$491,204. Under the terms of the royalty agreement between the Company and SickKids, such payments are to be made based on 5% of net revenue for the first CDN$15,000,000 of related Project product and 2.5% of net revenue thereafter.

 

10. SUBSEQUENT EVENTS

 

On May 14, 2015, the Company filed Articles of Amendment to effect a stock split on a 100,000 for 1 basis. The effect of the Stock Split was to increase the number of outstanding Common Shares from 135 to 13,500,000. These financial statements are presented to reflect the stock split retroactively.

 

On May 15, 2015, the Company received a $50,000 Subscription and issued 930,848 Common Shares thereon.

 

On May 15, 2015, Convertible Notes with a conversion value of CDN$561,109 were converted to common stock based on the conversion terms of the note. As a result of the conversion, 13,176,093 common shares were issued to holders of the Convertible Notes.

 

On July 7, 2015, the Company closed a financing transaction and received total proceeds of $325,000 for the sale of convertible notes and warrants. Under the terms of the financing, the secured notes will convert to common stock at a conversion price of $0.0409 per share. 794,621 shares were reserved for Purchase Warrants issued under the financing at an exercise price of $0.0818 per share.

 

 
F-13
 

   

2304101 ONTARIO INC.
O/A BEHAVIOURAL NEUROLOGICAL APPLICATIONS AND SOLUTIONS
BALANCE SHEETS
JUNE 30, 2015 AND JUNE 30, 2014
(UNAUDITED)

 

 

 

2015

 

 

2014

 

 

 

$

 

 

$

 

ASSETS 

 

 

 

 

 

 

Current Assets 

 

 

 

 

 

 

Cash 

 

 

1,748

 

 

 

2,127

 

Other receivables

 

 

5,959

 

 

 

7,069

 

Prepaid expenses

 

 

2,078

 

 

 

2,249

 

Refundable taxes receivable

 

 

106,989

 

 

 

84,045

 

Total current assets 

 

 

116,774

 

 

 

95,490

 

TOTAL ASSETS 

 

 

116,774

 

 

 

95,490

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT 

 

 

 

 

 

 

 

 

Current Liabilities 

 

 

 

 

 

 

 

 

Accounts payable 

 

 

160,048

 

 

 

118,570

 

Accrued interest on convertible notes

 

 

-

 

 

 

35,699

 

Advance from related parties (Note 4)

 

 

1,464

 

 

 

4,311

 

Total current liabilities

 

 

161,512

 

 

 

158,580

 

Long term liabilities

 

 

 

 

 

 

 

 

Development grant

 

 

180,382

 

 

 

210,870

 

Convertible notes

 

 

-

 

 

 

328,020

 

Total long term liabilities

 

 

 

 

 

 

538,890

 

Total Liabilities

 

 

341,894

 

 

 

697,470

 

Commitments (note 9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, no par value, unlimited authorized, 28,072,366 issued and outstanding (2014 – 13,500,000 issued and outstanding)

 

 

546,948

 

 

 

1

 

Accumulated deficit 

 

 

(878,314 )

 

 

(530,743 )

Accumulated other comprehensive income (loss)

 

 

106,245

 

 

 

(71,238 )

Total stockholders' deficit 

 

 

(225,121 )

 

 

(601,980 )

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT 

 

 

116,774

 

 

 

95,490

 

 

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

 

 
F-14
 

   

2304101 ONTARIO INC.

O/A BEHAVIOURAL NEUROLOGICAL APPLICATIONS AND SOLUTIONS

STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS

FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

(UNAUDITED)

 

For the six months ended
June 30,

2015

2014

$

$

Revenue 

-

-

Operating Expenses 

Salaries

87,035

97,526

Rent

7,108

10,021

Professional fees 

34,051

27,347

Insurance

2,078

2,188

Travel 

567

4,034

Software development

-

79,762

General and administrative 

2,683

5,241

Total operating expenses 

133,522

226,119

Operating Loss

(133,522

)

(226,119

)

Other income (expense)

Interest and bank charges, net 

(320

)

(202

)

Interest on convertible notes

-

(24,082

)

Total other income (expense)

(320

)

(24,284

)

Loss before taxes

(133,842

)

(250,403

)

Less: Refundable taxes

-

84,044

Net loss

(133,842

)

(166,359

)

Other Comprehensive Income (Loss)

 Foreign exchange translation adjustment

9,724

(89,967

)

Total other comprehensive income (loss)

9,724

(89,967

)

Comprehensive loss

(124,118

)

(256,326

)

 

 

 

 

 

 

 

 

 

Weighted average shares used to compute net loss per share

 

 

 16,626,864

 

 

 

 13,500,000

 

Net loss per share

 

 (0.007)

 

 

 (0.019)

 

 

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

 

 
F-15
 

 

2304101 ONTARIO INC.

O/A BEHAVIOURAL NEUROLOGICAL APPLICATIONS AND SOLUTIONS

STATEMENTS OF CASH FLOWS

FOR THE SIX MONTH PERIODS ENDED

JUNE 30, 2015 AND 2014

(UNAUDITED)

 

 

 

 

2015

 

 

2014

 

 

 

$

 

 

$

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Comprehensive loss 

 

 

(124,118 )

 

 

(256,326 )

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities: 

 

 

 

 

 

 

 

 

Other receivables

 

 

(301 )

 

 

(5,371 )

Prepaid expenses and deposits

 

 

2,391

 

 

 

2,262

 

Accounts payable 

 

 

(464 )

 

 

118,236

 

Advances to related parties 

 

 

10,234

 

 

 

4,311

 

Refundable taxes

 

 

85,348

 

 

 

270

 

Interest accrued on convertible debt

 

 

-

 

 

 

24,082

 

Net cash used in operating activities 

 

 

(26,910 )

 

 

(112,536 )
 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from convertible note

 

 

-

 

 

 

103,014

 

Proceeds from sale of common stock 

 

 

41,630

 

 

 

-

 

Decrease in development grant

 

 

(13,568 )

 

 

(675 )

Net cash provided by financing activities 

 

 

28,062

 

 

 

102,339

 

Net increase (decrease) in cash 

 

 

1,152

 

 

 

(10,197 )

Cash, beginning of year

 

 

596

 

 

 

12,324

 

Cash, end of year 

 

 

1,748

 

 

 

2,127

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow data

 

 

 

 

 

 

 

 

Non-cash financing activity

 

 

 

 

 

 

 

 

Conversion of convertible notes

 

 

483,768

 

 

 

-

 

 

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

 

 
F-16
 

   

2304101 ONTARIO INC.

O/A BEHAVIOURAL NEUROLOGICAL APPLICATIONS AND SOLUTIONS

STATEMENT OF STOCKHOLDERS' DEFICIT

(UNAUDITED)

 

Common stock

Accumulated

Accumulated Other Comprehensive

Total

Stockholders'

Shares

Amount

 deficit

Income (Loss)

deficit

Balance December 31, 2012

135

$

1

$

(142,753

)

$

(899

)

$

(143,651

)

Effect of 1for 100,000 stock split on May 14, 2015

13,499,865

-

As restated, December 31, 2012

13,500,000

1

(142,753

)

(899

)

(143,651

)

Net loss

(221,631

)

(221,631

)

Foreign exchange translation

19,628

19,628

Balance December 31, 2013

13,500,000

1

(364,384

)

18,729

(345,654

)

Issuance of shares for cash

465,424

21,549

21,549

Net loss

(380,088

)

(380,088

)

Foreign exchange translation

77,792

77,792

Balance December 31, 2014

13,965,424

21,550

(744,472

)

96,521

(626,401

)

Issuance of shares for cash

930,848

41,630

41,630

Conversion of debenture

13,176,094

483,768

483,768

Net loss

(133,842

)

(133,842

)

Foreign exchange translation

9,724

9,724

Balance June 30, 2015

28,072,366

$

546,948

$

(878,314

)

$

106,245

$

(225,121

)

 

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

 

 
F-17
 

 

2304101 ONTARIO INC.

O/A BEHAVIOURAL NEUROLOGICAL APPLICATIONS AND SOLUTIONS

NOTES TO FINANCIAL STATEMENTS

(UNAUDITED)

 

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

A. Organization and General Description of Business

 

Behavioural Neurological Applications and Solutions ("We" or "the Company"), was incorporated under the laws of the Province of Ontario on October 31 2011.

 

The Company is a cognitive software development company with a primary focus on the development of software based assessment and remediation software for children used in the professional assessment and treatment of cognitive disabilities. The Company entered into a collaboration with Toronto's Hospital for Sick Children ["SickKids"] to identify the clinical needs, design and processes required to create clinical grade toolsets. In addition to specific applications, the Company has developed a content delivery and patient data platform that enables both its own and third party content to be deployed, monitored, analyzed and accessed remotely by clinicians and patients.

 

B. 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 U.S. dollars. The Company's fiscal year end is December 31.

 

The Company qualifies as an "emerging growth company" as defined in Section 101 of the Jumpstart our Business Startups Act ("JOBS Act") as we do not have more than $1,000,000,000 in annual gross revenue and did not have such amount as of December 31, 2014, our last fiscal year. We are electing to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the JOBS Act.

 

Revenue Recognition

 

The following criteria must be met in determining whether revenue may be recorded: (1) persuasive evidence of a contract exists; (2) software has been delivered and/or services have been provided; (3) the price is fixed or determinable; and (4) collection is reasonably assured.

 

Revenue is recorded as the software is delivered and/or services are provided based on the relative fair value of each element. Unbilled receivables are created when services are performed or software is delivered and revenue is recognized in advance of billings. Deferred revenue is created when billing occurs in advance of performing services or when all revenue recognition criteria have not been met.

 

We generate revenue from the following sources: (1) Software revenue, (2) Software as a Service ["SaaS"], and (3) Services revenue.

 

Software Revenue : Our Software revenue is comprised of traditional software license fees, maintenance and support fees, and fees from the resale of third-party software licenses. These software license fees include term licenses, perpetual licenses and rental fees. Maintenance and support are generally offered under annual or multi-year terms and are billed either monthly or annually in advance. Our maintenance and support provides customers with periodic technology updates and interactive support related to our software. Maintenance and support revenue is recognized ratably over the stated term.

 

Services Revenue : Our services offerings help customers to install, optimize and integrate the Company's software into their computing environment. For fixed-fee professional services contracts, revenue is recorded based upon proportional performance, measured by the actual number of hours incurred divided by the total estimated number of hours for the project. Changes in the estimated costs or hours to complete the contract, and losses, if any, are reflected in the period during which the change or loss becomes known. The Company also provides professional services on a time and materials basis, recognized monthly based upon hours incurred to date. In all cases, contract milestones, project risk profile and refund provisions are taken into consideration.

 

 
F-18
 

   

Foreign Currency Translation

 

The functional currency of each of the Company's foreign operations is generally the local currency of the country in which the operation is located. All assets and liabilities are translated into U.S. dollars using exchange rates in effect at the balance sheet date. Revenue and expenses are translated using average exchange rates during the period. Increases and decreases in net assets resulting from currency translation are reflected in stockholders' deficit as a component of accumulated other comprehensive income (loss).

 

Software Products and Research and Development

 

Software development costs are expensed as incurred and consist primarily of design and development costs of new products, and significant enhancements to existing products incurred before the establishment of technological feasibility. Costs incurred subsequent to technological feasibility of new and enhanced products, costs incurred to purchase or to create and implement internal-use software, and software obtained through business acquisitions are capitalized. Such costs are amortized over the estimated useful lives of the related products, using the straight-line method.

 

Income Taxes

 

Income tax expense is based on income before income taxes, and is accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. 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 income in the period that includes the enactment date. Valuation allowances are recorded when it is not more likely than not that a deferred tax asset will not be realized. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Considerable judgment is required in assessing and estimating these amounts and the difference between the actual outcome of these future tax consequences and the estimates made could have a material impact on the operating results. To the extent that new information becomes available which causes the Company to change its judgment regarding the adequacy of existing tax liabilities, such changes to tax liabilities will impact income tax expense in the period in which such determination is made. The Company records interest and penalties related to unrecognized tax benefits in income tax expense.

 

The Company makes claims for Scientific Research and Experimental Development ("SRED") expenditures which are included in refundable taxes receivable. Judgment is required in the determination of qualifying expenses. The final determination of qualifying expenses is not known until acceptance by tax authorities. The Company's SRED credits are recorded on the balance sheet after review of the relevant accounting pronouncements and recorded as refundable taxes receivable once acceptance by tax authorities has occurred.

 

Cost of Sales and Direct Operating Expenses

 

Cost of sales and direct operating expenses represents the cost of providing the Company's software and services offerings to customers and excludes depreciation, amortization and the cost of maintenance.

 

Recent Pronouncements

 

During the periods June 30, 2015 and 2014, and through September 17, 2015 there were several new accounting pronouncements issued by the Financial Accounting Standards Board (FASB). Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company's financial statements.

 

 
F-19
 

   

C. Risks and Uncertainties

 

Business Risk

 

The Company is in its early stages and relies on third-party contractors for the research and development activities related to its products. Should the agreements with the Company's contractors terminate, the Company may experience disruption in is research and development activities until such time replacements can be contracted or hired.

 

Foreign Currency Risk

 

The Company is exposed to fluctuations in the exchange rate between the United States dollar and the Canadian dollar. The Company's continued financing activities are primarily in United States dollars while the Company's expenditures are primarily in Canadian dollars. Should the exchange rate between the Canadian dollar and the United States dollar fluctuate, the Company may be exposed to resource constraints.

 

2. GOING CONCERN

 

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate the continuation of the Company as a going concern. The Company reported an accumulated deficit of $878,314 and had a comprehensive loss of $124,118 for the six months ended June 30, 2015.

 

In view of the matters described, there is substantial doubt as to the Company's ability to continue as a going concern without a significant infusion of capital. At December 31, 2014, the Company had insufficient operating revenues and cash flow to meet its financial obligations. There can be no assurance that management will be successful in implementing its plans. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

The Company raised $325,000 through a private placement for convertible notes subsequent to the end of the period (see note 10). As a result of this funding, the Company is expected to have sufficient cash flows to operate for at least the next 12 months. See subsequent events note. Notwithstanding, we anticipate that we will have to raise additional capital to fund research and development and operations over the next 12 months. To the extent that we are required to raise additional funds and to cover costs of operations, we intend to do so through additional public or private offerings of debt or equity securities. There are no commitments or arrangements for other offerings in place, other than those described in the subsequent events note, no guaranties that any other such financings would be forthcoming, or as to the terms of any such financings. Any future financing may involve substantial dilution to existing investors.

 

3. FAIR VALUE MEASUREMENTS AND DISCLOSURES

 

ASC Topic 820,  Fair Value Measurement , establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Refundable taxes, accounts payable, development grant and convertible notes are all stated at the book value due to the term and nature of such items.

 

4. RELATED PARTY TRANSACTIONS

 

At June 30, 2015, a total of $1,464 (June 30, 2014: $4,311) in advances was due to Scott Woodrow, the Chief Executive Officer of the Company. The loan amounts due are non-interest bearing, unsecured and have no specified terms of repayment.

 

The company paid salaries to Scott Woodrow, the Chief Executive Officer and Director of the company $87,035 for the six month period ended June 30, 2015 ($97,526 for the six month period ended June 30, 2014).

 

See Note 6-Stock Based Compensation for details of stock issuances to director and officers for services rendered.

 

 
F-20
 

   

5. CONVERTIBLE NOTES

 

On May 14, 2015, convertible notes with an aggregate principal and related accrued interest value of $483,768 were converted to 13,176,094 shares of common stock of the Company.

 

6. STOCK BASED COMPENSATION

 

Under the terms of the Company's consulting agreement with Dr. Russell Schachar, Dr. Schachar received a grant of stock options to purchase up to 2,300,000 shares of the Company's common stock in accordance with the following vesting schedule:

 

a.

1,300,000 of the Option Shares shall vest on June 1, 2014

b.

600,000 of the Option Shares shall vest on June 1, 2015

c.

400,000 of the Option Shares shall vest on June 1, 2016.

 

The options allow for the purchase of common shares at an exercise price of equivalent to 50% of the market value of the common stock at the date of exercise. The options expire on June 1, 2024.

 

Under the terms of the Company's consulting agreement with Neil Closner, Mr. Closner received a grant of stock options to purchase up to 2,700,000 shares of the Company's common stock. The options granted were fully vested as of the grant date of June 1, 2013. The options allow for the purchase of common shares at an exercise price of CDN$0.00001and expire 10 years from the issuance date.

 

Under the terms of the Company's compensation agreement with Mr. Scott Woodrow, Mr. Woodrow received a grant of stock options to purchase up to 3,200,000 shares of the Company's common stock. The options granted were fully vested as of the grant date of December 31, 2013. The options allow for the purchase of common shares at an exercise price of CDN$0.00001 and expire 10 years from the issuance date. Mr. Woodrow is the CEO and Director of the Company.

 

Summary Stock Compensation Table

 

The following table sets forth the Company's paid or accrued stock compensation expense to its officers, directors, employees and contractors.

 

Stock Awards

Stock Options Awards

Non-Vested Stock Awards

Securities Underlying Non-Vested Stock

Total

Year ended December 31, 2013

$

-

$

-

$

-

-

$

-

Year ended December 31, 2014

$

-

$

-

$

-

5,500,000

$

-

Period ended June 30, 2015

$

-

$

-

$

-

5,500,000

$

-

 

 
F-21
 

 

A Summary of the status of the Company's option grants as of June 30, 2015 and the changes during the periods then ended is presented below:

 

 

 

Shares

 

 

Weighted-Average Exercise Price

 

 

Weighted Average Remaining Contractual Term

(in Years)

 

 

Aggregate Intrinsic Value

 

Outstanding December 31, 2012

 

 

2,300,000

 

 

$ 0

 

 

 

7.5

 

 

$ -

 

Granted

 

 

5,900,000

 

 

 

 

 

 

 

 

 

 

 

-

 

Exercised

 

 

-

 

 

 

0

 

 

 

8.5

 

 

 

-

 

Forfeited

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Outstanding December 31, 2013

 

 

8,200,000

 

 

$ 0

 

 

 

8.5

 

 

 

-

 

Granted

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Forfeited

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Outstanding December 31, 2014

 

 

8,200,000

 

 

$ -

 

 

 

8.5

 

 

$ -

 

Granted

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Forfeited

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Outstanding June 30, 2015

 

 

8,200,000

 

 

$ -

 

 

 

8.0

 

 

$ -

 

 

The weighted average fair value at the grant date for options during the years ended June 30, 2015 and 2014 was estimated using the Black-Scholes option valuation model with the following inputs:

 

Average expected life in years

10

Average risk-free interest rate

2.00

%

Average volatility

100

%

Dividend yield

0

%

 

Risk-free interest rates for the options were taken from the Daily Federal Yield Curve Rates on the grant dates for the expected life of the options as published by the Federal Reserve. The expected volatility was based on historical data and other relevant factors such as capital structure and the nature of the Company as a development stage company.

 

In calculating the expected life of stock options, the Company determines the amount of time from grant date to contractual term date for vested options. In developing the expected life assumption, all amounts of time are weighted by the number of underlying options.

 

 
F-22
 

   

A summary of the status of the Company' vested and non-vested option grants at June 30, 2015 and the weighted average grant date fair value is presented below:

 

 

 

Shares

 

 

Weighted Average Grant Date

Fair Value per Share

 

 

Weighted Average Grant Date

Fair Value

 

Vested

 

 

7,200,000

 

 

$ 0.00

 

 

$ 0

 

Non-vested

 

 

1,000,000

 

 

 

0.00

 

 

$ 0

 

Total

 

 

8,200,000

 

 

$ 0.00

 

 

$ 0

 

 

7. DEVELOPMENT GRANT

 

On June 7, 2012, the Company entered into a project funding agreement with the Canada-Israel Research and Development Foundation ("CIIRDF"). The purpose of the grant was to fund the Company's activities related to the development of a cognitive assessment and treatment platform for childhood attention deficit disorder and attention hyperactivity disorder (the "Development"). Under the terms of the grant, CIIRDF would fund up to CDN$300,000 of development activities related to the Development. The grant is repayable to CIIRDF based on 2.5% of annual gross sales related to products developed from the Development. The Company received CDN$225,000 from CIIRDF to fund the Development.

 

8. INCOME TAXES

 

The Company computes income taxes using the asset and liability approach. The Company currently has no issue that creates timing differences that would mandate a deferred tax expense. Due to the uncertainty as to the utilization of net operating loss carryforwards, a valuation allowance has been made to the extent of any tax benefit that net operating losses may generate. No provision for income has been recorded for the period ended June 30, 2015 and June 30, 2014 due to the Company's net operating loss carryforward from prior years.

 

The Company is entitled to refundable SRED tax credits for qualifying research and development activities performed in Canada. The Company recognizes the benefit of its SRED tax credits when there is reasonable assurance that they will be realized. During the year ended December 31, 2014, the Company claimed $132,073 (2013 - $84,312) of SRED tax. Subsequent to year end, the Company received SRED tax credits for $132,073 and $84,312. Consequently, the Company has recorded the related SRED tax credits in the year in which the underlying expenditures occurred.

 

The Company's expected income tax rate for 2015 is 15.5% (2014 - 15.5%). The Company has net operating losses totaling CDN$428,042 (2013 - $CDN$241,351) that can be carried forward over 20 years.

 

Deferred Income Taxes

 

Deferred income taxes primarily represent the net effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. The components of the Company's deferred taxes calculated at the interim period are as follows:

 

 

 

2015

 

 

2014

 

Deferred tax assets (liabilities):

 

 

 

 

 

 

Net operating loss carryforward

 

$ 87,091

 

 

$ 63,195

 

Total deferred tax assets

 

 

87,091

 

 

 

63,195

 

Valuation Allowance

 

 

(87,091 )

 

 

(63,195 )

Net Deferred tax assets

 

$ -

 

 

$ -

 

 

 
F-23
 

 

9. COMMITMENTS

 

On December 8, 2011 the Company entered into a Collaboration Agreement between The Hospital for Sick Children ("SickKids") and the Ontario Brain Institute ("OBI"). Under the terms of the Collaboration Agreement, the OBI agreed to fund SickKids activities related to the development of a software based treatment program for Attention Deficit and Hyperactivity Disorder in children (the "Project"). Funding of SickKids by the OBI was based on a Project budget of CDN$491,204 in which the Company was to contribute at least the same financial commitments for its own activities under the Project. During the Project period from December 8, 2011 to March 31, 2014, the Company contributed approximately CDN$540,000 consisting of CDN$437,400 of salaries and consulting fees, CDN$50,000 of software development and CDN$53,000 of equipment, supplies and overhead. Under the terms of the Collaboration Agreement, Project activities were to be substantially completed by March 31, 2014. Under the terms of the Collaboration Agreement, the Company is obligated to pay SickKids a minimum royalty on Project intellectual property of the amount of the Development Grant CDN$491,204. Under the terms of the royalty agreement between the Company and SickKids, such payments are to be made based on 5% of net revenue for the first CDN$15,000,000 of related Project product and 2.5% of net revenue thereafter.

 

10. SUBSEQUENT EVENTS

 

On July 7, 2015, the Company closed a financing transaction and received total proceeds of $325,000 for the sale of convertible notes and warrants. Under the terms of the financing, the secured notes will convert to common stock at a conversion price of $0.0409 per share. 794,621 shares were reserved for Purchase Warrants issued under the financing at an exercise price of $0.0818 per share. 

 

 

 

F-24


EXHIBIT 3.1

 

Request ID: 013666047

 

Province of Ontario

 

Date Report Produced: 2011/10/31

Demande n o :

Province de l' Ontario

 

Document produit le:

Transaction ID: 045828685

 

Ministry of Government Services

 

Time Report Produced: 15:13:39

Transaction n°:

Minist è re des Services gouverne mentaux

 

Imprim è á :

Category ID:  CT

 

 

Categorie:

 

 

Certificate of Incorporation

Certificat de constitution

 

This is to certify that

 

Ceci certifie que

 

 

 

2 3 0 4 1 0 1   O N T A R I O   I N C.

 

 

 

Ontario Corporation No.

 

Num è ro matricule de Ia personne morale en Ontario

 

 

 

0 0 2 3 0 4 1 0 1

 

 

 

is a corporation incorporated,

 

est une soci é t é constitu é e aux termes

under the laws of the Province of Ontario

 

des lois de Ia province del' Ontario.

 

 

 

These articles of incorporation are effective on

 

Les pr é sents statuts constitutifs entrent en vigueur le

 

O C T O B E R   31   O C T O B R E,   2 0 1 1

 

Director/Directrice

Business Corporations Act/Loi sur les soci é t é s par actions

 

 
 
 

Page: 1

 

Request ID / Demande n o

 

Ontario Corporation Number

Numero de la compagnie en Ontario

13666047

 

2304101

 

 

 

FORM 1

 

FORMULE NUMÉRO 1

 

 

 

BUSINESS CORPORATIONS ACT

/

LOI SUR LES COMPAGNIES

 

ARTICLES OF INCORPORATION

STATUTS CONSTITUTIFS

 

1.

The name of the corporation is:

Denomination sociale de la compagnie:

 

2304101 ONTARIO INC.

 
 

2.

The address of the registered office is:

Adresse du siège social:

 

110        EGLINTON AVENUE WEST

Suite 401

 

(Street & Number, or R.R. Number & if Multi-Office Building give Room No.)

(Rue et numéro, ou numéro, de la R.R. et, s'il s'agit édifice à bureau, numéro du bureau)

 

TORONTO

CANADA

 

ONTARIO

M4R 1A3

(Name of Municipality or Post Office)

(Nom de la municipalite ou du bureau de poste)

 

(Postal Code/Code postal)

 
3. Number (or minimum and maximum number) of directors is:  

Nombre (ou nombres minimal et maximal) d'administrateurs:

 

 

Minimum 1

 

Maximum 10

 

 

 

4.

The first director(s) is/are:

 

Premier(s) administrateur(s):

 

 

 

 

 

First name, initials and surname

Pr é nom, initiales et nom de famille

 

Resident        Canadian            State Yes or No

Resident        Canadien                 Oui/Non

 

 

 

 

 

Address for service, giving Street & No.

or R.R. No. Municipality and Postal Code

 

Domicile é lu, y compris la rue et le

num é ro, le numero de la R.R., ou le nom

de la municipalit é et le code postal

 

 

 

 

*

ELI

 

YES

 

LEIBOWITZ

 

 

 

7625 KEELE STREET

 

 

 

 

 

 

 

CONCORD ONTARIO

 

 

 

CANADA L4K1Y4

 

 

 

 
 
 

Page: 2

 

Request ID / Demande n o

 

Ontario Corporation Number

Numero de la compagnie en Ontario

13666047

 

2304101

 

5.

Restrictions, if any, on business the corporation may carry on or on powers the corporation may exercise.

 

Limites, s'il y a lieu, impos é es aux activites commerciales ou aux pouvoirs de la compagnie.

 

 

 

None

 

 

 

 

6.

The c1asses and any maximum number of shares that the corporation is authorized to issue:

 

Cat é gories et nombre maximal , s'i y a lieu, d'actions que la compagnie est autoris é e à é mettre:

 

 

 

An unlimited number of Common Shares without nominal or par value.

 

 
 
 

Page: 3

 

Request ID / Demande n o

 

Ontario Corporation Number

Numero de la compagnie en Ontario

13666047

 

2304101

 

7.

Rights, privileges, restrictions and conditions (if any) attaching to each class of shares and directors authority with respect to any class of shares which may be issued in series:

 

Droits, privil è ges, restrictions et conditions, s'il y a lieu, rattaches a chaque cat é gorie d'actions et pouvoirs des administrateurs relatifss a chaque categorie d'actions que peut être Smise en s é rie:

 

 

 

N/A

 

 
 
 

Page: 4

 

Request ID / Demande n o

 

Ontario Corporation Number

Numero de la compagnie en Ontario

13666047

 

2304101

  

8.

The issue, transfer or ownership of shares is/is not restricted and the restrictions (if any) are as follows:

 

L' é mission, le transfert ou la propri é te d'actions est/n'est pas restreinte. Les restrictions, s'il y a lieu, sont es suivantes:

 

 

 

 

No share or shares of the Corporation shall at any time be transferred to any person without either:

 

 

 

 

(a)

the consent of a majority of the directors to be signified by a resolution passed by the board or by an instrument or instruments in writing signed by a majority of the directors; or

 

 

 

 

(b)

the consent of the holders of not less than 51% of all votes attached to the then outstanding shares of the Corporation signified either by a resolution passed at a meeting of such shareholders or by an instrument or instruments in writing signed by such shareholders.

 

 
 
 

Page: 5

 

Request ID / Demande n o

 

Ontario Corporation Number

Numero de la compagnie en Ontario

13666047

 

2304101

 

9.

Other provisions, (if any, are):

 

Autres dispositions, s'ily a lieu:

 

 

 

 

1.

The Corporation shall have the right to:

 

 

 

 

(a)

borrow money upon the credit of the Corporation;

 

 

 

 

(b)

issue, sell or pledge debt obligations of the Corporation; or

 

 

 

 

(c)

charge, mortgage, hypothecate or pledge all or any currently owned or subsequently acquired real or personal, movable or immovable property of the Corporation, including book debts, rights, powers, franchises and undertaking, to secure any debt obligations or any money borrowed, or other debt or liability of the Corporation.

 

 

 

 

The words "debt obligation" as used in this clause mean bonds, debentures, notes or other similar obligations of the Corporation, whether secured or unsecured.

 

 

 

 

2.

The Corporation may purchase any of its issued shares.

 

 
 
 

Page: 6

 

Request ID / Demande n o

 

Ontario Corporation Number

Numero de la compagnie en Ontario

13666047

 

2304101

 

10.

The names and addresses of the incorporators are

 

 

Nom et adresse des fondateurs

 

 

 

 

 

First name, initials and last name or corporate name

Pr é nom, initiale et nom de fami le ou denomination sociale

 

 

 

 

Full address for service or address of registered office or of principal place of business giving street & No. or R.R. No., municipality and postal code  

 

Domicile é lu, adresse du si è ge social au adresse de l' é tablissement principal, y compris la rue et le numero, le numero de la R.R., le nom de lla muncipaliti é et le code postal  

 

 

 

*

ELI LEIBOWITZ

 

 

7625 KEELE STREET

 

 

 

 

 

CONCORD ONTARIO

 

 

CANADA L4K1Y4

 

 

 


EXHIBIT 3.2  

 

 

 

Ontario Corporation Number

Numéro de Ia sociéte en Ontario

 

2304101

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ARTICLES OF AMENDMENT

STATUTS DE MODIFICATION

Form 3

 

 

 

Business Corporations

 

1.

The name of the corporation is: (Set out in BLOCK CAPITAL LETTERS)

D é nomination sociale actuelle de Ia soci é t é : (Ecrire en LETTRES MAJUSCULES SEULEMENT)

Act

 

 

 

 

Formule 3

Loi sur les

soci é t é s par

actions

 

 

2 3 0 4 1 0 1   O N T A R I O   I N C .

 

 

 

 

 

 

 

 

 

 

2.

The name of the corporation is changed to (if applicable): (Set out in BLOCK CAPITAL LETTERS)

Nouvelle d é nomination sociale de Ia soci é t é (s'il y a lieu): (Écrire en LETTRES MAJUSCULES SEULEMENT)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.

Date of incorporation/amalgamation:

Date de Ia constitution ou de Ia fusion:

 

 

 

 

 

 

 

2011/10/31

 

 

 

(Year/Month/Day)

(ann é e, mois, jour)

 

 

 

 

 

 

4.

Complete only if there is a change in the number of directors or the minimum I maximum number of directors

 

 

 

II faut remplir cette partie seulement si le nombre d'administrateurs ou si le nombre minimal ou maximal d'administrateurs a chang é .

 

 

 

 

 

 

 

 

 

 

 

Number of directors is/are:

or

minimum and maximum number of directors is/are:

 

 

 

Nombre d'administrateurs:

ou

nombres minimal et maximum d'administrateurs:

 

 

 

 

 

 

 

 

 

Number

or

minimum and maximum

 

 

 

Nombre

ou

minimal     et    maximum

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5.

The articles of the corporation are amended as follows:

 

 

 

Les statuts de Ia societe sont modifies de Ia far;on suivante:

 

 

 

 

 

 

 

(A) By inserting the following rights, privileges, restrictions and conditions for the existing Common Shares:

 

 
 
 

1A

 

 

 

 

Common Shares

 

The rights, privileges, restnctwns and conditions attaching to the Common Shares of the Corporation are as follows:

 

(1) Voting Rights: Each holder of Common Shares shall be entitled to receive notice of and to attend all meetings of shareholders of the Corporation and at all such meetings shall be entitled to ONE (I) vote in respect of each Common Share held by such holder.

 

(2) Dividends: The holders of Common Shares shall be entitled to receive and the Corporation shall pay to them, as and when declared by the board of directors of the Corporation, such dividends as the board of directors of the Corporation may, in their complete and unfettered discretion, from time to time declare on the Common Shares and, for greater certainty, the board of directors of the Corporation may from time to time declare dividends to be payable on the Common Shares to the exclusion of any other class of shares in the Corporation.

 

(3) Dissolution: In the event of any liquidation, dissolution or winding-up of the Corporation or other distribution of the assets of the Corporation among its shareholders for the purpose of winding-up its affairs, the holders of Common Shares shall be entitled, subject to the rights of holders of shares of any class ranking prior to the Common Shares (if any), to receive the remaining property or assets of the Corporation, pari passu with the holders of other "Common Shares".

 

( 4) Purchase for Cancellation:

 

(a) Subject to applicable law, the Corporation may at any time or times purchase (if obtainable by contractual right or otherwise) for cancellation all or any part of the Common Shares outstanding from time to time at the lowest price or prices at which in the opinion of the directors such shares are obtainable; and, for greater certainty, the Corporation may from time to time purchase for cancellation all or any part of the Common Shares outstanding to the exclusion of any other class of shares in the Corporation.

 

(b) If upon any invitation for tenders the Corporation shall receive tenders of Common Shares at the same lowest price which the Corporation may be willing to pay in an aggregate number greater than the number for which the Corporation is prepared to accept, the Common Shares so tendered shall be purchased as nearly as may be pro rata (disregarding fractions) according to the number of Common Shares so tendered by each of the holders of Common Shares who submitted tenders at the said same lowest price.

 

(B) By creating an unlimited number of Non-Voting Common Shares with the rights, privileges, restrictions and conditions as hereinafter described:

 

Non-Voting Common Shares

 

The rights, privileges, restrictions and conditions attaching to the Non-Voting Common Shares of the Corporation are as follows:

 

(1) Voting Rights: Except as provided by law, and as hereinafter specifically provided, the holders of the Non-Voting Common Shares shall not be entitled to receive notice of or to vote at any meetings of shareholders but shall be entitled to receive notice of any meeting of shareholders called for the purpose of authorizing the dissolution of the Corporation or the sale, lease or exchange of all or substantially all the property of the Corporation other than in the ordinary course of business of the Corporation.

 

 
 
 

1B

    

 

 

 

(2) Dividends: The holders of Non-Voting Common Shares shall be entitled to receive and the Corporation shall pay to them, as and when declared by the board of directors of the Corporation, such dividends as the board of directors of the Corporation may, in their complete and unfettered discretion, from time to time declare on the Non-Voting Common Shares and, for greater certainty, the board of directors of the Corporation may from time to time declare dividends to be payable on the Non-Voting Common Shares to the exclusion of any other class of shares in the Corporation.

 

(3) Dissolution: In the event of any liquidation, dissolution or winding-up of the Corporation or other distribution of the assets of the Corporation among its shareholders for the purpose of winding-up its affairs, the holders of Non-Voting Common Shares shall be entitled, subject to the rights of holders of shares of any class ranking prior to the Non-Voting Common Shares (if any), to receive the remaining property or assets of the Corporation, pari passu with the holders of other "Common Shares".

 

( 4) Purchase for Cancellation:

 

(a) Subject to applicable law, the Corporation may at any time or times purchase (if obtainable by contractual right or otherwise) for cancellation all or any part of the Non-Voting Common Shares outstanding from time to time at the lowest price or prices at which in the opinion of the directors such shares are obtainable; and, for greater certainty, the Corporation may from time to time purchase for cancellation all or any part of the Non-Voting Common Shares outstanding to the exclusion of any other class of shares in the Corporation.

 

(b) If upon any invitation for tenders the Corporation shall receive tenders of Non-Voting Common Shares at the same lowest price which the Corporation may be willing to pay in an aggregate number greater than the number for which the Corporation is prepared to accept, the Non-Voting Common Shares so tendered shall be purchased as nearly as may be pro rata (disregarding fractions) according to the number of Non-Voting Common Shares so tendered by each of the holders of Non-Voting Common Shares who submitted tenders at the said same lowest price.

 

For greater certainty, reference herein to "Common Shares", without anything further, shall mean (i) the Common Shares, and (ii) the Non-Voting Common Shares.

 

 
 
 

 

 

 

6.

The amendment has been duly authorized as required by sections 168 and 170 (as applicable) of the Business Corporations Act.

 

 

 

La modification a ete dOment autorisee conformement aux articles 168 et 170 (selon le cas) de Ia loi sur les societes par actions.

 

 

 

 

 

 

7.

The resolution authorizing the amendment was approved by the shareholders/directors (as applicable) of the corporation on

 

 

 

Les actionnaries ou les administrateurs (selon le cas) de Ia societe ont approuve Ia resolution autorisant Ia modification le

 

 

 

 

 

 

 

2011/11/21

 

 

 

(Year, Month, day)

(annee, mois, jour')

 

 

 

 

 

 

 

These articles are signed in duplicate.

 

 

 

Les presents statuts sont signes en double exemplaire.

 

 

 

 

 

 

 

2304101 ONTARIO INC.

 

 

 

(Print name of corporation from Article 1 on page 1)

(Veuillez ecrir le nom de Ia societe de /'article un Ala page une)

 

 

 

 

 

 

 

 

By/

Par:

 

SCOTT L. WOODROW, DIRECTOR

 

 

 

( Signature)

( Signature )

 

(Description of Office)

( Fonction )

 

 


 

EXHIBIT 3.3

 

For Ministry Use Only

A l'usage exclusif du ministere

 

Ontario Corporation Number

Numero de la societe en Ontario

 

2304101

 

 

 

 

 

 

ARTICLES OF AMENDMENT

STATUTS DE MODIFICATION

Form 3

 

 

 

Business Corporations

 

1.

The name of the corporation is: (Set out in BLOCK CAPITAL LETTERS)

Denomination sociale actuelle de Ia societe (ecrire en LETIRES MAJUSCULES SEULEMENT)·  

Act

 

 

 

 

Formule 3

Loi sur les

soci é t é s par

actions

 

 

2 3 0 4 1 0 1   O N T A R I O   I N C .

 

 

 

 

 

 

 

 

 

2.

The name of the corporation Is changed to (if applicable ): (Set out in BLOCK CAPITAL LETIERS)

Nouvelle denomination sociale de Ia societe (s'il y a lieu) (ecrire en LETIRES MAJUSCULES SEULEMENT) :

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.

Date of incorporation/amalgamation:
Date de Ia constitution ou de Ia fusion :

 

 

 

 

 

 

 

2011/10/31

 

 

 

(Year/Month/Day)

(année, mois, jour)

 

 

 

 

 

 

4.

Complete only If there Is a change In the number of directors or the minimum / maximum number of directors. II faut rempllr cette partie aeulement slle nombre d'admlnlstrateurs ou slle nombre minimalou maximal d'admlnlstrateurs a chang.

 

 

 

 

 

 

Number of directors is/are:

 

minimum and maximum number of directors is/are:

 

 

 

Number d'administrateurs:

 

nombres minimum et maximum d'administrateurs: 

 

 

 

 

 

 

 

Number

 

minimum   and   maximum

 

 

 

Number

 

minimum     et     maximum

 

 

 

 

 

or

 

 

 

 

 

 

 

 

or

 

 

 

 

 

 

 

 

 

5.

The articles of the corporation are amended as follows:

Les statuts de Ia societe soot modifies de Ia fan suivante:  

 

 

 

 

 

 

To change the 135 issued and outstanding Common shares into 1,350,000 Common shares on a 100,000 for 1 basis.

 

Page 1 of/de 2

 
 
 

  

 

 

6.

The amendment has been duly authorized as required by sections 168 and 170 (as applicable) of the Business Corporations Act.

 

 

 

La modification a ete dument autorisee conformement aux articles 168 et 170 (selon le cas) de Ia Loi sur / es societes par actions.

 

 

 

 

 

 

7.

The resolution authorizing the amendment was approved by the shareholders/directors (as applicable) of the corporation on

 

 

 

Les actionnaires ou les administrateurs (selon le cas) de Ia societe ont approuve Ia resolution autorisant Ia modification le

 

 

 

 

 

 

 

2011/11/21

 

 

 

(Year, Month, day)

(annee, mois, jour')

 

 

 

 

 

 

 

These articles are signed in duplicate.

 

 

 

Les presents statuts sent signes en double exemplaire.

 

 

 

 

 

 

 

2304101 ONTARIO INC.

 

 

 

(Print name of corporation from Article 1 on page 1)

(Veuillez ecrir le nom de Ia societe de /'article un Ala page une)

 

 

 

 

 

 

 

 

By:

Par:

 

President  

 

 

( Signature  

Scott L. Woodrow

 

(Description of Office)

 

 

( Signature  

 

 

( Fonction )  

 

 

Page 2 of/de 2


EXHIBIT 3.4

 

   

 

 

 

 

 

ARTICLES OF AMENDMENT

STATUTS DE MODIFICATION

Form 3

 

 

 

Business Corporations

 

1.

The name of the corporation is: (Set out in BLOCK CAPITAL LETTERS)

Denomination sociale actuelle de la societe (ecrire en LETTRES MAJUSCULES SEULEMENT)·  

Act

 

 

 

 

Formule 3

Loi sur les

soci é t é s par

actions

 

 

2 3 0 4 1 0 1   O N T A R I O   I N C.

 

 

 

 

 

 

 

 

 

2.

The name of the corporation is changed to (if applicable ): (Set out in BLOCK CAPITAL LETTERS)

Nouvelle denomination sociale de la societe (s'il y a lieu) (ecrire en LETIRES MAJUSCULES SEULEMENT) :

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.

Date of incorporation/amalgamation:
Date de la constitution ou de la fusion :

 

 

 

 

 

 

 

2011/10/31

 

 

 

(Year/Month/Day)

(année, mois, jour)

 

 

 

 

 

 

4.

Complete only If there is a change in the number of directors or the minimum/maximum number of directors. II faut rempllr cette partie seulement si le nombre d'administrateurs ou si le nombre minimal ou maximal d'administrateurs a change.

 

 

 

 

 

 

Number of directors is/are:

 

minimum and maximum number of directors is/are:

 

 

 

Nombre d'administrateurs :

 

nombres minimum et maximum d'administrateurs : 

 

 

 

 

 

 

 

Number

 

minimum  and  maximum

 

 

 

Nombre

 

minimum    et    maximum

 

 

 

 

 

or

 

 

 

 

 

 

 

 

ou

 

 

 

 

 

 

 

 

 

5.

The articles of the corporation are amended as follows:

Les statuts de la societe sont modifies de la facon suivante :  

 

 

 

 

 

 

 

to delete in its entirety, item 8 of the Articles of the Corporation restricting the issue, transfer or ownership of shares of the Corporation.

 

Page 1 of/de 2

 
 
 

  

 

 

6.

The amendment has been duly authorized as required by sections 168 and 170 (as applicable) of the Business Corporations Act.

 

 

 

La modification a ete doment autorisee conformement aux articles 168 et 170 (selon le cas) de la Loi sur / es societes par actions.

 

 

 

 

 

 

7.

The resolution authorizing the amendment was approved by the shareholders/directors (as applicable) of the corporation on

 

 

 

Les actionnaires ou les administrateurs (selon le cas) de la societe ont approuve la resolution autorisant la modification le

 

 

 

 

 

 

 

2015/06/25

 

 

 

(Year, Month, day)

(annee, mois, jour')

 

 

 

 

 

 

 

These articles are signed in duplicate.

 

 

 

Les presents statuts sent signes en double exemplaire.

 

 

 

 

 

 

 

2304101 ONTARIO INC.

 

 

 

(Print name of corporation from Article 1 on page 1)

(Veuillez ecrir le nom de la societe de l'article un a la page une).

 

 

 

 

 

 

 

 

By:

Par:

 

President  

 

 

( Signature  

 

 

(Description of Office)

 

 

( Signature  

 

 

( Fonction )  

 

 

 

Scott Woodrow

 

 

 

 

Page 2 of/de 2


EXHIBIT 3.6

 

 

 

Ontario Corporation Number

Numéro de Ia sociéte en Ontario

 

2304101

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ARTICLES OF AMENDMENT

STATUTS DE MODIFICATION

Form 3

 

 

 

Business Corporations

 

1.

The name of the corporation is: (Set out in BLOCK CAPITAL LETTERS)

Denomination sociale actuelle de Ia societe (ecrire en LETIRES MAJUSCULES SEULEMENT)·  

Act

 

 

 

 

Formule 3

Loi sur les

soci é t é s par

actions

 

 

2 3 0 4 1 0 1   O N T A R I O   I N C .

 

 

 

 

 

 

 

 

 

2.

The name of the corporation Is changed to (if applicable ): (Set out in BLOCK CAPITAL LETIERS)

Nouvelle denomination sociale de Ia societe (s'il y a lieu) (ecrire en LETIRES MAJUSCULES SEULEMENT) :

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.

Date of incorporation/amalgamation:
Date de Ia constitution ou de Ia fusion :

 

 

 

 

 

 

 

2011/10/31

 

 

 

(Year/Month/Day)

(année, mois, jour)

 

 

 

 

 

 

4.

Complete only If there Is a change In the number of directors or the minimum I maximum number of directors. II faut rempllr cette partie aeulement slle nombre d'admlnlstrateurs ou slle nombre minimalou maximal d'admlnlstrateurs a chang6.

 

 

 

 

 

 

Number of directors is/are:

 

minimum and maximum number of directors is/are:

 

 

 

Nombre d'administrateurs :

 

nombras minimum et maximum d'administrateurs: 

 

 

 

 

 

 

 

Number

 

minimum  and  maximum

 

 

 

Nombre

 

minimum    et    maximum

 

 

 

 

 

or

 

 

 

 

 

 

 

 

or

 

 

 

 

 

 

 

 

 

5.

The articles of the corporation are amended as follows:

Les statuts de Ia societe soot modifies de Ia facon suivante:  

 

 

 

 

 

 

To change the name of the Corporation to ehave, Inc.

 

Page 1 of/de 2

 
 
 

  

 

 

6.

The amendment has been duly authorized as required by sections 168 and 170 (as applicable) of the Business Corporations Act.

 

 

 

La modification a ete dument autorisee conformement aux articles 168 et 170 (selon le cas) de Ia Loi sur / es societes par actions.

 

 

 

 

 

 

7.

The resolution authorizing the amendment was approved by the shareholders/directors (as applicable) of the corporation on

 

 

 

Les actionnaires ou les administrateurs (selon le cas) de Ia societe ont approuve Ia resolution autorisant Ia modification le

 

 

 

 

 

 

 

2015/11/03

 

 

 

(Year, Month, day)

(annee, mois, jour')

 

 

 

 

 

 

 

These articles are signed in duplicate.

 

 

 

Les presents statuts sent signes en double exemplaire.

 

 

 

 

 

 

 

2304101 ONTARIO INC.

 

 

 

(Print name of corporation from Article 1 on page 1)

(Veuillez ecrir le nom de Ia societe de I'article un a la page une)

 

 

 

 

 

 

 

 

By:

Par:

 

President  

 

 

( Signature  

 

(Description of Office)

 

 

( Signature  

 

 

( Fonction )  

 

 

 

Scott L. Woodrow

 

 

 

 

Page 2 of/de 2


EXHIBIT 5.1

 

   

Dentons Canada LLP

77 King Street West, Suite 400

Toronto-Dominion Centre

Toronto, ON, Canada M5K 0A1

T +1 416 863 4511

F +1 416 863 4592

 

 

 

November 16, 2015

 

File No.: 556152-1

 

ehāve Inc.

100 College Street, Suite 302

Toronto, Ontario M5G 1L5

 

Dear Sirs:

 

Re:

ehāve Inc.

 

We are Canadian counsel for ehāve Inc. (the " Corporation ").

 

Examinations

 

We examined and relied on (with respect to the matters of fact contained therein) each of the following:

 

(a)

a certificate of status dated November 16, 2015 issued by the Ministry of Government Services (Ontario) in respect of the Corporation on which we have exclusively relied for the purpose of rendering the opinion in paragraph 1 below;

 

(b)

an officer's certificate dated November 16, 2015, attached as Schedule "A", by an officer of the Corporation relating to the Corporation and, among other things, matters of corporate status, incumbency of officers and directors and corporate power and authority and attaching certified copies of:

 

 

(i)

the certificate and articles of incorporation and any certificate(s) and articles of amendment of the Corporation issued on or before the date hereof; and

 

 

(ii)

the by-laws of the Corporation and all amendments thereto.

 

We examined and relied on such other corporate and public records and made such other investigations, searches and inquiries and considered such matters of law as we considered necessary or appropriate to provide the opinions hereinafter expressed.

 

Assumptions and Interpretation

 

We have assumed:

 

 

(a)

with respect to all documents examined by us, the genuineness of all signatures, the legal capacity of individuals signing such documents, the authenticity of all certificates and other documents submitted to us as originals, and the conformity to originals of all documents submitted to us as certified or notarial copies or as telecopied or otherwise electronically transmitted or reproduced;

 

 
 
 

  

November 16, 2015

Page 2

 

(b)

that the certificate of status with respect to the Corporation referred to above continues to be accurate as of the date of this opinion as if issued on such date;

(c)

that the minute books and other corporate records of the Corporation made available to us for our review are genuine, accurate and complete;

(d)

the currency, completeness, truth and accuracy of all facts set forth in the official public records, certificates and documents provided by public officials, or otherwise delivered to us; and

(e)

the currency, completeness, truth and accuracy of all facts set forth in the officer's certificate referred to herein.

 

Except to the extent expressly set forth herein, we have not undertaken any independent investigation to determine the existence or absence of facts, and no inference as to our knowledge of the existence or absence of such facts should be drawn from the fact of our representation of the Corporation.

 

Laws Addressed

 

This opinion is limited to the laws of the Province of Ontario and the federal laws of Canada applicable in Ontario. Without limiting the generality of the immediately preceding sentence, we express no opinion with respect to the laws of any other jurisdiction. In addition, we express no opinion whether, pursuant to those conflict of laws rules, Ontario laws would govern the validity, perfection, effect of perfection or non-perfection or enforcement of those security interests.

 

Opinions

 

Based and relying on and subject to the foregoing and subject to the qualifications set out below, we are of the opinion that:

 

1.

The Corporation is a corporation incorporated and is subsisting under the laws of Ontario.

2.

The authorized capital of the Corporation consists of an unlimited number of common shares of which 28,072,366 common shares are issued and outstanding as fully paid and non-assessable (the "Shares").

3.

We hereby consent to the filing of this opinion as an exhibit to Form F-1/A Registration Statement under the Securities Act of 1933 dated November 16, 2015 (the "Registration Statement")and to the reference to our firm under the caption "Legal Matters" in theprospectus forming a part of the Registration Statement.

4.

The Corporation has taken all necessary corporate action to authorize the creation and issue of the Notes (as defined in the Registration Statement) and the Warrants (as defined in the Registration Statement) and, upon issue thereof in accordance with the terms thereof, the Notes and common shares issuable upon conversion of the Notes and the Warrants and common shares issuable upon exercise of the Warrants will be reserved and validly created and issued.

 

 
 
 

November 16, 2015

Page 3

 

Reliance

 

This letter and the opinions expressed herein are for use by the addressees hereof and their respective successors and assigns.

 

    Yours very truly,  

 

 

 

 

By: 

/s/ Dentons Canada LLP

 

 

 

 

 

 

 

 


EXHIBIT 10.7

 

ESCROW AGREEMENT

 

This Agreement is dated as of the 7th day of July, 2015 among 2304101 Ontario Inc. (operating as Behavioural Neurological Applications and Solutions), an Ontario corporation (the " Company "), the parties identified on Schedule A hereto (each a " Purchasers ", and collectively " Purchasers "), and Grushko & Mittman, P.C. (the " Escrow Agent "):

 

W I T N E S S E T H :

 

WHEREAS, the Company and Purchasers have entered into a Securities Purchase Agreement calling for the sale by the Company to the Purchasers of secured Notes and Warrants for an aggregate of up to $770,000 ; and

 

WHEREAS, the parties hereto require the Company to deliver the Notes against payment therefor, with such Notes, Warrants and the Escrowed Funds to be delivered to the Escrow Agent, along with the other documents, instruments and payments hereinafter described, to be held in escrow and released by the Escrow Agent in accordance with the terms and conditions of this Agreement; and

 

WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant to the terms and conditions of this Agreement;

 

NOW THEREFORE, the parties agree as follows:

 

ARTICLE I

 

INTERPRETATION

 

1.1. Definitions . Capitalized terms used and not otherwise defined herein that are defined in the Securities Purchase Agreement shall have the meanings given to such terms in the Securities Purchase Agreement. Whenever used in this Agreement, the following terms shall have the following respective meanings:

 

§ " Agreement " means this Agreement and all amendments made hereto and thereto by written agreement between the parties;

 

§ " Collateral Agent " shall mean Jesse Kaplan;

 

§ " Company Lockup Agreements " means the Lockup Agreements referred to in Section 2.2(a)(vi) of the Securities Purchase Agreement;

 

§ " Escrowed Payment " means an aggregate cash payment of up to $770,000;

 

§ " Initial Closing Date " shall have the meaning set forth in Section 1 of the Securities Purchase Agreement;

 

§ " Legal Opinion " means the original signed legal opinion referred to in Section 2.2(a)(vii) of the Securities Purchase Agreement;

 

§ " Notes " means the notes due twenty-four (24) months after the Initial Closing Date, in the form of Exhibit A to the Securities Purchase Agreement;

 

 
1
 

 

§ " Registration Rights Agreement " means the Registration Rights Agreeement (and the exhibits thereto) entered into or to be entered into by the parties in reference to the sale and purchase of Notes and Warrants;

 

§ " Security Agreement " means the General Security Agreement entered into or to be entered into by the parties in reference to the security interest granted pursuant to the Notes;

 

§ " Securities Purchase Agreement " means the Securities Purchase Agreement (and the exhibits thereto) entered into or to be entered into by the parties in reference to the sale and purchase of Notes;

 

§ "Warrants" shall have the meaning set forth in Section 1.1 of the Securities Purchase Agreement;

 

§ Collectively, the Company executed Securities Purchase Agreement, Company Lockup Agreements, Legal Opinion, Registration Rights Agreement, Security Agreement, Notes, and Warrants are referred to as " Company Documents "; and

 

§ Collectively, the Escrowed Payment, and the Purchasers executed Securities Purchase Agreement, Registration Rights Agreement and Security Agreement are referred to as " Purchasers Documents ".

 

1.2. Entire Agreement . This Agreement along with the Company Documents and the Purchasers Documents to which the Purchasers and the Company or Subsidiary are a party constitute the entire agreement between the parties hereto pertaining to the Company Documents and Purchasers Documents and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties. There are no warranties, representations and other agreements made by the parties in connection with the subject matter hereof, except as specifically set forth in this Agreement, the Company Documents and the Purchasers Documents.

 

1.3. Extended Meanings . In this Agreement words importing the singular number include the plural and vice versa; words importing the masculine gender include the feminine and neuter genders. The word "person" includes an individual, body corporate, partnership, trustee or trust or unincorporated association, executor, administrator or legal representative.

 

1.4. Waivers and Amendments . This Agreement may be amended, modified, superseded, cancelled, renewed or extended, and the terms and conditions hereof may be waived, only by a written instrument signed by all parties, or, in the case of a waiver, by the party waiving compliance. Except as expressly stated herein, no delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege hereunder preclude any other or future exercise of any other right, power or privilege hereunder.

 

1.5. Headings . The division of this Agreement into articles, sections, subsections and paragraphs and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.

 

 
2
 

 

1.6. Law Governing this Agreement . This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to conflicts of laws principles that would result in the application of the substantive laws of another jurisdiction . Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state of New York. Both parties and the individuals executing this Agreement and other agreements on behalf of the Company agree to submit to the jurisdiction of such courts and waive trial by jury. The prevailing party (which shall be the party which receives an award most closely resembling the remedy or action sought) shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.

 

1.7. Specific Enforcement, Consent to Jurisdiction . The Company and Purchasers acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injuction or injunctions to prevent or cure breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof or thereof, this being in addition to any other remedy to which any of them may be entitled by law or equity. Subject to Section 1.6 hereof, each of the Company and Purchasers hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Nothing in this Section shall affect or limit any right to serve process in any other manner permitted by law.

 

ARTICLE II

 

DELIVERIES TO THE ESCROW AGENT

 

2.1. Company Deliveries . On or before the Initial Closing Date, the Company shall execute and deliver the Company Documents to the Escrow Agent.

 

2.2. Purchasers Deliveries. On or before the Initial Closing Date, Purchasers shall execute and deliver the Purchasers Documents, shall cause the Collateral Agent to execute and deliver the Security Agreement, and shall deliver the Escrowed Payment in cash, to the Escrow Agent. The Escrowed Payment will be delivered pursuant to the following wire transfer instructions:

 

Citibank, N.A.

1155 6 th Avenue

New York, NY 10036

ABA Number: 0210-00089

For Credit to: Grushko & Mittman, IOLA Trust Account

Account Number: 9997242837

 

2.3. Intention to Create Escrow Over Company Documents and Purchasers Documents . The Purchasers and Company intend that the Company Documents and Purchasers Documents shall be held in escrow by the Escrow Agent pursuant to this Agreement for their benefit as set forth herein.

 

2.4. Escrow Agent to Deliver Company Documents and Purchasers Documents . The Escrow Agent shall hold and release the Company Documents and Purchasers Documents only in accordance with the terms and conditions of this Agreement.

 

 
3
 

 

ARTICLE III

 

RELEASE OF COMPANY DOCUMENTS AND PURCHASERS DOCUMENTS

 

3.1. Release of Escrow . Subject to the provisions of Section 4.2, the Escrow Agent shall release the Company Documents and Purchasers Documents as follows:

 

(a) On the Initial Closing Date, the Escrow Agent will simultaneously release the Company Documents to the Purchasers and release the Purchaser Documents to the Company, except that: (i) the Legal Fees will be released directly to the Purchasers' attorneys; and (ii) the Security Agreement will be released to the Collateral Agent . The Escrow Agent may request any written representations, certifications and documents in Escrow Agent's absolute discretion before releasing any funds from escrow.

 

(b) Notwithstanding the above, upon receipt by the Escrow Agent of joint written instructions (" Joint Instructions ") signed by the Company and the Purchasers, it shall deliver the Company Documents and Purchasers Documents in accordance with the terms of the Joint Instructions.

 

(c) Anything herein to the contrary notwithstanding, upon receipt by the Escrow Agent of a final and non-appealable judgment, order, decree or award of a court of competent jurisdiction (a " Court Order "), the Escrow Agent shall deliver the Company Documents and Purchasers Documents in accordance with the Court Order. Any Court Order shall be accompanied by an opinion of counsel for the party presenting the Court Order to the Escrow Agent (which opinion shall be satisfactory to the Escrow Agent) to the effect that the court issuing the Court Order has competent jurisdiction and that the Court Order is final and non-appealable.

 

3.2. The Initial Closing may take place on or before July 8, 2015. If an Initial Closing does not take place on or before July 8, 2015, the Escrow Agent will promptly return the applicable Company Documents to the Company and return the Purchasers Documents to the Purchasers.

 

3.3. Acknowledgement of Company and Purchasers; Disputes . The Company and the Purchasers acknowledge that the only terms and conditions upon which the Company Documents and Purchasers Documents are to be released are set forth in Sections 3 and 4 of this Agreement. The Company and the Purchasers reaffirm their agreement to abide by the terms and conditions of this Agreement with respect to the release of the Company Documents and Purchasers Documents. Any dispute with respect to the release of the Company Documents and Purchasers Documents shall be resolved pursuant to Section 4.2 or by agreement between the Company and Purchasers.

 

ARTICLE IV

 

CONCERNING THE ESCROW AGENT

 

4.1. Duties and Responsibilities of the Escrow Agent . The Escrow Agent's duties and responsibilities shall be subject to the following terms and conditions:

 

(a) The Purchasers and Company acknowledge and agree that the Escrow Agent (i) shall not be responsible for or bound by, and shall not be required to inquire into whether either the Purchasers or Company is entitled to receipt of the Company Documents and Purchasers Documents pursuant to any other agreement or otherwise; (ii) shall be obligated only for the performance of such duties as are specifically assumed by the Escrow Agent pursuant to this Agreement; (iii) may rely on and shall be protected in acting or refraining from acting upon any written notice, instruction, instrument, statement, request or document furnished to it hereunder and believed by the Escrow Agent in good faith to be genuine and to have been signed or presented by the proper person or party, without being required to determine the authenticity or correctness of any fact stated therein or the propriety or validity or the service thereof; (iv) may assume that any person believed by the Escrow Agent in good faith to be authorized to give notice or make any statement or execute any document in connection with the provisions hereof is so authorized; (v) shall not be under any duty to give the property held by Escrow Agent hereunder any greater degree of care than Escrow Agent gives its own similar property; and (vi) may consult counsel satisfactory to Escrow Agent, the opinion of such counsel to be full and complete authorization and protection in respect of any action taken, suffered or omitted by Escrow Agent hereunder in good faith and in accordance with the opinion of such counsel.

 

 
4
 

 

(b) The Purchasers and Company acknowledge that the Escrow Agent is acting solely as a stakeholder at their request and that the Escrow Agent shall not be liable for any action taken by Escrow Agent in good faith and believed by Escrow Agent to be authorized or within the rights or powers conferred upon Escrow Agent by this Agreement. The Purchasers and Company, jointly and severally, agree to indemnify and hold harmless the Escrow Agent and any of Escrow Agent's partners, employees, agents and representatives for any action taken or omitted to be taken by Escrow Agent or any of them hereunder, including the fees of outside counsel and other costs and expenses of defending itself against any claim or liability under this Agreement, except in the case of gross negligence or willful misconduct on Escrow Agent's part committed in its capacity as Escrow Agent under this Agreement. The Escrow Agent shall owe a duty only to the Purchasers and Company under this Agreement and to no other person.

 

(c) The Purchasers and Company jointly and severally agree to reimburse the Escrow Agent for reasonable outside counsel fees, to the extent authorized hereunder and incurred in connection with the performance of its duties and responsibilities hereunder.

 

(d) The Escrow Agent may at any time resign as Escrow Agent hereunder by giving five (5) days prior written notice of resignation to the Purchasers and the Company. Prior to the effective date of the resignation as specified in such notice, the Purchasers and Company will issue to the Escrow Agent a Joint Instruction authorizing delivery of the Company Documents and Purchasers Documents to a substitute Escrow Agent selected by the Purchasers and Company. If no successor Escrow Agent is named by the Purchasers and Company, the Escrow Agent may apply to a court of competent jurisdiction in the State of New York for appointment of a successor Escrow Agent, and to deposit the Company Documents and Purchasers Documents with the clerk of any such court.

 

(e) The Escrow Agent does not have and will not have any interest in the Company Documents and Purchasers Documents, but is serving only as escrow agent, having only possession thereof. The Escrow Agent shall not be liable for any loss resulting from the making or retention of any investment in accordance with this Escrow Agreement.

 

(f) This Agreement sets forth exclusively the duties of the Escrow Agent with respect to any and all matters pertinent thereto and no implied duties or obligations shall be read into this Agreement.

 

(g) The Escrow Agent shall be permitted to act as counsel for the Purchasers in any dispute as to the disposition of the Company Documents and Purchasers Documents, in any other dispute between the Purchasers and Company, whether or not the Escrow Agent is then holding the Company Documents and Purchasers Documents and continues to act as the Escrow Agent hereunder.

 

(h) The provisions of this Section 4.1 shall survive the resignation of the Escrow Agent or the termination of this Agreement.

 

 
5
 

 

4.2. Dispute Resolution: Judgments . Resolution of disputes arising under this Agreement shall be subject to the following terms and conditions:

 

(a) If any dispute shall arise with respect to the delivery, ownership, right of possession or disposition of the Company Documents and Purchasers Documents, or if the Escrow Agent shall in good faith be uncertain as to its duties or rights hereunder, the Escrow Agent shall be authorized, without liability to anyone, to (i) refrain from taking any action other than to continue to hold the Company Documents and Purchasers Documents pending receipt of a Joint Instruction from the Purchasers and Company, or (ii) deposit the Company Documents and Purchasers Documents with any court of competent jurisdiction in the State of New York, in which event the Escrow Agent shall give written notice thereof to the Purchasers and the Company and shall thereupon be relieved and discharged from all further obligations pursuant to this Agreement. The Escrow Agent may, but shall be under no duty to, institute or defend any legal proceedings which relate to the Company Documents and Purchasers Documents. The Escrow Agent shall have the right to retain counsel if it becomes involved in any disagreement, dispute or litigation on account of this Agreement or otherwise determines that it is necessary to consult counsel.

 

(b) The Escrow Agent is hereby expressly authorized to comply with and obey any Court Order. In case the Escrow Agent obeys or complies with a Court Order, the Escrow Agent shall not be liable to the Purchasers and Company or to any other person, firm, corporation or entity by reason of such compliance.

 

ARTICLE V

 

GENERAL MATTERS

 

5.1. Termination . This escrow shall terminate upon the release of all of the Company Documents and Purchasers Documents or at any time upon the agreement in writing of the Purchasers and Company.

 

5.2. Notices . All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

 

(a)

If to the Company, to:

 

2304101 Ontario Inc.  

100 College Street, Suite 213

Toronto, ON M5G 1L5

Attn: Scott Woodrow, Chief Executive Officer

Fax: (800) 887-5525

 

 
6
 

 

With a copy by fax only to (which shall not constitute notice):

 

David Lubin & Associates, PLLC  

108 S. Franklin Avenue, Suite 10  

Valley Stream, NY 11580  

Attn: David Lubin, Esq.  

F ax: (516) 887-8250

 

(b)

If to the Purchasers: to: the addresses and fax numbers listed on Schedule A hereto.

 

With a copy by facsimile only to (which shall not constitute notice):

 

Grushko & Mittman, P.C.  

515 Rockaway Avenue  

Valley Stream, New York 11581  

Attn: Edward M. Grushko, Esq.

Fax: (212) 697-3575

 

(c)

If to the Escrow Agent, to:

 

Grushko & Mittman, P.C.  

515 Rockaway Avenue  

Valley Stream, New York 11581  

Fax: (212) 697-3575

 

or to such other address as any of them shall give to the others by notice made pursuant to this Section 5.2.

 

5.3. Interest . The Escrowed Payment shall not be held in an interest bearing account nor will interest be payable in connection therewith. In the event the Escrowed Payment is deposited in an interest bearing account, any interest earned on the Escrowed Payment will be paid in the New York State Client Protection Fund or for a similar purpose.

 

 
7
 

 

5.4. Assignment; Binding Agreement . Neither this Agreement nor any right or obligation hereunder shall be assignable by any party without the prior written consent of the other parties hereto. This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective legal representatives, successors and assigns.

 

5.5. Invalidity . In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal, or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired thereby, it being intended that all of the rights and privileges of the parties hereto shall be enforceable to the fullest extent permitted by law.

 

5.6. Counterparts/Execution . This Agreement may be executed in any number of counterparts and by different signatories hereto on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument. This Agreement may be executed by facsimile transmission and delivered by facsimile transmission.

 

5.7. Agreement . Each of the undersigned states that he has read the foregoing Escrow Agreement and understands and agrees to it.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

 
8
 

 

IN WITNESS WHEREOF , the undersigned have executed and delivered this Escrow Agreement, as of the date first written above.

 

 

COMPANY:

 

2304101 ONTARIO INC.

An Ontario corporation

 

       
By: /s/ Scott L. Woodrow

 

 

Name:   

Scott L. Woodrow

 

 

Title:   

CEO

 

 

 

 

 

 

ESCROW AGENT :  

 

 

 

 

 

 

 

 

 

 

 

GRUSHKO & MITTMAN, P.C.

 

 

 

 

 

 

"PURCHASERS":  

 

 

 

 

 

 

 

[_____________________________________]

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

9

 

 

SCHEDULE A

 

PURCHASERS

 

PURCHASE PRICE AND PRINCIPAL AMOUNT OF NOTE

 

 

WARRANTS

 

 

 

 

 

 

 

 

DAVID STEFANSKY

156 Beach 9 th Street, Apt. 7A

Far Rockaway, New York 11691

Email: dstefansky@bezalelpartners.com

 

$ 65,000.00

 

 

 

 

LONG SIDE VENTURES LLC

1800 South Ocean Drive, PH2

Hallandale Beach, FL 33009

Attn: Benjamin Kaplan, Manager/Director

Email: bennyvegas@aol.com

 

$ 32,500.00

 

 

 

 

 

R&T SPORTS MARKETING INC.

15440 SW 82 Avenue

Palmetto Bay, FL 33157

Attn: Daniel Kaplan

Fax: (305) 661-6281

 

$ 32,500.00

 

 

 

 

 

ROCFRIM INC.

3625 Dufferin Street, Suite 409

Toronto, ON M3K1N4

Attn: Jesse Kaplan

Email: jkaplan@seekcapital.ca

 

$ 65,000.00

 

 

 

 

 

PLAZACORP INVESTMENTS LIMITED

10 Wanless Avenue, Suite 201

Toronto ON M4N1V6

Attn: Sruli Weinreb, Vice-President of Equity Investments

Fax: (416) 481-8000

 

$ 65,000.00

 

 

 

 

 

TACONIC GROUP

1835 NE Miami Gardens Drive, #272

North Miami Beach, FL 33179

Attn: Robert Grinberg

Email: robertgrinberg27@gmail.com

 

$ 32,500.00

 

 

 

 

 

SUMMIT TRADING LTD.

904 Silver Spur road, #257

Rolling Hills Estates, CA 90274

Attn: Daryl Orenge, Attorney-in-fact

Email: summittradingltd1@gmail.com

 

$ 32,500.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTALS

 

$ 325,000.00

 

 

 

 

 

 

 

10


EXHIBIT 10.9

 

LICENCE AGREEMENT made this 24st day of April, 2015

 

BETWEEN:

 

THE GOVERNING COUNCIL OF THE UNIVERSITY OF TORONTO

(hereinafter called "the University")

 

OF THE FIRST PART

 

AND:

 

2304101 ONTARIO INC. operating as Behavioural Neurological

Applications and Solutions

(hereinafter called "the Corporation")

OF THE SECOND PART

 

AND WHEREAS the University is willing to provide the use of 21.28 square metres / 229.06 square feet assignable floor area comprising Room 302 covering the period May 1, 2015 to April30, 2016 to be used as office space, including all existing furnishings and equipment (if any), and being located on the second (2nd) level of the Banting Institute at 100 College Street, as shown cross-hatched on Schedule "A" attached hereto (the "Licenced Premises") to the Corporation under licence from the University and upon the terms and conditions hereinafter set forth;

 

WITNESSETH:

 

1. The University hereby grants a licence to the Corporation to use and occupy the Licenced Premises as is marked on said Schedule "A", together with such reasonable means of access over the lands of the University thereto during normal business hours or as otherwise agreed between the Corporation and the University, upon and subject to the terms and conditions set forth herein.

 

2. The Cmporation will use the Licenced Premises for industrial laboratory purposes, related offices and no other purpose except with the express prior consent in writing of the University, and in accordance with all municipal, provincial and federal legal requirements. The Corporation will use its best efforts to not do anything or suffer to be done anything on the Licensed Premises in violation of any applicable laws, ordinances, rules or regulations.

 

 
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3. Intellectual property owned by the Corporation prior to this Agreement and brought onto the Licensed Premises during the term of this Agreement shall be the property of the Corporation. Intellectual property conceived and reduced to practice solely by the Corporation's employees on the Licensed Premises shall be the property of the Corporation. Intellectual property conceived and reduced to practice solely by University employees or students ("University Personnel") on the Licensed Premises shall be subject to the University's policies regarding intellectual property, except where such University Personnel are party to a separate agreement with the Corporation on duly authorized and approved by the University in accordance with its policies and procedures, in which case the separate agreement would govern. Intellectual property conceived and reduced to practice jointly by Corporation Personnel and University Personnel on the Licensed Premises shall be owned jointly by the Corporation and the University, except where such University Personnel are party to a separate agreement with the Corporation duly authorized and approved by the University in accordance with its policies and procedures, in which case the separate agreement would govern. Should the Corporation and the University undertake any other collaborative research programs, these will require specific agreements with regard to intellectual property rights. For purposes of this paragraph, "conceived and reduced to practice" shall be determined in accordance with rules of inventorship under Canadian patent law.

 

4. No partnership or joint venture is contemplated or created by this Agreement and no party shall hold any other out as being a partner or joint venturer of the other or in any way advertise the other, directly or indirectly, as other than an entity with whom it shares facilities.

 

5. The Corporation covenants and agrees with the University that it will at its own expense:

 

(a)

obtain Internet access services from a commercial provider;

(b)

repair any and all damage caused by it or by its employees, agents or other persons engaged or retained by it or for whom it is in law responsible, to any premises, equipment, furnishings or facilities of the University, reasonable wear and tear excepted;

(c)

at all times keep the Licenced Premises and its contents in a clean and tidy condition and observe and comply, and cause its employees and agents to observe and comply, with all occupational, environmental, health, fire and safety laws, by- laws and regulations that apply to or affect the Corporation's occupancy of the Licenced Premises or its operations and activities therein;

(d)

supply, maintain and keep in a good state of repair all additional equipment, furnishings and materials brought into the Licenced Premises and necessary for use in its operations which have not been supplied by the University;

(e)

in the event that the Corporation uses office facilities of the University (such as telephone, facsimile and photocopy equipment), the Corporation shall reimburse upon demand for these services at the University's usual rate.

 

 
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6. The Corporation shall occupy the Licenced Premises for the period May 1, 2015 to April 30, 2016 subject to i) early termination by either party pursuant to clause 11 (d) herein and ii) payment of the following fees:

 

(a)

a licence fee (inclusive of HST) of $9,835.80 per year ($819.65 monthly) representing space charges of $172.22 per square metre and overhead charges of $236.81 per square metre payable in monthly instalments in advance to the University of Toronto, Attention: John Smegal, Real Estate Analyst, Campus & Facilities Planning, 12 Queen's Park Crescent West, 4th Flr, Toronto ON M5S 1S8;

(b)

in the event that the University provides services to the Corporation for disposal of chemical and/or industrial waste materials, the Corporation will reimburse the University for these services at a rate to be determined by the University at no more than 50% in excess of standard commercial rates.

 

The amounts (a) shall be due and payable upon execution of this Agreement. Any amounts in (b) shall be paid by the Corporation within ten (10) days of receipt of invoices from the University for such costs, which invoices shall show how such amounts were determined. Non-payment of monies will render this Agreement terminable for cause by the University. The Corporation is permitted access to the Premises on acceptance of this Agreement at no charge to the Corporation for purposes of repair and installation of any leasehold improvements and/or equipment etc.

 

7. The University will use its best efforts to provide electrical energy, heat, water, snow removal at entrances to the building, janitorial services and waste paper removal reasonably required for the operations of the Corporation and in accordance with the University's normal practice for similar premises and facilities.

 

8. The University will take all reasonable steps to maintain the basic structural integrity of the Licenced Premises and fulfil its obligations with respect to the physical maintenance thereof during the term hereof, but the University's obligations with respect to repair and maintenance shall be no higher than are observed by the University with respect to University buildings generally.

 

9. The Corporation accepts the Licenced Premises on an "as is" basis but may decorate or make non-structural improvements to the Licenced Premises at its own expense, provided that all such work shall be approved in writing, in a timely manner (and such approval shall not be unreasonably withheld) and carried out to the reasonable satisfaction of the Facilities & Services Department of the University and by its staff or by staff of the Corporation supervised by that University or by other contractors or persons approved and supervised by that University.

 

10. The Corporation shall not be entitled to damages, losses, costs, or disbursements from the University caused by or on account of fire, water, or partial or temporary failure or stoppage of heating electrical, air handling or plumbing equipment whether due to acts of God, strikes, accidents, the making of alterations and repairs or from any cause whatsoever, provided that the said failure or stoppage is remedied within a reasonable time and the University shall not be responsible for delays resulting from causes beyond its reasonable control. In no case shall the University be liable for loss of business or profit or other indirect or consequential damage.

 

 
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11. The Licence hereby granted shall cease and determine, and the Corporation will vacate and deliver up vacant possession of the Licenced Premises to the University, doing no damage thereto and leaving the same in the same condition and state of repair as they were in on the date hereof, reasonable wear and tear excepted, on April 30, 2016 , or at such earlier time as is hereinafter set out, namely:

 

(a)

forthwith upon the bankruptcy, insolvency or commencement of steps for the dissolution or winding-up of the Corporation or upon any judgement or execution issuing against it and remaining unsatisfied for a period of I 20 days;

(b)

forthwith in the event of the destruction or partial destruction of the building forming pmt of the Licenced Premises, under circumstances in which the University in its sole discretion considers it undesirable or uneconomical to repair or rebuild it in from suitable for use as a research facility. In this event, the fees payable from the time of termination shall be apportioned;

(c)

one month after the Corporation shall have failed to remedy any material breach of the terms and conditions of this Agreement (except the events stipulated in this paragraph which shall be governed exclusively by such paragraph) which is capable of remedy and of which notice has been given by the University to the Corporation (provided that if the Corporation shall have commenced bona fide efforts to remedy such breach and shall have acted diligently thereafter to remedy the same the commencement of such period of one month shall be extended so long as the Corporation acts diligently), or within one month after the giving by the University to the Corporation of notice of a material breach hereof (except the said events stipulated in this paragraph which is not capable of remedy).

(d)

Either party may terminate this Agreement anytime after October 31,2015 by providing the other with thirty (30) days prior written notice. The Corporation may terminate this Agreement anytime before October 31, 2015 by providing ninety (90) days prior written notice.

 

12. The Corporation will exercise all due and reasonable care in its use of the Licenced Premises and, in conjunction with the University, will control access thereto and endeavour to ensure that all persons having access do the same. All employees or associates of the Corporation using the Licenced Premises during the term of this Agreement who are not employees of the University of Toronto will be required to sign a Release and Indemnity Agreement as per the attached Schedule "B" to this Agreement. Upon execution of this Agreement, the Corporation shall provide a list of their employees or associates who will be using the premises, along with the foregoing executed Release and Indemnity Agreements. Only those employees or associates listed and having signed these agreements will be permitted access by the University.

 

13. The Corporation will supply all equipment and furnishings necessary to its operation which have not been supplied by the University and acknowledges that the University is not obliged to make any changes in, or additions to, the Licenced Premises or to the facilities of the building(s) in which the Licenced Premises are contained, or to supply to the Corporation any equipment, supplies services, utilities or materials other than as herein expressly mentioned.

 

 
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14. Intentionally deleted.

  

15. The Corporation will not display signs on the exteriors of any facilities of the Licenced Premises except in forms and locations approved by the University, such approval not to be unreasonably withheld.

 

16. The Corporation will not use the name of the University in any advertising or publicity without the prior written permission of the University.

 

17. If by reason of the occupancy of the Licenced Premises by the Corporation, the Licenced Premises should become subject to municipal taxation, whether that be real property tax or business tax, the Corporation shall pay such taxation at the time or times called for in the real property tax or business tax bill presented to the Licensee. Or, the Corporation shall reimburse the University for the payment of such real property taxes or business taxes within thirty (30) days of the University providing evidence that it had paid such taxes on behalf of the Licensee. The University shall forward to the Corporation a copy of any notice of assessment or reassessment wherein the municipality declares its intent to tax the Licenced Premises for either real property tax or business tax.

 

18. The Corporation accepts full responsibility for the preservation of all its property and equipment upon the Licenced Premises, and that of its directors, officers, employees, agents and visitors including the risks of fire, theft and damage however caused, and agrees that the University shall have no liability whatsoever with respect to any loss or destruction of or damage to any such property, and the Corporation understands that prope1ty belonging to the Corporation and liabilities incurred by the Corporation are not covered by any insurance of any kind which the University may have.

 

19. The Corporation will indemnity and save harmless the University, its officers, employees and agents, of and from any and all suits, claims, demands, costs and expenses that may arise by reason of the operations or activities of the Corporation or any act, neglect or omission of the Corporation, its directors, officers, employees, agents or other persons engaged or retained by it or for whom it is in law responsible, including without limitation any suit or other claim in respect of injury to persons employed by the Corporation or any loss of or damage to property occurring on the Licenced Premises.

 

20. The Corporation agrees to keep in force during the currency of this Agreement a policy of comprehensive general liability insurance with a limit of not less than $2,000,000 per occurrence and with form, terms and with insurers satisfactory to the University acting reasonably. This policy shall cover all operations and activities of the Corporation and persons for whom it is in law responsible, and under which insurance the University shall be an additional named insured, with a cross-liability clause, and the Corporation will provide suitable evidence of such coverage forthwith upon the execution of this Agreement and upon any renewals thereof. Such insurance shall not be cancellable upon less than 30 days' notice from the insurer to the University's Insurance and Risk Department.

 

 
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21. The University's security staff and staff of the University's Facilities & Services Department shall have access to the Licenced Premises upon 24 hours' notice to any occupant at the time of giving such notice for the purpose of inspecting their condition, and the University shall retain a key or keys thereto accordingly, but this stipulation does not impose and shall not be deemed to impose any responsibility on the University for the security of the Licenced Premises. University staff shall be entitled to emergency access at anytime without notice.

 

22. Any notice, request, demand, consent, advice, approval or other communication provided or permitted hereunder shall be in writing or by facsimile and may be given by personal delivery, or may be sent by first class mail, postage prepaid, addressed to the party for which it is intended at its address as follows:

 

 

The University:

 

University of Toronto

Campus & Facilities Planning

12 Queen's Park Crescent West

4th Floor

Toronto, Ontario

M5S 1S8

Attention: John Smegal, Real Estate Analyst

 

 

 

 

 

The Corporation:

 

2304101 Ontario Inc. operating as Behavioural

Neurological Applications and Solutions (at the Premises)

Attention: Scott Woodrow

 

provided, however, that any patty may change its address for purposes of receipt of any such communication to another address by giving ten (10) days' prior written notice of such change to the other party in the manner above prescribed. Any notice sent by first class mail as aforesaid shall be deemed to have been given on the fifth business day next following the mailing thereof. Any notice delivered as aforesaid shall be deemed to have been received on the day of delivery. In the event of an actual or threatened disruption in postal service, notice shall be delivered.

 

23. This Agreement embodies the entire agreement between the parties hereto and shall enure to the benefit of and be binding upon the respective successors and assigns of the patties hereto, but the Corporation shall have no right to and shall not sell, assign, encumber, licence or otherwise transfer any of its rights or obligations hereunder without the express prior written consent of the University, which consent may be unreasonably withheld.

 

24. This Agreement shall be governed and construed in accordance with the laws of Canada and the laws of the Province of Ontario applicable therein.

 

 
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IN WITNESS WHEREOF the parties hereto have executed this Agreement.

 

 

THE GOVERNING COUNCIL OF THE

UNIVERSITY OF TORONTO

("the University")

 

     

 

 

Professor SCOTT MABURY

 

 

Vice-President, University Operations

 

 

 

 

 

 

 

 

 

 

 

2304101 ONTARIO INC.

operating as Behavioural Neurological Applications and Solutions

("the Corporation")

 

 

 

 

 

 

 

 

 

 

Authorized Signing Officer

 

 

 
7
 

 

SCHEDULE "A"

 

 
8
 

   

SCHEDULE "B"

 

RELEASE AND INDEMNITY AGREEMENT

 

I, ________________________, the undersigned do hereby, for and on behalf of my successors and assigns, agree to indemnify and save harmless the Governing Council of the University of Toronto ("the University"), its officers, employees, agents and assigns from any and all liability, suits, claims, demands, costs and expenses and all claims of any nature or character whatsoever, both at law and in equity, arising out of or resulting from or in any way connected with my use of the premises or facilities of the University which are the subject of an Agreement between the University and my employer, 2304101 ONTARIO INC. operating as Behavioural Neurological Applications and Solutions.

 

I further agree to abide by the rules and regulations and safety guidelines of the University as are applicable and I understand it is my responsibility to be familiar with these rules, regulations and guidelines.

 

I have read and understand the above Release and Indemnity Agreement and agree to its contents.

 

 

 

 

Signature

 

 

 

 

 

4/29/15

 

 

Date

 

 

 

9


EXHIBIT 10.11

 

EXECUTION COPY

 

2304101 ONTARI O INC. O/A BEHAVIOURAL NEUROLOGICAL APPLICATIONS AND SOLUTIONS

 

as Corporation

 

and

 

D R. RUSSELL SCHACHAR

 

as Consultant

 


CONSULTING AGREEMENT


 

Dated as of June 1 st , 2012

 

 
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EXECUTION COPY

 

CONSULTING AGREEMENT

 

This consulting agreement (the Agreement ) is made as of the 1 st day of June, 2012 by and between 2304101 ONTARIO INC. O/A BEHAVIOURAL NEUROLOGICAL APPLICATIONS AND SOLUTIONS, , an Ontario corporation (the Corporation ) and DR. RUSSELL SCHACHAR , residing at Toronto, Ontario ( Consultant ).

 

WHEREAS , the Corporation wishes to retain Consultant upon the terms and conditions set forth below and Consultant is agreeable to being so retained.

 

NOW THEREFORE , for the reasons set forth above, and in consideration of the mutual promises and agreements hereinafter set forth and other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the Corporation and Consultant agree as follows:

 

1. SERVICES

 

1.1.

Performance of Services.

 

(a)

Consultant shall perform:

 

 

(i)

During the first two (2) years of the Term (as defined below), the services related to the Project (as defined below) as set forth in Schedule "A" to this Agreement; and

 

 

(ii)

During the third (3rd) and fourth (4th) years of the Term, the services related to the Corporation as set forth in clause (f) in Schedule "A" to this Agreement

 

(i) and (ii) collectively (the Services ).

 

(b)

Consultant shall perform such Services in accordance with the prevalent standards of his profession. Consultant shall spend a significant amount of time and attention in performing the Services for Company.

(c)

The Consultant represents to the Company that to Consultant's knowledge, as of this date, the execution, delivery and performance by the Consultant of this Agreement do not conflict with or result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default under any contract, agreement or understanding, to which the Consultant is a party. Notwithstanding the foregoing, in the event that Consultant's obligations under this Agreement conflict with any conditions of Consultant's employment with the Hospital for Sick Children, or Consultant's academic standing or responsibilities, as they now exist or may exist in the future, Consultant may terminate this Agreement without any further liability to Company.

 

1.2.

Project.

 

(a)

For the purposes of this Agreement, Project means the project partnered with The Hospital for Sick Children called the "Study and Development of a Software Based Treatment Platform for Attention Deficit and Attention Deficit and Hyperactivity Disorder in Children" as funded, in part, by a grant from the "Ontario Brain Institute – FedDev Technology Development Program for Southern Ontario" as set forth in Schedule "B" to this Agreement.

(b)

The Corporation acknowledges and agrees that it will use the efforts and provide the staffing to support the Project as specified in the [Project Agreement between the Corporation and SickKids] .

 

 
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EXECUTION COPY

 

1.3.

Term.

 

This Agreement will commence on the date hereof and remain in effect for four (4) years unless terminated in accordance with the terms of this Agreement (the Term ).

 

1.4.

No Delegation.

 

Consultant agrees that he will not sub-contract or delegate the performance of any Service to anyone without the prior written consent of the Corporation.

 

1.5.

Equipment and Premises.

 

(a)

Consultant will possess or procure all equipment, software, human resources and materials necessary for it to provide the Services and shall be responsible for all costs related to the use of such equipment, software and materials.

(b)

During the Term, the Corporation shall provide Consultant, at no charge, with reasonable access to and use of a reasonable amount of office and laboratory space located at the office of the Corporation, to be used in connection with the performance of the Services hereunder and the Corporation shall provide Consultant reasonable access to the various premises of the Corporation as may be reasonably required by Consultant in the performance of the Services hereunder.

 

2. COMPENSATION

 

2.1.

Compensation.

 

(a)

As compensation for the Services, Consultant shall be entitled to receive CDN$60,000 per annum during the Term (the Fee ), which shall be paid by the Corporation to the Consultant within thirty (30) days after receipt by the Corporation of each invoice sent by the Consultant.

(b)

The Corporation hereby grants to Consultant the options (each an Option ) to acquirecommon shares in the capital of the Corporation ( Common Shares ) (the Option Shares ), subject to Section 2.2 of this Agreement, vesting at the times and in the amounts set forth below:

 

 

(i)

up to six per cent (6%) of the of the Common Shares on a fully diluted basis as of the date hereof, on the date that is two (2) years after the date hereof;

 

 

(ii)

up to three per cent (3%) of the of the Common Shares on a fully diluted basis as of the date hereof on the date that is three (3) years after the date hereof; and

 

 

(iii)

up to three per cent (3%) of the Common Shares on a fully diluted basis as of the date hereof on the date that is four (4) years after the date hereof.

 

(c)

The current capitalization of the Corporation, including the Options and other current or reserved rights to acquire equity, is set out in Schedule "D" below.

 

 
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EXECUTION COPY

 

2.2.

Share Option Terms.

 

(a)

Each Option is exercisable to purchase one Share.

(b)

For the purposes of this Agreement, Market Value means: (i) the value of the Common Shares as determined by the Corporation's board of directors acting in good faith; (ii) if there has been a material investment in the Corporation by a third party at arm's length to the Corporation (an Investor ), the fair market value determined in connection with the next subsequent grant of options; or (iii) if the Common Shares are listed for trading on one or more nationally recognized stock exchanges or over-the-counter markets, the most recent closing price of the Common Shares on the last trading day prior to the relevant date on the stock exchange on which the majority of the volume of trading of the Shares has occurred on the last trading day prior to the relevant date.

(c)

The exercise price (the Exercise Price ) of each Option, subject to the terms and conditions set forth in this Section 2.2, shall be calculated at an amount equal to fifty per cent (50%) of the Market Value of each Share on the date immediately preceding the date of exercise of an Option.

(d)

Consultant may elect to exercise an Option in whole or in part, and in lieu of paying the cash Exercise Price contemplated to be made to the Corporation, receive upon such exercise the Net Number of Common Shares determined according to the following formula ( Cashless Exercise ):

 

 

Net Number          =          [A x (B-C)] / B

 

Where:

 

 

A

equals the total number of Shares with respect to which the Option held by Consultant are then being exercised;

 

 

B

equals Market Value on the date immediately preceding the date of exercise of the Option; and,

 

 

C

equals the Exercise Price.

 

(e)

The election described in Section 2.2(b) may be made by Consultant by delivery to the Corporation of a written notice of cashless exercise in such form as the board of directors of the Corporation may from time to time approve, specifying the number of Shares subject to an Option with respect to which Consultant has elected a Cashless Exercise.

 
(f)

In connection with a Cashless Exercise, the number of Shares that would have been issuable pursuant to the Option in respect of which the election to Cashless Exercise was made shall be considered to have been issued for the purposes of the reduction in the number of Shares which may be issued hereunder.

 
(g)

The Options shall expire and all rights to purchase Shares thereunder shall cease at 5:00 p.m. (Toronto Time) on the date that is five (5) years and one day after the End Date (the Time of Expiry ).

 
(h)

The Options and all rights related thereto are non-assignable and non-transferable by Consultant.

 
(i)

The Options may be exercised in part.

 

 
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EXECUTION COPY

 

(j)

All certificates evidencing Shares issued upon the exercise of the Options (and any certificate(s) issued in exchange or in substitution thereof) shall bear the legend(s) required under applicable securities laws and the policies of the stock exchange(s) on which the common shares of the Corporation are then listed.

 
(k)

The Options shall be exercised by the delivery of a duly completed and executed "Exercise of Option Form" in a form and substance satisfactory to the Corporation acting reasonably together with the total aggregate purchase price of the Shares purchased pursuant to the exercise of the Options, to the corporate secretary of the Corporation at the registered address of the Corporation, provided, however, that the Options may not be exercised at any time when the Options or the granting or exercise thereof violates any law, government order or regulation applicable to the Corporation or the rules of any stock exchange(s) on which the common shares of the Corporation are then listed.

 
(l)

Within a reasonable time after the exercise of the Options and payment of the aggregate purchase price for the Shares in respect of which the Options are exercised, the Corporation shall cause to be delivered to Consultant a certificate evidencing the Shares purchased pursuant to the exercise of any Option.

 
(m)

The Corporation covenants with Consultant that so long as any Options remain outstanding, it will:

 

(i)

cause the Shares and the certificates representing the Shares from time to time acquired pursuant to the exercise of the Options to be duly issued and delivered in accordance with the terms hereof; and

(ii)

make all requisite filings under applicable Canadian securities legislation and applicable stock exchange rules, if any, to report the exercise of the right to acquire Shares pursuant to this Agreement.

 

(n)

Nothing contained in this Agreement shall be construed as conferring upon Consultant any right or interest whatsoever as a shareholder of the Corporation in respect of any Shares issuable upon exercise of such Options until such Shares have been paid for in full and issued to such person.

 

2.3.

Share Adjustments.

 

The rights of Consultant in relation to the number of Shares issuable upon the exercise of any Option will be adjusted from time to time in the events and in the manner provided in, and in accordance with the provisions of, Schedule "C" to this Agreement.

 

2.4.

Expenses.

 

The Corporation shall reimburse Consultant for all reasonable pre-approved business, travel, and out-of-pocket expenses incurred by Consultant in connection with Consultant's performance of the Services during the Term. Upon Consultant's submission of documentation evidencing such expenses, the Corporation shall reimburse Consultant within 14 days of the date such documentation is received by the Corporation.

 

2.5.

Deductions.

 

The Corporation has no responsibility to make deductions for, or to pay, welfare and pension costs, withholdings for income taxes, employment insurance premiums, Workers' Compensation premiums, Canada Pension Plan premiums, payroll taxes, disability insurance premiums or any other similar charges with respect to Consultant and Consultant acknowledges and agrees that he is fully responsible for all such matters.

 

 
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EXECUTION COPY

 

2.6.

Share Acceleration.

 

 

(a)

For the purposes of this Section 2.3, Change of Control means the acquisition by any person or by any person and a person acting jointly or in concert with such person, whether directly or indirectly, of voting securities of the Corporation which, when added to all other voting securities of the Corporation at the time held by such person(s), totals for the first time not less than 50% of the outstanding voting securitiesof the Corporation or the votes attached to those securities are sufficient, if exercised, to elect a majority of the board of Directors of the Corporation.

 

 

(b)

Notwithstanding Section 2.1 hereof, Consultant, or his successor, is entitled to subscribe for all of the Shares on the earlier of:

 

(i)

the date on which any Change of Control becomes effective; and

(ii)

the date on which the Corporation terminates this Agreement under Section 3.1(b) hereof.

 

3. TERMINATION

 

3.1.

Termination.

 

This Agreement may be terminated in the following circumstances:

 

 

(a)

by the Corporation: for theft, fraud, dishonesty, wilful misconduct or gross negligence by Consultant involving the property or affairs of the Corporation or the carrying out of the Services; or, a material breach or non-observance of the provisions of this Agreement;

 

 

(b)

by the Corporation in the event Consultant dies or suffers a disability which prevents Consultant from engaging in any substantial gainful activity by reason of any medically determinable mental or physical impairment;

 

 

(c)

by Consultant: for a material breach or non-observance of the provisions of this Agreement; for any failure by the Corporation to obtain the assumption of this Agreement by any successor or assign of the Corporation; or if the Corporation is adjudicated bankrupt, becomes insolvent, is the subject of appointment of a receiver or trustee by a creditor, or makes a general assignment for the benefit of its creditors; or

 

 

(d)

upon the issuance of any order of a court of competent jurisdiction terminating this Agreement.

 

3.2.

Termination by Mutual Consent.

 

Notwithstanding any provision to the contrary, the parties hereto may terminate this Agreement at any time by mutual consent.

 

3.3.

Early Termination.

 

In the event that the Corporation terminates this Agreement prior to its expiry for any reason or cause other than as set out in Section 3.1 and 3.2 hereof, the Corporation shall pay to Consultant a lump sum equal to the annual Fee, and an amount for reimbursement of unpaid expenses, required to be reimbursed under this Agreement, incurred up to the date of termination.

 

 
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EXECUTION COPY

 

4. CONFIDENTIALITY AND NON-COMPETITION

 

4.1.

Confidentiality and non-competition.

 

(a)

Invention(s) means all ideas, inventions, discoveries, improvements, developments, technology, work of authorship, trade secrets, know-how, formulae, techniques, tool, process, data, data structures, software, firmware, code, programs, systems, plans, devices, apparatus, specifications, developments, system architectures, documentation, algorithms, flow charts, logic diagrams, source code, methods, processes, design, circuit, layout, description, concept, drawing, schematic, composition or any other material or information, tangible or intangible (including all versions, modifications, enhancements and derivative works thereof, including works-in-progress), whether or not patented, copyrighted or otherwise protected and/or subject to statutory protection, whether or not reduced to practice, which have been conceived, created, authored, developed, or reduced to practice by Consultant, either alone or jointly with others, whether on the premises of the Company; provided, however, that any of the foregoing occurring neither on the premises of nor through the use of the property of nor at the direction of Company which do not related to the actual or anticipated business, activities, research or investigations by the Company, shall not constitute Inventions for purposes of this Agreement.

 
(b)

The Consultant hereby irrevocably assigns and undertakes to assign in the future to the Company or to anyone the Company shall instruct, all and any rights, title and interest in and to all Inventions to the Company, without any additional consideration. Notwithstanding the foregoing, the Consultant and the Company acknowledge and agree that they do not expect any Inventions to be made pursuant to this Agreement and that all intellectual property developed for the Company by the Hospital for Sick Children, its employees, contractors, agents and students, including the Contractor, shall be transferred pursuant to the [Hospital IP Agreement] among the Company and SickKids (the Hospital IP Agreement ) and that the compensation set out for such transfer under the Hospital IP Agreement constitutes all of the compensation to be received by the Consultant for such transfer.

 
(c)

The Consultant hereby expressly undertakes, in good faith and to the best of its knowledge and ability, to maintain any unique, non-public information of a confidential and/or proprietary nature, of any kind, whether written or otherwise, specifically and uniquely related to the Company and/or any of its products and/or services (or any part thereof) and/or to the Company's business (Confidential Information) which became, or will in the future become, known to him pursuant to this Agreement, in strict confidence at all times, and not to use it (or any part of it) in any manner, nor disclose, transmit, inform or make available to any entity, person or body, any of the Confidential Information except for the sole purposes of performing his obligations hereunder and as otherwise allowed herein.

 
(d)

The Confidential Information is and shall always remain the exclusive property of the Company, and the Consultant hereby acknowledges the right, title and interest of the Company in and to the Confidential Information. The Consultant will not, at any time, infringe, contest, dispute or question such right, title or interest or aid others in doing so, directly or indirectly. The disclosure to the Consultant of the Confidential Information or Consultant's use by it under this Agreement shall not be construed in any way as granting to the Consultant any right or license with respect to the Confidential Information other than the right to use the same strictly in accordance with the terms and conditions of this Agreement.

 

 
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(e)

Consultant's services herein are for the internal use and benefit of the Company. The Company shall not be permitted to identify Consultant, or use or communicate the Consultant's name, likeness, affiliations, or the existence of this Agreement to any third party without the prior written consent of Consultant.

 
(f)

The provisions of this Section shall survive the termination of this Agreement or the relations between the parties for a period of one (1) year.

 
(g)

The Consultant acknowledges that the provisions of the undertakings under this Section are reasonable and necessary to legitimately protect the Company's proprietary information, its property (including intellectual property) and its goodwill (the Company's Major Assets). The Consultant further acknowledges that he has carefully reviewed the provisions of such undertakings, he fully understands the consequences thereof and he has assessed the respective advantages and disadvantages to him of entering into such undertakings.

 
(h)

Non-Compete: The Consultant shall not, either during Term of the Agreement or for a period of twelve (12) months following the termination of the Agreement for any reason including resignation, without the prior written consent of the Company, carry on, or be engaged in, or be concerned with, or interested in, or employed by, any person engaged in or concerned with or interested in a business which is the same as, or substantially similar to, or in competition with, the Company's business at the time of any such termination; provided, however, that ownership of less than 10% of the voting equity of a publicly-traded company shall not per se be a breach of this Section 4.1(h).

 

4.2.

Limitation of Work.

 

(a)

Notwithstanding anything to the contrary in this Agreement, nothing in this Agreement shall be construed to restrict or limit the duties Consultant is performing or may perform in the course of, or incidental to, Consultant's appointment at The Hospital for Sick Children, including but not limited to research sponsored by a third party commercial entity, nor shall anything in this Agreement be construed to restrict or limit Consultant's right to serve as an advisor to any other entities including hospital, or to any governmental or not-for-profit organization

(b)

Notwithstanding anything to the contrary in this Agreement, nothing in this Agreement shall be construed to restrict or limit the duties Consultant is performing for other entities lawfully contracted between the Consultant and those entities. In addition notwithstanding anything to the contrary in this Agreement, nothing in this agreement shall obligate the Consultant to perform any work which would be prohibited by other agreements in which the Consultant is currently engaged.

 

4.3.

Exceptions.

 

Section 4.1 hereof shall not apply to any proprietary, confidential or secret information that: (a) at the commencement of the Term or at some later date, is publicly known under circumstances involving no breach of this Agreement; (b) is or becomes part of the public domain by publication or otherwise without any breach of this Agreement; (c) is obtained on a non-confidential basis from another source acting in good faith without any breach of this Agreement; or (d) was not obtained from another source and that can be demonstrated by the recipient to have been known or independently developed by the recipient before disclosure to the recipient.

 

 
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5. RELATIONSHIP AMONG PARTIES

 

5.1.

Consultant to be Independent Contractor.

 

The parties hereto agree that Consultant is an independent contractor and that he is not an employee or agent of the Corporation and this Agreement shall not create any partnership, joint venture, employer/ employee, principal/ agent, master/servant or any other relationship between the Corporation and Consultant except that of independent contractor.

 

5.2.

No Authority to Bind.

 

Consultant has no authority to bind the Corporation and Consultant agrees that he will not enter into, incur, make, change, enlarge or modify any contract, liability, agreement, obligation, representation, guarantee, warranty or commitment on behalf of the Corporation unless expressly requested to do so in writing by duly authorized representatives of the Corporation.

 

6. REPRESENTATIONS

 

6.1.

Representations of Consultant.

 

Consultant represents and warrants to the Corporation that:

 

(i)

his performance of the Services shall at all times be in compliance with all applicable laws, ordinances, codes and regulations of federal, provincial and local government and that he holds all permits and licenses as required by law or as necessary to perform the Services;

(ii)

his performance of the Services shall at all times be in compliance with all third party policies applicable to him, including the policies of The Hospital for Sick Children; and

(iii)

he is not under any existing contractual obligation that would inhibit or prevent him from performing the Services.

 

6.2.

Representations of the Corporation.

 

The Corporation represents and warrants that:

 

(i)

it has the corporate power and authority to enter into and perform its obligations under this Agreement;

(ii)

its execution, delivery and performance of this Agreement has been duly authorized by all necessary corporate action on the part of the Corporation; and

(iii)

its issuance of the Shares and the entering into and performance of this Agreement, will not violate, contravene, breach or offend against or result in any default under any security agreement, indenture, mortgage, lease, order, undertaking, licence, permit, agreement, instrument, constating documents, charter or by-law provision, resolution of shareholders or directors, statute, regulation, judgment, decree, or law, including any federal, provincial, territorial and local laws, rules, by-laws, ordinances, regulations, grants, concessions, franchises, licenses, orders, directives, judgments, decrees, and other governmental restrictions, to which the Corporation is party or by which the Corporation may be bound or affected.

 

 
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7. LIABILITY

 

7.1.

Limitation of Liability.

 

Neither party hereto shall be liable for incidental, indirect, special, aggravated, punitive or consequential damages or losses of any kind as a result of a breach, or related to, this Agreement.

 

7.2.

Indemnity.

 

The Corporation will indemnify Consultant and save him harmless from and against any and all liability, damages, losses, and expenses, including reasonable legal fees and expenses and damages for, or by reason of, or in any way arising out of Consultant's performance of the Services.

 

8. MISCELLANEOUS

 

8.1.

Notices.

 

Any notice, direction or other communication given under this Agreement shall be in writing and given by delivering it or sending it by facsimile or other similar form of recorded communication addressed:

 

 

(a)

in the case of the Corporation, to:

 

 

110 Eglinton Avenue West, Suite 401

 

 

Toronto, ON M4R 1A3

 

 

Attention: Mr. Scott Woodrow  

 

 

Telephone:

(416) 435-9112 

 

 

Facsimile:

(416) 955-0783 

 

 

E-mail:

swoodrow@intelligymtherapeutics.com 

 

 

(b)

in the case of Consultant, to:

 

 

57 Castlewood Road

 

 

Toronto, ON M5N 2L1

 

 

Telephone:

(416) 489-2862

 

 

E-mail:

russell.schachar@sickkids.ca

 

Any such communication shall be deemed to have been validly and effectively given and received: (i) if personally delivered, on the date of such delivery if such date is any day of the year, other than a Saturday, Sunday or any day on which banks are required or authorized to close in Toronto, Ontario (a Business Day ) and such delivery was made prior to 4:00 p.m. (Toronto time) and otherwise on the next Business Day; or, (ii) if transmitted by facsimile or similar means of recorded communication on the Business Day following the date of transmission. Any party hereto may change its address for service from time to time by notice given in accordance with the foregoing and any subsequent notice shall be sent to such party at its changed address.

 

8.2.

Amendments.

 

This Agreement may only be amended, supplemented or otherwise modified by written agreement signed by Consultant and the Corporation.

 

Notwithstanding any provision to the contrary, in the event that Consultant's obligations under this Agreement conflict with any conditions of Consultant's employment with the Hospital for Sick Children, as they now exist or may exist in the future, this Agreement may be modified by mutual agreement executed in writing by Consultant and the Corporation.

 

 
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8.3.

Waivers.

 

No supplement, modification, amendment or waiver of this Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this Agreement shall constitute a waiver of any other provision (whether or not similar) nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. No failure on the part of the Corporation or Consultant to exercise, and no delay in exercising, any right under this Agreement shall operate as a waiver of such right, nor shall any single or partial exercise of any such right preclude any other or further exercise of such right or the exercise of any other right.

 

8.4.

Entire Agreement.

 

This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter contemplated herein and supersedes and replaces any provision of any other document or agreement heretofore entered into by the parties hereto with respect to the subject matter of this Agreement. This Agreement also supersedes any oral or written contract entered into by Consultant with the Corporation or with any other employer.

 

8.5.

Survival.

 

The provisions of Section 3.3, Article 4, Article 5, Article 7, and Article 8 hereof and shall survive termination of this Agreement.

 

8.6.

Further Assurances.

 

The Corporation and Consultant agree that they shall, from time to time and at all times, do all such further acts and execute and deliver all such further documents and assurances as shall be reasonably required in order to fully perform and carry out the terms of the Agreement.

 

8.7.

Legal Costs.

 

The Company will reimburse the Consultant for 50% of the costs and expenses (including the fees and disbursements of legal counsel,) in connection with the drafting and negotiation of this Agreement up to a maximum reimbursement of $2,500.

 

8.8.

Successors and Assigns.

 

This Agreement shall not be assignable by any party hereto unless the written consent of the other parties hereto has been obtained; provided, however, that the Corporation may assign this Agreement to any entity to which the Corporation transfers all or substantially all of its assets or to any affiliate of the Corporation. This Agreement shall enure to the benefit and be binding upon the parties hereto, their respective heirs, executors, personal legal representatives, administrators, successors and permitted assigns.

 

8.9.

Severability.

 

If any such covenants or any other provision of this Agreement is determined to be illegal, invalid or unenforceable, in whole or in part, that provision shall be severed from this Agreement and the remaining provisions shall continue in full force and effect.

 

 
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8.10.

Headings.

 

The division of this Agreement into Articles and Sections and the insertion of headings are for convenient reference only and are not to affect its interpretation.

 

8.11.

Governing Law.

 

This Agreement shall be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein and the parties attorn and submit to the exclusive jurisdiction of the court of Ontario.

 

8.12.

Counterparts.

 

This Agreement may be executed in counterparts, each of which taken together shall constitute one single agreement between the parties hereto. The parties hereto agree that this Agreement may be executed by facsimile transmission and that the reproduction of signatures by facsimile or similar device shall be treated as binding as if originals and each party hereto agrees and undertakes to provide the other parties with a copy of the Agreement bearing original signatures forthwith upon demand by the other parties.

 

8.13.

Independent Legal Advice.

 

Consultant acknowledges having fully read and understood this Agreement, and having been requested and advised to obtain fully independent professional legal and accounting advice concerning the substance and effect of all of the provisions of this Agreement (including the effect of this Section 8.13) before signing this Agreement.

 

[THE REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK.]

 

 
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IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first written above.

 

 

BEHAVIOURAL NEUROLOGICAL APPLICATIONS AND SOLUTIONS INC.

 

 

 

Per:

/s/Scott Woodrow

 

 

Name:

Scott Woodrow

 

 

Title:

Director

 

 

 

 

 

 

Per:

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

/s/ Jennifer Crosbie

 

 

/s/ Russell Schachar

 

Witness

 

 

Dr. Russell Schachar

 

 

 
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(Signature page to Consulting Agreement.)

 

 

 

 

 

 
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SCHEDULE "A"

 

SERVICES

 

Consultant shall provide the following Service to the Corporation during the Term in accordance with the Agreement.

 

(a)

Providing general guidance to the Corporation, The Hospital for Sick Children and the Staff as to the design of clinical and user trials to be undertaken by the Corporation and The Hospital for Sick Children under the Project.

(b)

Overseeing and leading any necessary submissions to any research or ethics committees necessary to undertake the proposed clinical and user trials under the Project.

(c)

Advising on user experience and cognitive elements to be incorporated into the proposed software under the Project as they relate to the target population of the Project.

(d)

Liaising and interfacing with other persons, including advisors, and assisting in the making of recommendations to direct product development under the Project.

(e)

Advising on acceptable diagnostic forms and tools and feedback reports to be integrated by the Corporation and its affiliates into the proposed software under the Projects.

(f)

Supporting the Corporation and its affiliates in its media and publication strategy, and such other duties as may be jointly agreed by Consultant and the Company.

 

 
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SCHEDULE "B"

 

PROJECT

 

(See following pages.)

 

 

 

 

 
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SCHEDULE "C"

 

SHARE ADJUSTMENT

 

1.

For the purposes of this Schedule C, as used in this Schedule C: (i) Adjustment Period means the period commencing on the date hereof and ending at the Time of Expiry; and (ii) Share Rate means the number of Shares issuable upon the exercise of each Option, which numbers will be one Common Share for each Option.

2.

The Share Rate in effect at any date will be subject to adjustment from time to time if and whenever at any time during the Adjustment Period, the Corporation:

 

i.

subdivides or redivides the outstanding Common Shares into a greater number of Common Shares;

ii.

consolidates, combines or reduces the outstanding Common Shares into a lesser number of Common Shares; or

iii.

issues Common Shares to all or substantially all of the holders of Common Shares by way of a stock dividend or other distribution,

 

then, in each such event, the Share Rate will, on the effective date of or the record date for such event, be adjusted by multiplying the Share Rate in effect immediately prior to such date by a fraction, of which the denominator shall be the total number of Common Shares outstanding on such date before giving effect to such event, and of which the numerator shall be the total number of Common Sharesoutstanding on such date after giving effect to such event. Such adjustment will be made successively whenever any such event shall occur. Any such issue of Common Shares by way of a stock dividend shall be deemed to have been made on the record date for such dividend for the purpose of calculating the number of outstanding Common Sharesunder paragraphs (ii) and (iii).

 

3.

If and whenever at any time during the Adjustment Period, there is:

 

a.

any reclassification of the Common Sharesat any time outstanding, any change of the Common Sharesinto other shares, securities or property or any other capital reorganization of the Corporation;

b.

any consolidation, amalgamation, arrangement, merger or other form of business combination of the Corporation with or into any other corporation resulting in any reclassification of the outstanding Common Shares, any change of the Common Shares into other common shares, securities or property or any other capital reorganization of the Corporation, or any sale, lease, exchange or transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to another corporation or entity,

 

then, in each such event, Consultant will be entitled to receive, and shall accept, in lieu of the number of Shares to which he was theretofore entitled upon such exercise, the kind and number or amount of Common Sharesor other securities or property which Consultant would have been entitled to receive as a result of such event if, on the effective date thereof, Consultant had been the registered holder of the number of Common Sharesto which he was theretofore entitled upon such exercise. If necessary as a result of any such event, appropriate adjustments will be made in the application of the provisions set forth in this section with respect to the rights and interests thereafter of Consultant to the end that the provisions set forth in this Schedule C will thereafter correspondingly be made applicable as nearly as may reasonably be in the relation to any Common Sharesor other securities or property thereafter deliverable upon the exercise of an Option. Any such adjustments will be made by and set forth in a document supplemental hereto approved by the directors of the Corporation and shall for all purposes be conclusively deemed to be an appropriate adjustment.

 

 
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4.

In any case in which this Schedule C shall require that an adjustment the Corporation shall deliver to Consultant an appropriate instrument evidencing Consultant's right to receive such additional Common Sharesor other securities or property upon the occurrence and consummation of such event and the right to receive any dividend or other distribution in respect of such additional Common Sharesor other securities or property declared in favour of the holders of record of Common Sharesor of such other securities or property on or after the date on which Consultant exercises his right to acquire any of the Shares or such later date as Consultant would, but for the provisions of this subsection, have become the holder of record of such additional Common Sharesor of such other securities or property as a result of the exercise of the Options.

5.

The adjustments provided for in this Schedule C are cumulative, and shall, in the case of any adjustment to the Share Rate, be computed to the nearest one one-hundredth of a Common Shares and will apply (without duplication) to successive subdivisions, consolidations, distributions, issuances or other events resulting in any adjustment under the provisions of this Schedule C, provided that, notwithstanding any other provisions of this Schedule C, no adjustment of the Share Rate will be required:

 

a.

unless such adjustment would require an increase or decrease of at least 1% in the Share Rate then in effect (provided, however, that any adjustment which by reason of this subsection is not required to be made will be carried forward and taken into account in any subsequent adjustment), or

b.

if, in respect of any event described in this Schedule C (other than the events referred to in clauses (i) and (ii) of sections 2 and 3 of this Schedule C), Consultant is entitled to participate in such event, or is entitled to participate within 45 days in a comparable event, on the same terms, mutatis mutandis, as if the Options had been exercised prior to or on the effective date of or record date for such event.

 

6.

In the event of any question arising with respect to the adjustments provided for in this Schedule C, such question shall be conclusively determined by the Corporation's auditors or, if they are unable or unwilling to act, by such firm of chartered accountants as is appointed by the Corporation. Such accountants shall have access to all necessary records of the Corporation and such determination shall be binding upon the Corporation and Consultant.

 
7.

If and whenever at any time during the Adjustment Period, the Corporation shall take any action affecting or relating to the Common Shares, other than any action described in this Schedule C, which would materially affect the rights of Consultant, the Share Rate will be adjusted by the directors of the Corporation in such manner, if any, and at such time, as the directors may in their reasonable discretion determine to be equitable in the circumstances to Consultant. Failure of the taking of action by the directors of the Corporation so as to provide for an adjustment on or prior to the effective date of any action by the Corporation affecting the Common Sharesshall be conclusive evidence that the directors of the Corporation have determined that it is equitable to make no adjustment in the circumstances.

 
8.

As a condition precedent to the taking of any action which would require an adjustment in any of the acquisition rights pursuant to any of the Options, including the number of Shares which are to be received upon the exercise thereof, the Corporation shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation has unissued and reserved in its authorized capital and may validly and legally issue as fully paid and non-assessable all the Common Shareswhich Consultant is entitled to receive on the full exercise thereof in accordance with the provisions hereof.

 

 
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9.

At least 14 days before the earlier of the effective date of or record date for any event referred to in this Schedule C that requires or might require an adjustment in any of the rights under the Options, the Corporation will give notice to Consultant of the particulars of such event and, to the extent determinable, any adjustment required. Such notice need only set forth such particulars as have been determined at the date such notice is given. If any adjustment for which such notice is given is not then determinable, promptly after such adjustment is determinable the Corporation will give notice to Consultant of such adjustment.

 
10.

Notwithstanding anything in this Agreement, no adjustment shall be made in the acquisition rights attached to the Options if the issue of Common Sharesis being made pursuant to this Agreement or pursuant to any stock option or stock purchase plan in force from time to time for directors, officers or employees of the Corporation.

 
11.

The Corporation covenants with Consultant that it will not close its transfer books (during normal business hours) or take any other corporate action which might deprive Consultant the opportunity to exercise his right of acquisition pursuant thereto during the period of 14 days after the giving of the certificate or notices set forth in section 9 of this Schedule C.

 
12.

If a state of facts shall exist to which the provisions of this Schedule C are not strictly applicable, or if strictly applicable operate in an unclear manner or in a manner that would not fairly adjust the rights of Consultant against dilution in accordance with the intent and purposes hereof, the Corporation shall execute and deliver to Consultant an amendment hereto providing for an adjustment in the application of such provisions so as to adjust such rights.

 

 
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Schedule "D"

 

CAPITALIZATION TABLE

 

The following represents the capitalization table of the company on a fully diluted basis as of June 1, 2012:

 

 

 

 

 

Common

 

 

Options

 

 

Share
%

 

 

Fully Diluted
%

 

Romema

 

 

 

 

50

 

 

 

-

 

 

 

37.04 %

 

 

27.03 %
2110345

 

 

 

 

50

 

 

 

-

 

 

 

37.04 %

 

 

27.03 %

Nview

 

 

 

 

35

 

 

 

-

 

 

 

25.93 %

 

 

18.92 %

Closner

1

 

 

 

-

 

 

 

27

 

 

 

0.00 %

 

 

14.59 %

Schachar

2

 

 

 

-

 

 

 

23

 

 

 

0.00 %

 

 

12.43 %

Totals

 

 

 

 

135

 

 

 

50

 

 

 

100.00 %

 

 

100.00 %

 

 

20


 

EXHIBIT 10.12

 

Cooperation and Project Funding Agreement

 

Agreement made this 7th day of June, 2012 , by and

 

BETWEEN

 

The Canada-Israel Industrial Research and Development Foundation

(hereinafter referred to as "the Foundation" or "CIIRDF")

 

AND

 

Behavioural Neurological Applications and Solutions (BNAS)

(hereinafter referred to as the " Proposer")

 

WHEREAS the Government of the Province of Ontario as represented by the Premier of the Province of Ontario (hereinafter referred to as "Ontario") and the Government of the State of Israel as represented by the Minister of Industry, Trade and Labor (hereinafter referred to as "Israel"), did, on the 8 th day of April, 2005, sign a Memorandum of Understanding concerning bilateral cooperation in private sector industrial research and development (hereinafter refeered to as "the MOU");

 

AND WHEREAS it was agreed that Ontario and Israel within its respective competence and applicable legislation, will facilitate and encourage cooperation and support projects in the field of industrial and technological research and development on the basis of mutual balanced benefit between interested industries and organizations aimed at the development of products or processes to be commercialized in the global market and based on cooperation between at least one industrial partner from Ontario and at least one industrial partner from Israel (hereinafter referred to as " Eligible Projects"),

 

AND WHEREAS Ontario and Israel agreed that the Canada –Israel Industrial Research and Development Foundation (hereinafter referred to as "CIIRDF") will be the entity responsible to identify and facilitate partnerships and projects between Ontario and Israeli corporations

 

AND WHEREAS Ontario has provided CIIRDF with a grant of $3 million for activities and projects in support of the MOU;

 

AND WHEREAS Israel through the Office of the Chief Scientist has examined and duly approved the proposal submitted by the Proposer and Applied Cognitive Engieering Ltd ., entitled " Development of a Comprehensive Cognitive Diagnostic Assessment and Treatment Platform for Childhood Attention Deficit Disorder & Attention Deficit Hyperactivity Disorder (ADD/ADHD )", and is willing to provide certain funding for the implementation of the Proposal;

 

 
1
 

 

AND WHEREAS CIIRDF has examined and duly approved the proposal submitted by the Proposer Applied Cognitive Engieering Ltd , entitled " Development of a Comprehensive Cognitive Diagnostic Assessment and Treatment Platform for Childhood Attention Deficit Disorder & Attention Deficit Hyperactivity Disorder (ADD/ADHD )", and identified as Ontario Israel Project Number 170 , and is willing to provide certain funding for the implementation for the Proposal on the terms and conditions hereinafter set forth;

 

NOW THEREFORE the parties hereto agree as follows:

 

A:

General

 
A.1.

The preamble to this Agreement shall be deemed an integral part thereof.

 
A.2.

The President of CIIRDF is empowered by its Board of Directors to execute this Agreement and to perform all acts under the terms hereof on behalf of CIIRDF.

 
A.3.

The following document is incorporated by reference and made a part of this Agreement: The Proposal, dated the 28th day of November, 2011 , as stamped with CIIRDF's approval on the 28th day of November, 2011 submitted by the Proposer and Applied Cognitive Engieering Ltd ., and attached hereto as Annex G to this Agreement (the "Proposal"). Nonetheless, should any provision of said Proposal be inconsistent with any other provision of this Agreement, the provisions otherwise set forth in this document shall prevail .

 

A.4.

In this Agreement, "Innovation" shall mean any products, processes, inventions, technology, discoveries, improvements, modifications, methods, software, specifications, or any form of technical information developed or arising from the Proposal.

 

 

B:

Project Financing

 

 

B.1.

CIIRDF hereby agrees to fund, by grant, the implementation of the Proposal in the maximum sum of $300,000 or up to 50% of the actual expenditures of the Proposer on the project, as contemplated in the Approved Project Budget set forth in Annex A hereto, whichever is less, (the"Grant") and at the times as may otherwise be set forth in Annex B hereto.

 

B.1.1. The percentage of the actual expenditures of the project which CIIRDF provides shall hereinafter be described as the "Foundation's pro rata share".

 

B.2.

The Proposer shall provide in timely fashion all budgetary funds in excess of those provided hereunder by CIIRDF.

 
B.3.

The Proposer shall make payments to CIIRDF based on Gross Sales derived from the sale, leasing or other marketing or commercial exploitation of the Innovation, including service or maintenance contracts, commencing with the first such commercial transaction. Such payments shall be based on either of the following:

 

a) The Grant referred to in Sub.Sec.B.1. above (plus any other sums actually awarded to the Proposer by CIIRDF in connection with the subject matter of the Proposal {"Other Sums"}) shall be repaid in Canadian Dollars at the rate of 2½% per year's Gross Sales, until 100% of the Grant and Other Sums has been repaid, such repayments to be in year dollars.

 

b) When the Proposer shall have repaid the following maximum percentages of the Grant and Other Sums in any of the following years following the first commercial transaction, no additional payments to CIIRDF on account of the Grant and Other Sums shall be required.

 

 
2
 

 

Year of Repayment

 

Following

 

Maximum Percentage of

 

First Commercial

 

Grant and Other

 

Transaction

 

Sums to be Repaid

 

Year 1

 

 

90 %

Year 2

 

 

92 %

Year 3

 

 

94 %

Year 4

 

 

96 %

Year 5

 

 

98 %

Year 6 or more

 

 

100 %

  

B.3.1. The term "Gross Sales" shall include all specific export incentives or bonuses paid the Proposer on account of sale of the Innovation for export, but shall not include sums paid for commissions, brokerage, value added and sales taxes on the sale of the finished product, or transportation and associated insurance costs, if same have been included in the gross sales price.

 

B.3.2. The Innovation shall be deemed to have been sold, marketed or otherwise commercially exploited if the Innovation, or any improvement, modification or extension of it is put to the benefit of a third party, whether directly or indirectly, and whether standing alone or incorporated into or conjoined with other hardware or processes, and for which benefit the said third party gives something of value. This provision shall not apply to transactions between the Proposer and Applied Cognitive Engieering Ltd . or between the Proposer and its parent or subsidiaries. Should such parent or subsidiary resell the Innovation separately identified or incorporated in a system, the sales price shall be the price to third parties from the parent or subsidiary making the sale, such sales price being defined by the same criteria as sales are defined for purposes of "Gross Sales" in Sub.Sec.B.3.1 above.

 

If the Innovation is a part of a product sold, marketed or otherwise commercially exploited, the sale price for purposes of payments according to Sub.Sec.B.3 shall be the sales price of that product multiplied by a factor whose numerator is the manufacturing cost of the Innovation and whose denominator is the manufacturing cost of the product. If there shall have been established a market price for the Innovation, such price shall be the basis for payments according to Sub.Sec.B.3, notwithstanding the incorporation of the Innovation in another product.

 

B.4.

All payments due CIIRDF shall be calculated on a biannual calendar basis, and statements, consistent with generally accepted accounting procedures and with the standard accounting procedures of the Proposer and signed by an officer of the Proposer, rendered with payment in and within 90 calendar days following the end of each biannual period. Payments to CIIRDF per Sub.Sec.B.3 shall commence at the end of the biannual period during which the first sale was made.

 

All late payments shall bear interest at 1% more than the average prime rate prevailing at the Canadian Imperial Bank of Commerce (CIBC) during the period from the date payment was due until actually made.

 
B.5.

Should any portion of the technology or innovation developed in whole or in part under this Agreement be sold outright to a third party, one-half of all proceeds of the sale shall be applied as received until there has been full repayment to CIIRDF of a sum equal to the percentage indicated in Sub.Sec.B.3. hereto of the Grant and Other Sums actually received by Proposer hereunder, in equivalent dollars valued at time of repayment. Payments due and not made following receipt of proceeds shall bear interest at 1% more than the average prime rate prevailing at the CIBC.

 

 
3
 

 

B.6.

License agreements involving patented invention(s) or technology developed in whole or in part during this Foundation-supported project shall be subject to Annex E.

 

C:

Conduct of the Project

 
C.1.

The Proposer agrees to do the work set out in the Proposal in accordance with good standards relevant to such undertakings, and shall expend funds received hereunder only in accordance with such Proposal and the requirements of this Agreement.

 
C.2.

The Proposer agrees to comply with the Program Plan for the Innovation as set forth in Annex C hereto.

 
C.3.

The Proposer hereby appoints Neil Closner as Project Manager for the implementation of the project during the period of this Agreement and in accordance with the Program Plan as set out in Annex C of this Agreement.

 
C.4.

The Proposer shall not make substantial transfers of funds from one budget item to another, change key personnel or their duties and responsibilities or diminish their time allocated to the proposed work hereunder without prior written approval by CIIRDF, which approval shall not be unreasonably withheld.

 

C.4.1. Should any key person be absent from his work or should such absence be expected, for 90 days or more, or should there be any significant reduction in the total personnel force assigned the project under the Proposal, the Proposer shall forthwith notify CIIRDF.

 

D:

Reporting Requirements

 
D.1.

The Proposer shall submit to CIIRDF, in writing, the following reports:

 

a.

Fiscal and technical reports within 30 days following the expiration of the each phase period;

 
b.

Final fiscal, technical and commercialization reports within 60 days following termination of this Agreement.

 
c.

Reports on Sales are to be submitted bi- annually for the periods of January to June and July to December within 60 days of completion of the bi-annual period until such time as the Grant has been fully repaid.. Such reports are to provide details on all commercialization exploitation activities, including gross sales, revenues resulting from sales of patented inventions and revenues derived from license agreements.

 

D.1.1. Such reports shall be in form and substance as provided in Formats for Technical, Fiscal and Commercialization Reports, as set out in Annex F of this Agreement..

 

D.2.

The Proposer shall provide, at its expense, briefings on the progress of the work hereunder within 45 days following request by CIIRDF. Such briefings shall accord with the form and depth as CIIRDF may reasonably request.

 
E:

Publications

 
E.1.

In any publication in scientific or technical journals of data or other information derived from the work hereunder, or any publication related to the work, but not including product literature or manuals, the support of CIIRDF shall be acknowledged.

 

 
4
 

 

E.2.

To the extent so required to permit CIIRDF free dissemination of such publications or information which CIIRDF is privileged to disseminate subject to the limitation of Sec. F., below, the Proposer shall be deemed hereby to waive any claim with respect to such dissemination for infringement of any Copyright it may have or may obtain.

 
E.3.

The Proposer shall furnish to CIIRDF two (2) copies of all publications resulting from Foundation-supported work as soon as possible after publication.

 
F:

Proprietary Information

 
F.1.

Proprietary information, clearly identified as such, submitted to CIIRDF in the Proposal, in any report or verbally, or obtained by Foundation personnel observation pursuant to any request or briefing, shall be treated by CIIRDF as confidential. At the request of the Proposer a confidential disclosure agreement may separately be entered into by the parties.

 
F.2.

Nothing contained in the foregoing shall restrict the right of CIIRDF to make public the fact of CIIRDF's support for the project, and the identification of the Proposer therein. The details of any such publication, however, shall be subject to approval by the Proposer.

 
G:

Patents and Royalties

 
G.1.

If Proposer elects to apply for letters patent on any or all inventions resulting in whole or in part from performance of CIIRDF -supported activity, such applicant shall, at his own expense, so apply in Canada and in Israel, and in such other countries and at such times as he may deem appropriate.

 
G.2.

Unless the Proposer is making payments to CIIRDF under Sec. B hereto, where the Proposer retains rights in an invention and obtains a patent thereon in accordance with Sub.Sec.G.1., the Proposer shall pay to CIIRDF a royalty as set forth in Annex D hereto, on sales of any product embodying the invention or any product made by practicing the invention. CIIRDF's rights hereunder shall apply whenever such patents are obtained and shall survive termination of this Agreement.

 
H:

Revocation of Agreement

 
H.1.

CIIRDF may revoke any award, in whole or in part, for fundamental breach of the terms of the Agreement.

 
H.2.

Upon receipt of notice of the revocation for fundamental breach, the Proposer may cure the default in and within thirty calendar days after the date of receipt of the notice.

 
H.3.

Notwithstanding any other provision in this Agreement to the contrary, CIIRDF shall not be obliged to provide any further funding after notice until and unless the said default is cured and so demonstrated to the reasonable satisfaction of CIIRDF.

 
H.4.

If CIIRDF shall revoke as aforesaid, all funds given to the Proposer per Sub.Sec.B.1 above shall become due immediately without need for demand. Such funds which do not, by terms of this Agreement, bear interest, shall be repaid with interest at 1% more than the average prime rate prevailing at CIBC, from date of notice of revocation.

 
H.5.

The Proposer may not terminate this Agreement or abandon the project without the prior written consent of CIIRDF, which consent shall not be unreasonably withheld.

 

 
5
 

 

H.6.

If upon termination of this Agreement for any reason, the entire budgeted sum has not been expended, the Proposer shall forthwith return to CIIRDF its pro rata share of such unexpended portion. If not repaid forthwith, such sum shall bear interest as per Sub.Sec.H.4.

 
I:

Financial Records

 
I.1.

The Proposer shall maintain business and financial records and books of account for the work hereunder separate and apart from other business records of the Proposer. Such books and records shall be in usual and accepted form.

 
I.2.

Books and records of the work hereunder shall show the Proposer's contribution. Upon request by CIIRDF, the Proposer shall provide evidence of his compliance hereunder.

 
I.3.

CIIRDF may examine, or cause to be examined, the financial books, vouchers, records and any other documents of the Proposer relating to this Agreement at reasonable times and intervals during the term of this Agreement and for the period of one (1) year following termination, or for so long as payments per Sub.Sec.B.3, Sub.Sec.B.5 or of patent royalties are due, or may become due CIIRDF, whichever shall be the later.

 
J:

Suits Against CIIRDF

 
J.1.

The Proposer shall defend all suits brought against CIIRDF, its officers or personnel, indemnify them for all liabilities and costs and otherwise hold them harmless on account of any and all claims, actions, suits, proceedings and the like arising out of, or connected with or resulting from the performance of this Agreement by the Proposer, or from the manufacture, sales, distribution or use by the Proposer of the Innovation, whether brought by the Proposer or its personnel or by third parties.

 
J.2.

The Proposer agrees that persons employed by it in connection with the research project shall be deemed to be solely its own employees and that no relationship of master and servant shall be created between such employees and CIIRDF, either for purposes of tort liability, social benefits, or for any other purpose. The Proposer shall indemnify CIIRDF and hold it harmless from court costs and legal fees, and for any payment which CIIRDF may be obliged to make on a cause of action based upon an employee-employer relationship as aforesaid.

 
K:

Miscellaneous Conditions

 
K.1.

CIIRDF makes no representation, by virtue of its funding the work hereunder, or receiving payments or royalties as a result of this Agreement, as to the safety, value or utility of the Innovation or the work undertaken, nor shall the fact of participation of CIIRDF, its funding or exercise of its rights hereunder be deemed an endorsement of the Innovation or of the Proposer, nor shall the name of CIIRDF be used for any commercial purpose or be publicized in any way by the Proposer except within the strict limits of this Agreement.

 
K.2.

The Proposer may not assign this Agreement or any of the work undertaken pursuant to it without the prior written consent of CIIRDF, which consent shall not be unreasonably withheld.

 
K.3.

This Agreement shall be construed under the laws of the province of Ontario. The forum for the resolution of any dispute arising from this Agreement shall be Ottawa, Ontario, Canada.

 
K.4.

Unless the parties to a dispute shall agree otherwise, the dispute shall be referred to arbitration under the rules of the arbitration legislation in effect within the province of Ontario.

 

 
6
 

 

K.5.

The Proposer undertakes to comply with all applicable Canadian federal and provincial laws, rules and regulations, and will apply for and obtain all necessary licenses and permits for carrying out of its obligations hereunder.

 
K.6.

Notices, communications and reports shall be hand-delivered or mailed by prepaid first-class mail (airmail if transmitted internationally) addressed to:

 

a.

The Canada-Israel Industrial Research and Development Foundation

371A Richmond Road, Suite 3

Ottawa, Ontario  

K2A 0E7

 

 

 

 

b. 

Behavioural Neurological Applications and Solutions Inc.

 

 

70 Elmsthorpe Ave, Suite 201   

Toronto, Ontario  

M5P 2L7

 

L:

Limitation on Payments

 

 

Notwithstanding any other interpretation of this Agreement or the Annexes hereto to the contrary, the Proposer's total obligation hereunder for payments to CIIRDF shall not exceed the percentages indicated in Sub.Sec.B.3. hereto of the total funds actually provided by CIIRDF hereunder, in year dollars and the total obligation of the Proposer for payments to CIIRDF shall not exceed the amount actually provided to the Proposer by CIIRDF as set out in Annex B .

 

 
7
 

 

M:

Effective Date

 

 

The effective date of this Agreement shall be the 1 st day of February, 2012 . Unless sooner terminated by CIIRDF per Sec. I., this Agreement shall terminate in 18 months following the effective date.

 

Signed the day and date above first given

 

/s/Henri Rothchild                                                                                                                                            

Henri Rothschild, President of CIIRDF

 

 

/s/Neil Closner                                                                                                                                                  

Neil Closner, CEO of Behavioural Neurological Applications and Solutions Inc.

 

 
8
 

 

ANNEX A - APPROVED PROJECT BUDGET

<ONTARIO COMPANY> BNAS

Phase 1 - 9 Months

 

Direct Labour

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name, Title Role

 

Gross Annual Salary

 

 

% o
project

 

 

Period
Duration

 

 

Cost to
Project

 

 

 

 

 

Neil Closner, Project Lead

 

$ 100,000

 

 

 

75 %

 

 

9/12

 

 

$ 56,250

 

 

 

 

 

Software Developer

 

$ 100,000

 

 

 

100 %

 

 

7/12

 

 

$ 58,333

 

 

 

 

 

Scott Woodrow, Product manager

 

$ 85,000

 

 

 

30 %

 

 

5.5/12

 

 

$ 11,688

 

 

 

 

 

Psychologist

 

$ 85,000

 

 

 

100 %

 

 

9/12

 

 

$ 63,750

 

 

 

 

 

Software Architect

 

$ 100,000

 

 

 

90 %

 

 

8/12

 

 

$ 60,000

 

 

 

 

 

Video game designer

 

$ 95,000

 

 

 

90 %

 

 

6/12

 

 

$ 42,750

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

$ 292,771

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Overhead

 

@ 25%

 

 

 

 

 

 

 

 

 

 

$ 73,193

 

 

 

 

 

 

Equipment - Capital Depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Item Description

 

Number of Units

 

 

Total Purchase

 

 

% Time on Project

 

 

Annual

Depreciation Rate

 

 

Cost to Project

 

 

 

 

 

 

Cost

 

 

 

 

 

 

 

 

 

Desktops/Laptops

 

 

7

 

 

$ 1,800

 

 

 

92 %

 

 

0.50

 

 

 

5796

 

Tablets

 

 

15

 

 

$ 600

 

 

 

92 %

 

 

0.50

 

 

 

4140

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$ 9,936

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment - Leased

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Travel - Intl

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Destination & Purpose

 

Cost per person per trip

 

 

No. of Trips

 

 

   No. of People per Trip

 

 

Cost to Project

(CAD)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Israel – Kickoff & Organizational meeting, review Intelligym operations and systems

 

$ 5,000

 

 

 

1

 

 

 

4

 

 

$ 20,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Israel - Game design results review & analysis

 

$ 5,000

 

 

 

1

 

 

 

6

 

 

$ 30,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

$ 50,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Travel - Domestic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hourly Rate

 

 

Hours

 

 

 

 

 

 

Project Cost

 

 

 

 

 

Dr. Schachar

 

$ 400

 

 

 

150

 

 

 

 

 

 

$ 60,000

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

$ 60,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Phase 1 subtotal

 

 

 

 

 

 

 

 

 

 

 

 

 

$ 485,900

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

G&A

 

@ 5%

 

 

 

 

 

 

 

 

 

 

$ 24,295

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Phase 1 Total

 

 

 

 

 

 

 

 

 

 

 

 

 

$ 510,195

 

 

 

 

 

 

 
9
 

 

Phase 2 - 10 Months

 

Direct Labour

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name, Title Role

 

Gross Annual Salary

 

 

% on project

 

 

Period
Duration

 

 

Cost to Project

 

 

 

 

Neil Closner, Project Lead

 

$ 100,000

 

 

 

60 %

 

10/12

 

 

$ 50,000

 

 

 

 

Software Developer

 

$ 100,000

 

 

 

100 %

 

10/12

 

 

$ 83,333

 

 

 

 

Scott Woodrow, Product manager

 

$ 85,000

 

 

 

20 %

 

10/12

 

 

$ 14,167

 

 

 

 

Psychologist

 

$ 85,000

 

 

 

100 %

 

10/12

 

 

$ 70,833

 

 

 

 

Q/A Tester

 

$ 50,000

 

 

 

100 %

 

5/12

 

 

$ 20,833

 

 

 

 

Software Architect

 

$ 90,000

 

 

 

75 %

 

10/12

 

 

$ 56,250

 

 

 

 

Video game designer

 

$ 95,000

 

 

 

100 %

 

10/12

 

 

$ 79,167

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

$ 374,583

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Overhead

 

@25%

 

 

 

 

 

 

 

 

 

$ 93,646

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment - Capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Item Description

 

Number of Units

 

 

Total Purchase

Cost

 

 

% Time on
Project

 

 

Annual

Depreciation
Rate

 

 

Cost to
Project

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Laptops

 

 

6

 

 

$ 1,500

 

 

 

58 %

 

 

0.5

 

 

$ 4,500

 

Tablets

 

 

10

 

 

$ 600

 

 

 

58 %

 

 

0.5

 

 

$ 3,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servers

 

 

4

 

 

$ 3,750

 

 

 

58 %

 

 

0.33

 

 

$ 4,950

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$ 12,450

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equipment - Leased

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Travel - Intl

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Destination & Purpose

 

Cost per person per trip

 

 

No. of Trips

 

 

No. of People per

Trip

 

 

Cost to Project

(CAD)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Israel – Software development kick-off meeting

 

$ 5,000

 

 

 

1

 

 

 

4

 

 

$ 20,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Israel - Beta Review

 

$ 5,000

 

 

 

1

 

 

 

4

 

 

$ 20,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

$ 40,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Travel - Domestic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consultants

 

Hourly rate

 

 

Hours

 

 

 

 

 

 

Cost to Project

 

 

 

 

 

Dr. Schachar

 

$ 400

 

 

 

120

 

 

 

 

 

 

$ 48,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

$ 48,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Phase II Subtotal

 

 

 

 

 

 

 

 

 

 

 

 

 

$ 568,679

 

 

 

 

 

G&A

 

 

5 %

 

 

 

 

 

 

 

 

 

$ 28,434

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Phase 2 Total

 

 

 

 

 

 

 

 

 

 

 

 

 

$ 597,113

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Project Total

 

 

 

 

 

 

 

 

 

 

 

 

 

$ 1,107,308

 

 

 

 

 

 

 
10
 

 

ANNEX B - PAYMENT OF GRANT

 

Total Grant approved is CAD $300,000  

According to Budget submitted and approved:

 

Therefore:

 

1.

First Payment - On signing

 

 

Behavioural Neurological Application & Solutions Inc CAD $150,000

 

 

 

 

2.

Interim Payment - After receipt and approval of the interim technical and fiscal reports for the first 9 months period, or after actual expenditures on the project have equaled or exceeded $300,000 whichever is later.

 

 

 

 

 

Behavioural Neurological Application & Solutions Inc CAD $75,000

 

 

 

 

 

However, if at the required time of submission of the interim technical and fiscal reports, work on the project or expenditures thereon prove to be materially behind plan, per Annex D and Annex A, respectively, CIIRDF will review the project with Proposer and determine a suitable course of action with respect to further payments against the Grant, if any.

 

 

 

 

3. 

Final Payment - After receipt and approval of the Finaltechnical, fiscal and commercialization reports - the balance due Proposer up to the total sum of the Grant per Sub.Sec.B.1.

 

 

 

 

 

Behavioural Neurological Application & Solutions Inc CAD $75,000

 

 
11
 

 

ANNEX C – PROGRAM WORK PLAN 

(given in your proposed project)

 

General Project Plan

 

- A chronological schedule of all activities presented in a graphical form (GANTT chart) for the duration of the entire project, complete up to market-ready product/technology

 

- The plan should clearly indicate the estimated time required to completion of each task/activity in addition to milestones

 

See attached Gantt Chart below. This is to be reviewed in conjunction with IV (d) below.

 

 

Details of Project Activities

 

- Identification and detailed description of each task or activity (according to the chronological schedule provided under General Plan)

 

- Specify each Company's roles and assignments according to each activity

 

- Describe problem-solving strategies – resolving issues and the basis for selecting the preferred solution (supply sufficient support material to justify approach)

 

- Testing details should show what is being tested, how many tests are needed, test objectives, ___methodology, expected results, etc.

 

- Compliance with industry standards: the product/processes' ability or inability to meet applicable standards

 

 
12
 

 

Project Period 1

 

Task ID: 1  

Title: Identification of Appropriate End Goals and Objectives of IntelliGym Ò treatment software for childhood ADD/ADHD

Objective: Establish the psychological objectives and criteria for influence of our platform.

Task Lead: BNAS

Estimated Time: February 1, 2012 – April 1, 2012 (60 Days)  

This task consists of 2 subtasks - (1) ADD/ADHD task analysis; and (2) running baseline tests with ADD/ADHD diagnosed children in order to profile their cognitive performance.

(1) Task Analysis – Analyzing the cognitive task of "being a child with ADD/ADHD" and how this influences daily life. We will be seeking to bring improvement to at least three specific domains with multiple measures in each domain. The three areas are i) behavior, ii) academic abilities and iii) higher level of cognitive ability (otherwise known as executive function). Next to each skill and sub-skill, an emphasis and weight are assigned. It is important to understand how often and to what extent each element is utilized, under what circumstances and what is the contribution of each element to the overall behavior and experience of each child. Significant literature already exists on this topic but we will need to spend significant time identifying those elements that are most applicable and relevant to our end goals and to the future capabilities of our software.

 

This detailed task analysis is a crucial fundamental building block for developing the assessment and treatment systems. It is used in the treatment design, in shaping the treatment paradigm and in testing the product. An accurate map will result in treatment system that stimulates the correct combination and degree of brain processes. It is also during this phase that we will be identifying the specific age range that we intend to have our product target. We may in fact have a few different versions of our product for different age ranges. Our assumption currently is that we will be successful in design a product for the 8-15 year old demographic.

 

(2) Baseline Observation – Once the common and prominent brain qualities of children are selected we will seek to gather baseline data on a population of children to validate our selection. The problem with this measurement is a lack of a standardized test battery for children. We will gather data from teachers and parents via surveys, questionnaires and telephone interviews. Results must be calibrated and validated on a wide population similar to the tested target audience. Our partners at the Hospital for Sick Children have a database containing similar data on over 17,000 children of target age. This data provides our researchers with accurate performance benchmarks for many relevant skills. Running this test battery is done by the cognitive research teams of BNAS and HSC.

 

Task ID: 2  

Title: ADD/ADHD Assessment Tool Selection  

Objective: Select appropriate assessment tools for inclusion into the platform.

Task Lead: BNAS  

Estimated Time: April 1, 2012 – April 11, 2012 (10 days)  

We will be selecting from amongst a number of accepted tools that exist in the field today to assess children suspected of ADD/ADHD for incorporation and integration into our psychological platform. As we've discussed elsewhere in this application, determination of ADD/ADHD is a difficult and somewhat lengthy process. We will however be seeking to bring some objective metrics to this activity in order to simplify the assessment. BNAS and its assembled consultants will perform this task with assistance from BNAS partner, HSC.

 

 
13
 

 

Task ID: 3

Title: Clinical study on the efficacy of the existing IntelliGym Ò in improving cognitive factors in ADD/ADHD diagnosed children.  

Objective: Establish the degree to which the current version of the IntelliGym Ò has a positive impact on ADD/ADHD diagnosed children.

Task Lead: All parties  

Estimated Time: April 15, 2012 – June 15, 2012 (60 days)  

Experts at the Hospital for Sick Children will gather study participants in order to validate the current IntelliGym Ò product for its impact on ADD/ADHD children. Using the scoring tools already embedded in the system we will be able to assess those areas that require attention and modification(s). The specific purpose of this study is not to necessary measure the success rate or impact rate of the existing software on children with ADD/ADHD but rather to gauge other elements such as user interface, game play, user experience, feedback loop, attention span, game play length etc. Prior to the commencement of the study some minor modifications will be necessary in order to tune the existing software to be more applicable to the adolescent market. This task will be run primary by BNAS (and HSC).

 

Task ID: 4

Title: Treatment Trainer Design  

Objective: Planning a video-game-like training environment that will be both effective and engaging

Task Lead: All parties

Estimated Time: June 15, 2012 – August 14, 2012 (60 days)

In this phase of the project, a detailed design of the "game" is laid out. This stage is highly important since it is the direct "translation" of the cognitive information gathered in the Task Analysis (Task 1) into a video-game-like environment. When this "game" is played, it should stimulate the same cognitive skills used by children (as identified in Task 1). This phase is divided into 3 sub-tasks, as follows:

 

(1) Functional Requirements – The first step in this process will be to list the functional requirements for the system. This list has to be coherent with the map of cognitive skills drawn in the task analysis. This is accomplished by transferring the raw data gathered earlier into a list of training environment functions. The resulting description will enable us to build a "game" that accurately addresses the required cognitive skills set.

 

(2) Conceptual Design – in this stage, a "game" concept is created. It contains the treatment program's main theme, structures, behavior and objectives. At this point, elements like user interface design are not addressed yet. For example, it has to be decided whether the "game" would be 2-dimentional or 3-dimentional (2D/3D); how "arcade like" will it be; what the basic rules are etc. In order to ensure an engaging and fun treatment environment (a trait which is sometimes called game "stickiness"), a gaming expert will be involved.

 

(3) Detailed Design - following the conceptual design, a functional design of the game is done. The main concern in this phase is to make sure that the "game" will yield a realistic simulation of the actual cognitive load taking in the desired life experiences of the child. In order to achieve this goal, "short feedback cycles" with children, parents and teachers are utilized. This methodology is entitled collaborative usability inspection (ISO-9241 - Usability Testing Standard). It will be done, in order to reduce the risk of forming an improper game.

 

Task ID: 5  

Title: Treatment Paradigm

Objective: Designing the framework of the training plan

Task Lead: All parties  

Estimated Time: August 15, 2012 – October 14, 2012 (60 days)  

The training paradigm is the core of the cognitive treatment program, and includes the definition of the mental "effort scale" necessary for the generation of effective treatment results, construction of the various treatment stages, setting of thresholds for personalization of the treatment plan and determining the "blend" of contents and the emphases during the treatment period. In an analogy to physical training in a fitness room, the training paradigm would be the "big picture" outline of the training curriculum: starting with a couple of weeks of light aerobic workout, then focus on certain muscles groups and so on. In cognitive terms, this framework states which and when each skill will be trained or treated and what is the optimal way of combining several elements of treatment. In addition, the training regimen is defined: how long should a treatment session last and how often would we recommend executing these treatment sessions.

 

 
14
 

 

Project Period 2

 

Task ID: 6

Title: Trainer software development

Objective: Release of a working prototype, and then beta version, of the product

Task Lead: All parties  

Estimated Time: November 1, 2012 – September 14, 2013 (317 days)  

In this phase the insights and definitions of previous tasks are embedded into a software program through a highly iterative process.  

Producing a "game-like" software program is done by a team. In this case, the team is even more diverse than the common practice. The usual development team will be comprised of a product manager, system analyst, user interface designer, graphic designer, programmer and tester. Here, the guidance of a cognitive engineer, psychologists and other ADD/ADHD experts will be required. Typical to a rapid development methodology (sometimes referred to as "Agile"), a QA plan is done in advance. However, the QA process is done manually. Testing a cognitive treatment system requires qualitative assessment and evaluation. The answers to important questions like "how difficult was it?" or "how do you feel about the feedback at this point?" cannot be answered by automated testing programs. The code is written using standard development tools. Selecting the tool will take into consideration the need to be compliant to many our desired system platforms (i.e. operating systems and hardware choices, e.g. Windows vs. Mac and desktop vs. tablet).

 

Task ID: 7  

Title: Detailed Training Plan

Objective: Specify elements of the treatment protocol

Task Lead: All parties  

Estimated Time: February 15, 2013 – May 1, 2013 (75 days)  

Typically, each treatment session will be divided into blocks and rounds. In this stage of the project, a detailed program of the actual treatment plan is laid down. Using the analogy of a physical training, this plan has the details of the actual workout, the number of repetitions of each action etc.

 

As an illustration to the amount of detail required in this program – the existing

 

Treatment Plan of the Basketball IntelliGym Ò contained up to 34 sessions. Each session has 20 to 35 rounds of approximately 30 seconds. Each round is defined by some 80(!) different parameters determining the character of the challenge, the level of difficulty, speed, colors, background sound and images, number of moving objects and their trajectories, information to be presented before and after the round etc.

 

Putting together a full Treatment Plan requires a combination of intense cognitive engineering know-how and an innovative and creative approach. The Plan has to strictly adhere to the broader definitions of the treatment paradigm. However, within these rigid boundaries, an engaging and fun game environment has to be created. Here again, a collaboration of a cognitive engineer, gaming expert and hockey coach is required. In addition, some programming time is required as well to facilitate the plan's data structure. In the past, this data was handled via a standard spreadsheet. However, the complexity of the treatment plan of the proposed product requires a multi-dimensional data structure that will be facilitated in a relational database.

 

 
15
 

 

Task ID: 8  

Title: Alpha and Beta testing with sample populations

Objective: Fine-tuning the training plan and its dynamic self-adjustment algorithms  

Task Lead: BNAS

Estimated Time: May 5, 2013 – September 2, 2013 (120 days)  

In this phase both technical performance testing takes place as well as formal, full scale beta testing. First, a sample of the target population will try the alpha release of the system and their treatment data will be collected. Various performance and usability parameters will be measured and compared to a control group. More than one test iteration may likely be required. In this phase various aspects of the training process are reviewed, such as program effectiveness, adjustment to target audience and user interface factors. It is essential that this test-run will be done as close as possible to the actual use by future customers – children in the designated age group(s).

 

This task is performed in two phases: a calibrated treatment plan enables the more delicate task of fine-tuning the multi-dimensional TRAP-Vector (detailed description of the TRAP-Vector is provided earlier in this chapter).

 

Task ID: 9  

Title: Design and Development of Administration and Reporting Tools  

Objective: Planning an effective administration and monitoring tool for coaches

Task Lead: All parties

Estimated Time: November 1, 2012 – September 14, 2013 (317 days)  

After the treatment apparatus for the child is in place, it is possible to design the 'tool-box' for the parent or therapist to control and manipulate it. This utilities-set includes a capability to control various aspects of the treatment program and as well as the generation of progress reports for each of the concerned parties (child, parent, teacher, therapist, physician). The same methodology used for designing the player's module (task 4), will be applied here. Hence, this task is performed in three stages: functional requirements, conceptual design and detailed design. See task 4 above for a detailed description.

 

 
16
 

 

ANNEX D - ROYALTY PAYMENTS ON SALE OF PATENTED PRODUCTS

 

1.

ROYALTY RATE: The Royalty Rate in accordance with SubSection G.2 shall be 2.5 %.

 
2.

ROYALTY BASE:

 

(a) Where the product sold by the Third Party consists of the Innovation and such Innovation consists essentially of, or depends primarily on, a patented invention or inventions made in whole or in part during the performance of CIIRDF-supported work on the project, the Royalty Base shall be the selling price of the product as defined in SubSection G.2.

 

(b) Where the product sold consists of an assemblage of subsystems or entities, the Royalty Base shall be the selling price of the product multiplied by a fraction the numerator of which shall be the manufacturing cost of those subsystems or entities which incorporate a patented invention or inventions made in whole or in part on the implementation of the Proposal, and the denominator of which shall be the manufacturing cost of the product sold.

 

(c) If, however, a market price shall have been established for any subsystem or entity which incorporates a patented invention or inventions made in whole or in part under this project and which is sold separately, sold as part of the Innovation, or sold as part of any other product, such market price shall be the Royalty Base.

 

3.

ROYALTY: The Royalty due shall be the Royalty Rate multiplied by the appropriate Royalty Base.

 
4.

ROYALTY PAYMENTS:

 

(a) Save as provided in sub-paragraph (c) of this paragraph 4, no Royalty payments shall be made on sales between the Proposer and the Third Party.

 

(b) The Proposer shall make Royalty payments, as computed according to paragraphs 1., 2., and 3. of this Annex D, only when there is outstanding obligation of the Proposer with respect to payments under Section G of this Agreement.

 

(c) However, in no event shall the Proposer's obligation with respect to payments be greater than the amounts indicated in Sub-Section B.3(b) of this Agreement. Should the Proposer's obligations for payment to CIIRDF under Sub-Section B.3(b) not be fully discharged, any such deficiency shall be made up from Royalty payments on sales of the products between the Proposer and the Third Party under sub-paragraph (a) of this paragraph 4, if any.

 

5.

TERMS OF ROYALTY PAYMENTS:

 

The obligation to make Royalty payments in the full amount under this Agreement shall continue for the life of the last-to-expire patent issued on any invention made in whole or in part under this CIIRDF-supported project.

 

6.

Royalty payments shall be made on a semiannual calendar basis; commencing at the end of the semiannual period during which any royalty first becomes due.

 

7.

DEFINITIONS

 

The terms "Royalty Rate", "Royalty Base" and "Royalty" shall have the meanings as respectively provided in paragraphs 1, 2 and 3 of this Annex D, and "Third Party" shall mean such third party person(s) who is granted the right for the sales of any products embodying the Innovation or made by practicing the Innovation under a license of a patent obtained for the Innovation.

 

 
17
 

 

ANNEX E - LICENSE AGREEMENTS

 

1.

If any patented invention or inventions made in whole or in part during this project becomes the subject of any license agreement between the Proposer and [Israeli Company], or either Proposer, and a third party, such licensor-Proposer shall pay to CIIRDF 30% of all payments received by it under such license agreement.

 
2.

If any technology developed, but not including any patented invention or inventions made in whole or in part during this CIIRDF-supported project, becomes the subject of any license agreement between the Proposer and [Israeli Company], or the Proposer, and a third party, such licensor-Proposer shall pay to CIIRDF 30% of all payments received by it under such license agreements.

 
3.

In no event shall this Annex E be construed as requiring payments of any amounts greater than those indicated in Sub-Section B.3 of this Agreement.

 
4.

"License Agreement" as defined in paragraphs 1. and 2. of this Annex E shall comprise only license agreements under which the Proposer, cedes to third parties the rights to use any patents or technology arising from this CIIRDF-supported project for purposes of using said patents or technology for engendering sales or products developed hereunder. "License Agreements" shall not include any license agreements which the Proposer, enters into as a necessary, common or convenient means by which said products are sold to end-users in the ordinary course of business.

 

 
18
 

 

ANNEX F – REPORTING GUIDELINES

 

All reports must be prepared jointly by both companies and submitted to CIIRDF office in Ottawa. Technical and fiscal reports must be submitted to and approved by CIIRDF prior to the transfer of all grant payments except for the initial grant payment made on execution of the Cooperation and Project Funding Agreement (CP F A).

 

·

Full-Scale Projects: The Technical and Fiscal Reports for Interim Evaluation are to be submitted within 30 days following the expiration of the Interim Segment of the project. The Interim Segment is the mid way point of the entire project period. Final Technical, Fiscal and Commercialization Reports are to be submitted within 60 days following the completion date of the project.

 

 

·

Feasibility Projects: Due to the nature of these projects, NO Interim Reports are required. Only Final Technical and Fiscal Reports are to be submitted within 60 days of the completion of the project. Part III of the Final Report is not required for Feasibility Projects.

 

1.

INTERIM REPORTS (for Full-Scale Projects)

 

a)

Should be prepared according to the Technical Report Outline and Fiscal Report Outline.

 
b)

Must be submitted within 30 days from the ending of the interim period.

 

2.

FINAL REPORTS

 

Three (3) Parts  

 

a)

Part I should be prepared according to the Technical Report Outline.

 
b)

Part II should be prepared according to the Fiscal Report Outline.

 
c)

Part III should be prepared according to the Commercialization Report Outline

 

The Final Report must be submitted within 60 days following the completion date of the project .

 

3.

INFORMAL REPORTS

 

a)

CIIRDF welcomes any additional informal reporting of significant project events, positive or otherwise.

 
b)

In the event of favorable variations or unforeseen problems, our early awareness will enable us to work with the Project Manager or team in any necessary rescheduling or program activities.

 
c)

As a contributor to the project, CIIRDF may request for informal reports, without prior notice, in attempt to be kept informed of the project's status.

 

PLEASE NOTE THAT INFORMAL REPORTS ARE NOT CONSIDERED AS SUBSTITUTE FOR THE FORMAL REPORTING OUTLINED ABOVE.

 

 
19
 

 

A: TECHNICAL REPORTS

 

Technical reports submitted to CIIRDF will be treated as confidential to the extent described in the Confidential Disclosure Agreement. Nonetheless, proprietary or commercially sensitive information should be identified as such.

 

The purpose of the technical report is to enable CIIRDF to monitor project progress, and to justify any adjustments or modifications incurred by the project to the original work p lan (as detailed in Annex C of the CPFA) ; furthermore, to provide CIIRDF a viable basis for continued disbursement of the grant award. Results of unusual interest should be highlighted.

 

1.

REPORT OUTLINE

 

a)

Cover Page - refer to Technical Report cover page (sample)

 
b)

Table of Contents

 
c)

Objectives - state overall objectives of the project and of the work performed during the segments covered by the report.

 
d)

Summary of accomplishments (including inventions) - this should discuss and update on the methods and results of the investigations/development. The summary should be self-sufficient and understandable to someone who reads nothing else in the report

 
e)

RESULTS - describe with reference to the Program Plan, the results obtained during the reporting segment on an activity-by-activity basis. Identify and describe results that represent significant variation from the Program Plan. Discuss any activities/tasks that may have been eliminated or added to the Program Plan, and give the reasons for the changes. Indicate how such modifications will affect the nature of the product being developed in terms of features, specifications, performance, etc

 
f)

Graphical comparisons of results versus Program Plan. Using the Program Plan (Annex C of CPFA), show graphically the project status and explain any deviations from the plan.

 
g)

For interim reports only: Outline plans for next project segment showing any rescheduling or additions to activities on the Program Plan and indicate which, if any, of the originally planned activities/tasks are being terminated or redirected. Discuss the impact of rescheduled activities on original Plan, and whether additional time will be needed to complete project. (Note: if additional time is needed, a separate written request should be jointly submitted by the companies

 
h)

Cooperation between the companies - discuss the activities conducted during the reporting segment that have enabled the companies to keep abreast of each other's progress. Has the division of tasks and responsibilities between the two companies been integrated to mutual benefit? Any problems that have developed in this regard should be noted, along with details of corrective measures that have been taken or are planned.

 
i)

Published reprints - attach a copy of any reprint that is based, in whole or in part, on the work conducted on the CIIRDF project. Include a report on any inventions or patents filed. Technical and user manuals do not have to be submitted.

 

 
20
 

 

2.

TECHNICAL REPORT COVER PAGE (SAMPLE)

 

To: CIIRDF, Canada-Israel Industrial Research and Development Foundation

 

Project File No: _____________________________________________________________

 

Project Title: _______________________________________________________________

 

__________________________________________________________________________

 

 

Company Names

 

(Israeli Company): ____________________________________________________________

 

(Canadian Company): __________________________________________________________

 

Type of Report: (Interim; Final) __________________________________________________

 

Project Start Date: ___________________________________________________________

 

Period Covered: _____________________________________________________________

 

 

 

Company Name

 

Company Name

 

Project Managers :

 

Israeli Company Officer

 

Canadian Company Officer

 

 

 

 

 

 

 

Signature

 

 

 

 

 

 

 

 

 

 

 

Printed Name

 

 

 

 

 

 

 

 

 

 

 

Authorized Company Official

 

 

 

 

 

 

 

 

 

 

 

Signature

 

 

 

 

 

 

 

 

 

 

 

Printed Name

 

 

 

 

 

 

 

 

 

 

 

Date Submitted

 

 

 

 

 

 

 
21
 

 

B: FISCAL REPORTS

 

The purpose of the fiscal reports is to enable CIIRDF to monitor actual expenditures on the project and to assist in decisions relating to the continued funding of the project.

 

All expenses incurred on a CIIRDF-supported project must be itemized. Expenditures in all categories should be shown along with the Approved Project Budget for the relevant segment, as per Annex A of the CPFA.

 

CIIRDF recognizes expense variations from budget of up to 10% within any of the major budget categories : Direct Labor, Subcontracts, Consultants, etc., with the understanding that the total amount does not change. However, during the course of the project, should the actual expenses relating to any budget category be expected to exceed the 10% variation allowed or a need to transfer between budget line-items occurs , a request for an amendment to the budget must be submitted. Clear and complete reasons and explanations should substantiate this request .

 

1.

REPORT OUTLINE

 

a)

Cover Page – refer to Fiscal Report cover page (sample)

 
b)

Total Actual Expenditures – compare against the approved budget amount (taken from Annex A of the CPFA)

 
c)

Direct Labor – report on percentage time for employees engaged in the project, whom should be clearly identified (see Budget Guidelines for details).

 
d)

Equipment – an itemized worksheet must be included in the report indicating dates of purchase and/or commencement of lease and percentage use on the project (see Budget Guidelines for details).

 
e)

Travel – both foreign and domestic travel must be reported in detail (see Budget Guidelines for details) A brief description of the objectives of the trip and its relation to the project should be available at the company for inspection during auditing of the fiscal reports.

 
f)

All Other Budget items – the expenses reported must be itemized in accordance with and in reference to the original budgets submitted as part of the Cooperation Project Funding Agreement. (see CPFA attachment)

 

 
22
 

 

2. FISCAL REPORT COVER PAGE (SAMPLE)

 

( Separate cover page to be submitted by each company)

 

To: CIIRDF, Canada-Israel Industrial Research & Development Foundation

 

Project File No: __________________________________________________________ _____

 

Project Title: _____________________________________________________________ ____

 

Company Name:___________________________________________________________ ____

 

Type of Report (Interim; Final): _ ___________________ ________________________ __ _____

 

Project Start Date: __________________________________________________ ____ ______

 

Period Covered: _____________________________________________________ _____ ____

 

EXPENDITURE   BUDGET

$ ACTUAL

 

$ TOTAL APPROVED

(Per Annex A of CPFA)

 

Direct Labor

Overhead @ 25%

Total Direct Labor

 

Equipment

Materials & Supplies

 

Travel :

Foreign

Domestic

 

Data Processing

 

Subcontracts

 

Consultants

 

Other Expenses

 

Total Expenditures

 

G&A @ 5%

 

Total Company Expenditure

 

Budget for Current Reporting Period:

 

Estimated Budget for Next Reporting Period (if relevant):

 

 
23
 

 

We confirm that this report is prepared from separate accounting records maintained for recording the entire project expenditures. The Project Manager's signature is his/her confirmation that all listed items and expenditures were within the framework of the project.   

 

Printed name and signature:

 

 

 

 

 

Project Manager Official

 

Accounting Official

 

Authorized Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

Date Submitted: ____________________

 

 
24
 

 

C: COMMERCIALIZATION REPORT

 

This report should describe the Market and Commercialization plans and identify any important changes that have developed in the course of completing the Project. It should explain the impact on overall Program Plan and budget and describe the outcome of the project in commercial terms.

 

1.

REPORT OUTLINE

 

a)

Detailed market and product descriptions, including a discussion on changes in the product definition, market size and growth rate;

 
b)

Quantitative updated forecast of the relevant market size and growth rate over the next 3 years;

 
c)

Market acceptance of the products/processes developed, current sales and cash flow forecasts, new product opportunities and any further activities planned jointly by the project partners

 
c)

The original estimate of the sales /licensing revenue from the product submitted in the project proposal to CIIRDF when the companies applied for CIIRDF funding;

 
d)

The revised (current) forecast of the sales / licensing revenue expected over the next 1 – 3 years. Include also the % that is applied to this revenue as the basis for repayment to CIIRDF (this % as was agreed upon and formalized in the CPFA;

 
e)

Explain the reasons for differences between the revised sales / licensing revenue forecast currently presented and that which was submitted with the original proposal

 
f)

Provide an accurate and concrete commercial plan to include detailed action items such as,

 

 

 

·

List of target clients

 

 

 

 

 

 

·

Marketing strategy or plan

 

 

 

 

 

 

·

Schedule for product launching

 

g)

Plan to overcome any new unforeseen obstacles

 
f)

Detailed repayment schedule for both companies showing the projected annual repayments of the grant until completion of repayments.

 

 
25
 

 

D: SALES REPORTS

 

1.

REPORT OUTLINE

 

Reports on Sales are reported to CIIRDF on a bi-annual calendar basis, for the periods of January to June and July to December, commencing from the completion date of the project . Reports are due within 60 days following the end of each of these bi-annual periods. Standard reporting format is to be used. Refer to Report On Sales sample .

 

Reports on Sales can be in the form of any of, but not limited to, the three primary categories as defined in the CPFA:

 

1.

Gross Sales , include all product revenues from the "sale, leasing, or other marketing or commercial exploitation of the Innovation, including service or maintenance contracts." Repayments are made at the stated repayment rate (in the CPFA); generally at 2.5 % of the Gross Sales. Please note that the "Date of First Sale" is important for those agreements in which the repayment rate changes following the first year of sales. The date of first sale will be used to determine when to implement the change in repayment rate. If the repayment rate changes during the current reporting period, the gross sales amount must be allocated into two amounts, i.e., sales during and subsequent to the first year of commercialization. The appropriate repayment rates shall then be applied. The form allows for both sales and repayment information to be reported.

 
2.

Revenues resulting from sales of patented inventions are covered in Section G and Annex D of the CPFA. The grant repayment rate on these revenues is 1.5 % and repayment becomes due as detailed in Subsection B.4.

 
3.

Revenues derived from license Agreements , as described in Annex E of the CPFA, are subject to repayment to CIIRDF at the rate of 30%.

 

It should be noted that cumulative repayments and royalties due to CIIRDF, from any and all source of revenues, are not to exceed 100% of the grant funds actually awarded to the participants.

 

 
26
 

 

D: REPORT ON SALES Template

 

To: Canada-Israel Industrial Research and Development Foundation (For the current semiannual period)

 

Project File No: _____ 

 

Project Title : _____________________________________

 

 

 

Company Name: _______________ 

 

Partner Company Name: ________________

 

For the period _______________to ______________ (dd/mm/yy)

 

____________________________________________________

 

Semiannual Company Revenue – Total revenue from all goods and services

 

From: _________

 

To: _________

…………………………..…

 

Date of first sales revenue from the developed products: _______________ (dd/mm/yy)

 

Semiannual revenue from the developed products, and repayment to CIIRDF:

 

For the period

(dd/mm/yy)

Most recent revenue forecast submitted to CIIRDF for the period ( CAD $)

Total revenues for the period – basis for repayment (CAD $)

Repayment rate (%)

Repayment due (CAD $)

From: _________

 

To: _________

…………………………..…

……………………

…….……..

………….

 

 

·

List all products in which the "Innovation" is used, in whole or in part, including products not mentioned in the project proposal and including all products reported in the sales report above:

 

 

 

 

·

If the products were not developed to commercial readiness, is there a substantial possibility that they will in the future? If yes, when and what does it depend on?

 

 

a)

If a process such as clinical studies have to be undertaken prior to commencement of sales please provide a report giving a summary of progress and expectations

 

 

 

b)

If commercialization is still dependant on gaining financing or regulatory approvals please specify what activities have been undertaken to further these ends (specify bodies approached etc.)

 

 
27
 

 

 

·

If commercialization differs from previous projections please explain why and insert your updated projections.

 

 

 

 

·

Has the technology developed in the project also been commercialized by your partnering company to the CIIRDF project? Yes/No

 

 

 

 

·

Was service or maintenance revenue derived from sales of the developed products? Yes/No

 

 

 

 

·

If yes, please include it in the sales report below.

 

 

·

Please furnish, as an attachment, a separate report on income derived from licensing or sales of the technology developed in the CIIRDF project

 

 

 

 

·

Please specify how the completed CIIRDF project has impacted on any or all of the following:

 

 

a)

Number of new jobs created

 

b)

Any increased investment in the company

 

c)

Entry into new markets

 

d)

Increased market share in existing markets

 

e)

Increased valuation

 

f)

Further R&D or business collaborations

 

g)

Spin off companies created

 

h)

Development of other products or processes within the company

 

i)

Development of new technological or scientific expertise within the company

 

j)

Development of highly qualified people (including training)

 

k)

Access to new facilities, R&D infrastructure or technology services

 

l)

Opportunities for promotion and influence

 

m)

Social or community benefits

 

Forecast of semiannual revenue from the developed products (basis for repayments to CIIRDF) for the next 4 semiannual periods:

 

____________ to ____________                        $____________________

 

____________ to ____________                        $____________________

 

____________ to ____________                        $____________________

 

____________ to ____________                        $____________________

 

The undersigned confirm that this report is prepared from the company's accounting records in which all commercialization activity relevant to the Cooperation and Project Funding Agreement, subject to repayments are recorded and that this report is accurate and true in its contents.

 

Company Officer Accounting Official  

 

Signature:

 

 

 

 

 

 

 

 

 

 

 

Printed Name:

 

 

 

 

 

 

 

 

 

 

 

Title/Position:

 

 

 

 

 

 

 

 

 

 

 

E-mail:

 

 

 

 

 

 

 

 

 

 

 

Date Submitted:

 

 

 

 

 

  

 
28
 

 

ANNEX G– PROPOSAL

 

As per the proposal received by CIIRDF on November 15, 2011 , and signed by Neil Closner of Behavioural Neurologcal Applications and Solutions Inc. and Danny Dankner of Applied Cognitive Engineering Ltd.

 

 

29


EXHIBIT 10.13

 

MEMORANDUM OF UNDERSTANDING

 

THIS MEMORANDUM OF UNDERSTANDING (the "MOU") is made effective as of December 8, 2011 (the "Effective Date"), by and between Behaviour Neurological Applications and Solutions ("Company"), and The Hospital for Sick Children ("Hospital"), located at 555 University Avenue, Toronto, Ontario, Canada (collectively, the "Parties").

 

AND WHEREAS, Hospital and Company have collaborated on the development of a protocol entitled "Development of a Software Based Treatment program for Children with ADD/ADHD" (the "Project");

 

AND WHEREAS, the Project will be funded by a contribution ("Financial Contribution") pursuant to a Technology Development Program Contribution Agreement entered into between the Ontario Brain Institute ("OBI") and the Federal Economic Development Agency for Southern Ontario ("FedDev") dated March 21, 2012 ("Contribution Agreement"); and

 

AND WHEREAS the Parties entered into a Collaboration Agreement, with an effective date of December 8, 2011 to set out their respective understandings, rights and obligations concerning the Financial Contribution from FedDev which will be disbursed through OBI;

 

AND WHEREAS, Hospital and Company wish to enter into this MOU to set out their mutual understanding and agreement regarding certain matters related to intellectual property that may arise from the Project.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, and intending to be legally bound hereby, the parties hereto agree to the following terms and conditions:

 

1 Capitalized terms not defined in this MOU will have the meaning ascribed to such terms in the Collaboration Agreement.

 

2. For clarity, the Parties agree that any intellectual property that results from or arises from the Project shall be Project Intellectual Property and will be subject to the Option granted under Section 4.1 of the Collaboration Agreement.

 

 
 
 

 

 

3. The Parties agree that if the Company exercises the Option granted in Section 4.1 of the Collaboration Agreement, any license that may be negotiated pursuant to such Option will include mutually agreeable terms, including at a minimum, the following:

 

a. A definition of "Licensed Product(s)", which shall mean: "any products, processes, or services based upon or created using Project Intellectual Property."

 

b. A definition of "Net Sales", which shall mean: "gross revenue actually received by Company, affiliates and sublicensees, if any, from the use, sale or other distribution of a Licensed Product less the sum of: (i) sales taxes, tariff duties and/or use taxes directly and paid with reference to such sales; (ii) out of pocket outbound transportation charges paid with reference to such sales; (iii) amounts allowed, adjusted, or credited on returns of Licensed Product(s); (iv) amounts that are uncollectable as bad debts; and (v) the actual cost of any commission paid to an arms-length third-party internet distributor for on-line sales of Licensed Products. No deductions shall be made for commissions paid to individuals or for cost of collections. Licensed Product(s) shall be considered used, sold or distributed when billed out or invoiced."

 

c. A term that indicates that the Hospital will receive a royalty of five percent (5%) of Net Sales until cumulative Net Sales equal fifteen million dollars ($15,000,000) and thereafter a royalty of two and one-half percent (2 'Y2 %) of Net Sales until cumulative Net Sales equal twenty-five million dollars ($25,000,000). For clarity, the Parties agree that the Hospital will earn up to one-million dollars ($1,000,000) in royalties on Net Sales. After the Hospital has collected royalties equaling one-million dollars ($1,000,000), the Hospital will assign its legal interest in the underlying Project Intellectual Property to the Company, except the Hospital will perpetually retain a non-exclusive license to use the Project Intellectual Property for non-commercial research, educational and internal clinical purposes.

 

4. This MOU will be governed by the laws of the Province of Ontario and the laws of Canada applicable therein. All dollar amounts in this Agreement are expressed in Canadian funds. Subject to any amendments or waivers made in accordance with this Section, this MOU constitutes the entire agreement between the parties with respect to the subject matter hereof. If any provision of this MOU is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such determination shall not impair or affect the validity, legality or enforceability of the remaining provisions hereof, and each provision is hereby declared to be separate, severable and distinct. No amendment or waiver of any provision of this MOU shall be binding on the Parties hereto unless consented to in writing by the Parties. No waiver of any provision of this Agreement shall constitute a waiver of any other provision, nor shall any waiver constitute a continuing waiver so as to impair such party's rights to future enforcement of its rights unless otherwise expressly provided in writing.

 

5. The terms of the Collaboration Agreement shall supersede any inconsistent provision of this MOU.

 

 
 
 

 

 

  IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement effective as of the date first written above.

 

 


 

EXHIBIT 10.14
 
COLLABORATION AGREEMENT  
 
THIS COLLABORATIVE RESEARCH AGREEMENT (the "Agreement") is made effective as of December 8, 2011 (the "Effective Date"), by and between the Ontario Brain Institute ("OBI"), Behaviour Neurological Applications and Solutions ("Company"), and The Hospital for Sick Children ("Hospital"), located at 555 University Avenue, Toronto, Ontario, Canada.
 
WHEREAS OBI is a not-for-profit corporation located in Southern Ontario planning to undertake the development and commercialization of technology, as more fully described in this Agreement, in collaboration with other not-for-profit corporations, post-secondary institutions and private sector entities located in Southern Ontario;
 
WHEREAS the Southern Ontario Development Program (SODP) was created to support the Federal Economic Development Agency for Southern Ontario's ("FedDev") mandate to help make Canadians more productive and competitive in a knowledge-based economy, by supporting economic development, economic diversification, job creation, and sustainable, self-reliant communities in Southern Ontario;
 
WHEREAS the Technology Development Program is an initiative of the SODP with the aim of addressing the funding gap between business-driven research and development by encouraging greater collaboration and partnerships between private and public sectors located in Southern Ontario on innovative, game-changing technologies.
 
WHEREAS OBI has entered into a Contribution Agreement ("Contribution Agreement") with the Minister responsible for the Federal Economic Development Agency for Southern Ontario ("Minister") pursuant to which the Minister has agreed to provide a contribution to OBI for its eligible and supported costs of the Projects subject to the terms of this Agreement (as defined below);
 
WHEREAS the OBI has identified 14 projects at research institutes in partnership with the private sector, with potential to accelerate the commercial development of neurotechnology projects founded on Ontario's world-leading academic and clinical research;
 
WHEREAS FedDev will provide funding support to OBI to assist it in achieving its goals and executing the Project described in the Contribution Agreement dated 28 Mach 2012;
 
AND WHEREAS the Hospital and Company of this Project have submitted an application to OBI for funding support as part of The Development of the Ontario Neurotechnology Cluster FedDev application with the Project entitled: "Development of a software based treatment program for ADD/ADHD in children";
 
AND WHEREAS OBI, the Hospital and Company wish to set out in this Agreement their respective understandings, rights and obligations concerning the Financial Contribution from FedDev which will be disbursed through OBI;
 
 
1
 
 
 
 
NOW, THEREFORE , in consideration of the premises and mutual covenants contained herein, and intending to be legally bound hereby, the parties hereto agree to the following terms and conditions:
 
SECTION I - Definitions
 
1.1 "Confidential Information" shall mean (a) all information arising out of the Project and (b) all information disclosed by the Disclosing Party to the Receiving Party, whether disclosed orally or in written, graphic or electronic form. In particular, but without limitation, Confidential Information shall include, but not be limited to, the Disclosing Party's scientific, technical and business information such as patent applications, trade secrets, inventions, ideas, procedures, formulations, processes, formulas, data, business plans and strategies, business operations and systems, and information concerning existing and potential employees, customers, strategic partners and licensees. The term "Confidential Information" shall not, however, be deemed to include information that the Receiving Party can demonstrate by competent written proof: (i) is now, or hereafter becomes, through no act or failure to act on the part of the Receiving Party, in the public domain; (ii) is known by the Receiving Party at the time of receiving such information, as evidenced by its records; (iii) is independently developed by or for the Receiving Party by employees or contractors who did not have access to the Confidential Information; or (iv) is hereafter furnished to the Receiving Party by a third party, as a matter of right and without restriction on disclosure.
 
1.2 "Disclosing Party" means any party to this Agreement providing information to any other party to this Agreement.
 
1.3 "Inventor" shall mean an individual who qualifies as an inventor according to the definition of this term under U.S. patent law, and who is employed by Hospital or Company or who is contractually required to assign intellectual property to Hospital or Company.
 
1.4 "Project Intellectual Property" includes, without limitation, all designs, specifications, software, data, drawings, plans, reports, patterns, models, prototypes, demonstration units, practices, inventions, methods and related technology, processes or other information conceived, produced, developed or reduced to practice in carrying out the Project, and all rights therein, including, without limitation, patents, copyrights, industrial designs, trade-marks and any registrations or applications for the same and all other rights of intellectual property therein, including any rights which arise from the above items being treated as trade secrets or confidential information.
 
1.5 "Patent" shall mean any present or future patent or patent application in Canada or elsewhere, any pending patent applications, and any future patent covering the Project Intellectual Property or any part thereof.
 
1.6 "Receiving Party" shall mean a party receiving information from any other party to this Agreement.
 
 
2
 
 
 
 
1.7 "Duration of the Contribution Agreement" is 12 months after the earlier of Project Completion date of 31 March 2014 or the completion of the project.
 
1.8 "Control Period" The parties agree that, for the purposes of this Agreement, the "Control Period" means the period of six (6) years following the Duration of the Agreement.
 
SECTION II - Collaborative Research: Term and Termination
 
2.1 The Hospital and Company shall each perform the tasks and activities allocated to the Hospital and Company in Appendix A. The parties acknowledge and agree that Dr. Russell Schachar (the "Investigator") shall have primary responsibility for overseeing the Hospital's role in the Project.
 
2.2 The Company shall devote the cash or in-kind resources to the Project as outlined in the budget included in Appendix A. The Company agrees that the Company Contribution shall be equal to at least fifty percent (50%) of all funding provided to the project through OBI from FedDev, on a combined basis.
 
2.3 OBI shall disburse the Financial Contribution to the Hospital according to the payment terms in the Contribution Agreement and according to the budget included in Appendix A, attached to this Agreement and as OBI receives funds from FedDev. None of the Financial Contribution funds are payable to the Company. The Company will be solely responsible for any cost overruns and funding shortfalls relating to the Project. The Hospital shall submit a Claim Statement (the form of which is attached as Exhibit B) to OBI to be reimbursed for cash expenses incurred, no less frequently than quarterly. Notwithstanding the foregoing, the Hospital may submit Claim Statements as frequently as monthly to allow for a timely reimbursement of cash expenses. The Attestation Form (attached as Exhibit C) must be used for labour expenses. The Company must attest and document that the Company's in-kind Contribution is greater than or equal to the Financial Contribution. As such, the Company is required to submit signed reports to the Hospital within 45 days after the end of each quarter, containing sufficient detail to permit the Hospital to prepare a financial Claim Statement.
 
2.4 The parties acknowledge and agree that according to Section 6.7 of the Contribution Agreement, if any interest is earned by the Hospital as a consequence of any advance payment of funds under the Contribution or if revenue is earned from all or part of the activities supported by the Contribution, FedDev may in its sole and absolute discretion reduce the Contribution by all or by such portion of the revenue (including the interest) as FedDev deems appropriate.
 
2.5 The term of this Agreement shall commence on the Effective Date and shall remain in effect until the expiration or termination of the Contribution Agreement, unless sooner terminated in accordance with Section 2.6 of this Agreement. 
 
2.6 Any party may terminate this Agreement upon thirty (30) days advance notice in the event of default by another party, provided that the defaulting party may prevent termination by curing the default within such thirty (30) day period. For purposes of this Section, a party shall be in default if such party makes a misrepresentation, fails to comply with a term or condition of this Agreement, commits an act of bankruptcy, becomes insolvent, winds-up or is dissolved, ceases or substantially ceases to carry on its business, or sells all or substantially all of its assets. Notwithstanding anything to the contrary in this Agreement, the following sections shall survive termination of this Agreement: Section I, Section 2.2, 2.4, 2.5, 2.6, Section IV, Section VI, Section VII and Section VIII.
 
 
3
 
 
 
 
SECTION III - Intellectual Property and Assets
 
3.1 The parties agree that all background intellectual property of a party and all intellectual property of a party that is created during the term of this Agreement that is not Project Intellectual Property remains the property of that party and the other party shall have no right or license to it, except as otherwise specifically set out herein.
 
3.2 All rights and title to Project Intellectual Property shall belong jointly to Hospital and Company. The Hospital and Company shall retain such ownership of Project Intellectual Property for the duration of the Contribution Agreement. Notwithstanding the applicable patent or other intellectual property laws in any jurisdiction, none of the parties may commercially exploit any Project Intellectual Property except as specifically provided for in Section 4.
 
3.3 Each party shall promptly notify the other party = of any Project Intellectual Property that is created during the term of this Agreement. Within 90 days of becoming aware of the creation of Project Intellectual Property, a party shall provide a written notice to the other party providing a detailed description of the Project Intellectual Property. The Company shall ensure that appropriate steps are taken to protect the Project Intellectual Property and shall, upon request, provide information to the Hospital, OBI, and FedDev in this regard.
 
Company may elect to file one or more Patents relating to such Project Intellectual Property, in which case Company shall promptly prepare, file, and prosecute such Patents in such jurisdictions as Company determines in the joint names of Hospital and Company. Company shall bear all costs incurred in connection with the preparation, filing, prosecution, and maintenance of such Patents. If Company does not elect to file one or more Patents within the Option Period (defined below), Hospital may elect to file one or more Patents relating to such Project Intellectual Property, in which case Hospital shall promptly prepare, file, and prosecute such Patents in such jurisdictions as Hospital determines in the joint names of Hospital and Company.
 
3.4 Company shall cooperate with Hospital to ensure that all Patents it files cover, to the best of Company's knowledge, all items of commercial interest and importance. While Company shall be responsible for making final decisions regarding the scope and content of those Patents and the prosecution thereof, Company shall keep Hospital informed of all material developments regarding those Patents, shall provide Hospital with copies of all Patents and related documents, and shall provide Hospital with a reasonable opportunity to comment on all material documents relating to the Patent process. Company shall promptly provide Hospital with copies of any issued Patents, as well as related serial numbers and filing dates.
 
 
4
 
 
 
 
3.5 If any party intends to file a patent application on subject matter that is related in any way to the Project but does not constitute Project Intellectual Property covered by this Agreement, that party shall give notice to the other party, at least 30 days prior to filing its patent application, of the basic subject matter of the patent application, the claims being made in the patent application and the names of the inventors on the patent application.
 
3.6 In accordance with Section 14.1 of the Contribution Agreement, the Hospital shall retain title to, and ownership of any assets (excluding Project Intellectual Property), the cost of which has been contributed to by FedDev under the Contribution Agreement and shall not sell, assign, transfer, encumber, pledge, grant a security interest or otherwise dispose of same, without the prior written consent of FedDev. If such assets are jointly owned by the Hospital and Company as a result of the sharing of acquisition costs, this Section will apply only to the portion owned by Hospital.
 
3.7 In accordance with Section 14.2 of the Contribution Agreement, any assets (other than Project Intellectual Property) the cost of which has been contributed to by FedDev under the Contribution Agreement may be owned by the Hospital, provided that for the duration of the Contribution Agreement and the Control Period (as defined in the Contribution Agreement) the Hospital will not sell, assign, transfer, encumber, pledge, grant a security interest or otherwise dispose of such assets other than in a manner set out in Subsection 14.1 of the Contribution Agreement.
 
SECTION IV - Grant of Rights
 
4.1 Hospital hereby grants to Company the option to obtain (the "Option") an exclusive, world-wide, perpetual, royalty-bearing license to use or otherwise exploit Hospital's interest in Project Intellectual Property, subject to terms and conditions determined in accordance with this Section 4 under reasonable licensing terms. The option shall exist for a period of 12 months after written disclosure of the Project Intellectual Property (the "Option Period"). The Option may be exercised within the Option Period by Company delivering written notice to Hospital (the "Option Exercise Notice").
 
4.2 If Company exercises the Option, the parties shall negotiate in good faith to determine the specific terms and conditions on which the license shall be granted by Hospital to Company.
 
4.3 If Company obtains a license to Project Intellectual Property pursuant to this Agreement and reasonably requires the ability to use or otherwise exploit Hospital's intellectual property that is not also Project Intellectual Property, Hospital shall grant a license to use or otherwise exploit such intellectual property, if available, to the extent required for Company to use or otherwise exploit the Project Intellectual Property, and such license shall be negotiated to contain mutually acceptable terms, including but not limited to a term requiring the payment of consideration over and above the royalties applicable to the Project Intellectual Property.
 
 
5
 
 
 
 
4.4 Notwithstanding the above, each party retains the following rights with regard to the Project Intellectual Property:
 
(a) Each party retains an internal-use license, strictly for research and educational purposes, to all Project Intellectual Property; and
 
(b) In the absence of the execution of an exclusive license of Hospital's interest in any Project Intellectual Property to Company, the parties will not sell, assign, transfer, license or exploit the Project Intellectual Property or their interests therein unless and until the parties have executed an agreement allocating between the Hospital and Company any revenue, remuneration, or consideration that may be derived from using, commercializing or otherwise exploiting Project Intellectual Property.
 
4.5 No exclusive and irrevocable license to the Project Intellectual Property will be granted and no sublicense will be granted except where the Hospital receives royalties directly or indirectly from the sublicense or whereby the licensee of an exclusive and irrevocable license has compensated the Hospital in a minimum amount of the Contribution.
 
SECTION V - Patent Infringement
 
5.1 If either Company or Hospital should learn of the infringement of any Patent, that party shall promptly notify the other party in writing of the existence of the infringement and shall provide as much detail about the nature of the infringement as is available to that party. Company, in cooperation with Hospital, shall use its best efforts to eliminate such infringement without litigation. If the efforts of the parties are not successful in eliminating the infringement within 30 days after the infringer has been formally notified of the infringement, either party to this Agreement shall have the right to:
 
(a) commence suit on its own account;
 
(b) join with the other party in such suit;
 
(c) join with any licensee(s) in such suit; or
 
(d) refuse to participate in such suit by giving written notice to the other party within 30 days or notice by such other party of its intention to commence suit.
 
Company may permit its licensee(s) to bring suit on its own account and participate in such suit with such licensee(s), but only if Company and Hospital elect not to commence separately or join each other in any suit, other than as a nominal party plaintiff, either by formal notice or by failure to act within the above referenced 30 days for giving written notice.
 
 
6
 
 
 
 
5.2 The expenses for any legal action instituted under Section 5.1 shall be paid for by the party or parties filing the litigation. If either party elects not to join the litigation, that party shall not have to pay any related legal expenses, and that party shall not be entitled to any proceeds from the litigation. If, however, the parties jointly file the litigation (or one party joins the litigation after the other party has filed it), the parties shall agree to an allocation of litigation expenses and proceeds within 90 days of joining together in the litigation.
 
5.3 Each party agrees to cooperate with the other in litigation proceedings instituted hereunder at the expense of the party on account of whom suit is brought if brought solely for one party's account. The party bringing suit shall control such litigation (including the settlement thereof), except that Company shall control the suit if brought jointly. Hospital may be represented at its expense by counsel of its choice in any suit brought solely by Company or its licensee(s).
 
SECTION VI -Confidential Information
 
6.1 Each Receiving Party agrees, during the term of this Agreement and for five years after this Agreement is terminated:
 
(a) to hold Confidential Information in confidence and to take reasonable precautions to protect the same (including, without limitation, all precautions such party employs with respect to its own confidential information);
 
(b) not to divulge any such Confidential Information to any third party (except consultants approved in writing by the Disclosing Party, provided that such consultants agree to be bound by confidentiality provisions at least as restrictive as those contained in this Section VI);
 
(c) not to make any use whatsoever at any time of such Confidential Information except for the purpose of performing the party's obligations under this Agreement;
 
(d) not to use any such Confidential Information as the basis for beginning any new research and development programs; and
 
(e) not to copy or reverse engineer any such Confidential Information.
 
6.2 Notwithstanding any other provision of this Agreement, disclosure of Confidential Information shall not be prohibited if such disclosure: (i) is necessary to fulfill Company's responsibilities with respect to managing any Patents; (ii) is in response to a valid order of a court or other governmental body of Canada or any political subdivision thereof; provided, however, that the Receiving Party shall first have given notice to the Disclosing Party and shall have made a reasonable effort to obtain a protective order requiring that the Confidential Information so disclosed be used only for the purposes for which the order was issued; (iii) is otherwise required by law, or (iv) consists of OBI disclosing Confidential Information to FedDev, or any other government agency or authority.
 
 
7
 
 
 
 
6.3 At the conclusion of this Agreement, each party shall either return the other's Confidential Information in its possession (including all copies) or shall, at the Disclosing Party's direction, destroy such Confidential Information (including all copies) and certify its destruction to the Disclosing Party.
 
6.4 In the course of performing the Project, Hospital and Investigator may collect personal information or personal health information, as those terms are defined in Canada's Personal Information Protection and Electronic Documents Act, S.C. 2000, c.5 ("PIPEDA") and Ontario's Personal Health Information Protection Act ("PHIPA") (the " Privacy Laws "), from patients/subjects. In the event that personal information or personal health information about a Study Subject (collectively " PHI ") is transferred to the Company and/or OBI including their employees, authorized representatives or agents, the Company, OBI and their employees, authorized representatives and agents shall comply with the Privacy Laws and, specifically, shall not use or disclose such PHI except as expressly permitted in relevany informed consent forms or as required by law. Such PHI shall be appropriately protected against misuse by the Company and OBI and shall be retained only as long as necessary for fulfillment of the approved purpose for which it was collected. The obligations of this section shall survive the termination of this Agreement.
 
SECTION VII - Publications
 
7.1 The Hospital and the Company shall collaborate in preparing and submitting a joint publication of the results of the Project, and neither the Hospital or the Company shall publicly present, orally or in writing, any results of the Project prior to such joint publication without the consent any other party.
 
7.2 Notwithstanding the above, if the Hospital and the Company have an irreconcilable dispute as to the content or timing of the joint publication, or if the Hospital or the Company desires to publicly present results of the Project and any other party will not consent to such presentation, where each party has negotiated in good faith, either the Hospital or the Company may publish or present individually the results of the Project, provided however that:
 
(a) the Hospital or the Company intending to publish or present (the "Presenting Party") shall provide to the Hospital or the Company not intending to publish or present (the "Nonpresenting Party"), as soon as possible, but in any event at least 60 days prior to submission to a journal, editor, or other third party, copies of any proposed publication or presentation; and
 
(b) the Nonpresenting Party has not, within 30 days after receipt of said copies, objected in writing to such proposed presentation or proposed publication in accordance with Article 7.3 of this Agreement.
 
 
8
 
 
 
 
7.3 The Nonpresenting Party may object to a proposed presentation or proposed publication of the other party on the grounds that it contains Confidential Information of the Nonpresenting Party or on the grounds that it discloses patentable subject matter relating to Project Intellectual Property. If the Nonpresenting Party makes such objection on the former ground, the Presenting Party shall ensure that its researchers remove such Confidential Information immediately from the proposed presentation or publication, after which the Presenting Party and its representatives may proceed with said presentation or publication. If the Nonpresenting Party makes an objection on the latter ground, it shall be deemed an election by the Nonpresenting Party to file a Patent pursuant to Section 3.3, and the Presenting Party shall ensure that its representatives refrain from making such publication or presentation until the earlier of: (a) the date the Nonpresenting Party has filed one or more Patents with one or more patent offices directed to such patentable subject matter, or (b) the later of the expiration of the Option Period or 90 days after receipt of such written objection from the Nonpresenting Party.
 
7.4 All of this Section VII shall be subject to Section 8.12 Publicity.
 
SECTION VIII - Miscellaneous
 
8.1  Government Requirements and Compliance . Each party shall comply with all federal, provincial, territorial, municipal, and other applicable laws, regulations, by-laws, rules, decrees and ordinances governing the parties and the Project, including without limitation, environmental legislation and any mitigation measures imposed by FedDev, as well as all relevant laws, regulations, standards and policies regarding research subject protection and the ethical conduct of research, including the Tri-Council Policy Statements: Ethical Conduct for Research Involving Humans.
 
8.2  Notices . Any notice under any of the provisions of this Agreement shall be deemed given two days after being deposited in the mail, postage prepaid, registered or certified first class mail and addressed to the applicable party at the address stated on the signature page hereof, or such other address as such party shall specify for itself by like notice to other party. All notices shall be in writing and be signed by an authorized representative. Either party may change such address by notice given to the other party in the manner set forth above. Notice shall be given to the parties at the addresses listed below:
 
If from Company to Hospital:
 
For scientific or technical issues:
The Hospital for Sick Children
Department of Psychology
Dr. Russell Schachar
555 University Ave
Toronto, Ontario M5G 1X8
 
 
9
 
 
 
 
For financial issues:
The Hospital for Sick Children
Grants Management Office
555 University Ave
Toronto, Ontario M5G 1X8
 
For legal, intellectual property or technology transfer issues:
The Hospital for Sick Children
Director of Legal Services
555 University Ave
Toronto, Ontario M5G 1X8
 
If from Hospital to Company:
 
Neil J. Closner
110 Eglinton Avenue West. Suite 401
Toronto, Ont. M4R 1A3
 
8.3  Governing Law . This Agreement will be governed by the laws of the Province of Ontario and the laws of Canada applicable therein.
 
8.4  Independent Contractors . The relationship of the parties to this Agreement shall be that of independent contractors. Each party shall maintain sole and exclusive control over its personnel and operations.
 
8.5  Use of Name or Endorsements. By entering into this Agreement, neither party shall be deemed to directly or indirectly endorse any product or service provided, or to be provided, whether directly or indirectly related to either this Agreement or to any patent or other intellectual property license or agreement that implements this Agreement by its successors, assignees, or licensees. Neither party shall in any way state or imply that this Agreement is an endorsement of any such product or service by the other party. Neither party shall be authorized to use the name(s) and/or logo(s) of the other party for publicity and marketing without the written consent of such party.
 
8.6  Reasonable Consent . Whenever a party's consent or permission is required under this Agreement, such consent or permission shall not be unreasonably withheld.
 
8.7  Dispute Resolution . All disputes arising out of or relating to this Agreement shall be resolved using the following procedure:
 
(a)  Negotiation. The parties shall attempt in good faith to resolve any dispute arising out of or relating to this Agreement promptly between officials who have authority to settle the controversy.
 
(b)  Mediation. If the matter had not been resolved by negotiation within 30 days, the parties shall then attempt in good faith to settle the dispute by mediation.
 
 
10
 
 
 
 
(c)  Arbitration. If the matter had not been resolved by mediation within 90 days of the initiation of such procedure, or if either party did not wish to participate in a mediation, the dispute shall then be settled by arbitration in accordance with Ontario's Arbitration Act, 1991.
 
(d)  Location. The parties agree that any mediation or arbitration shall be held in a mutually convenient location.
 
8.8  Records and Audits .
 
(a) The parties will maintain proper and accurate accounts and records in relation to the Project for at least six (6) years after the Date of Completion (as defined in the Contribution Agreement), and will maintain a copy of all records relating to the Project in a location in Southern Ontario. Such records shall include, without limitation:
 
 
i)
Invoices, which should include details of what is being invoiced (product/service), and clear information on what created the value shown on the invoice (e.g. product specificationss, itemized breakdowns, etc);
     
 
ii)
Pay stubs, which should align with expenses/contributions appropriately;
     
 
iii)
Bank records evidencing payment;
     
 
iv)
Third party proof of payment;
     
 
v)
Project activity tracking documents. E.g. reports generated by project management software;
     
 
vi)
Accounting / financial records;
     
 
vii)
Delivery slips demonstrating receipt of goods; and
     
 
viii)
Relevant photographs.
 
(b) The parties agree and acknowledge that FedDev and/or the Auditor General of Canada may have access to all accounts and records of the Project (including those of agents and third party contractors) and audit, or cause to have audited, such accounts and records as per Subsection 7.9 of the Contribution Agreement.
 
(c) The parties agree and acknowledge that FedDev may make site visits and access all records or documents relating to the Project in order to monitor and evaluate the Project in accordance with Section 7 and Subsection 11.3 of the Contribution Agreement.
 
 
11
 
 
 
 
(d) The Hospital and Company will provide OBI with progress reports on a quarterly basis no later than the 15 th business day following the end of each quarter - March 31, June 30, September 30, and December 31, of each year, based on Annex 4 of the Contribution Agreement (Exhibit D of this Agreement) during the course of the Project in order for OBI to meet its obligation to send progress reports to FedDev no later than the 20 th business day following the end of the quarter to which the report relates. The Hospital and Company will provide OBI with a final report no later than the two months following the end of the final quarter of the Project, March 31,2014, based on Annex 5 of the Contribution Agreement (Exhibit E of this Agreement) in order for OBI to meet its obligation to send progress reports to FedDev. The Hospital and the Company must both sign each progress report required by this Section.
 
(e) The Hospital and the Company will provide a financial report outlining all costs incurred and the amount of the Company's Contribution no later than ninety (90) days after the end of each fiscal year ending March 31. The Hospital will be responsible for reporting all costs incurred that are covered by the Financial Contribution and the Company will be responsible for reporting the amount and value of the Company's Contribution.
 
8.9  Insurance . The Hospital shall maintain for the duration of the Project general liability insurance and property damage insurance in amounts consistent with the scope and investments of the Project conducted at the Hospital's location, and will include no less than $2,000,000 for general liability insurance. The Hospital will provide endorsements on the property damage insurance naming "Her Majesty the Queen in Right of Canada" as "co-loss payee" and OBI as their interest may appear and endorsements to the liability insurance naming "Her majesty the Queen in Right of Canada" and OBI each as "additional insured". The parties acknowledge and understand that the Hospital's general liability insurance does not cover the clinical activities of physicians, including the Investigator. The parties agree that in the event that any claim arises from the clinical activities of the Investigator, their sole recourse will be against the Investigator. The Investigator will be independently responsible for maintaining coverage through the Canadian Medical Protective Association during the term of this Agreement.
 
8.10  Tendering . The Hospital will adhere to its applicable tendering and acquisition policies for the purposes of the Project.
 
8.11  Change of Control . The Company will provide prior notice to the Hospital and OBI at least 15 days prior to the implementation of any Change of Control (as defined in the Contribution Agreement), providing OBI the right, at its sole discretion, to terminate this Collaboration Agreement if such event occurs.
 
8.12  Publicity . The parties acknowledge that all announcements, ceremonies, and other communications activities related to the Project shall be consistent with the provisions of Section 9 of the Contribution Agreement. Specifically, in this context, the parties will:
 
a. acknowledge OBI and Her Majesty's participation;
 
b. agree to public announcements of the Project by or on behalf of the Minister in the form of a news release;
 
c. maintain confidentiality of this Agreement until the Minister informs the parties of the date of the public announcement;
 
d. agree to the participation of the Minister to any announcement event of the Project organized by the parties and ensure that the event takes place at a mutually agreeable date;
 
 
12
 
 
 
 
e. agree to a media/public event upon the completion of the Project with the Minister at a mutually agreeable venue, time, and date; and
 
f. agree to display promotional material provided by the Minister.
 
8.13 Funding to OBI Terminated . Notwithstanding any other term of this Agreement, OBI may terminate this Agreement immediately or any time during in the event that FedDev or the Ontario Provincial Government or any agency or subdivision thereof at any time suspends, revokes or terminates funding to OBI in whole or in part or indicates its intention to do so and OBI is then unable or anticipates that it will in the future be unable to provide its contributions, or satisfy any obligations, contemplated by this Agreement. In such instance OBI will meet its obligation to dispurse funds received from FedDev for already incurred expenses, but will be released from all of its forward obligations and will not be liable for any damages arising from any failure to fund.
 
8.14  Limitation of Liability . In no event shall OBI be liable to another party hereto for any special, indirect, incidental, consequential, or punitive damages of any kind or nature whatsoever, including loss of profits or revenue, howsoever caused, even if such damages are foreseeable or such party has been advised of the possibility of such damages. Furthermore, OBI's total liability to another party hereto in the aggregate for any and all claims arising out of or in any connection with this Agreement, with respect to any expense, damage, loss, injury, or liability of any kind or nature whatsoever, regardless of the form of action or theory of liability (including for breach of contract, tort, negligence, by statute or otherwise) will be limited to the total amount of funds actually disbursed by OBI under this Agreement. Noteithstanding the foregoing, the limitation of liability set forth in this section will not apply to any damage, claim, expense, loss, injury or liability caused by OBI's gross negligence or intentional misconduct.
 
8.15  Overpayment or Non-entitlement . Where, for any reason, the Hospital or the Company is not entitled to all or part of the Financial Contribution, or the amount paid to the Hospital or the Company exceeds the amount to which they are entitled under this Project, the Financial Contribution or the amount in excess shall be recovered from the recipients. The Hospital and the Company agree to repay OBI within thirty (30) calendar days from the date of OBI's notice the amount of the Financial Contribution disbursed or the amount of the overpayment, as the case may be, together with interest calculated in accordance with the Interest and Administrative Charges Regulations, in effect on the due date, from the date of notice, until payment is received by OBI.
 
8.16  Counterparts and Execution bv Facsimile . This Agreement may be executed in one or more counterparts each of which when so executed shall be deemed to be an original and such counterparts together shall constitute but one and the same instrument. Delivery of an executed copy of a signature page to this Agreement by facsimile or electronic transmission shall be effective as delivery of a manually executed copy of this Agreement and each party hereto undertakes to provide each other party hereto with a copy of the Agreement bearing original signatures forthwith upon demand.
 
 
13
 
 
 
 
IN WITNESS WHEREOF , the parties hereto have duly executed this Agreement effective as of the date first written above. 
 
THE HOSPITAL FOR SICK CHILDREN:
 
 
BEHAVIOUR NEUROLOGICAL APPLICATIONS AND SOLUTIONS:
 
 
ONTARIO BRAIN INSTITUTE:
 
 
The Investigator hereby acknowledges that he has read and understands the content of this Agreement and understands the scope if his role in the Project as described in Appendix A
 
 
 
14
 
 
 
 
EXHIBIT A; PROJECT PLAN AND BUDGET
 

 
 
 
 


 
 
 
 
 
 
15
 
 
 
 
Project Outline
 
Project Name
Development of a Software Based Treatment program for Children with ADD/ADHD
Project Address
110 Eglinton Ave West Suite 401, Toronto, Ontario M4R 1A3
Total Project Cost
$ 1,623,384
Prviate Sector Investment
$ 1,132,180
FedDev Contribution
$ 491,204
Other Contribution (if any)
$0
Duration of project (months)
29 months
 
Not-For-Profit Partner
Hospital For Sick Children
Address
555 University Avenue, Toronto, Ontario, M5G 1X8
Role in Project
Oversee clinical study, review and report results
Cash Investment
n/a
In-kind Investment
n/a
Total Investment
$0
% of Total Budget: 0%
 
Private Sector Partner #1
2304101 Ontario Inc., d/b/a Behavioural Neurological Applications and Solutions ("BNAS")
Industry Sector
Healthcare software
Address
110 Eglinton Ave West Suite 401, Toronto, Ontario M4R 1A3
Role in Project
Lead commercial partner, project management, software development, IP holder
Cash Investment
 
In-kind Investment
$1,132,180
Total Investment
$1,132,180 million
% of Total Budget: 70%
 
Project Description:
 
(THIS ANSWERS THE "WHAT" AND "WHY" OF THE PROJECT)
 
 
-
What is the project? Describe the product/technology to be developed.
   
The overall objective of this undertaking is to develop the world's first comprehensive diagnosis, therapeutic and reporting software tool for the treatment of childhood ADD/ADHD. With the assistance of Dr. Russell Schachar and the Hospital for Sick Children, BNAS Inc., leveraging prior intellectual property licenced from ACE Ltd. of Hod HaSharon, Israel, hopes to design and begin marketing this offering within the next 24-30 months.
 
 
16
 
 
 
 
 
-
What will the technology do and how will it work?
   
The software is intended to offer an objective diagnosis of ADD/ADHD in children, deliver a software based gaming tool for the therapeutic treatment of this condition and a comprehensive reporting engine customized for the various stakeholders.
     
 
-
Why is the project being undertaken (what need will be filled)?
   
Currently there is no test available on the market that objectively tests for ADD/ADHD. The process today is highly subjective and a number of various methods are utilized by physicians and therapists. Additionally, the market lacks a comprehensive, user friendly and engaging software based program for children to treat ADD/ADHD. The goal is to create a game for children that is both engaging and therapeutic.
 
 Economic Impact
 
1. How many person-months of employment are expected to be created during the project?
145
2. How many FTEs are expected to be created during the project?*
8
3. How many FTEs are expected to be created or maintained within 3 years after the project?*
20+
4. What is the expected FedDev cost per permanent job created?**
Approx. $25k
5. What is the ratio of private sector funds leveraged vs. the FedDev contribution?**
2.5:1
6. # of partnerships expected to be established between NFPs and/or PSIs and private sector enterprises during the project:
2
7. # of partnerships expected to be established between NFPs and/or PSIs and private sector enterprises within 3 years after the project:
5
8. # of innovations expected to be advanced during the project and within 3 years after the project...
        -# of invention disclosures:
        -# of patent applications:
Unclear
9. Non-manufacturing company start-ups (#): Manufacturing start-ups: Other (please describe):
1 non- manufacturin g start-up
10. What % of activities will take place in Southern Ontario?
80%
11. What % of the budget will be spent in Southern Ontario?
Over 90%
 
Sales Projections (during the project and for each of the 3 years following the project)
 
 

 

2012

 

 

2013

 

 

2014

 

 

2015

 

 

2016

 

 

2017

 

Users

 

 

-

 

 

 

-

 

 

 

-

 

 

 

30,000

 

 

 

100,000

 

 

 

225,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

-

 

 

 

-

 

 

 

-

 

 

$ 1,500,000

 

 

$ 5,000,000

 

 

$ 11,000,000

 

 
 
17
 
 
 
 
Budget Details
(THIS ANSWERS THE "WHAT ARE WE PAYING FOR" AND "WHEN" QUESTION)
 
 
-
Where did the numbers come from? (e.g. supporting documentation such as quotes, detailed breakdowns)
     
 
-
What costs are included within each line item? Eligibility must be determined for anticipated costs
     
 
-
How were they calculated? For example:
 
 
·
Labour and Operating = X number of people at Y salary with Z benefits; X space at Y rate, etc.
     
   
Research Assistant = 1 @ $46,350 (annual salary) with 20% benefits of $9,270
Post Doctoral Student = 1 @ $60,000 (annual salary) with 20% benefits of $12,000
Medical Advisor = 1 @ $15,504 (annual salary) with 20 % benefits of $3,100 (based on $150/hr for 2 hours per week/year)
     
 
·
Equipment = What equipment, what cost, used? New? For what duration? Usage costs or full value?
     
   
Equipment purchased for this project will include the purchase of a few new computers and some new computer tablets (i.e. iPads) and related/necessary software for employee use and for design and testing of the application on children. We are including the full value in our budget as these devices become obsolete within 2 years.
     
   
We have also included a modest budget amount for Materials and Supplies of $7,890. This will cover minor office supplies and the purchase of some third-party reports necessary for our user trials.
     
 
·  
Professional Services = How many consultants for what purpose at what rate for how long;
     
   
Due to the unique nature of this project (modification and enhancements being made to proprietary software) which goes beyond the typical work conducted at HSC, a contractor(s) will be engaged to undertake the design and development of the software code/product as well as the procurement, operation and disposal of necessary hardware and software in order to complete this successfully. The total amount of the grant allocated for these purposes is projected to amount to $181,380. The direct labour portion will amount to $142,120, which is comprised of a 20% allocation of a project manager's time based on an annual salary of $90,000 plus 17% benefits and $100,000 of total software designer/programmer time at $125/hr for 33 hours per month (the actual number of hours per month will be closer to 140 hours).
 
 
18
 
 
 

     
 
·
Commercialization costs = description of exactly what this includes, how much... should be broken down (not grouped together) for us to determine eligibility;
     
   
There are no explicit commercialization costs included in our budget. These costs will be entirely born by BNAS.
     
 
·
Admin = what expenses does this include, how much, etc.
     
   
The only admin costs that we have included are those that are being remitted to the Ontario Brain Institute. This total amounts to $23,358.
 
 
-
Everything should be broken down into quarters and fiscal year.
 
 
19
 
 
 
 
Milestones and Activities
 
The estimation of the cost for each milestone is exceedingly difficult to arrive at given the variables that we may encounter during this project. We have estimated to the best of our ability but please understand that there is no way to do this with exact figures.
 
Milestone/deliverable
(what will be delivered
once the activity(ies) is/are done?)
Activities
(What will be done?)
Objective/Purpose
(Why do it? How does it relate to
theultimate project goal?)
Start
Date
End Date
Cost (Milestone/ deliverable level)
Parties Executing
each Activity
Level of Completion (%)
Are you on
schedule?
(Yes/No )
Feasibility and Efficacy Study on original Intelligym™
-Establishment of project road map
-Design efficacy study parameters
-Procurere quired equipement(software/hardware)
-hire post doc student and research assistant
Before designing anything new we must adequately understand the limitations of the existing platform. To do this we must undertake a careful study of the existing system with a cohort of our target demographic
Dec. 2011
May 2012
FedDev: $70,332 BNAS: $265,308
HSC
BNAS
   
                 
Planning the development phase of a new Intelligym™ Including determination of appropriate tasks, cognitive mapping,
Task mapping matrix and translation documentation Completion of Alpha of new Intelligym™
Intensive design/development phase for new program. Will involve physicians, computer programmers, software engineers and game developers.
May 2012
December
2012
FedDev: $144,180 BNAS: $204,361
HSC
BNAS
   
                 
Development of user interface and beta population assembly.
Design active game play elements of new Intelligym™ Enroll beta population for testing of new Intelligym™
Once the cognitive elements are in place it is crucial that we design a game that children will "want" to play
Nov. 1 2012
June 2013
FedDev: $90,259 BNAS: $193,538
HSC
BNAS
   
 
Undertake a 60 person randomized clinical trial on new version of Intelligym™
First step of validation of new product using new game vs. placebo
Test new product for efficacy
June
2013
Sept 2013
FedDev: $70,972 BNAS: $189,931
HSC
BNAS
   
                 
Undertake another 100 person trial to test the effectiveness of the new product vs. control group
Validate the product again a control group that is interacting with another type of computer video game
Test new product for effectiveness
October
2013
January
2014
FedDev: $52,479 BNAS: $151,223
HSC
BNAS
   
                 
Final modifications and release of Intelligym™ li (final version)
Complete product
Project Completion
January
2014
March
2014
FedDev: $39,636 BNAS: $127,823
BNAS
   
 
 
20
 
 
 
 
Project Budget and Timing
 
 

 

   Total Project

 

 

 

FedDev -
to SK

 

 

BNAS
(Ontario)

 

 

FedDev to
OBI

 

 

 

 

 

 

Cash

 

 

In-kind

 

 

Cash

 

 

Total

 

Direct Labour

 

 

 

 

 

 

 

 

 

 

 

 

Medical Advisor Salary

 

 

34,884

 

 

 

-

 

 

 

 

 

 

34,884

 

Benefits

 

 

6,977

 

 

 

 

 

 

 

 

 

 

6,977

 

Post Doc Psychologist

 

 

115,000

 

 

 

-

 

 

 

 

 

 

115,000

 

Benefits

 

 

23,000

 

 

 

 

 

 

 

 

 

 

23,000

 

Research Assistant

 

 

88,838

 

 

 

-

 

 

 

 

 

 

88,838

 

Benefits

 

 

17,768

 

 

 

 

 

 

 

 

 

 

17,768

 

Project Manager

 

 

-

 

 

 

144,000

 

 

 

 

 

 

144,000

 

Benefits

 

 

 

 

 

 

24,480

 

 

 

 

 

 

24,480

 

Product Lead

 

 

-

 

 

 

170,000

 

 

 

 

 

 

170,000

 

Benefits

 

 

 

 

 

 

28,900

 

 

 

 

 

 

28,900

 

Developers/Software engineering

 

 

-

 

 

 

440,000

 

 

 

 

 

 

440,000

 

Benefits

 

 

 

 

 

 

74,800

 

 

 

 

 

 

74,800

 

Minor & Non Capital Acquisitions

 

 

16,500

 

 

 

-

 

 

 

 

 

 

16,500

 

Materials and Supplies

 

 

7,890

 

 

 

 

 

 

 

 

 

 

7,890

 

Professional Services/Professional Fees

 

 

156,990

 

 

 

-

 

 

 

 

 

 

156,990

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Access to Intelligym Development Platform

 

 

 

 

 

 

250,000

 

 

 

 

 

 

250,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative (goes to OBI)

 

 

 

 

 

 

-

 

 

 

23,358

 

 

 

23,358

 

Total

 

 

467,846

 

 

 

1,132,180

 

 

 

23,358

 

 

 

1,623,384

 

 
 

 

FedDev
Cash to SK

 

 

BNAS
In-kind

 

 

FedDev
to OBI

 

 

Total

 

2012 total

 

 

52,341

 

 

 

250,000

 

 

 

2,617

 

 

 

304,958

 

2013 total

 

 

216,433

 

 

 

335,790

 

 

 

10,822

 

 

 

563,045

 

2014 total

 

 

199,072

 

 

 

546,390

 

 

 

9,920

 

 

 

755,381

 

Project Total

 

 

467,846

 

 

 

1,132,180

 

 

 

23,358

 

 

 

1,623,384

 

 
Professional Services/Professional Fees
Project Manager (20% of $90k/yr salary plus 17% benefits billed to project). $100k of software development 33 hours billed at $125/hr per month.
   
Minor & Non Capital Acquisitions
Laptops/tablets and software
   
Materials and Supplies
Misc supplies as needed
 
 
21
 
 
 
 
Project Budget and Timing
 
 

 

   Dec 2011-March 2012

 

 

 

Fed Dev -

 

 

BNAS

 

 

Fed Dev to

 

 

 

 

 

 

to SK

 

 

(Ontario)

 

 

OBI

 

 

 

 

 

 

Cash

 

 

In-kind

 

 

Cash

 

 

Total

 

Direct Labour

 

 

 

 

 

 

 

 

 

 

 

 

Medical Advisor Salary

 

 

5,168

 

 

 

 

 

 

 

 

 

5,168

 

Benefits

 

 

1,034

 

 

 

 

 

 

 

 

 

1,034

 

Post Doc Psychologist

 

 

-

 

 

 

 

 

 

 

 

 

-

 

Benefits

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Research Assistant

 

 

-

 

 

 

 

 

 

 

 

 

-

 

Benefits

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Project Manager

 

 

 

 

 

 

-

 

 

 

 

 

 

-

 

Benefits

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Product Lead

 

 

 

 

 

 

-

 

 

 

 

 

 

-

 

Benefits

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Developers/Software engineering

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Benefits

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Minor & Non Capital Acquisitions

 

 

8,639

 

 

 

 

 

 

 

 

 

 

8,639

 

Materials and Supplies

 

 

-

 

 

 

 

 

 

 

 

 

 

-

 

Professional Services/Professional Fees

 

 

37,500

 

 

 

 

 

 

 

 

 

 

37,500

 

Access to Intelligym Development Platform

 

 

 

 

 

 

250,000

 

 

 

 

 

 

250,000

 

Administrative (goes to OBI)

 

 

 

 

 

 

 

 

 

 

2,617

 

 

 

2,617

 

Total

 

 

52,341

 

 

 

250,000

 

 

 

2,617

 

 

 

304,958

 

 
 

 

Total Contributions

 

 

 

 

 

2012 total

 

FedDev

 

 

491,204

 

 

 

 

 

 

 

2013 total

 

BNAS

 

 

1,132,180

 

 

 

 

 

 

 

 

 

2014 total

 

Total

 

 

1,623,384

 

 

 

 

 

 

 

 

 

Project Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Professional Services/Professional Fees
 
Minor & Non Capital Acquisitions
 
Materials and Supplies
 
 
22
 
 
 
 
Project Budget and Timing
 
 

 

April-June 2012

 

 

 

Fed Dev -
to SK

 

 

BNAS
(Ontario)

 

 

FedDev to 
OBI

 

 

 

 

 

 

Cash

 

 

In-kind

 

 

Cash

 

 

Total

 

Direct Labour

 

 

 

 

 

 

 

 

 

 

 

 

Medical Advisor Salary

 

 

3,876

 

 

 

 

 

 

 

 

 

3,876

 

Benefits

 

 

775

 

 

 

 

 

 

 

 

 

 

 

775

 

Post Doc Psychologist

 

 

15,000

 

 

 

 

 

 

 

 

 

 

 

15,000

 

Benefits

 

 

3,000

 

 

 

 

 

 

 

 

 

 

 

3,000

 

Research Assistant

 

 

11,588

 

 

 

 

 

 

 

 

 

 

 

11,588

 

Benefits

 

 

2,318

 

 

 

 

 

 

 

 

 

 

 

2,318

 

Project Manager

 

 

 

 

 

 

18,000

 

 

 

 

 

 

 

18,000

 

Benefits

 

 

 

 

 

 

3,060

 

 

 

 

 

 

 

3,060

 

Product Lead

 

 

 

 

 

 

21,250

 

 

 

 

 

 

 

21,250

 

Benefits

 

 

 

 

 

 

3,613

 

 

 

 

 

 

 

3,613

 

Developers/Software engineering

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Benefits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Minor & Non Capital Acquisitions

 

 

1,465

 

 

 

 

 

 

 

 

 

 

 

1,465

 

Materials and Supplies

 

 

986

 

 

 

 

 

 

 

 

 

 

 

986

 

Professional Services/Professional Fees

 

 

14,936

 

 

 

 

 

 

 

 

 

 

 

14,936

 

Access to Intelligym Development Platform

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Administrative (goes to OBI)

 

 

 

 

 

 

 

 

 

 

2,697

 

 

 

2,697

 

Total

 

 

53,944

 

 

 

45,923

 

 

 

2,697

 

 

 

102,564

 

 
2012 total
2013 total
2014 total
Project Total
 
Professional Services/Professional Fees
 
Minor & Non Capital Acquisitions
Materials and Supplies
 
 
23
 
 
 
 
Project Budget and Timing
 
 

 

July-Sept 2012

 

 

 

FedDev -

 

 

BNAS

 

 

FedDev to

 

 

 

 

 

 

to SK

 

 

(Ontario)

 

 

OBI

 

 

 

 

 

 

Cash

 

 

In-kind

 

 

Cash

 

 

Total

 

Direct Labour

 

 

 

 

 

 

 

 

 

 

 

 

Medical Advisor Salary

 

 

3,876

 

 

 

 

 

 

 

 

 

3,876

 

Benefits

 

 

775

 

 

 

 

 

 

 

 

 

775

 

Post Doc Psychologist

 

 

15,000

 

 

 

 

 

 

 

 

 

15,000

 

Benefits

 

 

3,000

 

 

 

 

 

 

 

 

 

3,000

 

Research Assistant

 

 

11,588

 

 

 

 

 

 

 

 

 

11,588

 

Benefits

 

 

2,318

 

 

 

 

 

 

 

 

 

2,318

 

Project Manager

 

 

 

 

 

 

18,000

 

 

 

 

 

 

18,000

 

Benefits

 

 

 

 

 

 

3,060

 

 

 

 

 

 

3,060

 

Product Lead

 

 

 

 

 

 

21,250

 

 

 

 

 

 

21,250

 

Benefits

 

 

 

 

 

 

3,613

 

 

 

 

 

 

3,613

 

Developers/Software engineering

 

 

 

 

 

 

25,000

 

 

 

 

 

 

25,000

 

Benefits

 

 

 

 

 

 

4,250

 

 

 

 

 

 

4,250

 

Minor & Non Capital Acquisitions

 

 

1,465

 

 

 

 

 

 

 

 

 

 

1,465

 

Materials and Supplies

 

 

986

 

 

 

 

 

 

 

 

 

 

986

 

Professional Services/Professional Fees

 

 

14,936

 

 

 

 

 

 

 

 

 

 

14,936

 

Access to Intelligym Development Platform

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Administrative (goes to OBI)

 

 

 

 

 

 

 

 

 

 

2,697

 

 

 

2,697

 

Total

 

 

53,944

 

 

 

75,173

 

 

 

2,697

 

 

 

131,814

 

 
2012 total
 
2013 total
 
2014 total
 
Project Total
 
 
Professional Services/Professional Fees
 
Minor & Non Capital Acquisitions
 
Materials and Supplies 
 
 
24
 
 
 
 
Project Budget and Timing
 
 

 

Oct-Dec 2012

 

 

 

FedDev- to
SK

 

 

BNAS
(Ontario)

 

 

FedDev to
OBI

 

 

 

 

 

 

Cash

 

 

In-kind

 

 

Cash

 

 

Total

 

Direct Labour

 

 

 

 

 

 

 

 

 

 

 

 

Medical Advisor Salary

 

 

3,876

 

 

 

 

 

 

-

 

 

 

3,876

 

Benefits

 

 

775

 

 

 

 

 

 

 

 

 

 

775

 

Post Doc Psychologist

 

 

15,000

 

 

 

 

 

 

 

 

 

 

15,000

 

Benefits

 

 

3,000

 

 

 

 

 

 

 

 

 

 

3,000

 

Research Assistant

 

 

11,588

 

 

 

 

 

 

 

 

 

 

11,588

 

Benefits

 

 

2,318

 

 

 

 

 

 

 

 

 

 

2,318

 

Project Manager

 

 

 

 

 

 

18,000

 

 

 

 

 

 

 

18,000

 

Benefits

 

 

 

 

 

 

3,060

 

 

 

 

 

 

 

3,060

 

Product Lead

 

 

 

 

 

 

21,250

 

 

 

 

 

 

 

21,250

 

Benefits

 

 

 

 

 

 

3,613

 

 

 

 

 

 

 

3,613

 

Developers/Software engineering

 

 

 

 

 

 

45,000

 

 

 

 

 

 

 

45,000

 

Benefits

 

 

 

 

 

 

7,650

 

 

 

 

 

 

 

7,650

 

Minor & Non Capital Acquisitions

 

 

1,465

 

 

 

 

 

 

 

 

 

 

 

1,465

 

Materials and Supplies

 

 

1,315

 

 

 

 

 

 

 

 

 

 

 

1,315

 

Professional Services/Professional Fees

 

 

14,936

 

 

 

 

 

 

 

 

 

 

 

14,936

 

Access to Intelligym Development Platform

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Administrative (goes to OBI)

 

 

 

 

 

 

 

 

 

 

2,714

 

 

 

2,714

 

Total

 

 

54,273

 

 

 

98,573

 

 

 

2,714

 

 

 

155,559

 

 
2012 total
 
2013 total
 
2014 total
 
Project Total
 
 
Professional Services/Professional Fees
 
Minor & Non Capital Acquisitions
 
Materials and Supplies 
 
 
25
 
 
 
 
Project Budget and Timing
 
 

 

Jan-March 2013

 

 

 

FedDev-to
SK

 

 

BNAS
(Ontario)

 

 

FedDev to
OBI

 

 

 

 

 

 

Cash

 

 

In-kind

 

 

Cash

 

 

Total

 

Direct Labour

 

 

 

 

 

 

 

 

 

 

 

 

Medical Advisor Salary

 

 

3,876

 

 

 

 

 

 

 

 

 

3,876

 

Benefits

 

 

775

 

 

 

 

 

 

 

 

 

775

 

Post Doc Psychologist

 

 

15,000

 

 

 

 

 

 

 

 

 

15,000

 

Benefits

 

 

3,000

 

 

 

 

 

 

 

 

 

3,000

 

Research Assistant

 

 

11,588

 

 

 

 

 

 

 

 

 

11,588

 

Benefits

 

 

2,318

 

 

 

 

 

 

 

 

 

2,318

 

Project Manager

 

 

 

 

 

 

18,000

 

 

 

 

 

 

18,000

 

Benefits

 

 

 

 

 

 

3,060

 

 

 

 

 

 

3,060

 

Product Lead

 

 

 

 

 

 

21,250

 

 

 

 

 

 

21,250

 

Benefits

 

 

 

 

 

 

3,613

 

 

 

 

 

 

3,613

 

Developers/Software engineering

 

 

 

 

 

 

60,000

 

 

 

 

 

 

60,000

 

Benefits

 

 

 

 

 

 

10,200

 

 

 

 

 

 

10,200

 

Minor & Non Capital Acquisitions

 

 

1,465

 

 

 

 

 

 

 

 

 

 

1,465

 

Materials and Supplies

 

 

1,315

 

 

 

 

 

 

 

 

 

 

1,315

 

Professional Services/Professional Fees

 

 

14,936

 

 

 

 

 

 

 

 

 

 

14,936

 

Access to Intelligym Development Platform

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Administrative (goes to OBI)

 

 

 

 

 

 

 

 

 

 

2,714

 

 

 

2,714

 

Total

 

 

54,273

 

 

 

116,123

 

 

 

2,714

 

 

 

173,109

 

 
2012 total
                               
2013 total
                               
2014 total
                               
Project Total
                               
 
Professional Services/Professional Fees
 
Minor & Non Capital Acquisitions
Materials and Supplies  
 
 
26
 
 
 
 
Project Budget and Timing
 
 

 

April-June 2013

 

 

 

FedDev - to SK

 

 

BNAS 
(Ontario)

 

 

FedDev to
OBI

 

 

 

 

 

 

Cash

 

 

In-kind

 

 

Cash

 

 

Total

 

Direct Labour

 

 

 

 

 

 

 

 

 

 

 

 

Medical Advisor Salary

 

 

3,876

 

 

 

 

 

 

 

 

 

3,876

 

Benefits

 

 

775

 

 

 

 

 

 

 

 

 

775

 

Post Doc Psychologist

 

 

15,000

 

 

 

 

 

 

 

 

 

15,000

 

Benefits

 

 

3,000

 

 

 

 

 

 

 

 

 

3,000

 

Research Assistant

 

 

11,588

 

 

 

 

 

 

 

 

 

11,588

 

Benefits

 

 

2,318

 

 

 

 

 

 

 

 

 

2,318

 

Project Manager

 

 

 

 

 

 

18,000

 

 

 

 

 

 

18,000

 

Benefits

 

 

 

 

 

 

3,060

 

 

 

 

 

 

3,060

 

Product Lead

 

 

 

 

 

 

21,250

 

 

 

 

 

 

21,250

 

Benefits

 

 

 

 

 

 

3,613

 

 

 

 

 

 

3,613

 

Developers/Software engineering

 

 

 

 

 

 

60,000

 

 

 

 

 

 

60,000

 

Benefits

 

 

 

 

 

 

10,200

 

 

 

 

 

 

10,200

 

Minor & Non Capital Acquisitions

 

 

1,500

 

 

 

 

 

 

 

 

 

 

1,500

 

Materials and Supplies

 

 

986

 

 

 

 

 

 

 

 

 

 

986

 

Professional Services/Professional Fees

 

 

14,936

 

 

 

 

 

 

 

 

 

 

14,936

 

Access to Intelligym Development Platform

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Administrative (goes to OBI)

 

 

 

 

 

 

 

 

 

 

2,699

 

 

 

2,699

 

Total

 

 

53,979

 

 

 

116,123

 

 

 

2,699

 

 

 

172,800

 

 
2012 total
                               
2013 total
                               
2014 total
                               
Project Total
                               
 
Professional Services/Professional Fees
 
Minor & Non Capital Acquisitions
Materials and Supplies
 
 
27
 
 
 
 
Project Budget and Timing
 
 

 

July-Sept 2013

 

 

 

FedDev -
to SK

 

 

BNAS
(Ontario)

 

 

FedDev
to OBI

 

 

 

 

 

 

Cash

 

 

In-kind

 

 

Cash

 

 

Total

 

Direct Labour

 

 

 

 

 

 

 

 

 

 

 

 

Medical Advisor Salary

 

 

3,876

 

 

 

-

 

 

 

-

 

 

 

3,876

 

Benefits

 

 

775

 

 

 

 

 

 

 

 

 

 

 

775

 

Post Doc Psychologist

 

 

15,000

 

 

 

 

 

 

 

 

 

 

 

15,000

 

Benefits

 

 

3,000

 

 

 

 

 

 

 

 

 

 

 

3,000

 

Research Assistant

 

 

11,588

 

 

 

 

 

 

 

 

 

 

 

11,588

 

Benefits

 

 

2,318

 

 

 

 

 

 

 

 

 

 

 

2,318

 

Project Manager

 

 

 

 

 

 

18,000

 

 

 

 

 

 

 

18,000

 

Benefits

 

 

 

 

 

 

3,060

 

 

 

 

 

 

 

3,060

 

Product Lead

 

 

 

 

 

 

21,250

 

 

 

 

 

 

 

21,250

 

Benefits

 

 

 

 

 

 

3,613

 

 

 

 

 

 

 

3,613

 

Developers/Software engineering

 

 

 

 

 

 

90,000

 

 

 

 

 

 

 

90,000

 

Benefits

 

 

 

 

 

 

15,300

 

 

 

 

 

 

 

15,300

 

Minor & Non Capital Acquisitions

 

 

500

 

 

 

 

 

 

 

 

 

 

 

500

 

Materials and Supplies

 

 

986

 

 

 

 

 

 

 

 

 

 

 

986

 

Professional Services/Professional Fees

 

 

14,936

 

 

 

 

 

 

 

 

 

 

 

14,936

 

Access to Intelligym Development Platform

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Administrative (goes to OBI)

 

 

 

 

 

 

 

 

 

 

2,649

 

 

 

2,649

 

Total

 

 

52,979

 

 

 

151,223

 

 

 

2,649

 

 

 

206,850

 

 
2012 total
                               
2013 total
                               
2014 total
                               
Project Total
                               
 
Professional Services/Professional Fees
 
Minor & Non Capital Acquisitions
Materials and Supplies  
 
 
28
 
 
 
 
Project Budget and Timing
 
 

 

Oct-Dec 2013

 

 

 

FedDev- to SK

 

 

BNAS (Ontario)

 

 

FedDev to OBI

 

 

 

 

 

 

Cash

 

 

In-kind

 

 

Cash

 

 

Total

 

Direct Labour

 

 

 

 

 

 

 

 

 

 

 

 

Medical Advisor Salary

 

 

3,876

 

 

 

 

 

 

 

 

 

3,876

 

Benefits

 

 

775

 

 

 

 

 

 

 

 

 

775

 

Post Doc Psychologist

 

 

15,000

 

 

 

 

 

 

 

 

 

15,000

 

Benefits

 

 

3,000

 

 

 

 

 

 

 

 

 

3,000

 

Research Assistant

 

 

11,588

 

 

 

 

 

 

 

 

 

11,588

 

Benefits

 

 

2,318

 

 

 

 

 

 

 

 

 

2,318

 

Project Manager

 

 

 

 

 

 

18,000

 

 

 

 

 

 

18,000

 

Benefits

 

 

 

 

 

 

3,060

 

 

 

 

 

 

3,060

 

Product Lead

 

 

 

 

 

 

21,250

 

 

 

 

 

 

21,250

 

Benefits

 

 

 

 

 

 

3,613

 

 

 

 

 

 

3,613

 

Developers/Software engineering

 

 

 

 

 

 

90,000

 

 

 

 

 

 

90,000

 

Benefits

 

 

 

 

 

 

15,300

 

 

 

 

 

 

15,300

 

Minor & Non Capital Acquisitions

 

 

-

 

 

 

 

 

 

 

 

 

 

-

 

Materials and Supplies

 

 

986

 

 

 

 

 

 

 

 

 

 

986

 

Professional Services/Professional Fees

 

 

14,936

 

 

 

 

 

 

 

 

 

 

14,936

 

Access to Intelligym Development Platform

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Administrative (goes to OBI)

 

 

 

 

 

 

 

 

 

 

2,624

 

 

 

2,624

 

Total

 

 

52,479

 

 

 

151,223

 

 

 

2,624

 

 

 

206,325

 

 
2012 total
2013 total
2014 total
Project Total
 
Professional Services/Professional Fees
 
Minor & Non Capital Acquisitions
Materials and Supplies  
 
 
 
 
 
 
 
Project Budget and Timing
 
 

 

Jan-March 2014

 

 

 

FedDev - to SK

 

 

BNAS (Ontario)

 

 

 

 

 

 

 

 

 

Cash

 

 

In-kind

 

 

Cash

 

 

Total

 

Direct Labour

 

 

 

 

 

 

 

 

 

 

 

 

Medical Advisor Salary

 

 

2,584

 

 

 

 

 

 

 

 

 

2,584

 

Benefits

 

 

517

 

 

 

 

 

 

 

 

 

517

 

Post Doc Psychologist

 

 

10,000

 

 

 

 

 

 

 

 

 

10,000

 

Benefits

 

 

2,000

 

 

 

 

 

 

 

 

 

2,000

 

Research Assistant

 

 

7,725

 

 

 

 

 

 

 

 

 

7,725

 

Benefits

 

 

1,545

 

 

 

 

 

 

 

 

 

1,545

 

Project Manager

 

 

 

 

 

 

18,000

 

 

 

 

 

 

18,000

 

Benefits

 

 

 

 

 

 

3,060

 

 

 

 

 

 

3,060

 

Product Lead

 

 

 

 

 

 

21,250

 

 

 

 

 

 

21,250

 

Benefits

 

 

 

 

 

 

3,613

 

 

 

 

 

 

3,613

 

Developers/Software engineering

 

 

 

 

 

 

70,000

 

 

 

 

 

 

70,000

 

Benefits

 

 

 

 

 

 

11,900

 

 

 

 

 

 

11,900

 

Minor & Non Capital Acquisitions

 

 

-

 

 

 

 

 

 

 

 

 

 

-

 

Materials and Supplies

 

 

329

 

 

 

 

 

 

 

 

 

 

329

 

Professional Services/Professional Fees

 

 

14,936

 

 

 

 

 

 

 

 

 

 

14,936

 

Access to Intelligym Development Platform

 

 

-

 

 

 

 

 

 

 

 

 

 

-

 

Administrative (goes to OBI)

 

 

 

 

 

 

 

 

 

 

1,948

 

 

 

1,948

 

Total

 

 

39,636

 

 

 

127,823

 

 

 

1,948

 

 

 

169,406

 

 
2012 total
2013 total
2014 total
Project Total
 
Professional Services/Professional Fees
 
Minor & Non Capital Acquisitions
Materials and Supplies  
 
 
29
 
 
 
 
EXHIBIT B: CLAIM STATEMENT FORM

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30
 
 
 
 
ONTARIO
BRAIN
INSTITUTE
TECHNOLOGY DEVELOPMENT PROGRAM
Project Cost Statement
Period from:
Discover Deliver Period to:
mm/dd/yyyy
mm/dd/yyyy
 
Converge Discover Deliver
Project Information:
Project Name:
 
Project Number:
 
Address:
 
City/Pro vince/Postal Code
 
 
Claim Information:
Data of Invoice
Cost Category:
Payment Description:
Sub-total ($)
HST (13%)
Total Amount ($)
Not-for-profit Expenses
           
           
           
           
           
           
           
           
           
           
 
Industry Expenses/Contributlons
           
           
           
           
           
           
           
           
           
           
           
 
 
31
 
 
 
 
Not-for-profit Total Claim:
 
$
0.00
 
For-profit Total Expenses/Contributlons
 
$
0.00
 
 
Notes:
 
 
 
 
 
 
 
 
 
 
Additional Information: Additional Payment Deicripticn/ Information can be written here
 
Signed:______________________________
Authorized Signatory (Not for Profit)
 
Date:________________________________
 
Signed:______________________________
Authorized Signatory (Industry)
 
Date:________________________________
 
Signed:______________________________
Authorized Signatory (Ontario Brain Institute)
 
Date:________________________________ 
 
 
32
 
 
 
 
EXHIBIT C: ATTESTATION FORM
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
33
 
 
 
 
ONTARIO
BRAIN
INSTITUTE
LABOUR ATTESTATION FORM (Not-for-profit)
   
Converge. Discover. Deliver.
 
Project Number:
 
This letter is provided to confirm that salanes/wages claimed under Claim #_____ for the following individuals have been incurred and paid specific to the project and that the individuals noted below have spent the claimed time solely on the project acti
 
All expenses claimed have not been reimbursed under any other reimbursement programs be it: Private, Federal, Provincial or other
 
Employee Name
Penod From
Period To
Hourly Rate
Hours
Worked
Wages Claimed
Benefits*
Total Amount
Employee Activities
         
$0, 00
 
$0 00
 
         
$0 00
 
$0.00
 
         
$0.00
 
$0 00
 
         
$0 00
 
$0 00
 
         
$0 00
 
$0 00
 
         
$0, 00
 
$0,00
 
         
$0 00
 
$0 00
 
         
$0 00
 
$0 00
 
         
$0 00
 
$0 00
 
         
$0 00
 
$0 00
 
         
$0 00
 
$0 00
 
 
Subtotals
$0.00
$0 00
$0.001
 
* Payroll Fringe Benefits includes employer's share of El, WSIB, health benefits, and other eligible benefits, to a maximum of 20% of gross wages. 
 
 

 

Authorized Official
 
 
Name
 
Date
 
 

 

 
Titile
 
 
 
 
34
 
 
 
 
ONTARIO
BRAIN
INSTITUTE
LABOUR ATTESTATION FORM (Industry Partner)
   
Converge. Discover. Deliver.
 
Project Number:
 
This letter is provided to confirm that salanes/wages claimed under Claim #_____ for the following individuals have been incurred and paid specific to the project and that the individuals noted below have spent the claimed time solely on the project acti
 
All expenses claimed have not been reimbursed under any other reimbursement programs be it: Private, Federal, Provincial or other
 

Employee Name

Penod From

Period To

Hourly Rate

Hours

Worked

Wages Claimed

Benefits*

Total Amount

Employee Activities

$0, 00

$0 00

$0 00

$0.00

$0.00

$0 00

$0 00

$0 00

$0 00

$0 00

$0, 00

$0,00

$0 00

$0 00

$0 00

$0 00

$0 00

$0 00

$0 00

$0 00

$0 00

$0 00

Subtotals

$0.00

$0 00

$0.001

 

 

 

Authorized Official
 
 
Name
 
Date
 
 

 

 
Titile
 
 
 
 
35
 
 
 
 
EXHIBIT D: QUARTERLY PROGRESS REPORT FORM
 
Quarterly Reporting Template and Milestones and Activities

TECHNOLOGY DEVELOPMENT PROGRAM

QUARTERLY PROGRESS REPORT
 
Incorporating the "Major Activity Areas" and "Expected Results of the Project" sections of Annex 1 - Statement of Work, the Recipient will report quarterly to the Minister on the progress of the Project, including a percentage of completion for each sub-section within Annex 1 - Statement of Work.
 
Report for the period: __________________________ to_________________________
 
Recipient:
«Legal Name»
Project Number:
«CMIS_End_Proj No
» Project Location:
«Project Location»
 
MAJOR ACTIVITY AREAS
 
 
Activity Milestones
 
Percent Complete
 
On Schedule
           
(Y/N) A)
         
           
B)
         
           
C)
         
           
D)
         
           
E)
         
           
F)
         
           
G)
         
 
If you have answered that any of your Activities are not on schedule, please explain why and offer a proposed new completion date for that Activity(ies)
 
 
36
 
 
 
 
EXPECTED RESULTS OF THE PROJECT
 
As per the list of expected results in Annex 1 - Statement of Work, please comment on the following:
 
 
1.
$ value of investments (direct expenditures) in the project by source (e.g., federal contribution vs funds leveraged from private sector and other sources)
     
 
2.
# of partnerships established between NFPs and/or PSIs and private sector enterprises by census division
     
 
3.
# of partnerships established between NFPs and/or PSIs and private sector enterprises by sector (NAICS code)
     
 
4.
# of innovations advanced (i.e., # of invention disclosures, # of patent applications)
     
 
5.
# of person months of employment (both temporary and permanent) created or maintained as a result of TDP funding
     
 
6.
Total value of sales resulting from innovations developed
     
 
7.
# of contributions/loans leveraged by TDP-supported collaborations (e.g., private sector, other non-government funding)
     
 
8.
$ value of contributions/loans leveraged by TDP-supported collaborations (e.g., private sector, other non-government funding)
 
Please answer the following with each report:
Yes
No
Unsure
       
1. Will the Project be complete by [ insert date ]?
______
______
______
       
2. Are all aspects of spending on schedule?
______
______
______
       
3. Is there a revised cost forecast?
______
______
______
       
4. Would a meeting with a Program Officer be beneficial now?
______
______
______
 
Signature _________________________________________________________
Date _____________________________
 
 
37
 
 
 
 
EXHIBIT E: FINAL PROGRESS REPORT FORM
 
TECHNOLOGY DEVELOPMENT PROGRAM FORMS OF FINAL REPORT AND FINAL
CERTIFICATE 
FINAL REPORT
 
Upon completion of the Project, please provide a final summary report of the purpose, objectives and benefits, and the results as compared to the information contained in Annex 1 - Statement of Work. The written report should also include information pertaining to the following points:
 
·
How has the Project significantly contributed to the development of a globally competitive market- ready technology that has the potential to develop opportunities for businesses and/or benefits to an industry sector, business network, value chain, community or region in southern Ontario
·
Describe the financial impact as well as economic and other benefits and measurables as a result of the Project (e.g. project sales, market share, etc.)
·
Describe the potential application of the Project Intellectual Property
·
Describe measures that have been or will be taken to ensure that any Project Intellectual Property will provide continuing benefits for Southern Ontario
·
If not yet commercialized, describe how the Project has brought the technology closer to commercialization; discuss the remaining steps to commercialization
·
Will there be future collaborations between the Recipient and the Collaborator(s) in the immediate future or in the long term?
·
Will the Recipient or the Collaborator(s) seek collaboration(s) with other parties in a similar manner in the immediate future or in the long term?
·
Discuss the impact that the Project has on the strategic direction of the Recipient and the Collaborator(s)
·
Provide a summary of the first 3 years of the number of person months of employment that has been created or maintained during the Project and the number of long-term jobs (FTEs) to be created as a result of the project
·
Comment on unexpected results, hurdles and considerations
·
Is there a potential for future projects to be created as a result of this project?
·
Provide the aggregate results based on the Major Activity Areas and Expected Results of the Project, which were reflected in the Quarterly Progress Reports
·
Provide any other details or items of interest regarding the Project.
 
 
38
 
 
 
Recipient Name:
 
FINAL CERTIFICATE
Application # Project#:
 
1.
The Project was completed on ___ (Date)
   
2.
Has the Project been successfully completed in accordance with the Statement of Work in Annex 1 of the Contribution Agreement? Yes__ No __
   
3.
Have all costs claimed been paid to the suppliers? Yes If no, please provide details: No __
   
4.
Have all costs been claimed at actual arm's length cost or at fair market value, net of any refunds or other consideration provided by any supplier? Yes__ No__
   
5.
Are there any present or potential liens or claims known to you, which could put the ownership of Project assets at risk? Yes__ No __
   
If yes, who is this party?-------------------------
   
6.
Is the Project in compliance with environment protection measures, which satisfy the requirements of all regulatory bodies of appropriate jurisdiction? Yes__ No__
   
7.
Have all special and general conditions stated in the Contribution Agreement been satisfied? Yes__ No__
   
8.
Have you disposed of, leased to other parties or ceased to use in the operation any Project assets? Yes__ No__
   
If
yes, please describe: __
   
9.
Is a final itemized statement of all Project Eligible Costs attached? Yes__ No__
   
10.
Is a final statement of all Project costs attached? Yes__ No__
   
11.
Is a statement of all funding applied to this Project, including the total government funding received, attached? Yes__ No__
 
 
39
 
 
 
 

 
Behavioural Neurological Applications and Solutions
Humanity Together with Technology
100 College Street, Suite 213
Toronto, ON M5G 1L5
July 3, 2014
Hospital for Sick Children
Industry Partnerships & Commercialization
Attention Heidi Falckh
Peter Gilgan Centre for Learning and Research, 3rd Floor
686 Bay Street
Toronto, ON MSG OA4
 
Re: Notice of Exercise of Option
 
This letter shall serve as the Option Exercise Notice as defined under Section IV- Grant Rights in the Collaboration Agreement among the Ontario Brain Institute, The Hospital for Sick Children and Behavioural Neurological Applications and Solutions Inc. which is dated as of December 8, 2011and amended on July 3, 2014.
 
Sincerely,
Scott L. Woodrow, CEO
Behavioural Neurological Applications and Solutions Inc.
scott@ehave.net
(416) 435-9112
 
40

EXHIBIT 10.18

 

 

SOFTWARE LICENSE AGREEMENT

 

T HIS SOFTWARE LICENSE AGREEMENT (the " Agreement ") is made as of December 9, 2014 (the " Effective Date ") by and between Pear Therapeutics, Inc. (" Pear "), a Delaware corporation having its principal place of business at 55 Temple Place, Floor 3, Boston MA 02111, and Behavioural Neurological Applications and Solutions Inc. (" Licensor "), having his principal place of business at 100 College Street, Suite 213, Toronto, ON M5G 1L5.

 

W HEREAS Licensor owns and operates a suite of software applications called Megateam, which are software solutions for treating mental health conditions including ADHD (i.e., the Applications);

 

W HEREAS, Licensor licenses the Applications in the form of a software development kit (" SDK "). The SDK is a customized version of the Applications, which includes clinical data tables, clinical data, sample user interface modules, the Application and application program interfaces (" API ") to permit third party developers to build bridges or interfaces to communicate with and import and export data to and from the Applications;

 

W HEREAS Pear desires to obtain a license to the Licensor Products in order to allow Pear to embed a customized version of the Licensor Products into its own software and content offerings (i.e., the Pear Application) in order to create Integrated Products for use by healthcare professionals and patients worldwide, subject to the terms and conditions set forth in this Agreement; and

 

W HEREAS Licensor is willing to enter into an agreement with Pear whereby Licensor will provide Pear with a license to the Licensor Products in order for Pear to create Integrated Products and license such Integrated Products to Pear's Users, as well as to provide related services to Pear, including customization of the Applications, support and maintenance services, development services, training, and other professional services, on the terms set forth in this Agreement.

 

NOW, THEREFORE, the parties agree as follows:

 

1. DEFINITIONS.

 

C apitalized terms used but not defined in the body of this Agreement will be as defined in Exhibit A . The meanings given to terms in this Agreement are equally applicable to both the singular and the plural forms of the terms as the context may require.

 

2. LI C E NSE.

 

2 .1 Grant of Licenses . During the License Term and subject to the terms of this Agreement, Licensor hereby grants Pear a worldwide, non-transferable (except as permitted in the Agreement) right and license for Pear to do the following:

 

2 .1.1 Create Combination Products : to combine and package the Licensor Products with pharmaceutical drugs, medical foods, and/or food supplements to be marketed as a single product offering as a Combination Product;

 

2 .1.2 Commercialize Combination Products: to commercialize and distribute, by way of sublicense to Users, the Combination Product in object code format only, which shall include: (a) the right to use the Content portion of the Licensor Products in Combination Products; and (b) as part of Stand-alone Offerings;

 

2 .1.3 Create Integrated Products: to use the source code to the SDK, including the APIs to adopt, modify, utilize, incorporate, embed and/or enhance the Licensor Products for the purpose of creating Integrated Products;

 

 
1
 

 

 

2 .1.4 Commercialize Integrated Products: to license, sublicense and distribute to Users the Licensor Products in o b j ect code format only as part of and included in any Integrated Products created by Pear, as part of a comprehensive product offering which may include, without limitation, compliance software, medical support, and data outcomes monitoring, as created by Pear;

 

2 .1.5 Branding: to create the branding of Integrated Products with marks of Pear's choosing, provided that Licensor is clearly identified as creator of the Applications and Content (e.g., "powered by Licensor" or comparable ingredient branding agreed upon by the parties);

 

2 .1.6 Reseller: to distribute, license, sublicense and distribute to Users the Licensor Products in object code format only on a stand-alone basis, including permitting Users to access and use the Content;

 

2 .1.7 Sub Distribution: Pear's license rights set out in subsections 2.1.2, 2.1.4 and 2.1.6 include the right for Pear to distribute Licensor Products to its Users directly or indirectly through Pear's distributors, OEMs and resellers; and

 

2 .1.8 Clinical Studies: to use the Licensor Products and the Integrated Products in clinical validation studies.

 

T h e license right granted above to Pear by Licensor will be exclusive (including as to Licensor) with respect to the right granted in Subsection 2.1.2(a) above (i.e., with respect to use of the Licensor Products in connection with the creation of Combination Products), and non-exclusive with respect to all other rights granted to Pear in the Licensor Products under Section 2.1. In addition, all of the foregoing rights granted under Section 2.1 will be permissive but not obligatory; meaning that (unless otherwise expressly set forth in the Agreement to the contrary) Pear will not be under any obligation to use the Licensor Products and/or the Content in any manner whatsoever unless it so chooses.

 

2 .2 Restrictions . Except as expressly permitted in this Agreement, Pear will not (and will not permit third parties to):

 

( a) (except as necessary to exercise the rights set forth in Section 2.1, above) distribute, rent, or otherwise transfer any rights in the Licensor Products;

 

(b ) except as necessary in the creation of Integrated Products, or pursuant to Section 3.17, modify the Applications. In addition, changes to the Integrated Products that involve further modifications of any customized version of the Applications provided by Licensor will be subject to mutual agreement of the parties, including around the reasonable costs involved to make any such changes;

 

( c) except as permitted by applicable law, reverse engineer, decrypt, decompile, or disassemble the L icensor Products; or

 

(d ) use the Licensor Products in any manner or for any purpose not authorized or contemplated by this Agreement.

 

2. 3 Limitations on License . Notwithstanding the foregoing, if Pear does not secure the rights to sell Acceptable Drugs in conjunction with the Combination Products, the license granted pursuant to Section 2.1.2(a) will revert to a non-exclusive license.

 

 
2
 

 

 

3. RESPONSIBILITIES OF THE PARTIES.

 

3 .1 Responsibilities of Licensor . Licensor will have primary responsibility for performing the following tasks and providing the following services:

 

3 .1.1 Delivery . Licensor will deliver the Licensor Products in the manner set forth in Exhibit B . Unless o therwise specified in Exhibit B , or in any amendment hereto, Licensor will deliver all Licensed Products electronically to the location(s) designated by Pear. Suppler will deliver patches, updates, and upgrades to the Licensed Products in accordance with the terms set forth in a separate agreement .

 

3 .1.2 Integration . Licensor will work with Pear (for a mutually agreed upon duration of at least 60 days), to integrate the Licensor Products (i.e., the customized version of the Applications into the Integrated Product); both parties will work in good faith to insure that the integration will not materially impact the core operation of the Applications. If, during the foregoing mutually agreed upon integration period, the Licensor Products do not perform in accordance with the applicable specifications therefor, or Pear is unable to integrate the Licensor Products into the Integrated Products, Pear may return the Licensor Products and Licensor will refund to Pear all amounts paid for the such Licensor Products.

 

3 .1.3 Clinical Validation. Licensor will provide access to all newly created clinical data involving the Applications as well as, where feasible, access to all existing clinical data. Licensor will also provide services related to further clinical validation of the Applications in combination with drugs. Services shall specifically include the composition of grant applications for clinical validation studies, as well as assistance with any funded clinical validation studies. Costs associated with these activities shall be covered by Pear at reasonable rates to be agreed by both parties.

 

3 .1.4 Enhancement Requests . Licensor and Pear shall enter into a separate agreement for any enhancement requests made by Pear.

 

3 .1.5 Additional Services . Licensor and Pear shall enter into a separate agreement for any other services requested by Pear.

 

3 .1.6 Support and Maintenance . In exchange for the payment of the Support and Maintenance fees set forth in a separate agreement , if Pear so elects, Licensor will provide Pear with the Support and Maintenance Services (collectively, " Support ") more fully described in a separate agreement , which, for greater certainty, shall only consist of Tier 2 background support in relation to the Licensor Products.

 

3 .2 Responsibilities of Pear . Subject to the Confidentiality provisions in Exhibit D , Pear will provide Licensor with access to any evaluations, methodology and the data produced through use of the Integrated Products that Pear's partners/licensor allow Pear to access and provide (collectively, "Product Data"); provided that, Licensor may only use such Product Data for Licensor's internal research purposes only. Without limiting the generality of the foregoing, and by way of illustration, (a) Licensor may not use any Product Data to market any end users on behalf of a competitive product or service; (b) the Product Data will not contain any personally identifiable information; and (c) such Product Data will be owned by Pear.

 

3 .3 Mutual Obligations of the Parties . Unless agreed by the parties, this Agreement does not set forth any specific service level agreements for customer support. Absent further agreement, Pear will respond to any support requests arising from Users that relate specifically to the Pear Customizations or any Pear functionality or data contained in the Integrated Product. Licensor will provide customer support regarding any and all issues arising from the Licensor Products themselves in accordance with its standard support practices and levels.

 

 
3
 

 

 

4. H I PAA REQUIREMENTS.

 

4 .1 Compliance with HIPAA . Licensor acknowledges that any Pear Data transmitted to Licensor hereunder may be subject to federal and state laws, rules and regulations relating to among other subjects, the confidentiality, privacy or security of patient information, including without limitation, the Administrative Simplification Provisions of the Health Insurance Portability and Accountability Act of 1996, Public Law 104-191.45 C.F.R. Part 160, 162, 16 4 (" HIPAA ") and the applicable regulations promulgated thereunder. The parties will at all times comply with the applicable provisions of such laws, rules, and regulations and with the applicable corporate policies and pro v ision of the parties, with respect to the performance of their obligations under this Agreement, with respect to the confidentiality, privacy and security of Protected Health Information (" PHI ") and electronic Protected Health Information, as defined in 45 C.F.R. § 164.501 (" ePHI "). For purposes of this Agreement, PHI means individually identifiable information as defined by the Standards for Privacy of Individually Identifiable Health Information, 45 C .F.R. Parts 160 and 164. Cross border data considerations and protocols will be designed by Pear to ensure compliance.

 

5. REQUIREMENTS REGARDING USERS.

 

5 .1 User License Agreement . For Combination Products that have a shrink wrap End User License Agreement (an " EULA "), Licensor shall deliver to Pear the required EULA for delivery to the User. Pear shall deliver to the User with each such Combination Product and the appropriate EULA packaged correctly such that the User must perform the necessary steps to agree to the terms of the EULA prior to the User being able to use the Combination Product. For those Combination Products that do not have an associated shrink wrap EULA, Pear shall require the User to execute an EULA, in a form mutually agreed to by Pear and Licensor prior to delivering the Combination Product to the User. In the event that a prospective User desires to amend or change the EULA, such amendments or changes shall require Licensor's prior written approval.

 

5. 2 User Information and Reporting . Pear shall obtain from each User such information as required by Licensor from time to time and, if necessary, the consent of such User to collect such information and consent to provide such information to Licensor; provided that, notwithstanding the foregoing, Licensor shall not require any personally identifiable or personal health information. Within ten (10) business days after the end of each calendar quarter and upon the expiration or termination of this Agreement, Pear shall provide Licensor with the required information collected from each End User.

 

5 .3 No Representations . Pear shall not:

 

(i)

make any representations to any Person regarding the performance and functionality of the Combination Product or Stand-alone Product other than those contained in Licensor's published specifications; or

(ii)

hold itself out as an agent of Licensor and shall not, nor attempt to, negotiate any contractual arrangement as agent of Licensor, sign any agreement as if it is Licensor or otherwise bind Licensor to any contractual arrangement with a third Person, other than to deliver to an End User an EULA.

 

6. FEES.

 

6 .1 License Fees . In consideration of the licenses granted to Pear herein, Pear will pay Licensor the license fees set forth in Exhibit B (the " License Fee ").

 

6 .2 Reimbursement of Expenses . Pear will reimburse Licensor for all reasonable out-of-pocket expenses incurred by Licensor in performing services under Section 3.15 of this Agreement provided such expenses are approved in writing by Pear in advance. Such out-of-pocket expenses may include: reasonable travel expenses, other than for normal commuting, including airfares, rental vehicles, and highway mileage in company or personal vehicles at the then current IRS approved rate, and meals and lodging. Licensor shall submit an itemized statement of Licensor's expenses due under this Section 6.2, including receipts and other documentation, on a monthly basis. Pear shall reimburse Licensor within forty-five (45) days from the receipt of each statement by Pear.

 

7 . STANDARD LEGAL TERMS AND CONDITIONS: T h e Standard Legal Terms and Conditions governing this Agreement are contained in Exhibit D and incorporated herein by reference

 

 
4
 

 

 

I N WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

 

PEAR THERAPEUTICS, INC.;

 

LICENSOR:  

 

 

 

 

 

 

 

By:

 

 

By:

 

 

Name:

 

Name:

 

Title:

 

Title:

 

Date:

 

Date:

 

 

 
5
 

 

E XHIBIT A

 

DEFINITIONS

 

" Acceptable Drugs " means a commonly prescribed branded drug acceptable to Licensor, such acceptance shall not be unreasonably withheld.

 

" Applications " means Licensor's applications as described in Exhibit B .

 

" Combination Products " means drug/software combinations, where software is offered as part of a p h armaceutical product) (e.g., eFormulations).

 

" Confidential Information " means any and all information disclosed or made available by either party to the other, including orally conveyed information, in connection with this Agreement that is: (a) at the time of disclosure identified or marked as confidential or proprietary information; or (b) by its nature and the circumstances should be considered, or is reasonably obvious to be confidential information. Confidential Information shall be deemed to include the Pear Data, if any, supplied by Pear to Licensor pursuant to this Agreement. Confidential Information does not include any information that the receiving party can demonstrate is: (a) rightfully known prior to disclosure; (b) rightfully obtained from a third party authorized to make such a disclosure, without breach of the terms and conditions of this Agreement or other binding confidentiality obligation; (c) independently developed by the receiving party; (d) available to the public without restrictions; (e) approved for disclosure with the prior written approval of the disclosing party; or (f) disclosed by court order or as otherwise required by law, provided that the party required to disclose the information provides prompt advance notice to enable the other party to seek a protective order or otherwise prevent such disclosure.

 

" Content " means audio and visual information, documents, data and pictures contained in the Applications or made available to Pear in the course of using the Licensor Products.

 

" I ntegrated Product " means the product resulting from integrating the Licensor Product with a Pear Application. The Integrated Product will constitute a "Pear Wrapper" –i.e., a customized version of the Applications for use by Pear and its Users, with compliance and other layers and allow Users to access software functionality and other data and content contained in the Licensor Products, and will be hosted on servers owned and/or controlled by Pear.

 

" License Term " means the period identified in Exhibit B for which Pear will have access to the Licensor P r o d u cts.

 

" Licensor IP " means collectively, the Licensor Products made available to Pear by Licensor under the Agreement, including any source code, know-how, and clinical data related to the Applications, and all trademarks licensed by Licensor to Pear under the Agreement.

 

" Licensor Products " means collectively, the SDK and Content, as further described in E x hib it B .

 

" Pear Application " means a Pear-owned, proprietary software application, including any future releases, updates, or upgrades thereto.

 

" Pear Customizations " means any proprietary scripts, macros, modules or software developed by Pear or L icensor to customize Pear's use of, or access to, the Licensor Products.

 

" Pear Data " means any data, information or material that Pear and/or Pear's Users submit to or receive from the Licensor Products in the course of Users using the Integrated Products, as well as all clinical data from clinical studies involving any Pear resources.

 

 
6
 

 

 

 

 

" Pear IP " means collectively, the Pear Application; the Pear Customizations; the Pear Data; Pear trademarks; and the Pear-Owned Property, as well as any and all improvements to all licensed IP, and improvements to source code thereunder.

 

" Pear-Owned Property " means all tangible and intangible items or information that Licensor receives from Pear or from a third party on Pear's behalf, or that is paid for by Pear, including but not limited to Pear Data and Pear Customizations.

 

" Person " means any individual, corporation, partnership, limited liability company, association, unincorporated association, trustee, trust or other entity or organization.

 

" Source Code " means the human-readable language form of the software code that comprises (in object code form) the Licensor Products, together with any build tools (e.g., compilers, linkers and other related tools), compile/link scripts, logic diagrams, program comments, installation scripts and other documentation and tools necessary for an ordinarily skilled programmer to understand and be able to address errors in or create ports, updates or other modifications to such software code, or to recompile the same into fully functioning object code of the applicable Licensor Products.

 

" Stand-alone Offerings " means software content, designed for use in combination with a particular pharmaceutical, but sold alone (i.e., outside of Combination Products' packaging).

 

" U s ers " means any Person who Pear, either directly or indirectly, authorizes to use the Combined Product, Integrated Product or Licensor Products, through an EULA.

 

 
7
 

 


 

E XHIBIT B – LICENSE SCHEDULE

 

LI C E NSE TERMS AND FEES

 

T h is License Schedule sets forth the terms and conditions for a license for the use of the Licensor Products, as identified below. Except as modified by this License Schedule, the terms and conditions of the Agreement govern the license to the Licensor Products.

 

(1 ) LICENSE TERM.

 

T h e license term begins on the Effective Date of the Agreement and will continue in perpetuity unless terminated in accordance with the express terms of the Agreement (the " License Term ").

 

(2 ) DESCRIPTION OF LICENSOR PRODUCTS.

 

T h e Applications shall consist of only the following software modules:

 

Megateam Attention and Working Memory Assessment and Remediation System consisting of: (a) Game World;

 

(b ) Stop Signal Assessment Task Assessment (Inhibitory Control); (c) Working Memory Assessment;

 

(d ) Attention Training Game; and

 

( e) Working Memory Training Game.

 

(3 ) UPGRADES.

 

A ll upgrades, updates, bug fixes, improvements, corrections, enhancements, and major and minor releases to the Licensor Products (collectively, " Upgrades ") will be delivered and installed, if applicable, according to the terms of the Agreement, at no additional cost to Pear. Licensor will provide sufficient testing instructions and description of the new functionality or features of all Upgrades to ensure its successful implementation. Any Upgrades shall be deemed to be Licensor Products for purposes of this Agreement and are hereby automatically licensed to Pear subject to the terms and conditions of this Agreement.

 

(4 ) FEES.

 

A ) License Fees . In connection with the licenses granted in this Agreement, Pear will pay

 

L icensor as follows:

 

Fees will be paid via the following revenue sharing arrangement: a royalty equal to 2.5% of Net Revenue from the (i) license of Integrated Products; (ii) license of Combination Products, and (iii) license of the Licensor Products on a Stand-alone Basis, utilizing the Licensor Products during the Term. Pear will provide payments to Licensor on a quarterly basis. Pear will provide reports along with license payments hereunder in sufficient detail to illustrate the basis for the payments made, if applicable. " Net Revenue " means amounts actually received by Pear from the license of Users of Integrated Products and/or  C o m b i n ation products utilizing the Licensor Products and/or Licensor Products on a Stand-alone Basis d u r ing the Term less the following: (i) customary trade, quantity, or cash discounts; (ii) amounts repaid or credited by reason of rejection or return; (iii) any taxes or other governmental charges; (iv) transportation costs prepaid or allowed and costs of insurance in transit; and (v) commissions, and other costs of goods sold.

 

 
8
 

 

 

B ) Support and Maintenance . Will be set forth in a separate agreement.

 

(5 ) THIRD PARTY PRODUCTS

 

Megateam is built on a Unity platform. A Unity Developer License is required for patches, updates, upgrades and enhancement.

 

(6 ) DELIVERY .

 

x Within 10 days of the Effective Date, Licensor will provide Pear a link to a cloud locker containing the Licensor Products. In providing of Support, Licensor will make maintenance releases and Upgrades available to Pear on a web site designated by Licensor and accessible using FTP protocols. C) Clinical Validation Fees . The fees payable by Pear to Licensor for clinical validation and consulting services (the " C linical Validation Fees ") shall be set out in a mutually acceptable Statement of Work provided to Pear pertaining to clinical services, upgrades or other requested services. Each Statement of Work will include, but not be limited to, the following items: (i) scope of services, necessary requirements, assumptions, dependencies and obligations of each party. Pear acknowledges that each Statement of Work may require an upfront retainer fee in such an amount that is mutually agreeable. Pear shall not unreasonably withhold consent or agreement relating to the foregoing matters.

 

 
9
 

 

 

 

EXHIBIT C

 

Intentionaly! omitted.

 

 
10
 

 

 

E XHIBIT D

 

Standard Legal Terms and Conditions

 

1 . Ownership .

 

1 .1 Title to Licensor Products . Pear acknowledges that title to the Licensor IP made available to Pear by Licensor under this Agreement is and will remain the sole property of Licensor. Pear acknowledges that it has no proprietary interest in or right to use the Licensor IP except in accordance with the terms of the licenses granted in this Agreement.

 

1 .2 Title to Pear IP . Subject to its underlying rights in the Licensor Products, Licensor acknowledges that title to the Pear IP is and will remain the sole property of Pear. Without limiting the generality of the foregoing and by way of illustration only, Licensor acknowledges that it has no proprietary interest in or right to use the Pear Data or the Pear-Owned Property except in accordance with the express terms of this Agreement.

 

1 .3 Assignment . To the extent that Licensor has or at any time acquires any right, title or interest in or to any Pear Data, Integrated Products, Pear Customizations or any other Pear IP, Licensor hereby assigns all of such right, title and interest, including all copyrights, patents and other intellectual property rights, in and to such Pear IP to Pear. On request from Pear, Licensor shall execute any documents necessary to confirm and perfect Pear's ownership of the Pear IP, at no additional cost to Pear.

 

2 . Confidentiality. Neither party will use any Confidential Information of the other party except as expressly permitted in this Agreement or as expressly authorized in writing by the other party. Each party shall use the same degree of care to protect the other party's Confidential Information as it uses to protect its own Confidential Information of like nature, but in no circumstances less than reasonable care. Neither party is allowed to disclose the other party's Confidential Information to any person or entity other than the receiving party's officers, employees, consultants and legal advisors who need access to such Confidential Information to effectuate the intent of the Agreement and who are subject to confidentiality obligations with such party. Each party agrees to notify the other of any unauthorized use or disclosure of Confidential Information and to provide reasonable assistance to such other party, and its licensors, in the investigation and prosecution of such unauthorized use or disclosure. All Pear-Owned Property shall be deemed the Confidential Information of Pear. Without limiting the generality of the foregoing, Licensor does not own any Pear Owned Property and may not use or disclose any Pear-Owned Property except as expressly provided in this Agreement. Licensor shall have sole responsibility for maintaining the accuracy, quality, integrity, reliability, and confidentiality of all Pear-Owned Property transmitted to Licensor in Pear's use of the Licensor Products. Licensor shall be responsible for the deletion, destruction, damage, loss or failure to store any Pear-Owned Property sent to Licensor under this Agreement.

 

3 . Warranties. Licensor represents and warrants each of the following:

 

3 .1 Title . Licensor has and will have good, marketable and unencumbered title to the Applications and the Licensor Products.

 

3 .2 Performance . The Licensor Products, and any upgrades, enhancements, new releases, or updates thereto, shall perform in accordance with all specifications and documentation, and be free from material or frequent errors; provided however, that the foregoing warranty will not apply to the extent the Licensor Products are modified by Pear in an authorized manner or used beyond the scope of the licenses granted in this Agreement.

 

 
11
 

 

 

3 .3 Non-Infringement . Neither the Licensor Products, the use thereof, nor Pear's exercise of its rights un d er this Agreement, will not infringe, misappropriate or otherwise violate any intellectual property right w or ldwide or other right of any third party worldwide, including property, contractual, employment, copyright, patent, trade secret, trademark, or nondisclosure rights.

 

3 .4 Other Licenses . The performance of this Agreement and Pear's use of the Licensor Products will not require any license to use the intellectual property of a third party, except as otherwise expressly set forth on Exhibit B, as applicable. If any part of the Licensor Products contains third-party software, Licensor has the full power and authority to sublicense the third-party software as part of its license grant to Pear hereunder, and such use by Pear hereunder will not require additional licenses to be obtained and/or fees to be paid by Pear.

 

3 .5 No Viruses . The Licensor Products will be free from any viruses, worms, disabling programming codes, instructions or other such items that may threaten, infect, damage, disable or otherwise interfere with the permitted use of the Licensor Products (" Virus "). If Pear notifies Licensor that it has been informed or has reason to believe that a Virus has infected Pear computer or server, Licensor will promptly assist and work continuously with Pear, at Pear's direction and at no charge, until, in Pear's determination, the Virus has been eliminated.

 

3 .6 Malicious Technolog y. The Licensor Products will not: (i) contain any Malicious Technology, (ii) contain any files or features that will disable or destroy any functionality of the Licensor Products, (iii) monitor Pear's or its Users' use of the Integrated Products; (iv) replicate, transmit or activate itself without control of a person operating the computing equipment on which it resides; or (v) alter, damage or erase any data or computer programs without control of a person operating the computing equipment on which it resides. If the Licensor is in breach of this Section, no "right to cure" period will apply. Pear reserves the right to pursue any available civil or criminal action against Licensor for violation of this provision. Licensor will not install, use or execute any software on any Pear CPUs without Pear's written approval. " Malicious Technology " means any software, electronic, mechanical or other means, device or function , e.g . (key node, lock, time-out, "back door," trapdoor," "booby trap," "drop dead device," "data scrambling device," "Trojan Horse,") that would allow Licensor or a third party to: (i) monitor or gain unauthorized access to any Pear system, (ii) use any electronic self-help mechanism or (iii) restrict, disable, limit or impair the performance of a Pear system or network.

 

3 .7 Compliance with Laws . Licensor will comply with all applicable laws, orders, codes and regulations in the performance of this Agreement, including, if applicable, those regarding privacy and security of protected health information. Licensor warrants that it has not at any time been disbarred or excluded from participation in any federal healthcare program, nor is Licensor under investigation or consideration for such disbarment or exclusion. Licensor will obtain and keep current at its expense all governmental permits, certificates and licenses (including professional licenses, if applicable) necessary for Licensor to grant the licenses under this Agreement. Licensor will proactively and cooperatively work with and assist Pear in a timely manner to ensure that the Licensor Products have been effectively tested and complies with all legal requirements prior to or contemporaneously with the effective date of such legal requirements.

 

3 .8 Good Standing . Licensor (i) is validly existing and in good standing, and is qualified to do business, in each jurisdiction where it will conduct business under this Agreement; (ii) the signing, delivery and performance of this Agreement by the party has been properly authorized; and (iii) no claims, actions or proceedings are pending or, to the knowledge of the party, threatened against or affecting the party that may, if adversely determined, reasonably be expected to have a material adverse effect on the party's ability to perform its obligations under this Agreement.

 

 
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3 . 9 Open Source . Licensor complies with Open Source Licenses for software embedded in the Licensor Products or otherwise used or incorporated in the Licensor Products and has not and shall not use such software licensed under Open Source Licenses in a manner that will cause or could reasonably cause Contamination of Customer's technology in providing the licenses to the Licensor Products under the Agreement. "Contamination" means that proprietary technology has become subject to the terms of an Open Source License under which downstream recipients or other third parties may claim the right to (a) copy, create derivative works of, or redistribute the proprietary technology, or (b) receive the source code of the proprietary technology. "Open Source License" means a software license under which source code is made available under terms allowing a licensee to copy, create derivative works and distribute the software without fee or cost.

 

3 .10 Breach of Warranty; Remedy . If there is a breach of any of the foregoing warranties, Licensor will promptly replace and/or repair nonconforming Licensor Products at Licensor's sole cost. If Licensor fails to promptly replace and/or repair nonconforming Licensor Products to Pear's reasonable satisfaction, Pear may, in addition to exercising any other available remedies, replace or repair nonconforming Licensor Products at Licensor's sole cost and/or terminate the license and receive a refund for any fees paid for the nonconforming Licensor Products prior to such point of termination.

 

4 . Indemnification.

 

4 .1 Indemnification . Licensor shall indemnify and hold harmless Pear and its affiliated entities, and all of their trustees, officers, directors, shareholders, legal representatives, customers, partners, employees, successors, assigns and agents from and against any and all claims, proceedings, damages, injuries, liabilities, losses, costs and expenses (including reasonable attorneys fees and litigation expenses) based on or arising from: (a) any claim or allegation that the Licensor Products infringe any intellectual property right or other proprietary right of any third person, (b) any injury to or death of any person or damage to tangible, personal or real property to the extent caused by Licensor's negligence or willful misconduct in the course of its performing services under this Agreement; (c) any violation of applicable law by Licensor; or (d) any breach or alleged breach by Licensor of this Agreement, including any of its representations, warranties or obligations set forth in this Agreement. Pear will give Licensor prompt notice of any such claim or allegation or the commencement of any litigation against Pear to which the above indemnification obligation applies, provided that Pear's failure to give such notice shall not relieve Licensor of any of its obligations under this Section except to the extent that Licensor is actually prejudiced by such failure. Pear shall fully cooperate with Licensor in the defense of such claim. Except as required by law, Licensor shall conduct the defense and any settlement negotiations in any such third-party action arising as described herein using experienced counsel reasonably acceptable to Pear, provided, Licensor shall not compromise or settle any claim in a manner which affects Pear's rights, makes admissions on Pear's behalf or obligates Pear to take or not take any action, including without limitation the payment of money, without Pear's prior written approval, which shall not be unreasonably withheld or delayed.

 

4 .2 Disruption of Use of Licensor Products . If a third-party claim causes Pear's quiet enjoyment and use of the Licensor Products and/or Integrated Products to be endangered or disrupted, Licensor shall, at Pear's sole option: (a) replace the Licensor Products, without additional charges, with a functionally equivalent and non-infringing product; or (b) modify the Licensor Products to avoid the infringement; or (c) obtain a license for the Pear to continue use of the Licensor Products and pay for an y additional fee required for such license. If none of these are feasible to Pear's reasonable satisfaction, Pear will be entitled to terminate this Agreement and, in addition to any other remedies it may have under this Agreement or at law, will receive a refund for moneys previously paid for the affection portions of the Licensed Products.

 

 
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5 . LIMITATION OF LIABILITY . EXCEPT IN THE EVENT OF BREACH OF ITS CONFIDENTIALITY OBLIGATIONS, OR WITH RESPECT TO EITHER PARTY'S INDEMNIFICATION OBLIGATIONS, OR IN THE EVENT OF A BREACH BY LICENSOR OF ITS EXCLUSIVITY OBLIGATIONS IN SECTION 2, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES, OR DAMAGES ON ACCOUNT OF LOSS OF PROFITS OR FAILURE TO ACHIEVE ANTICIPATED REVENUES, EVEN IF SUCH DAMAGES WERE WITHIN THE CONTEMPLATION OF THE PARTIES. EXCEPT FOR IN CONNECTION WITH EITHER PARTY'S INDEMNIFICATION OBLIGATIONS, OR A BREACH OF ITS CONFIDENTIALITY OBLIGATIONS, OR IN THE EVENT OF A BREACH BY LICENSOR OF ITS EXCLUSIVITY OBLIGATIONS IN SECTION 2, IN NO EVENT WILL EITHER PARTY'S TOTAL AGGREGATE LIABILITY FOR ALL CLAIMS ARISING OUT OF THIS AGREEMENT EXCEED THE AMOUNT PAID OR PAYABLE BY PEAR UNDER THIS AGREEMENT PRIOR TO THE EFFECTIVE DATE OF THE NOTICE OF ANY SUCH CLAIM. THIS PROVISION APPLIES REGARDLESS OF HOW THE LIABILITY AROSE OR THE THEORY OF L I A BI L I T Y, INCLUDING WITHOUT LIMITATION CONTRACT OR TORT (INCLUDING P R ODUCTS LIABILITY, STRICT LIABILITY, NEGLIGENCE AND MISREPRESENTATION).

 

6 . Term And Termination.

 

6 .1 Term . The initial term of this Agreement begins on the Effective Date and will continue for the d u r ation of the License Term (the " Term "), unless terminated sooner in accordance with this Section 6.

 

6 .2 Termination by Licensor . Licensor may terminate this Agreement if:

 

( i) Pear has not paid USD$4,000,000 annual royalties to Licensor for each of fiscal calendar years 2022 , 2023 and 2024; and

 

( ii) Pear has not obtained appropriate regulatory approvals resulting in the right to commercialize the Combination Products and/or the Integrated Products within eight (8) years of the Effective Date.

 

6. 3 Termination for Material Breach . If a party materially breaches this Agreement, the other party must give the breaching party a material breach notice, identifying the action or inaction that is the basis of the breach. The party giving the breach notice may terminate this Agreement if the other party does not cure the breach to the reasonable satisfaction of the non-breaching party within thirty (30) days after receiving the breach notice. No breach under this Agreement will constitute a breach under any other agreement, license or schedule between the parties. Unless otherwise provided in the breach notice or unless the breach has been cured to the reasonable satisfaction of the non-breaching party, the termination is effective thirty-one (31) days after the breach notice is given. In addition to any other rights or remedies that Pear may have, if Pear terminates under this Section, Licensor must reimburse Pear for the increased costs incurred by Pear for replacement services or products.

 

6. 4 Change in Control of Licensor . Pear may, at any time and without liability, terminate this Agreement, if a person or entity previously not in control of Licensor acquires, directly or indirectly, control of Licensor, or in the event of a purchase or sale of all or substantially all of the assets, stock, or business operations of Licensor. Licensor must give Pear no less than one hundred and twenty (120)-days' notice of any change in control or sale of Licensor, unless prohibited by applicable laws. Unless otherwise provided in the notice, the termination is effective ten (10) days after Pear gives the termination notice, if applicable.

 

6 .5 INTENTIONALLY DELETED.

 

6. 6 Insolvency . If Licensor becomes Insolvent, Pear may terminate this Agreement without liability and without notice to Licensor. " Insolvent " means: (i) Licensor does not meet its undisputed obligations, including judgments, to third parties as those obligations become due, (ii) Licensor's stock is removed or delisted from a trading exchange, (iii) Licensor's long term debt goes on a watch or warning list, or (iv) Licensor's long term debt rating is downgraded more than two (2) levels from its debt rating as of the Effective Date.

 

 
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6. 6 Termination Without Cause . Pear may at any time without cause terminate this Agreement upon at least sixty (60) days written notice to Licensor.

 

6. 7 Effect of Termination . Termination of this Agreement is without prejudice to any other right or remedy of the parties. Termination of this Agreement for any reason does not release either party from any liability which, at the time of termination, has already accrued to the other party, or which may accrue in respect of any act or omission prior to termination or from any obligation which is expressly stated to survive the termination.

 

6. 8 Post-Termination Obligations . Upon termination of this Agreement, the parties will perform the following obligations:

 

( A ) Within fifteen (15) days after the effective date of termination or expiration, Licensor will return P ear Owned Property to locations designated by Pear;

 

(B ) Within thirty (30) days after the effective date of termination or expiration, Licensor will invoice P ear for any final amounts accrued prior to the effective date of termination under the Agreement;

 

( C ) Within one hundred twenty (120) days after the effective date of termination or expiration, Pear will terminate availability of access to the Integrated Products that are utilizing the Licensor Products (or any approved modified version thereof); provided that any previously granted end user licenses to the Integrated Products and/or Stand-alone Offerings shall survive according to their terms. The parties will mutually agree on mechanisms for Licensor to monitor such cessation, which may include a license validation system incorporated into the Integrated Product, and the right to monitor App Store listings; and

 

( D ) Bo th parties will immediately discontinue making any statements or taking any actions that might cause third parties to infer that a business relationship continues to exist between the parties under the Agreement, and where necessary or advisable, the parties will inform third parties that the parties no longer have a business relationship.

 

7 . Audit. Licensor may, at its expense and upon ten (10) business days prior written notice, audit such records, documentation or files, including financial records and documentation, of Pear that evidence compliance by Pear of this Agreement, including the calculation and remittance of the appropriate fees. Any such audit shall be conducted during regular business hours at Pear's facilities and shall not unreasonably interfere with Pear's business activities. Pear shall provide reasonable assistance to Licensor in the conduct of the audit. If an audit reveals that Pear has underpaid any fees to Licensor, Pear shall be invoiced for the difference between the fees to be paid as determined by the audit and the actual fees paid by Pear. If the difference between the fees to be paid as determined by the audit and the actual fees paid by Pear exceed ten percent (10%) of the actual fees paid by Pear, then Pear shall also pay Licensor's costs of conducting the audit. Audits shall be conducted no more than once annually, unless an audit reveals an underpayment by Pear, in which case an audit may be conducted again by Pear at any time upon five (5) business days prior written notice.

 

 
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8 . Miscellaneous.

 

8. 1 Notice . Notices provided under this Agreement must be in writing and delivered by (i) certified mail, return receipt requested, (ii) hand delivered, (iii) facsimile with receipt of a " T ransmission OK " acknowledgment, (iv) e-mail, or (v) delivery by a reputable overnight carrier service (in the case delivery by facsimile or e-mail the notice must be followed by a copy of the notice being delivered by a means provided in (i), (ii) or (v)). The notice will be deemed given on the day the notice is received. In the case of notice by facsimile or e-mail, the notice is deemed received at the local time of the receiving machine, and if not received, then the date the follow-up copy is received. Notices must be delivered to the f o llowing addresses or at such other addresses as may be later designated by notice:

 

Pear:

 

Licensor:

C or e y McCann

 

Scott Woodrow

5 5 Temple Place, Floor 3

 

10 0 College Street, Suite 213

Boston, MA 02111

 

Toronto, ON M5G 1L5

Email: c m ccann@peartherapeutics.com

 

E m ail: s cott@ehave.net

 

8. 2 Assignment . This Agreement shall be binding upon and inure to the benefit of the parties hereto, their successors, assigns, and legal representatives. Except as otherwise set forth in this Agreement, Pear will not assign any of the licenses granted to it under the Agreement in whole or in part without Licensor's prior written consent; provided however that notwithstanding the foregoing, (i) Pear may assign this Agreement to any successor to its business, including by a purchase or sale of all or substantially all of the assets, stock or business operations, any change of control, acquisition, merger or consolidation of Pear into, by, or with another entity, or any other transfer by operation of law; and (ii) Pear may hire or contract with third parties of its choice to assist it in fulfilling its obligations and exercising any of its rights pursuant to this Agreement, provided that Pear will remain liable for the subcontractor's performance. Licensor may not assign, or otherwise transfer this Agreement, any right granted or obligation imposed hereunder, in whole or in part, without Pear's prior written consent.

 

8. 3 Access to Books and Records . To the extent that Section 952 of P.L. 96-499 (42 U.S.C. Section

 

1395 x ( v )(1 ) ) is applicable to this Agreement, the parties agree as follows: (a) until the expiration of four (4) years after the furnishing of such services pursuant to this Agreement, each party shall make available, upon written request of the Secretary of the U.S. Department of Health and Human Services or upo n request of the Comptroller General of the United States, or any of his/her duly authorized representatives, this Agreement, and books, documents and records of such party that are necessary to certify the nature of the duties of this Agreement; and (b) if either party performs its services hereunder through a subcontract with a value of cost of Ten Thousand Dollars ($10,000) or more over a twelve (12)-month period, then any such subcontract shall contain a clause to the effect that until the expiration of four (4) years after the furnishing of such services pursuant to such subcontract, the related organization shall make available, upon written request of the Secretary of the U.S. Department of Health and Human Services or upon request of the Comptroller General of the United States, or any of his/her duly authorized representatives, the subcontract, and books, documents and records of such organization that are necessary to verify the nature and extent of the cost of services provided pursuant to such subcontract.

 

8. 4 Governing Law . This Agreement shall be governed, interpreted and enforced under and in accordance with the laws of the Commonwealth of Massachusetts, excluding its conflicts of law provisions. Each party submits to the exclusive jurisdiction of and forum in the state and federal courts located in Suffolk County, Commonwealth of Massachusetts.

 

8. 5 Unenforceability . Should any of the provisions of this Agreement be found illegal or unenforceable in any respect, such illegality or unenforceability shall not affect the other provisions of the Agreement, all of which shall remain enforceable in accordance with their terms. Any unenforceable provisions shall be replaced by an enforceable provision effecting the intention of the parties, as determined by the tribunal of fact.

 

8. 6 Currency . All amounts are stated and payable in United States dollars.

 

 
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8. 7 Survival . The following sections of the main body of the Agreement and of this Exhibit D will survive expiration or termination of this Agreement for any reason: Section 4 of the main body of the Agreement ("HIPAA Requirements"); and Sections 1 ("Ownership"), 2 ("Confidentiality"), 3 ( " W arranties"), 4 ("Indemnification"); 5 (Limitation of Liability); 6.6 ("Effect of Termination"), 6.7 ( " P o s t-Termination Obligations"), 7 (Audit) and 8 (Miscellaneous) of this Exhibit D.

 

8. 8 Use of Name . Nothing in this Agreement grants Licensor the right to use any trademarks, trade names or logos proprietary to Pear. If Licensor is granted a right to use such marks, Licensor will do so only in strict compliance with Pear guidelines provided by Pear. All goodwill associated with any use of Pear trademarks will inure to Pear.

 

8. 9 Remedies . All rights and remedies of the parties, under this Agreement, in law or at equity, are cumulative and may be exercised concurrently or separately. The exercise of one remedy will not be an election of that remedy to the exclusion of other remedies.

 

8 .10 Applicability of Laws . Each party will comply with all applicable export laws, obtain any applicable export licenses and will not export or re-export any part of the Licensor Products to any country in violation of such restrictions, or any country that may be subject to an embargo by the United States. Prior to providing Pear with any Licensor Products subject to export control laws, Licensor will notify Pear and identify such items and the applicable export control laws, and will furnish to Pear the applicable Export Control Classification Numbers.

 

8 .11 Public Announcements . Neither party will make any public announcement regarding the business relationship of the parties or this Agreement without the other party's prior express written permission, unless required by law; in which case, the disclosing party will provide the other party as much advance written notice as reasonably possible. Notwithstanding the foregoing, Pear will be entitled, without Licensor's prior consent, to publically disclose the fact of the partnership contemplated by this Agreement, but not the specific commercial terms of the Agreement.

 

8.1 2 Entire Agreement . This Agreement, including Exhibits, all of which are attached, constitute the entire Agreement and understanding between Licensor and Pear concerning the subject matter hereof, and supersedes and terminates all prior written and oral agreements, proposals, promises, and representations of the parties respecting the Service covered by this Agreement. In the event of any conflict or ambiguity between any Exhibit and the terms and conditions set forth in this Agreement, the terms and conditions in this Agreement shall control.

 

 

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EXHIBIT 10.19

 

2304101 Ontario Inc.

Subscription Confirmation

 

The undersigned, intending to be legally bound, hereby irrevocably subscribes for and agrees to purchase ________ shares of the common stock of 2304101 Ontario Inc., a Canadian corporation (the "Company"), for a purchase price of $_______, or $0.0409 per share. Simultaneous with the execution and delivery of this confirmation to the Company, the undersigned is either delivering a check made payable to "David Lubin & Associates, PLLC Master Escrow Account for the benefit of 2304101 Ontario Inc." or sending a wire transfer payment for the benefit of the Company's account as follows:

 

Bank of America  

300 Broadhollow Road 

Melville, NY 11747 Phone: 800-285-5245 

ABA: 026009593  

SWIFT: BOFAUS3N 

ACH: 021000322 

Master Escrow Account: 483031048535

 

Account name: David Lubin & Associates Master Escrow Account

 

The undersigned acknowledges that he has received a copy of the prospectus of the Company, dated _____, 2015 filed with the Securities and Exchange Commission ("Prospectus") with respect to the offer and sale of the shares of stock being purchased. The undersigned is not relying on the Company or its affiliates with respect to economic considerations involved in this investment, but has relied solely on its own advisors.

 

The undersigned further acknowledges that although the shares of common stock being purchased from the Company are registered securities under the U.S. Securities Act of 1933, as amended, there may be restrictions on the resale of the shares imposed by the particular state law where the undersigned resides or in a jurisdiction outside of the United States. Accordingly, the undersigned will not offer to sell or sell the Shares in any jurisdiction unless the undersigned obtains all required consents, if any.

 

The undersigned understands that an investment in the shares is a speculative investment which involves a high degree of risk and the potential loss of his entire investment. The undersigned is further aware that no federal or state agency has (i) made any finding or determination as to the fairness of this investment, (ii) made any recommendation or endorsement of the shares or the Company, or (iii) guaranteed or insured any investment in the Shares or any investment made by the Company. The undersigned understands that the price of the stock purchased hereby bears no relation to the assets, book value or net worth of the Company and was determined arbitrarily by the Company. The undersigned agrees and acknowledges that it has read all the information contained in the Prospectus, including without limitation, the Risk Factors contained therein.

 

 

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Date: ______

 

Amount of Investment: $_____ Number of Shares: ______

 

1.

Print Full Name of Investor:

Individual:

____________________________________________________________

First, Middle, Last

Partnership, Corporation, Trust, Custodial Account, Other:

____________________________________________________________

Name of Entity

2.

Permanent Address of Investor:

____________________________________________________________

3.

Name of Primary Contact Person:

____________________________________________________________

Title:

____________________________________________________________

 

 

 

4.

Telephone Number:

 

5.

E-Mail Address:

____________________________________________________________

6.

Facsimile Number:

 

 

 

 

7.

Social Security or EIN of Investor:

(attach an executed Form W-8)

____________________________________________________________

 

 

 

8.

Authorized Signatory:

____________________________________________________________

 

Title:

____________________________________________________________

 

If Investor is an entity, provide copy of Articles of Incorporation, Certificate of Formation or other evidence of existence, as well as a copy of board resolution or other evidence of authorization to purchase the shares of the Company.

 

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EXHIBIT 10.20

 

Escrow Agreement

 

This Escrow Agreement (this "Agreement"), dated as of November ___, 2015, among 2304101 Ontario Inc., a Canadian corporation having its principal place of business at 100 College Street, Suite 302, Toronto, ON M5G 1L5 (the "Company") and David Lubin & Associates, PLLC, a law firm having its principal place of business at 108 S. Franklin Avenue, Valley Stream, NY 11580 (the "Escrow Agent") and each Investor (as defined below) joining this Agreement from time to time. The Company and each Investor are sometimes referred to herein collectively as the "Escrow Parties."

 

WHEREAS, the Company wishes to create a segregated escrow account with the Escrow Agent on behalf of the Company and for the benefit of each Investor to deposit their funds until the Company reaches its required minimum amount in the offering (the "Offering") described in the Registration Statement on Form F-1 (333-207107) filed by the Company with the Securities and Exchange Commission and declared effective as of the date hereof;

 

WHEREAS, each Investor will delivering an amount equal to its total subscription in the Company (the "Deposit") to be held in a non-interest bearing escrow account established hereby until the Company reaches its required minimum amount, as Escrow Agent shall be notified in writing by the Company (the "Escrow Period"), unless earlier released in accordance with the terms hereof; and

 

WHEREAS, the parties desire to set forth their understandings with regard to the escrow account established by this Agreement.

 

NOW, THEREFORE, in consideration of the premises and agreements of the parties contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

 

1. Appointment of Agent. The Company, by its execution hereof, and each Investor, by its execution of its Subscription Confirmation and joinder hereto, hereby appoints the Escrow Agent as the agent to hold in escrow, and to administer the disposition of, the Escrow Fund (as defined below) in accordance with the terms of this Agreement, and the Escrow Agent accepts such appointment.

 

2. Establishment of Escrow. Following execution and delivery of this Agreement by the Company and the Escrow Agent, the Company shall, from time to time, cause each Investor executing and delivering an Investment Confirmation to the Company to deliver to the Escrow Agent a joinder signature page to this Agreement prior to or simultaneous with the Investor forwarding its Deposit to be deposited with the Escrow Agent, and Escrow Agent shall promptly upon request acknowledge to the Company and such Investor receipt of any funds so deposited. The Deposits and all additional amounts now or hereafter deposited with the Escrow Agent shall be referred to as the "Escrow Fund."

 

 
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3. Customer Identification and TIN Certification. To help the government fight terrorism and money laundering activities, Federal laws require all financial institutions to obtain, verify and record information that identifies each individual or entity that opens an account. Therefore, the Escrow Agent must obtain the name, address, taxpayer or other government identification number, and other information, such as date of birth for individuals, for each Investor that is subject to this Agreement or which has delivered a Deposit. For individuals that are Investors, the Escrow Agent requires a copy of a driver's license, passport or other form of photo identification. For business and other entities that are Investors, the Escrow Agent will require such documents as it deems necessary to confirm the legal existence of the entity. The Escrow Agent also must obtain the name, address, taxpayer or other identification number, and other information for the Company.

 

The Company shall provide, and, at the time of or prior to delivery of an Investor's Deposit, the Company shall cause such Investor to provide, to the Escrow Agent a tax identification number for tax reporting purposes and a completed IRS Form W-9, and every individual executing the joinder signature page to this Agreement on behalf of a Investor shall provide to the Escrow Agent a copy of a driver's license, passport or other form of photo identification acceptable to the Escrow Agent. The Escrow Parties agree to provide to the Escrow Agent such organizational documents and documents establishing the authority of any individual acting in a representative capacity as the Escrow Agent may require in order to comply with its established practices, procedures and policies.

 

4. Deposit of the Escrow Fund. The Escrow Agent shall deposit the Deposit of each Investor who has joined this Agreement and has provided an IRS Form W-9 to the Escrow Agent (the "Information Reporting Party") in a non-interest bearing deposit account at Bank of America (the "Sub-Account"). The Sub-Account is associated with a non-interest bearing master deposit account at Bank of America entitled David Lubin & Associates, PLLC Master Escrow Account (the "Master Account"). Investors shall initially wire their Deposits to the Master Account for the benefit of the Sub-Account.

 

The Sub-Accounts and the Master Account are "noninterest-bearing transaction accounts." The Escrow Agent shall not be liable or responsible for any loss resulting from any deposits made pursuant to this Section 4, other than as a result of the gross negligence or willful misconduct of the Escrow Agent.

 

5. Release of the Escrow Fund.

 

(a) If (i) the Company has not reached its required minimum amount of $250,000 on or prior to 90 days from the date hereof (unless the Offering is extended by the board of directors of the Company) or (ii) the Offering is earlier terminated by the board of directors of the Company, then the Company shall promptly provide the Escrow Agent with written notification that the Offering is terminated and written instruction to release each Investors' Deposit to each Investor by wire transfer in accordance with wire transfer instructions set forth on the joinder page for each Investor or by check if the wire transfer instructions were not included on the joinder page.

 

 
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(b) If the Company decides not to accept an Investor after the Investor has made a deposit with the Escrow Agent, the Company provide a written notification of such to the Escrow Agent which then shall promptly return the Investor's Escrow Fund to such Investor in accordance with the wire transfer instructions set forth on the joinder page for such Investor or by cashier's check if the wire transfer instructions were not included on the joinder page.

 

(c) The Company shall provide the Escrow Agent with written notice when it has reached is required minimum amount and which time the Escrow Agent shall disburse the Escrow Fund to the Company.

 

(d) Notwithstanding anything to the contrary in this Agreement, if the Board of Directors of the Company determines to extend the expiration of the offering period, the Company shall send the Escrow Agent notice thereof and the Escrow Agent shall abide by such extended date.

 

6. Methods of Payment. All payments required to be made by the Escrow Agent under this Agreement shall be made by wire transfer or by check, as elected by the Escrow Agent. Any wire transfers shall be made subject to, and in accordance with, the Escrow Agent's normal funds transfer procedures in effect from time to time. The Escrow Agent shall be entitled to rely upon all bank and account information provided to the Escrow Agent by any of the Escrow Parties. The Escrow Agent shall have no duty to verify or otherwise confirm any written wire transfer instructions but it may do so in its discretion on any occasion without incurring any liability to any of the Escrow Parties for failing to do so on any other occasion. The Escrow Agent shall process all wire transfers based on bank identification and account numbers rather than the names of the intended recipient of the payment, even if such numbers pertain to a recipient other than the recipient identified in the payment instructions. The Escrow Agent shall have no duty to detect any such inconsistencies and shall resolve any such inconsistencies by using the account number.

 

7. Responsibilities and Liability of Escrow Agent.

 

(a) Duties Limited. The Escrow Agent undertakes to perform only such duties as are expressly set forth in this Agreement. The Escrow Agent's duties shall be determined only with reference to this Agreement and applicable laws and it shall have no implied or other duties. The Escrow Agent shall not be bound by, deemed to have knowledge of, or have any obligation to make inquiry into or consider, any term or provision of any agreement between any of the Escrow Parties and/or any other third party or as to which the escrow relationship created by this Agreement relates, including without limitation any documents referenced in this Agreement.

 

(b) Limitations on Liability of Escrow Agent. Except in cases of the Escrow Agent's bad faith, willful misconduct or gross negligence, the Escrow Agent shall be fully protected (i) in acting in reliance upon any certificate, statement, request, notice, advice, instruction, direction, other agreement or instrument or signature reasonably and in good faith believed by the Escrow Agent to be genuine, (ii) in assuming that any person purporting to give the Escrow Agent any of the foregoing in connection with either this Agreement or the Escrow Agent's duties, has been duly authorized to do so, and (iii) in acting or failing to act in good faith on the advice of any counsel retained by the Escrow Agent. The Escrow Agent shall not be liable for any mistake of fact or law or any error of judgment, or for any act or omission, except as a result of its bad faith, willful misconduct or gross negligence. The Escrow Agent shall not be responsible for any loss incurred upon any action taken under circumstances not constituting bad faith, willful misconduct or gross negligence.

 

 
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In connection with any payments that the Escrow Agent is instructed to make by wire transfer, the Escrow Agent shall not be liable for the acts or omissions of (a) any Escrow Party or other person providing such instructions, including without limitation errors as to the amount, bank information or bank account number; or (b) any other person or entity, including without limitation any Federal Reserve Bank, any transmission or communications facility, any funds transfer system, any receiver or receiving depository financial institution, and no such person or entity shall be deemed to be an agent of the Escrow Agent.

 

Without limiting the generality of the foregoing, it is agreed that in no event will the Escrow Agent be liable for any lost profits or other indirect, special, incidental or consequential damages which the parties may incur or experience by reason of having entered into or relied on this Agreement or arising out of or in connection with the Escrow Agent's services, even if the Escrow Agent was advised or otherwise made aware of the possibility of such damages; nor shall the Escrow Agent be liable for acts of God, acts of war, breakdowns or malfunctions of machines or computers, interruptions or malfunctions of communications or power supplies, labor difficulties, actions of public authorities, or any other similar cause or catastrophe beyond the Escrow Agent's reasonable control.

 

In the event that the Escrow Agent shall be uncertain as to its duties or rights under this Agreement, or shall receive any certificate, statement, request, notice, advice, instruction, direction or other agreement or instrument from any other party with respect to the Escrow Funds which, in the Escrow Agent's reasonable and good faith opinion, is in conflict with any of the provisions of this Agreement, or shall be advised that a dispute has arisen with respect to the Escrow Fund or any part thereof, the Escrow Agent shall be entitled, without liability to any person, to refrain from taking any action other than to keep safely the Escrow Fund until the Escrow Agent shall be directed otherwise in accordance with Joint Written Instructions or an order of a court with jurisdiction over the Escrow Agent. The Escrow Agent shall be under no duty to institute or defend any legal proceedings, although the Escrow Agent may, in its discretion and at the expense of the Escrow Parties as provided in subsections (c) or (d) immediately below, institute or defend such proceedings.

 

(c) Indemnification of Escrow Agent. The Escrow Parties jointly and severally agree to indemnify the Escrow Agent for, and to hold it harmless against, any and all claims, suits, actions, proceedings, investigations, judgments, deficiencies, damages, settlements, liabilities and expenses (including reasonable legal fees and expenses of attorneys chosen by the Escrow Agent) as and when incurred, arising out of or based upon any act, omission, alleged act or alleged omission by the Escrow Agent or any other cause, in any case in connection with the acceptance of, or performance or non-performance by the Escrow Agent of, any of the Escrow Agent's duties under this Agreement, except as a result of the Escrow Agent's bad faith, willful misconduct or gross negligence.

 

 
4
 

 

(d) Authority to Interplead. The Escrow Parties authorize the Escrow Agent, if the Escrow Agent is threatened with litigation or is sued, to interplead all interested parties in any court of competent jurisdiction and to deposit the Escrow Fund with the clerk of that court. In the event of any dispute, the Escrow Agent shall be entitled to petition a court of competent jurisdiction and shall perform any acts ordered by such court.

 

8. Termination. This Agreement and all the obligations of the Escrow Agent shall terminate upon the earliest to occur of the release of the entire Escrow Fund by the Escrow Agent in accordance with this Agreement or the deposit of the Escrow Fund by the Escrow Agent in accordance with Section 7(d) hereof.

 

9. Removal of Escrow Agent. The Escrow Parties acting together shall have the right to terminate the appointment of the Escrow Agent, specifying the date upon which such termination shall take effect. Thereafter, the Escrow Agent shall have no further obligation to the Escrow Parties except to hold the Escrow Fund as depository and not otherwise. The Escrow Parties agree that they will jointly appoint a banking corporation, trust company or attorney as successor escrow agent. Escrow Agent shall refrain from taking any action until it shall receive joint written instructions from the Escrow Parties designating the successor escrow agent. Escrow Agent shall deliver all of the Escrow Fund to such successor escrow agent in accordance with such instructions and upon receipt of the Escrow Fund, the successor escrow agent shall be bound by all of the provisions of this Agreement.

 

10. Resignation of Escrow Agent. The Escrow Agent may resign and be discharged from its duties and obligations hereunder at any time by giving no less than ten (10) days' prior written notice of such resignation to the Escrow Parties, specifying the date when such resignation will take effect. Thereafter, the Escrow Agent shall have no further obligation to the Escrow Parties except to hold the Escrow Fund as depository and not otherwise. In the event of such resignation, the Escrow Parties agree that they will jointly appoint a banking corporation, trust company, or attorney as successor escrow agent within ten (10) days of notice of such resignation. Escrow Agent shall refrain from taking any action until it shall receive joint written instructions from the Escrow Parties designating the successor escrow agent. Escrow Agent shall deliver all of the Escrow Fund to such successor escrow agent in accordance with such instructions and upon receipt of the Escrow Fund, the successor escrow agent shall be bound by all of the provisions of this Agreement.

 

11. Accounting. At the request of the Company, the Escrow Agent shall render to the Company a written statement setting forth the balance of each Investor's Escrow Fund.

 

12. Survival. Notwithstanding anything in this Agreement to the contrary, the provisions of Section 7 shall survive any resignation or removal of the Escrow Agent, and any termination of this Agreement.

 

13. Escrow Agent Fees, Costs, and Expenses. In consideration of the services provided by the Escrow Agent in the performance of its duties hereunder, the Escrow Agent shall charge a onetime administrative fee of $2,500 payable upon the earlier to occur of the disbursement of the Escrow Funds to the Company or the return of the Deposits to the Investors, and shall be entitled to be reimbursed for its customary fees and charges for any wire transfers or other depository services rendered in connection with the Escrow Fund and any delivery charges or other out of pocket expenses incurred in connection the Escrow Fund. The Companyacknowledges its obligation to pay any fees, expenses and other amounts owed to the Escrow Agent pursuant to this Agreement. The Escrow Parties agree that the Escrow Agent shall be entitled to withhold any distribution otherwise required to be made from the Escrow Fund if any fees, expenses or other amounts owed to the Escrow Agent under this Agreement remain unpaid on the date such distribution would otherwise be made.

 

 
5
 

 

14. Notices. All notices under this Agreement shall be transmitted to the respective parties, shall be in writing and shall be considered to have been duly given or served when personally delivered to any individual party, or on the first (1st) business day after the date of deposit with an overnight courier for next day delivery, postage paid, or on the third (3rd) business day after deposit in the United States mail, certified or registered, return receipt requested, postage prepaid, or on the date of telecopy, fax or similar transmission during normal business hours, as evidenced by mechanical confirmation of such telecopy, fax or similar transmission, addressed in all cases to the party at his or its address set forth below, or to such other address as such party may designate, provided that notices will be deemed to have given to the Escrow Agent on the actual date received:

 

If to the Company:

 

100 College Street 

Suite 302 

Toronto, ON M5G 1L5 

Fax No: (416)435-9112

 

If to an Investor:

 

To the address indicated on its Joinder Signature Page

 

If to the Escrow Agent:  

David Lubin, Esq. 

David Lubin & Associates, PLLC 

108 S. Franklin Avenue, Suite 10 

Valley Stream, NY 11580 

Fax No.: (516) 887-8250

 

Any notice, except notice by the Escrow Agent, may be given on behalf of any party by its counsel or other authorized representative. In all cases the Escrow Agent shall be entitled to rely on a copy or a fax transmission of any document with the same legal effect as if it were the original of such document.

 

15. Modifications; Waiver. This Agreement may not be altered or modified without the express prior written consent of all of the parties to this Agreement. No course of conduct shall constitute a waiver of any terms or conditions of this Agreement, unless such waiver is specified in writing, and then only to the extent so specified. A waiver of any of the terms and conditions of this Agreement on one occasion shall not constitute a waiver of the other terms of this Agreement, or of such terms and conditions on any other occasion.

 

 
6
 

 

16. Further Assurances. If at any time the Escrow Agent shall determine or be advised that any further agreements, assurances or other documents are reasonably necessary or desirable to carry out the provisions of this Agreement and the transactions contemplated by this Agreement, the Escrow Parties shall execute and deliver any and all such agreements or other documents, and do all things reasonably necessary or appropriate to carry out fully the provisions of this Agreement.

 

17. Assignment. This Agreement shall inure to the benefit of and be binding upon the successors, heirs, personal representatives, and permitted assigns of the parties. This Agreement is freely assignable by the Escrow Parties; provided, however, that no assignment by such party, or it successors or assigns, shall be effective unless prior written notice of such assignment is given to the other parties, including, without limitation, the Escrow Agent. This Agreement may not be assigned by the Escrow Agent, except that upon prior written notice to the Escrow Parties, the Escrow Agent may assign this Agreement to an affiliated or successor bank or other qualified bank entity.

 

18. Section Headings. The section headings contained in this Agreement are inserted for purposes of convenience of reference only and shall not affect the meaning or interpretation of this Agreement.

 

19. Governing Law. This Escrow Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflicts of law.

 

20. Counterparts and Facsimile Execution . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. The exchange of copies of this Escrow Agreement and of signature pages by facsimile transmission shall constitute effective execution and delivery of this Escrow Agreement as to the parties and may be used in lieu of the original Escrow Agreement for all purposes (and such signatures of the parties transmitted by facsimile shall be deemed to be their original signatures for all purposes).

 

[Signature Page Follows]

 

 
7
 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. 

 

 

230410 ONTARIO INC.

 

BY: ________________________

 

NAME: _____________________

 

TITLE: _____________________

 

 

DAVID LUBIN & ASSOCIATES, PLLC

 

BY: ________________________

 

NAME: _____________________

 

TITLE: _____________________

 

 
8
 

 
INVESTOR JOINDER SIGNATURE PAGE

 

INVESTOR'S NAME:


 

SIGNATURE:


 

NAME OF SIGNER (IF AN ENTITY):


 

TITLE OF SIGNER (IF AN ENTITY):


 

ADDRESS:


 

EIN/TIN: ___________________________________ DOB (IF AN INDIVIDUAL): _______________________________________

 

STATE OF FORMATION (IF AN ENTITY):


 

WIRING INSTRUCTIONS:


 

 

9


EXHIBIT 10.21

 

 

OFFICE SUITE LICENCE AND SERVICES AGREEMENT

 

This office suite licence and services agreement (the "Agreement") is made as of, and is between iQ University LP. ("iQ") and the client specified below (the "Client") for services provided at 250 University Avenue, Toronto.

 

Account Name

ehave

Prepared By

Sarah Lieberman

Bill To

100 College Street, Suite 302 

Toronto, Ontario M5G1L5

Canada

Company Address

140 Yonge Street, Suite 200

Toronto, Ontario M5C 1S6 

Canada

Phone

(416) 435-9112

E-mail

slieberman@iqoffice.ca

Email

scott@ehave.net

 

 

 

iQ has agreed to provide certain services as outlined herein to the Client and has agreed to grant the Client a licence to occupy the office suite(s) as described below on the terms and conditions contained herein.

 

The parties therefore agree as follows and to the full performance of the Terms and Conditions attached hereto at Schedule "A":

 

Basic Terms

 

Description

 

 

Monthly
Fee + HST

 

 

 

 

 

 

229

 

 

$ 3,000

 

 

 

 

 

 

 

Voip Phone

 

 

$ 99

 

 

 

 

 

 

 

Business Service Package(s) - $149 Each

 

 

$ 447.00

 

 

 

 

 

 

 

Promotional Discount

 

 

$ 447

 

 

 

 

 

 

 

Term (Months)

 

 

 

6

 

 

 

 

 

 

 

Commencement Date (D/M/Y)

 

 

01/11/2015

 

 

 

 

 

 

 

Security Deposit

 

 

$ 3,000

 

 

Includes 1 hour of meeting space a month for duration of term

 

 
1
 

 

 

Until this agreement is signed,returned and confirmed by iQ. this agreement shall be subject to availability. By signing this Agreement you confirm that you have read and understand the attached Terms and Conditions. NOTE: this Agreement does not automatically terminate. See Section 2 of Schedule "A".

 

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first above written.

 

For iQ University LP  

 

For the CLIENT  

 

 

 

 

 

 

 

By:

 

By:

/s/ Scott Woodrow

 

Name:

Kane Willmott

 

Name:

Scott Woodrow

 

Title:

Authorized Signing Officer

 

Title:

Authorized Signing Officer

 

 

We have authority to bind the corporation

 

 

I have authority to bind the corporation

 

 

 
2
 

 

 

 

Schedule "A" -TERMS AND CONDITIONS

 

1.

GRANT AND LICENCE- Effective as of the Commencement Date, iQ hereby grants to the Client the right to use and occupy the serviced and furnished Office Suite(s) (the " Licensed Office Space ") for the purpose of office accommodation. The Licensed Office Space is situated within certain premises located at 250 University Avenue, Toronto, Ontario (the " Building ") where iQ and its other clients also conduct, or intend to conduct, office businesses. The Client accepts the Licensed Office Space in an "as is" condition. The Client shall use the Licensed Office Space solely for general office purposes in accordance with all applicable laws, and for no other purpose. The rights granted to the Client hereunder shall be deemed a licence only, and are not under any circumstances intended to constitute a franchise, partnership, employment agreement, joint venture, lease, sublease, licence coupled with an interest or any arrangement other than the grant of a licence, and nothing contained in this Agreement shall give the Client any estate whatsoever in the Licensed Office Space or in the Building, whether as tenant or otherwise.

 
2.

TERM - The term of this Agreement (the " Term ") shall be for the period set forth in the Basic Terms on the cover page, unless terminated sooner in accordance with the terms hereof. Following the period set forth in the Basic Terms, this Agreement shall automatically renew on a Month-to-Month basis, during which either party may terminate this Agreement with not less than two (2) months prior written notice from the first of the month. A 10% Month-to-Month fee shall be added to all monthly reoccurring charges until the contract is terminated in accordance with this agreement.

 
3.

FEES- Commencing on the Commencement Date and throughout the Term, the Client shall pay to iQ, together with all applicable harmonized sales tax, goods and services tax and any other value added taxes thereon:

 

a) the Monthly Fees identified in the Basic Terms set forth on the cover page, monthly in advance; and

b) all other amounts due to iQ pursuant to any other provision of this Agreement.

 

The Client acknowledges and agrees that iQ has the right to change the Monthly Fees for any iQ Virtual Services upon 30 days' prior written notice to Cl ient. Fees for additional services not included in the Monthly Fees shall be invoiced in arrears and payable on the fifteenth (15th) day of the month following the calendar month in which the additional service was provided. The Client shall submit a Security Deposit and shall pay the one-time Setup Fee as set forth on the cover page, within 24 hours of execution of this Agreement by iQ. The Security Deposit shall be held as security for all of the Client's obligations under this Agreement and may be applied against any default by the Client. The Security Deposit, or any balance remaining after deducting any outstanding fees and other charges, will be returned within thirty (30) days after the end of the Term and upon the Client's fulfillment of all obligations hereunder. Any late payments will be charged an administrative fee equal to a minimum of one hour of administrative services to recover the cost of collection efforts. For clarity, the Security Deposit will not be applied toward any outstanding invoices and late payments may result in suspension of services, additional administrative services costs and setup fees to restore services.

 
4.

FIXTURES AND SIGNS- The Client shall not, without first obtaining the written consent of iQ, use or install any fixtures, equipment, cabling, wiring or signs in the Licensed Office Space or in the Building except those furnished or approved by iQ. Any fixtures, equipment, cabling, wiring or signs which may be furnished by iQ shall remain the property of iQ and shall be kept in good order and condition by the Client.

 
5.

PROPERTY LOSS OR DAMAGE- The Client shall, at all times, except as otherwise provided in this Agreement, have sole possession and control of its equipment, supplies and other property in the Licensed Office Space. The Client acknowledges and agrees that its equipment, supplies and other property may be subject to damage or loss by reason of natural or other hazards, including, but not limited to, theft, fire, water leakage, heat or power failure, accidents, defects in plumbing, explosion, and the bursting of pipes. The Client further acknowledges and agrees that it shall be solely responsible for its own equipment, supplies and other property and shall assume the entire risk of damage to or loss of the same resulting from any hazard or from any cause whatsoever, and hereby releases iQ, its agents, employees and insurers from any and all liability for any damage or loss (including consequential damages) to any of its merchandise, equipment, supplies and other property in the Licensed Office Space or located elsewhere in the Building regardless of the cause of or the reason for such damages or losses, even if such cause or reason is the negligence of iQ.

 

 
3
 

 

 

6.

SERVICES AND LIMITATION OF LIABILITY- iQ agrees to provide, and the Client agrees to pay for, those iQ Services as identified in the Basic Terms and set forth in this Agreement and as described on iQ's website, as may be modified from time to time. Upon request and to the extent not otherwise provided to the Client, as stipulated in the Basic Terms set forth on the cover page, iQ shall provide the following additional services, at an extra charge in accordance with iQ's published rates in effect from time to time: (a) printing or photocopying; (b) facsimile transmissions; (c) meeting and conference rooms; (d) mail handling; (e) internet access; (f) courier services; (g) telephone services; (h) secretarial/administrative services; (i) voicemail; and (j) any other additional service offered by iQ from time to time. If the services include mail handling and mail storage, the Client acknowledges that iQ does not accept mail packages over one pound or mail packages that are unable to fit in iQ's file folder.

 

iQ agrees to provide the following office services during the normal operating hours of the Building, at no additional cost to the Client: (a) access to the Licensed Office Space; (b) reception of the Client's visitors by iQ's receptionist; (c) heating, air- conditioning, lighting and electrical power as provided generally to the Building; (d) cleaning and security services to the same extent that such are supplied generally to the Building; (e) servicing, maintenance and repair of iQ's office equipment; and (f) use of any kitchen and sanitary facilities within or serving the Building.

 

In no event shall iQ, including its affiliates, and their respective directors, shareholders, officers, employees and agents, be liable for any damages or losses whatsoever, including any direct, incidental, consequential, special or exemplary damages, and any damages for loss of profits, business opportunity, savings, goodwill or other intangible losses, regardless of whether iQ had been advised of or could have foreseen the possibility of such damages and even if caused by the negligence of iQ or those for whom it is at law responsible, arising out of or in connection with (a) the use, inability to use, interruption or failure to perform any of the foregoing services, including any iQ Virtual Services and, including without limitation, loss of, or failure to deliver, mail or electronic communications; or (b) any other matter relating to this Agreement, the Licensed Office Space or any of the services.

 

7.

INDEMNITY AND INSURANCE- The Client shall indemnify, hold harmless and defend each of iQ, its affiliates, and their respective directors, shareholders, officers, employees and agents from any and all losses, claims, actions, demands, including without limitation reasonable legal and accounting fees, resulting from or related to: (a) the Client's breach of this Agreement; (b) the Client's access to, reliance on or use of the Licensed Office Space or the services provided by iQ, including the iQ Virtual Services; (c) injuries to persons (including injury resulting in death); (d) damage to or loss of property arising, directly or indirectly, out of or in connection with, directly or indirectly, the use of the Licensed Office Space or the Building by the Client; (e) any act of the Client or its officers, employees, franchisees or agents; or (f) any other claims, losses, damages or expenses arising out of, or in connection with, any alleged infringement of any patent, copyright, trade mark or trade name, industrial design, any unfair competition or any violation of any law or regulation, or any allegation of such. The Client shall obtain and maintain, at its expense, and at all times during the Term, property and liability insurance (minimum $2 million liability coverage) on all of its equipment, supplies and other property in the Licensed Office Space for full replacement value. Said policy of property and liability insurance shall contain a waiver of the insurer's right of subrogation against iQ, its agents and employees. The Client understands that it is not mandatory for them to obtain insurance but it is recommended by iQ as the Client is not covered under iQ's insurance policy.

 

 
4
 

 

 

8.

TERMINATION- The parties agree that upon the occurrence of any of the following events, iQ shall have the right to terminate or suspend this Agreement in part or its entirety and revoke the services and licence of the Licensed Office Space by giving five (5) days' written notice to the Client:

 

a) the Client's failure to pay any amount when due hereunder; 

b) the Client's default in performing and observing any of the terms, covenants, warranties or conditions of this Agreement (except as otherwise expressly listed in this Section) and the Client's subsequent failure to cure any such default within five (5) days after the receipt of notice thereof; 

c) a petition in bankruptcy or insolvency or for a reorganization or for the appointment of a receiver or trustee of the Client's property is filed by or against the Client; or

d) an assignment or petition or arrangement for the benefit of creditors is made or is entered into by the Client; or 

e) Unnecessary abuse or hostile treatment of staff or other individuals while on site; or 

f) Disruption of the quiet enjoyment or access to shared services of other individuals onsite.

 

iQ may withhold any services (including, without limitation, any iQ Virtual Services and/or denying access to the Licensed Office Space), at any time should the Client be in default of any payment hereunder or in default of any other provision of this Agreement. iQ reserves the right to market and enter into a contract with another client for the Licensed Office Space should this agreement be suspended or terminated without any offset to the Clients obligation herein. If iQ terminates this Agreement by reason of any of the foregoing events, in addition to other remedies available, it may recover from the Client: (a) all Monthly Fees and other charges required to be paid pursuant to this Agreement, plus an amount equal to the Monthly Fees for any charges that would become due and payable for the 60 day period following the last day of the month of default, and (b) all costs associated with collection of outstanding accounts to include but not be limited to collection services, legal costs and administrative charges of onsite staff.

 

Following the Initial Term, either party may terminate this Agreement by any reason whatsoever by providing the other party two (2) months prior written notice (the " TerminaUonPeriod ").The Termination Period shall begin on the first day of the preceding month after notice is provided. If any Monthly Fees become due and owing during the Termination Period, the Monthly Fees shall remain payable by the Client and the Client hereby authorizes iQ to charge the Monthly Fee to the Client.

 

Upon the occurrence of any damage to or destruction of the Licensed Office Space by fire or other casualty, iQ shall have the right to terminate this Agreement in its entirety and revoke the licence of the Licensed Office Space without notice.

 

 
5
 

 

 

 

9.

REMOVAL AT END OF TERM - Prior to the end of the Term, the Client shall remove all of its equipment, supplies and other property from the Licensed Office Space and leave the Licensed Office Space in good order and condition. In the event of any default by the Client in the performance of its obligation to leave the Licensed Office Space in good order and condition, the Client hereby agrees that iQ may repair or remedy any damage or deficiency in the Licensed Office Space at the cost and expense of the Client, and the Client agrees to pay to iQ, upon demand, the cost and expenses so incurred by iQ. In the event of any default by the Client in removing all of its equipment, supplies and other property, iQ may dispose of or cause the same to be removed to a place of storage selected by iQ without any liability to iQ with respect to such items, and the Client shall, upon demand, reimburse iQ for any and all costs incurred by iQ by reason of such disposal , removal and/or storage.

 
10.

HEAD LEASE- The Client acknowledges that iQ is not the owner of the Building but is a tenant of the Owner. The Client shall not do anything that may interfere, disturb or cause a nuisance to other users of the Building. The Client shall comply with all of the rules and regulations enacted by the landlord of the Building and which are in effect from time to time in respect to the Building as if the Client were the Tenant named in such rules and regulations. Building Rules and Regulations can be found at http://iqoffice.ca/140-yonge-rules-and-regulations (Password: 140) and http://iqoffice.ca/250-university-rul es-and-regulations (Password: 250). The Client acknowledges that this Agreement is subordinate to iQ's lease(s) and that in the event of termination of iQ's lease for any reason whatsoever this Agreement shall, at the option of the Landlord, be terminated as well. Upon request from iQ, the Client shall deliver an acknowledgement to iQ's landlord to such effect.

 
11.

GENERAL- iQ may, from time to time, relocate the Licence Office Suite within the Building or allocate different office suites to the Client from time to time provided that the Client shall incur no relocation cost or expense. This Agreement including any Schedules hereto comprise the entire agreement between the parties relating to the subject matter hereof. No amendment shall be valid unless in writing and signed by each party. If any provision herein is held to be invalid or unenforceable in any way, all other provisions herein will be unaffected and separately valid and enforceable. No omission or delay by either party in exercising any right, power or privil ege hereunder shall operate as a waiver thereof and no receipt of money by iQ shall be deemed to constitute a waiver of any default of Client or to extend or reinstate the Term hereof. If two or more individuals or corporations sign as Client, each will be jointly and severally liable to iQ.

 

This Agreement shall enure to the benefit of and be binding upon each of the parties hereto and their respective successors and permitted assigns and shall become effective upon execution by both iQ and the Client and upon payment by Client of the Security Deposit. The Client shall not assign this Agreement or any portion thereof without the written consent of iQ. This Agreement shall be construed in accordance with and governed by the laws, and subject to the jurisdiction of the courts, of the Province of Ontario. The division of this Agreement into articles and sections is for convenience of reference only and shall not affect the interpretation or construction of this Agreement. Any notice given or received under this Agreement must be in writing and may be delivered personally, by facsimile, email or registered mail at the address stated herein. Notices shall be deemed to have been received on the fifth business day following mailing or, if deli vered personally or by email or fax, on the day of delivery if a business day or, if not, on the following business day. All provisions of this Agreement which, by their nature, are intended to survive termination shall continue in force notwithstanding termination hereof.

 

Ò iQ Office Suites Inc. 2013, all rights reserved

 

 
6
 

 

 

ADDITIONI AL SERVI CES

 

Virtual Office Plans (see www.iqoffice.ca for details)

 

Monthly

 

 

Setup Fee

 

 

 

1) iQ Mail Plan

 

$ 59.00

 

 

$ 59.00

 

 

 

 

2) iQ Virtual Phone with Auto Attendant

 

$ 99.00

 

 

$ 99.00

 

 

 

 

 

3) iQ Virtual Complete (combine 1 & 2 above)

 

$ 149.00

 

 

$ 149.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Services Package

 

$ 149.00

 

 

$ 149.00

 

 

 

 

 

Secure Internet Connection with Virtual Private Network ( 5 mbps per V-Lan)

 

lncluded

 

 

 

 

 

 

 

 

 

1,000 B&W copies or prints per month

 

lncluded

 

 

 

 

 

 

 

 

 

Unlimited Scanning and local Faxing

 

lncluded

 

 

 

 

 

 

 

 

 

Access to the iQ lounge during business hours

 

lncluded

 

 

 

 

 

 

 

 

 

Shredding

 

lncluded

 

 

 

 

 

 

 

 

 

Unlimited coffee & tea with cream, milk & sugar; filtered water

 

lncluded

 

 

 

 

 

 

 

 

 

Fulty configured iQ access card

 

lncluded

 

 

 

 

 

 

 

 

 

 

Communication

 

 

 

 

 

 

 

 

 

Hosted Phone System - includes hardware rental and unlimited long distance calling*

 

$ 99.00

 

 

$ 99.00

 

 

 

 

Phone Answering ($1.40 per minute, billed in 6 second increments)

 

$ 59.00

 

 

$ 150.00

 

 

 

 

 

Incoming Fax Service (Unlimited incoming faxes sent directly to e-mail)

 

$ 29.00

 

 

$

29..00

 

 

 

 

 

Outgoing Long Distance Fax

 

$ 0.50

 

 

per impression

 

 

 

 

 

Port Your Phone Number (max 30 days to process)

 

$ 100.00

 

 

one time fee

 

 

 

 

 

Port Your Phone Number (expediud · max 7 business days to process)

 

$ 300.00

 

 

one time fee

 

 

 

 

 

Additional Internet Bandwidth · 5MBPS

 

$ 100.00

 

 

per month

 

 

 

 

 

 

 
7
 

 

 

Meeting Rooms

 

Hourly

 

 

Half Day

 

 

 

Full day

 

10 Person Meeting Room

 

$ 89.00

 

 

10% Discount

 

 

 

20% Discount

 

8 Person Meeting Room

 

$ 69.00

 

 

10% Discount

 

 

 

20% Discount

 

6 Person Meeting Room

 

$ 49.00

 

 

10% Discount

 

 

 

20% Discount

 

3 Person Meeting Room

 

$ 29.00

 

 

10% Discount

 

 

 

20% Discount

 

10 Person Meeting Room - 10 Hour Pack

 

$ 650.00

 

 

one time fee

 

 

 

 

 

8 Person Meeting Room  - 10 Hour Pack

 

$ 500.00

 

 

one time fee

 

 

 

 

 

6 Person Meeting Room - l0 Hour Pack

 

$ 350.00

 

 

one time fee

 

 

 

 

 

3 Person Meeting Room - 10 Hour Pack

 

$ 200.00

 

 

one time fee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional Busi ness Services.

 

 

 

 

 

 

 

 

 

 

 

Black & White Prints/Copies (per impression)

 

$ 0.10

 

 

 

 

 

 

 

 

Colour Prints/Copies (per impression)

 

$ 0.50

 

 

 

 

 

 

 

 

Courier Services

 

Cost + 20% admin fee

 

 

 

 

 

 

 

 

Postage

 

Cost + 20% admin fee

 

 

 

 

 

 

 

 

Business Supplies

 

Cost + 20% admin fee

 

 

 

 

 

 

 

 

Catering

 

Cost + 20% admin fee

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Miscellaneous

 

 

 

 

 

 

 

 

 

 

 

Video Conferencing in the Dineer Room

 

$

119.00 per hour

 

 

 

 

 

 

 

 

Lost Building Access Cards

 

$

100.00

 

 

 

 

 

 

 

 

Guest Pass - Internet and iQ Lounge access (day rate)

 

$

29.00

 

 

 

 

 

 

 

 

Office Paint & Patch Fee (if wall needs repair at end of term)

 

$

200.00

 

 

 

 

 

 

 

 

Administrative Services (billed in 15 minute increments)

 

$

60.00 per hour

 

 

 

 

 

 

 

 

Remote Access Point

 

$

39.00 per month

 

 

 

 

 

 

 

 

Custom Fumiture Configuration

 

$

200.00

 

 

 

 

 

 

 

 

Technology Support (Provided by 3rd party)

 

Cost + 20% admin fee

 

 

 

 

 

 

 

 

416 Area Code

 

$

20.00 per month

 

 

 

 

 

 

 

 

iQ lounge Rental (during non-business hours & on weekends) -140 Yonge Street

 

$

200.00 per hour**

 

 

 

 

 

 

 

 

iQ lounge Rental (during non-busin!!ss hours & on weekends) - 250 Univl!rsity Avenue

 

$

500. 00 per hour**

 

 

 

 

 

 

 

 

Extra File Console

 

$

25.00

 

 

 

 

 

 

 

 

Data Room Rack Rental - per Rack Unit ( 1.75 inches of rack height)

 

$

50 set up file + $50/month

 

 

 

 

 

 

 

 

Third Party Circuit Install (assistance with carrier setup and rental of infrastructure)***

 

$

200 set up fee@ + $100/month

 

 

 

 

 

 

 

 

 

*outgoing calls to continental North America 

**3 hour minimu m; $75 cleaning fee applies 

***Client responsible for 3rd party carrier charges and contract

  

 

8


EXHIBIT 10.22

 

AMENDMENT TO COLLABORATION AGREEMENT

 

THIS AMENDMENT (the "Amendment") is made effective as of January 1, 2014 (the "Effective Date"), by and between the Ontario Brain Institute ("OBI"), Behaviour Neurological Applications and Solutions ("Company") , and The Hospital for Sick Children ("Hospital"), located at 555 University Avenue, Toronto, Ontario, Canada (collectively, the "Parties").

 

WHEREAS the Parties entered into a Collaboration Agreement as of December 8, 2011, relating to a Project entitled: "Development of a software based treatment program for ADD/ADHD in children";

 

AND WHEREAS the Parties wish to amend the Collaboration Agreement as set out herein;

 

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, and intending to be legally bound hereby, the parties hereto agree to the following terms and conditions:

 

1.1 As of the effective date of this Amendment, Jennifer Crosbie shall replace Russell Schachar as the Investigator. Accordingly, Section 2.1 of the Collaboration Agreement shall be revised by adding the following sentence at the end of the existing provision: " The parties acknowledge and agree that as of January 1, 2014, Dr. Russell Schachar shall be replaced by Dr. Jennifer Crosbie, who shall thereafter serve as the Investigator and shall have primary responsibility for overseeing the Hospital's role in the Project. Dr. Russell Schachar will continue to participate in the Project."

 

1.2 Sections 3.2, 3.3, and 3.4 of the Colaboration Aggreement shall be deleted and replaced with the following clauses, with retroactive effect to the Effective Date of the Colaboration Agreement:

 

3.2 All rights and title to Project Intellectual Property shall belong solely and exclusively to Hospital. The Hospital shall retain such ownership of Project Intellectual Property for the duration of the Contribution Agreement. Notwithstanding the applicable patent or other intellectual property laws in any jurisdiction, none of the parties may commercially exploit any Project Intellectual Property except as specifically provided for in Section 4.

 

3.3 Each party shall promptly notify the other party of any Project Intellectual Property that is created during the term of this Agreement. Within 90 days of becoming aware of the creation of Project Intellectual Property, a party shall provide a written notice to the other party providing a detailed description of the Project Intellectual Property. The Hospital shall ensure that appropriate steps are taken to protect the Project Intellectual Property and shall, upon request, provide information to the Company, OBI, and FedDev in this regard.

 

Hospital may elect to file one or more Patents relating to such Project Intellectual Property, in which case Hospital shall promptly prepare, file, and prosecute such Patents in such jurisdictions as Hospital determines in the name of Hospital. Hospital shall bear all costs incurred in connection with the preparation, filing, prosecution, and maintenance of such Patents.

 

3.4 Hospital shall promptly provide Company with copies of any issued Patents, as well as related serial numbers and filing dates.

 

1.3 Except as specifically revised by this Amendment, the Collaboration Agreement remains unchanged and in full force and effect .

 

 

1

 

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment effective as of the date first written above.

 

THE HOSPITAL FOR SICK CHILDREN :

 

By: /s/ Ramune Pleinys

Name: Ramune Pleinys

Title: Executive Director

Date:__________________

BEHAVIOUR NEUROLOGICAL APPLICATIONS AND SOLUTIONS :

 

By: /s/ Scott Woodrow

Name: Scott Woodrow

Title: President

Date: ____________________

 

 

ONTARIO BRAIN INSTITUTE:

 

By: /s/ Donald Stuss

Name: Donald Stuss

Title:President and Scientific Director

Date: ____________________

Read and Acknowledged By:

 

By: /s/ Russell Schachar

Russell Schachar, MD

 

Date: ___________________

 

I hereby acknowledge that I have read and understand the content of this Amendment and the Collaboration Agreement and understand the scope of my role in the Project as described in Appendix A

 

 

/s/ Jennifer Crosbie

Jennifer Crosbie, Ph.D., C. Psych.

 Date: _________________

 

2


EXHIBIT 23.1

 

 

Consent of Independent Registered Public Accounting Firm

 

The Board of Directors  

Behavioural Neurological Applications and Solutions  

Toronto, Ontario  

 

We consent to the use of our Independent Registered Public Accounting Firm Report dated September 17, 2015, on our audit of the financial statements of Behavioural Neurological Applications and Solutions as of December 31, 2014 and 2013 and for the years then ended, to be included in the Form F-1/A to be filed with the Securities and Exchange Commission on or about November 16, 2015.

 

/s/ Turner, Stone & Company, L.L.P.  

 

Certified Public Accountants  

Dallas, Texas

November 16, 2015