Nevada
|
000-54381
|
26-1974399
|
(State or other jurisdiction of incorporation or organization)
|
(Commission File Number)
|
(I.R.S. Employer Identification No.)
|
13455 Noel Road, Suite 1000
Dallas, TX 75240
|
||
(Address of principal executive offices)
|
||
949-415-7478
|
||
(Registrant’s telephone number, including area code)
|
||
(Former address, if changed since last report)
|
||
(Former fiscal year, if changed since last report)
|
Class of Securities
|
Shares Outstanding at September 27, 2013
|
Common Stock, no par value
|
33,580,001
|
PART I
|
||||
Item 1.
|
Business
|
6
|
||
Item 1A.
|
Risk Factors
|
13
|
||
Item 1B.
|
Unresolved Staff Comments
|
29
|
||
Item 2.
|
Properties
|
29
|
||
Item 3.
|
Legal Proceedings
|
29
|
||
Item 4.
|
Mine Safety Disclosures
|
29
|
||
PART II
|
||||
Item 5.
|
Market for the Registrant’s Common Stock, Related Stockholder Matters and Issuer Repurchases of Equity Securities
|
30
|
||
Item 6.
|
Selected Financial Data
|
31
|
||
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
31
|
||
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
44
|
||
Item 8.
|
Financial Statements and Supplementary Data
|
44
|
||
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
44
|
||
Item 9A
|
Controls and Procedures
|
44
|
||
Item 9B
|
Other Information
|
45
|
||
PART III
|
||||
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
46
|
||
Item 11.
|
Executive Compensation
|
49
|
||
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
52
|
||
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
53
|
||
Item 14.
|
Principal Accountant Fees and Services
|
55
|
||
PART IV
|
||||
Item 15.
|
Exhibits, Financial Statement Schedules
|
55
|
·
|
“Discount Dental” or “DDOO” refers to Discount Dental Materials, Inc., a Nevada corporation;
|
·
|
“Commission” refers to the Securities and Exchange Commission;
|
·
|
“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
|
·
|
“Cerebain” refers to Cerebain Biotech Corp., a Nevada company; and
|
·
|
“Securities Act” refers to the Securities Act of 1933, as amended.
|
§
|
Affected population worldwide
|
§
|
Cost
|
·
|
develop and expand their product offerings more rapidly;
|
·
|
adapt to new or emerging changes in customer requirements more quickly;
|
·
|
take advantage of acquisition and other opportunities more readily; and
|
·
|
devote greater resources to the marketing and sale of their products and adopt more aggressive pricing policies than we can.
|
·
|
Our applications for patents relating to our business may not be granted and, if granted, may be challenged or invalidated;
|
·
|
Issued patents may not provide us with any competitive advantages;
|
·
|
Our efforts to protect our intellectual property rights may not be effective in preventing misappropriation of our technology;
|
·
|
Our efforts may not prevent the development and design by others of products or technologies similar to or competitive with, or superior to those we develop; or
|
·
|
Another party may obtain a blocking patent and we would need to either obtain a license or design around the patent in order to continue to offer the contested feature or service in our products.
|
·
|
Establish annual, non-deductible fees on any entity that manufactures or imports certain branded prescription drugs and biologics, beginning 2011;
|
·
|
Increase minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program;
|
·
|
Extend manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;
|
·
|
Establish a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical effectiveness research;
|
·
|
Require manufacturers to participate in a coverage gap discount program, under which they must agree to offer 50 percent point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D, beginning 2011; and
|
·
|
Increase the number of entities eligible for discounts under the Public Health Service pharmaceutical pricing program, effective January 2010.
|
·
|
the federal healthcare programs’ Anti-Kickback Law, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs;
|
·
|
federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent;
|
·
|
the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; and
|
·
|
state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers.
|
·
|
unforeseen safety issues;
|
·
|
determination of dosing issues;
|
·
|
lack of effectiveness during clinical trials;
|
·
|
slower than expected rates of patient recruitment;
|
·
|
inability to monitor patients adequately during or after treatment; and
|
·
|
inability or unwillingness of medical investigators to follow our clinical protocols
|
·
|
the patient eligibility criteria defined in the protocol;
|
·
|
the size of the patient population required for analysis of the trial’s primary endpoints;
|
·
|
the proximity of patients to study sites;
|
·
|
the design of the trial;
|
·
|
our ability to recruit clinical trial investigators with the appropriate competencies and experience;
|
·
|
our ability to obtain and maintain patient consents;
|
·
|
the risk that patients enrolled in clinical trials will drop out of the trials before completion; and
|
·
|
competition for patients by clinical trial programs for other treatments.
|
·
|
the perceived advantages of our products over competing products and the availability and success of competing products;
|
·
|
the effectiveness of our sales and marketing efforts;
|
·
|
our product pricing and cost effectiveness;
|
·
|
the safety and efficacy of our products and the prevalence and severity of adverse side effects, if any; and
|
·
|
publicity concerning our products, product candidates or competing products.
|
·
|
variations in our operating results and market conditions specific to Biomedical Industry companies;
|
·
|
changes in financial estimates or recommendations by securities analysts;
|
·
|
announcements of innovations or new products or services by us or our competitors;
|
·
|
the emergence of new competitors;
|
·
|
operating and market price performance of other companies that investors deem comparable;
|
·
|
changes in our board or management;
|
·
|
sales or purchases of our common stock by insiders;
|
·
|
commencement of, or involvement in, litigation;
|
·
|
changes in governmental regulations; and
|
·
|
general economic conditions and slow or negative growth of related markets.
|
(b)
|
Stockholders of Record
|
•
|
Plan of Operations
|
•
|
Results of Operations
|
•
|
Liquidity and Capital Resources
|
•
|
Capital Expenditures
|
•
|
Development Stage Company
|
•
|
Fiscal Year End
|
•
|
Going Concern
|
•
|
Critical Accounting Policies
|
•
|
Recent Accounting Pronouncements
|
•
|
Off-Balance Sheet Arrangements
|
•
|
Inflation
|
·
|
We will work with device manufacturers’ to develop a medical device while also pursuing with researchers and universities to develop a synthetic drug solution.
|
·
|
Raising additional capital with which to develop a medical device solution, pursuing research for a synthetic drug solution, develop a sales and administrative infrastructure and fund ongoing operations until our operations generate positive cash flow.
|
·
|
We will be working with already established affiliates and partnerships to promote our products to healthcare providers and Alzheimer patients. We will also market directly to consumers through direct-to-consumer advertising that communicates the uses, benefits and risks of our products. In addition, we will sponsor general advertising to educate the public on Alzheimer’s disease awareness, prevention and wellness, and public health issues.
|
Fiscal Year Ended June 30,
|
||||||||
2013
|
2012
|
|||||||
Cash at beginning of period
|
$ | 4,185 | $ | 746 | ||||
Net cash used in operating activities
|
(298,677 | ) | (930,955 | ) | ||||
Net cash used in investing activities
|
- | (8,000 | ) | |||||
Net cash provided by financing activities
|
294,500 | 942,394 | ||||||
Cash at end of period
|
$ | 8 | $ | 4,185 |
•
|
a retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit;
|
•
|
liquidity or market risk support to such entity for such assets;
|
•
|
an obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument; or
|
•
|
an obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by, and material to the Company, where such entity provides financing, liquidity, market risk or credit risk support to or engages in leasing, hedging, or research and development services with the Company.
|
Name
|
Age
|
Position(s)
|
||
Eric Clemons
|
42
|
President and a Director
|
||
Wesley Tate
|
50
|
Chief Financial Officer and Secretary
|
||
Gerald DeCiccio
|
55
|
Director
|
·
|
the director is, or at any time during the past three years was, an employee of the company;
|
·
|
the director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for board or board committee service);
|
·
|
a family member of the director is, or at any time during the past three years was, an executive officer of the company;
|
·
|
the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions);
|
·
|
the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the company served on the compensation committee of such other entity; or
|
·
|
the director or a family member of the director is a current partner of the company’s outside auditor, or at any time during the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit.
|
Name and
Principal Position
|
Fiscal Year
|
Salary($)(2)
|
Bonus($)
|
All Other
Compensation ($)
|
Total($)(2)
|
|||||||||||||
Eric Clemons
|
2013
|
$
|
12,265
|
$
|
10,000
|
$
|
0
|
22,265
|
||||||||||
President
|
||||||||||||||||||
Wesley Tate
|
2013
|
$
|
18,034
|
$
|
0
|
$
|
0
|
$
|
18,034
|
|||||||||
CFO
|
||||||||||||||||||
Gerald DeCiccio (1)
|
2013
|
$
|
21,080
|
$
|
0
|
$
|
0
|
$
|
21,080
|
|||||||||
Former President and
|
2012
|
$
|
28,730
|
$
|
0
|
$
|
0
|
$
|
28,730
|
|||||||||
Chief Executive Officer
|
2011
|
$
|
13,570
|
$
|
0
|
$
|
0
|
$
|
13,570
|
|||||||||
R. Douglas Barton (3)
|
2013
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
|||||||||
Former CEO, CFO and
|
2012
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
|||||||||
COA
|
2011
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
|||||||||
James Barton (3)
|
2013
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
|||||||||
Former VP and Secretary
|
2012
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
|||||||||
2011
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
Option Awards
|
Stock Awards
|
||||||||
Name
|
Number of Securities Underlying Unexercised Options
(#)
Exercisable
|
Number of Securities Underlying Unexercised Options
(#)
Unexercisable
|
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
(#)
|
Option Exercise Price
($)
|
Option Expiration Date
|
Number of Shares or Units of Stock That Have Not Vested
(#)
|
Market Value of Shares or Units of Stock That Have Not Vested
($)
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#)
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
($)
|
Eric Clemons
|
200,000
|
800,000
|
-0-
|
.50
|
2019
|
-0-
|
-0-
|
-0-
|
-0-
|
Wesley Tate
|
100,000
|
400,000
|
-0-
|
.50
|
2019
|
-0-
|
-0-
|
-0-
|
-0-
|
Gerald A. DeCiccio (1)
|
-0-
|
-0-
|
-0-
|
N/A
|
N/A
|
-0-
|
-0-
|
-0-
|
-0-
|
R. Douglas Barton (1)
|
-0-
|
-0-
|
-0-
|
N/A
|
N/A
|
-0-
|
-0-
|
-0-
|
-0-
|
James Barton (1)
|
-0-
|
-0-
|
-0-
|
N/A
|
N/A
|
-0-
|
-0-
|
-0-
|
-0-
|
(1)
|
Former executive officer.
|
Name and Address
(2)
|
Amount of Beneficial Ownership
|
Percent of Class
(1)
|
||||||
Eric Clemons
(3) (5)
|
1,673,850
|
5.3%
|
||||||
Wesley Tate
(3) (5)
|
100,000
|
0.3%
|
||||||
Gerald A. DeCiccio
(3)
|
725,000
|
2.3%
|
||||||
Dr. Surinder Singh Saini, MD
|
8,250,000
|
26.12%
|
||||||
Teg S. Sandhu
|
7,612,500
|
24.1%
|
||||||
Harbans K. Sandhu
|
1,875,000
|
6.0%
|
||||||
Brad Vroom
|
3,194,612
(4)
|
9.9%
|
||||||
All Officers and Directors as
a Group (3 Persons)
|
2,498,850
|
7.9%
|
(1)
|
Based on 31,580,001 shares of common stock issued and outstanding. Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage of the person holding such options or warrants, but are not deemed outstanding for purposes of computing the percentage of any other person.
|
(2)
|
Unless otherwise noted, the address of each beneficial owner is c/o Cerebain Biotech Corp., 13455 Noel Road, Suite 1000, Dallas, TX 75240.
|
(3)
|
Indicates an officer and/or director of the Company.
|
(4)
|
Includes 694,612 shares of our common stock that Mr. Vroom could acquire under convertible notes he has with the company, which include a 9.9% limiter on them that prohibit conversion if such conversion would cause Mr. Vroom to own more than 9.9% of our common stock.
|
(5)
|
Includes options of 200,000 shares for Mr. Clemons and 100,000 shares for Mr. Tate.
|
Item No.
|
Description
|
|
3.1 (1)
|
Articles of Incorporation of Discount Dental Materials, Inc., a Nevada corporation, filed with the Secretary of State for the State of Nevada on December 18, 2007
|
|
3.2 (1)
|
Bylaws of Discount Dental Materials, Inc., a Nevada corporation
|
|
10.1 (1)
|
Agreement by and between Discount Dental Materials, Inc. and R. Douglas Barton dated January 2, 2009
|
|
10.2 (1)
|
Agreement by and between Discount Dental Materials, Inc. and R. Douglas Barton dated January 2, 2009
|
|
10.3 (2)
|
Share Exchange Agreement by and between Discount Dental Materials, Inc. and the shareholders of Cerebain Biotech Corp. dated January 17, 2012
|
|
10.4 (2)
|
Spinoff Agreement by and between Discount Dental Materials, Inc. and R. Douglas Barton dated January 17, 2012
|
|
10.5 (2)
|
Stock Purchase Agreement by and between Cerebain Biotech Corp. and certain shareholders of Discount Dental Materials, Inc. dated January 17, 2012
|
|
10.6 (2)
|
Patent License Agreement by and between Cerebain Biotech Corp. and Dr. Surinder Singh Saini dated June 10, 2010
|
|
10.7 (3)
|
Letter Agreement with Sonos Models, Inc. dated September 24, 2012
|
10.8 (4)
|
$240,000 Principal Amount Convertible Promissory Note dated June 18, 2012
|
|
10.9 (6)
|
$235,000 Amended and Consolidated Promissory Note dated November 1, 2012
|
|
10.10 (5)
|
Termination Agreement and General Release with Gerald A. DeCiccio dated January 18, 2013
|
|
10.11 (5)
|
Termination Agreement and General Release with Eric Clemons dated January 18, 2013
|
|
10.12 (5)
|
Termination Agreement and General Release with Paul Sandhu dated January 18, 2013
|
|
10.13 (5)
|
Promissory Note Issued to Gerald A. DeCiccio dated January 18, 2013
|
|
10.14 (5)
|
Promissory Note Issued to Eric Clemons dated January 18, 2013
|
|
10.15 (5)
|
Promissory Note Issued to Paul Sandhu dated January 18, 2013
|
|
10.16 (7)
|
$600,000 Amended and Consolidated Promissory Note dated March 14, 2013
|
|
10.17*
|
Employment Agreement with Eric Clemons dated June 15, 2013
|
|
10.18*
|
Employment Agreement with Wesley Tate dated June 15, 2013
|
|
10.19*
|
Consulting Agreement with Gerald DeCiccio dated June 15, 2013
|
|
10.20*
|
Consulting Agreement with IDC Consulting & Investors LLC dated April 15, 2013
|
|
14 (1)
|
Code of Ethics of Discount Dental Materials, Inc.
|
|
31.1
|
Certification of the Chief Executive Officer pursuant to Rule 13a-14 of the Securities
Exchange Act of 1934 as amended, as adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2003. *
|
|
|
||
31.2
|
Certification of the Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange
Act of 1934 as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2003. *
|
|
|
||
32.1
|
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2003. *
|
|
|
||
32.2
|
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2003. *
|
|
101**
|
Interactive Data File (Form 10-K for the fiscal year ended June 30, 2012 furnished in XBRL).
|
|
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
|
|
|
*
|
filed herewith
|
|
**
|
Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections
|
(1)
|
Incorporated by reference from our Registration Statement on Form S-1 filed with the Commission on January 27, 2009.
|
(2)
|
Incorporated by reference from our Form 8-K filed with the Commission on February 10, 2012.
|
(3)
|
Incorporated by reference from our Form 8-K filed with the Commission on September 28, 2012.
|
(4)
|
Incorporated by reference from our Form 10-Q filed with the Commission on November 14, 2012.
|
(5)
|
Incorporated by reference from our Form 8-K filed with the Commission on January 24, 2013.
|
(6)
|
Incorporated by reference from our Form 10Q filed with the Commission on February 12, 2013.
|
(7)
|
Incorporated by reference from our Form 10-Q filed with the Commission on May 3, 2013.
|
Discount Dental Materials, Inc.
a Nevada corporation
|
||
By:
|
/s/ Eric Clemons
|
|
Eric Clemons
|
||
President
|
Page
|
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated Balance Sheets
|
F-3
|
Consolidated Statements of Operations
|
F-4
|
Consolidated Statements of Changes in Stockholders’ Deficit
|
F-5
|
Consolidated Statements of Cash Flows
|
F-6
|
Notes to Consolidated Financial Statements
|
F-7
|
For The Fiscal Year Ended
June 30,
|
February 22, 2010 (date of inception) through June 30, 2013 | |||||||||||
2013
|
2012
|
|||||||||||
Operating Expenses
|
||||||||||||
Selling, general and administrative expenses
|
$ | 1,082,114 | $ | 544,368 | $ | 2,129,174 | ||||||
Research and development costs
|
108,500 | 4,078 | 112,578 | |||||||||
Accretion of debt discount
|
139,118 | 2,813 | 141,931 | |||||||||
Marketing expenses
|
2,135 | - | 3,635 | |||||||||
Purchase of shell
|
- | 397,000 | 397,000 | |||||||||
Depreciation
|
357 | 855 | 1,711 | |||||||||
Total operating expenses
|
1,332,224 | 949,114 | 2,786,029 | |||||||||
Net operating loss
|
(1,332,224 | ) | (949,114 | ) | (2,786,029 | ) | ||||||
Loss before income taxes
|
(1,332,224 | ) | (949,114 | ) | (2,786,029 | ) | ||||||
Income taxes
|
-- | -- | -- | |||||||||
Net loss
|
$ | (1,332,224 | ) | $ | (949,114 | ) | $ | (2,786,029 | ) | |||
Loss per share:
|
||||||||||||
Basic and diluted loss per share
|
$ | (0.04 | ) | $ | (0.03 | ) | ||||||
Basic and diluted weighted average shares outstanding
|
31,255,206 | 30,363,440 | ||||||||||
Common
Stock
# of
Shares
|
Common
Stock
Amount
|
Common
Stock
Issuable
|
Additional
Paid in
Capital
|
Deficit
Accumulated
During the
Development stage
|
Total
Stockholders’ Deficit
|
|||||||||||||||||||
Balance, February 22, 2010 (date of inception)
|
- | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||
Estimated fair market value of stock issued to founders
|
4,062,500 | 4,063 | - | (813 | ) | - | 3,250 | |||||||||||||||||
Estimated fair market value of stock issuable for patent rights
|
- | - | 6,600 | - | - | 6,600 | ||||||||||||||||||
Net loss for the year
|
- | - | - | - | (116,799 | ) | (116,799 | ) | ||||||||||||||||
Balance, June 30, 2010
|
4,062,500 | 4,063 | 6,600 | (813 | ) | (116,799 | ) | (106,949 | ) | |||||||||||||||
Estimated fair market value of stock issued to founders
|
13,312,500 | 13,312 | - | (2,662 | ) | - | 10,650 | |||||||||||||||||
Estimated fair market value of stock issued for patent rights
|
8,250,000 | 8,250 | (6,600 | ) | (1,650 | ) | - | - | ||||||||||||||||
Shares issued for fund raising at $0.16 per share
|
1,250,000 | 1,250 | - | 198,750 | - | 200,000 | ||||||||||||||||||
Shares issued for fund raising at $0.40 per share
|
50,000 | 50 | - | 19,950 | - | 20,000 | ||||||||||||||||||
Free trading shares as a result of reverse merger
|
2,500,001 | 2,500 | - | (2,500 | ) | - | - | |||||||||||||||||
Offering costs associated with shares issued for fundraising
|
- | - | - | (61,000 | ) | - | (61,000 | ) | ||||||||||||||||
Net loss for the year
|
- | - | - | - | (387,892 | ) | (387,892 | ) | ||||||||||||||||
Balance, June 30, 2011
|
29,425,001 | 29,425 | - | 150,075 | (504,691 | ) | (325,191 | ) | ||||||||||||||||
Shares issued for fund raising at $0.40 per share
|
1,555,000 | 1,555 | - | 620,445 | - | 622,000 | ||||||||||||||||||
Shares issued for fund raising at $0.50 per share
|
200,000 | 200 | - | 99,800 | - | 100,000 | ||||||||||||||||||
Offering costs associated with shares issued for fundraising
|
- | - | - | (89,116 | ) | - | (89,116 | ) | ||||||||||||||||
Beneficial conversion feature associated with convertible note
|
- | - | - | 135,000 | - | 135,000 | ||||||||||||||||||
Net loss for the year
|
- | - | - | - | (949,114 | ) | (949,114 | ) | ||||||||||||||||
Balance, June 30, 2012
|
31,180,001 | 31,180 | - | 916,204 | (1,453,805 | ) | (506,421 | ) | ||||||||||||||||
Shares Issued for services
|
400,000 | 400 | 311,600 | 312,000 | ||||||||||||||||||||
Warrants issued
|
108,500 | 108,500 | ||||||||||||||||||||||
Options issued
|
246,500 | 246,500 | ||||||||||||||||||||||
Beneficial conversion feature associated with convertible note
|
- | 312,813 | 312,813 | |||||||||||||||||||||
Net loss for the year
|
- | (1,332,224 | ) | (1,332,224 | ) | |||||||||||||||||||
Balance, June 30, 2013
|
31,580,001 | $ | 31,580 | $ | - | $ | 1,895,617 | $ | (2,786,029 | ) | $ | (858,832 | ) |
|
DISCOUNT DENTAL MATERIALS, INC. AND SUBSIDIARY
|
For the Fiscal Year Ended
|
February 22, 2010 (date of inception) through June 30, 2013 | |||||||||||
June 30,
|
||||||||||||
2013
|
2012
|
|||||||||||
Cash flows from operating activities:
|
||||||||||||
Net loss
|
$ | (1,332,224 | ) | $ | (949,114 | ) | $ | (2,786,029 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||||||
Depreciation
|
357 | 855 | 1,711 | |||||||||
Accretion of debt discount
|
139,118 | 2,813 | 141,931 | |||||||||
Warrants issued for research and development
|
108,500 | 108,500 | ||||||||||
Options issued
|
246,500 | 246,500 | ||||||||||
Stock issued for services
|
312,000 | 312,000 | ||||||||||
Supplies contributed for founder’s shares
|
- | - | 10,650 | |||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Accounts payable
|
38,387 | 33,318 | 81,154 | |||||||||
Related party payables
|
177,338 | (18,827 | ) | 496,621 | ||||||||
Prepaid expenses
|
(1,533 | ) | (1,533 | ) | ||||||||
Accrued payroll and taxes
|
12,880 | 12,880 | ||||||||||
Net cash used in operating activities
|
(298,677 | ) | (930,955 | ) | (1,375,615 | ) | ||||||
Cash flows from investing activities:
|
||||||||||||
Capitalized patent costs
|
- | (8,000 | ) | (27,300 | ) | |||||||
Purchases of computer equipment
|
- | - | (1,711 | ) | ||||||||
Net cash used in investing activities
|
- | (8,000 | ) | (29,011 | ) | |||||||
Cash flows from financing activities:
|
||||||||||||
Founders capital contribution
|
- | - | 3,250 | |||||||||
Proceeds from issuance of common stock and warrants, net of offering costs
|
- | 632,884 | 791,884 | |||||||||
Notes payable to related parties
|
500 | 500 | ||||||||||
Repayment of notes payable to related parties
|
(18,000 | ) | (18,000 | ) | ||||||||
Repayment of notes payable to stockholders
|
- | (5,490 | ) | (19,490 | ) | |||||||
Notes payable to stockholders
|
312,000 | 315,000 | 646,490 | |||||||||
Net cash flows provided by financing activities:
|
294,500 | 942,394 | 1,404,634 | |||||||||
Net change in cash and cash equivalents
|
(4,177 | ) | 3,439 | 8 | ||||||||
Cash and cash equivalents- beginning of period
|
4,185 | 746 | - | |||||||||
Cash and cash equivalents- end of period
|
$ | 8 | $ | 4,185 | $ | 8 | ||||||
Supplemental disclosure of non cash activities:
|
||||||||||||
Cash paid during the period for:
|
||||||||||||
Interest
|
$ | - | $ | - | $ | - | ||||||
Income tax
|
$ | - | $ | - | $ | - |
Acquisition of patent rights for related party payable and common stock issuable
|
$ | - | $ | - | $ | 56,600 | ||||||
Issuance of common stock issuable
|
$ | - | $ | - | $ | 6,600 | ||||||
Beneficial conversion feature on convertible note
|
$ | 312,813 | $ | 135,000 | $ | 447,813 | ||||||
Conversion of related party payables into notes payable
|
$ | 441,615 | $ | - | $ | 441,615 | ||||||
Conversion of short term notes payable into long term note payable
|
$ | - | $ | 240,000 | $ | 240,000 |
Laptop computers
|
2 years
|
|
Computers and computer software
|
|
3 years
|
·
|
Level 1 – observable market inputs that are unadjusted quoted prices for identical assets or liabilities in active markets.
|
·
|
Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, etc.).
|
·
|
Level 3 – significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments).
|
·
|
Warrants,
|
·
|
Convertible notes,
|
·
|
Employee stock options, and
|
·
|
Other equity awards, which include long-term incentive awards.
|
June 30, 2013
|
June 30, 2012
|
|||||||
Computer equipment
|
$ | 1,711 | $ | 1,711 | ||||
1,711 | 1,711 | |||||||
Less: accumulated depreciation
|
(1,711 | ) | (1,354 | ) | ||||
Total
|
$ | - | $ | 357 |
2013
|
2012
|
|||||||||||||||
Warrants
|
Weighted Average
Exercise Price
|
Warrants
|
Weighted Average
Exercise Price
|
|||||||||||||
Outstanding, beginning of year
|
37,500 | $ | 0.80 | 25,000 | $ | 0.80 | ||||||||||
Granted
|
50,000 | 0.20 | 12,500 | 0.80 | ||||||||||||
Exercised
|
- | - | - | - | ||||||||||||
Expired/Forfeited
|
(25,000 | ) | 0.30 | - | - | |||||||||||
Outstanding, end of year
|
62,500 | $ | 0.32 | 37,500 | $ | 0.80 | ||||||||||
Exercisable at the end of the year
|
62,500 | $ | 0.32 | 37,500 | $ | 0.80 | ||||||||||
Incurred expense
|
$ | 108,000 | - |
2013
|
2012
|
|||||||||||||||
Options
|
Options Average
Exercise Price
|
Options
|
Options Average
Exercise Price
|
|||||||||||||
Outstanding, beginning of year
|
- | $ | - | - | $ | - | ||||||||||
Granted
|
1,500,000 | 0.50 | - | - | ||||||||||||
Exercised
|
- | - | - | - | ||||||||||||
Expired/Forfeited
|
- | - | - | - | ||||||||||||
Outstanding, end of year
|
1,500,000 | $ | 0.50 | - | $ | - | ||||||||||
Exercisable at the end of the year
|
300,000 | $ | 0.50 | - | $ | - | ||||||||||
Expected to be vested
|
1,200,000 | $ | 0.50 | |||||||||||||
Incurred expense
|
$ | 246,500 | - |
For The Fiscal Years Ended
June 30,
|
||||||||
2013
|
2012
|
|||||||
Net loss attributable to the common stockholders
|
$ | (1,332,224 | ) | $ | (949,114 | ) | ||
Basic weighted average outstanding shares of common stock
|
31,255,206 | 30,363,440 | ||||||
Dilutive effect of options and warrants
|
- | - | ||||||
Diluted weighted average common stock and common stock equivalents
|
31,255,206 | 30,363,440 | ||||||
Earnings (loss) per share:
|
||||||||
Basic and diluted
|
$ | (0.04 | ) | $ | (0.03 | ) |
June 30, 2013
|
June 30, 2012
|
|||||||
Current tax provision:
|
||||||||
Federal
|
$ | -- | $ | -- | ||||
Taxable income - federal
|
$ | -- | $ | -- | ||||
State
|
$ | -- | $ | -- | ||||
Taxable income - state
|
$ | -- | $ | -- | ||||
Total current tax provision
|
$ | -- | $ | -- | ||||
Deferred tax provision:
|
||||||||
Federal and State
|
||||||||
Total deferred tax provision
|
$ | -- | $ | -- |
June 30, 2013
|
June 30, 2012
|
|||||||
Loss carryforwards
|
$ | 917,000 | $ | 493,000 | ||||
Less – valuation allowance
|
(917,000 | ) | (493,000 | ) | ||||
Total net deferred tax assets
|
$ | -- | $ | -- |
|
% Vesting
Date of Vesting
20% June 15, 2013
20% June 1, 2014
20% June 1, 2015
20% June 1, 2016
20% June 1, 2017
|
|
5.2.1
|
Eric Clemons voluntarily resigns or is voluntarily terminated.
|
|
5.2.2
|
Eric Clemons is terminated by DDOO for Cause. The following shall constitute “Cause” for purposes of this Agreement:
|
|
a.
|
A willful act of dishonesty by Eric Clemons involving theft of funds or assets;
|
|
b.
|
The conviction of Eric Clemons of a felony; or
|
|
c.
|
Willful failure or refusal of Eric Clemons to properly perform Eric Clemons 's duties under this Agreement, other than any such failure resulting from Eric Clemons’s exercise of business judgment or incapacity due to physical or mental illness;
|
"The Company"
|
"Employee"
|
|
% Vesting
Date of Vesting
|
|
5.2.1
|
Wesley Tate voluntarily resigns or is voluntarily terminated.
|
|
5.2.2
|
Wesley Tate is terminated by DDOO for Cause. The following shall constitute “Cause” for purposes of this Agreement:
|
|
a.
|
A willful act of dishonesty by Wesley Tate involving theft of funds or assets;
|
|
b.
|
The conviction of Wesley Tate of a felony; or
|
|
c.
|
Willful failure or refusal of Wesley Tate to properly perform Wesley Tate 's duties under this Agreement, other than any such failure resulting from Wesley Tate’s exercise of business judgment or incapacity due to physical or mental illness;
|
"The Company"
|
"Employee"
|
Discount Dental Materials, Inc.
/s/ Eric Clemons
By: Eric Clemons
Title: President
|
|
CONTRACTOR:
/s/ Gerald DeCiccio
_______________________________________
By: Gerald DeCiccio
|
"The Company"
|
"Consultant"
|
1.
|
CONSULTING SERVICES
|
2.
|
TERM OF AGREEMENT
|
3.
|
COMPENSATION TO CONSULTANT
|
4.
|
REPRESENTATIONS AND WARRANTIES OF CONSULTANT
|
5.
|
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
6.
|
INDEPENDENT CONTRACTOR
|
7.
|
NOTICES
|
8.
|
ASSIGNMENT
|
9.
|
CHOICE OF LAW AND VENUE
|
10.
|
SEVERABILITY
|
11.
|
CAPTIONS
|
12.
|
COUNTERPARTS
|
13.
|
MODIFICATION
|
14.
|
ATTORNEYS FEES
|