UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

______________________

 

Date of Report (Date of earliest event reported): November 8, 2016

 

Panther Biotechnology Inc.

(Exact Name of Registrant as Specified in its Charter)

______________________________________________________________________________

 

Nevada 000-55074 33-1221758
(State of Incorporation) (Commission File Number) (IRS Employer Identification No.)

 

1517 San Jacinto Street, Houston, Texas 77002

(Address of principal executive offices)

 

888 Prospect Street, Suite 200, La Jolla, CA 92037 

(Former name or former address, if changed since last report.)

 

Registrant’s telephone number, including area code:         (713) 652-3937

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

 

     
 

 

 

Introductory Note

 

On November 8, 2016 (the “Closing Date”), Panther Biotechnology, Inc. (“we”, “us” or the “Company”), consummated the transactions contemplated by a Share Exchange Agreement (the “Exchange Agreement”), by and between the Company, Brown Technical Media Corporation (“Brown”) and the shareholders of Brown (the “Exchange”), on the same day. In connection with the closing of the Exchange, we issued 32,000,000 restricted shares of our common stock, to the shareholders of Brown, which included Evan M. Levine, our Chief Executive Officer and director (6,600,000 shares of common stock beneficially owned by Mr. Levine, when including minor children and affiliates, who received shares in the Exchange), Noah I. Davis, our President and Chief Operating Officer (7,175,522 shares of common stock beneficially owned by Mr. Davis), and Steven M. Plumb, our Chief Financial Officer (11,469,785 shares of common stock beneficially owned by Mr. Plumb, when including shares held by his minor children and affiliates, who received shares in the Exchange) in consideration for 100% of the outstanding capital stock of Brown, and Brown became our wholly-owned subsidiary. We refer to the acquisition and the other transactions contemplated by the Exchange Agreement as the “Business Combination.”

 

Except where the context otherwise requires and for purposes of this Current Report on Form 8-K only:

 

· “we,” “us,” “our company,” “our,” “the Company” refer to Panther Biotechnology, Inc.;

 

· “Exchange Act” refers to the Securities Exchange Act of 1934, as amended;

 

· “SEC” or the “Commission” refers to the United States Securities and Exchange Commission; and
     
· “Securities Act” refers to the Securities Act of 1933, as amended.

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Current Report on Form 8-K contains “forward-looking” statements including statements regarding our expectations of our future operations. For this purpose, any statements contained in this Form 8-K that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include, but are not limited to, economic conditions generally and in the industries in which we may participate and competition within our chosen industry. In light of these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. Such statements reflect the current view of our management with respect to future events and are subject to risks, uncertainties, assumptions and other factors (including the risks contained in the section of this report entitled “Risk Factors”) as they relate to our industry, our operations and results of operations, and any businesses that we may acquire. Should one or more of the events described in these risk factors materialize, or should our underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

 

Although we believe that the expectations reflected in the forward looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the U.S. federal securities laws, we do not intend to update any of the forward-looking statements to conform them to actual results. The following discussion should be read in conjunction with our pro forma financial statements and the related notes that will be filed herein.

 

Item 1.01 Entry into a Material Definitive Agreement.

 

The information in Item 2.01 below regarding the Exchange Agreement is incorporated in this Item 1.01 by reference.

 

Item 2.01. Completion of Acquisition or Disposition of Assets.

 

On November 8, 2016 (the “Closing Date”), Panther Biotechnology, Inc. (“we”, “us” or the “Company”), consummated the transactions contemplated by a Share Exchange Agreement (the “Exchange Agreement”), by and between the Company, Brown Technical Media Corporation (“Brown”) and the shareholders of Brown (the “Exchange”), on the same day. In connection with the closing of the Exchange, we issued 32,000,000 restricted shares of our common stock, to the shareholders of Brown, which included Evan M. Levine, our Chief Executive Officer and director (6,600,000 shares of common stock beneficially owned by Mr. Levine, when including minor children and affiliates, who received shares in the Exchange), Noah I. Davis, our President and Chief Operating Officer (7,175,522 shares of common stock beneficially owned by Mr. Davis), and Steven M. Plumb, our Chief Financial Officer (11,469,785 shares of common stock beneficially owned by Mr. Plumb, when including shares held by his minor children and affiliates, who received shares in the Exchange) in consideration for 100% of the outstanding capital stock of Brown, and Brown became our wholly-owned subsidiary. 

 

In November 2015, the Company authorized the payment of $15,000 per month to Mr. Levine, effective January 15, 2016 and $1,000 per month as healthcare reimbursement as compensation for his services as CEO. In February 2014, Brown entered into consulting agreements with Mr. Davis and Mr. Plumb. The agreements were modified on May 1, 2016 such that Mr. Davis, the President and Chief Operating Officer is paid $11,000 per month and Mr. Plumb, the Chief Financial Officer, is paid $4,500 per month. The contracts expire on December 19, 2017. The Brown employment agreements were assumed by the Company as part of the Business Combination.

 

 

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We also agreed to provide the pre-closing shareholders of the Company additional shares of common stock, subject to the terms of the Exchange Agreement, in the event that Transferrin Doxorubicin (a) meets the primary endpoint for Phase 2 clinical trials (6 million shares); (b) meets the primary endpoint for Phase 3 clinical trials (8 million shares); and (c) receives FDA Approval/clearance to market (10 million shares), prior to the earlier of January 22, 2020 and the date the assets relating to Transferrin Doxorubicin are sold or divested by us.

 

The Exchange Agreement requires that the Company raise $250,000 in capital, in the form of the sale of common stock or convertible notes, prior to closing. As of the date of this filing $212,000 has been raised by the Company through the sale of convertible notes and shares (described in greater detail below under Item 3.02). Both the Company and Brown have agreed to waive the capital raise requirement and accept the amount of capital raised as sufficient to close.

 

The Exchange Agreement includes customary representations, warranties, and indemnification obligations of the parties.

 

In conjunction with the Share Exchange Agreement, on November 8, 2016, Noah I. Davis was appointed President and Chief Operating Officer of the Company and Steven M. Plumb and Noah I. Davis were appointed to the Board of Directors of the Company.

 

The foregoing description of the Exchange Agreement is qualified in its entirety by reference to the full text thereof which is filed as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference.

 

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The Company assumed the debts of Brown in connection with the Exchange Agreement, which debts and liabilities are described in greater detail below under Item 5.06.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

As described above under “Item 2.01 Completion of Acquisition or Disposition of Assets”, in connection with the Exchange Agreement, the Company issued 32,000,000 shares of restricted common stock to the owners of Brown, which included Evan M. Levine, our Chief Executive Officer and director (6,000,000 shares of common stock) and Steven M. Plumb, our Chief Financial Officer (11,791,371 shares of common stock).

 

On August 31, 2016, the Company sold a convertible promissory in the amount of $50,000 to an investor. The note bears interest at 10% per annum and may be converted into the common stock of the Company upon the completion of a capital raise of $500,000 by December 31, 2016 (a “Qualified Raise”). The note may be converted into common stock at 75% of the price of the capital raised in the Qualified Raise. The note is due on December 31, 2016.

 

On October 14, 2016, the Company sold two convertible promissory notes totaling $37,000 to two investors in a private transaction. The notes bear interest at 10% per annum and may be converted into the common stock of the Company upon the completion of a Qualified Raise. The notes may be converted into common stock at 75% of the price of the capital raised in the Qualified Raise. The notes are due on December 31, 2016.

 

On October 31, 2016, the Company sold a convertible promissory in the amount of $50,000 to an investor in a private transaction. The note bears interest at 10% per annum and may be converted into the common stock of the Company upon the completion of a Qualified Raise. The note may be converted into common stock at 75% of the price of the capital raised in the Qualified Raise. The note is due on December 31, 2016.

 

In October 2016, the Company sold 500,000 shares of its restricted common stock to an investor for gross proceeds of $75,000.

 

On November 7, 2016, the Company agreed to issue 500,000 shares of its restricted common stock to the incoming Vice Chairman of the Board, Richard Corbin.

 

On November 7, 2016, the Company agreed to issue 75,000 shares of restricted common stock to James Sapirstein, a former director of the Company, for his service as a director.

 

On November 7, 2016, the Company formed a Scientific Advisory Board (“SAB”) comprised of David Barshis, John Norton, and Heinz-Josef Lenz. The Company agreed to issue 150,000 shares of its restricted common stock to each member of the SAB as compensation for their service on the SAB.

 

 

 

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The Company claims an exemption from registration for such issuances and sales described above pursuant to Section 4(2) and/or Rule 506 of Regulation D of the Securities Act since the foregoing issuances and sales did not involve a public offering, the recipients took the securities for investment and not resale, we took appropriate measures to restrict transfer, and the recipients were either (a) an “accredited investor”; and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Securities Act. With respect to the transactions described above, no general solicitation was made either by us or by any person acting on our behalf. The transactions were privately negotiated. No underwriters or agents were involved in the foregoing issuance or grant and the Company paid no underwriting discounts or commissions. The securities sold are subject to transfer restrictions, and the certificate(s) evidencing the securities contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom.

 

Item 5.01 Changes In Control Of Registrant.

 

As a result of the Business Combination, the owners of Brown prior to the combination, obtained majority voting control over the Company, with Evan M. Levine, our Chief Executive Officer and director (receiving 6,000,000 shares of common stock), Steven M. Plumb, our Chief Financial Officer (11,469,785 shares of common stock), and Noah I. Davis, our newly appointed President, Chief Operating Officer and Director (7,175,522 shares of common stock). The information in Item 2.01 above regarding the Exchange Agreement and the information below under “Item 5.06 - Security Ownership of Certain Beneficial Owners and Management” are incorporated in this Item 5.01 by reference.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

On November 7, 2016, David Barshis, James Sapirstein, Heinz-Josef Lenz and John Norton resigned from the Board of Directors. Such resignations were not in connection with a disagreement with the Company. On the same date, David Barshis, James Sapirstein, Heinz-Josef Lenz were appointed to the Company’s Scientific Advisory Board.

 

Effective on November 7, 2016, Richard Corbin, Jr., was appointed as Vice Chairman of the Board of Directors.

 

On November 8, 2016, Steven M. Plumb and Noah I. Davis were appointed to the Board of Directors, Mr. Davis was appointed to the positions of President and Chief Operating Officer and Mr. Plumb was appointed to the positions of Secretary and Treasurer of the Company. In connection with Mr. Davis’ appointment, Evan Levine stepped down as President of the Company.

 

Mr. Plumb’s and Mr. Davis’ bios are provided below under “Form 10 Disclosure” - “Item 5. Directors and Executive Officers” – “Background of Officer and Directors”.

 

On November 7, 2016, the vesting of the 180,000 shares of common stock issued to Steven M. Plumb on March 21, 2016, in consideration for services rendered, which were to vest to him over a 36 month period, was accelerated such that all remaining unvested shares vested to him on such date.

 

On November 7, 2016, the Board of Directors approved the appointments of the following individuals to the various committees of the Board of Directors: Audit Committee - Messrs. Levine and Plumb; Nominating and Governance Committee - Messrs. Levine, Plumb, and Corbin; and Compensation Committee - Messrs. Levine, Plumb, and Corbin.

 

Section 5.06 Change in Shell Company Status

 

Prior to the Business Combination, we were a “shell company” (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act). As a result of the Business Combination, we have ceased to be a “shell company.” The information contained in this Report, together with the information contained in our Annual Report on Form 10-K for the fiscal year ended May 31, 2015, and our subsequent Quarterly Report on Form 10-Q for the quarter ended August 31, 2016, as filed with the SEC, constitute the current “Form 10 information” necessary to satisfy the conditions contained in Rule 144(i)(2) under the Securities Act of 1933, as amended, or the Securities Act.

 

Item 2.01(f) of Form 8-K states that if the registrant was a shell company, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities on Form 10 under the Securities Exchange Act of 1934, as amended. Accordingly, we have provided the information that would be included in a Form 10 registration statement, other than information previously filed by us as disclosed above, below.

 

 

 

 

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FORM 10 DISCLOSURE

 

Item 1. Business

 

Company Overview

 

As described above, on November 8, 2016, the Company consummated the transactions contemplated by the Exchange Agreement, pursuant to which, Brown became a wholly-owned subsidiary of the Company, and the Company’s main operations changed to those of Brown.

 

Brown is a global provider of technical codes and standards, training materials, and e-Learning solutions.

 

Brown was incorporated on January 21, 2014. On January 31, 2104, Brown acquired a 51% interest in Brown Book Shop, Inc., a Texas corporation that was formed as Brown Book Shop, a sole-proprietorship, in 1946, and on June 8, 1976 was incorporated in Texas as Brown Book Shop, Inc. Brown operates a bookstore in Houston, Texas, and operates an e-commerce website, www.browntechnical.org, which includes information we do not desire to incorporate by reference into this filing.

 

On August 6, 2014, Brown formed Pink Professionals, LLC (“Pink”) to develop and market social networking software aimed at female managers and professionals in certain targeted professions, such as Oil and Gas, Finance and Information Technology. At the time of formation, Brown owned 75% of the membership units of Pink. On October 31, 2014, Brown sold the rights to the use of the software in the Oil and Gas industry to the 25% owner of Pink in exchange for cash consideration and the cancelation of such other owner’s membership units. Accordingly, Brown now owns 100% of the equity in Pink.

 

On October 31, 2016, Brown acquired an additional 48% of Brown Book Shop, Inc. for $50,000 in cash and a note payable in the amount of $184,981. The note is due October 31, 2026, bears interest at 8% per annum, requires monthly payments of principal and interest of $2,244, and a balloon payment of $110,687 after five years. The note is unsecured. As a result of this transaction, Brown now owns 99% of Brown Book Shop, Inc.

 

Brown provides technical professionals with the information required to more effectively design products and construct and complete engineering projects. Its product offerings include content on millions of engineering and technical standards, codes, specifications, handbooks, reference books, journals, and other scientific and technical documents.

 

Brown is an independent provider of print and electronic codes and standards used by engineers and tradesmen to ensure that they are following the national and local building and industrial codes as they perform their jobs. Brown sells individual print and electronic versions of individual codes and subscriptions to sets of codes. Brown also sells aids and guides that assist engineers and tradesmen in the performance of their jobs. Brown publishes its own content and resells the content of independent third parties. In September 2016, Brown established an eLearning division that is involved in producing and distributing online training courses aimed at its target market.

 

Marketing

 

Brown serves the small to medium sized business market in the United States, although its sales are worldwide. Brown has seventy years of experience in its market. Currently Brown has 25,000 active customers on its website. Since 2014, Brown has devoted considerable resources to building its online presence and expanding its web presence and closing efficiency. Brown offers over 20 customized sites for its customers and utilizes extensive email marketing campaigns with custom landing pages for each campaign. Over 95% of Brown’s sales are derived from its website and corporate customers.

 

Competition

 

Brown’s product offerings compete with IHSMarkit, SAI Global, TechStreet, Thomson Reuters, Thomas Publishing, and the standards developing organizations (SDOs), among others.

 

Competitive advantage

 

Brown has invested in its user interface which allows small and medium sized business customers to quickly and easily locate the products that meet their needs. Brown bundles its products to allow its customers to rapidly find complementary products. Its product bundles are competitively priced and provide an alternative to expensive online subscription products.

 

Global delivery. Brown has expanded its customer service and delivery systems to allow it to process orders and ship within 24 hours of the receipt of an order. Brown ships across the United States and around the world.

 

 

 

 

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Outstanding reputation. Brown has built an outstanding reputation in the codes and standards industry through its fast, reliable, quality and friendly service. Its reputation is well known in the industry among its customers and suppliers.

 

Complementary product mix. Brown believes that it is one of the largest independent single-source providers of the resources needed to train, license, certify, and perform in a vocational trade. Brown offers codes and standards, training materials, work place guides, online eLearning, testing and certifications to the vocational trades. Brown believes that the breadth of its service and product offerings allows it to better serve the needs of its customers by providing them with single-source solutions to learn a trade, expand their capabilities and more efficiently and effectively perform their trade. Brown believes that the integration of its services into a single platform, together with its global presence and delivery capabilities, allows its customers to leverage its solutions to address their performance improvement needs in a way that improves the speed and efficiency at which critical know-how is disseminated on a firm-wide basis, and enables them to achieve their desired performance improvement goals.

 

Employees

 

The Company has 13 full-time employees. The Company utilizes a variety of methods to attract and retain personnel.

 

Employment agreements

 

In November 2015, the Company authorized the payment of $15,000 per month to Mr. Levine, effective January 15, 2016, and $1,000 per month as healthcare reimbursement, as compensation for his services as CEO. In February 2014, Brown entered into consulting agreements with Mr. Davis and Mr. Plumb. The agreements were modified on May 1, 2016 such that Mr. Davis, the President and Chief Operating Officer is paid $11,000 per month and Mr. Plumb, the Chief Financial Officer, is paid $4,500 per month. The contracts expire on December 19, 2017. The Brown employment agreements were assumed by the Company as part of the Business Combination.

 

Content agreements

 

Brown has entered into numerous agreements to publish books and materials under its Brown Technical imprint and license content for its proprietary eLearning courses. These agreements provide Brown with the exclusive rights to the intellectual property that Brown has licensed.

 

Available Information

 

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are available free of charge after we electronically file or furnish it to the SEC. The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling 1-800-SEC-0330. The SEC also maintains a website at  www.sec.gov  that contains reports, proxy and information statements, and other information regarding issuers that file electronically. We assume no obligation to update or revise forward looking statements in this Current Report on Form 8-K, whether as a result of new information, future events or otherwise, unless we are required to do so by law.

 

Prior Business Combination Operations

 

See the information contained in Part I, Item 1, “Business”, of the Company’s Annual Report on Form 10-K for the year ended May 31, 2016, filed on September 13, 2016, which is incorporated herein by this reference.

 

* * * * * *

 

Hereafter, references in this report to “Brown,” the “Company,” “we” and “our” include Panther Biotechnology, Inc. and Brown and its subsidiaries, except in those circumstances where the context and reference to “Brown” or the “Company” or “Panther” is intended to relate to just the parent company or subsidiary, whether before or after the exchange transaction.

 

 

 

 

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Risk Factors

 

The following are some of the factors that we believe could cause our actual results to differ materially from historical results and from the results contemplated by the forward-looking statements contained in this report and other public statements made by us. Additional risks and uncertainties not presently known to us, or that we currently see as immaterial, may also harm our business. Most of these risks are generally beyond our control. If any of the risks or uncertainties described below, or any such additional risks and uncertainties actually occur, our business, results of operations and financial condition could be materially and adversely affected and the value of our securities may decline in value. In addition to the risk factors below, the Company is still subject to all of the risks described under the heading “Item 1A. Risk Factors”, in its Annual Report on Form 10-K for the year ended May 31, 2016, filed with the Securities and Exchange Commission on September 13, 2016, and incorporated herein by reference.

 

We have future capital needs and without adequate capital we may be forced to cease or curtail our business operations.

 

Our growth and continued operations could be impaired by limitations on our access to capital markets. The limited capital we have raised to date may be inadequate for our long-term growth and to support our operations. If financing is available, it may involve issuing securities senior to our common stock. In addition, in the event we do not raise additional capital from conventional sources, such as our existing investors or commercial banks, there is every likelihood that our growth will be restricted and we may be forced to scale back or curtail implementing our business plan. Even if we are successful in raising capital in the future, we will likely need to raise additional capital to continue and/or expand our operations. If we do not raise the additional capital, the value of any investment in our Company may become worthless. In the event we do not raise additional capital from conventional sources, it is likely that we may need to scale back or curtail implementing our business plan.

 

Changing economic conditions in the United States could harm our business, results of operations and financial condition.

 

Our revenues and profitability are related to general levels of economic activity and employment primarily in the United States. As a result, an economic recession in the United States could harm our business and financial condition. If the economies in which our customers operate are weakened in any future period, these companies may reduce their expenditures on external training, and other products and services supplied by us, which could materially and adversely affect our business, results of operations and financial condition. As we expand our business globally, we may be subject to additional risks associated with economic conditions in the countries into which we enter or in which we expand our operations.

 

If we cannot successfully implement our business strategy, then our business, financial condition and results of operations could be materially adversely affected.

 

Our ability to successfully implement our business strategy is subject to a number of risks, many of which are beyond our control, including:

 

rising development costs for eLearning courses ,
higher technology costs due to the trend toward delivering more educational content in both digital and traditional print formats,
rising advances for popular authors and market pressures to maintain competitive retail pricing,
a material increase in product returns or in certain production costs,
market acceptance of new technology products, including online or computer-based learning,
changing demographics and preferences of vocational students and teachers that may affect product offerings and revenues, and
consolidation in the eLearning vocational training market.

 

We may not be able to successfully implement our business strategy and, even if successfully implemented, our strategy may not improve our operating results. In addition, we may decide to alter or discontinue aspects of our business strategy and may adopt alternative or additional strategies due to business or competitive factors or factors not currently expected, such as unforeseen costs and expenses or events beyond our control. If we are unable to successfully implement our business strategy our business, financial condition and results of operations could be adversely affected.

 

 

 

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We have made, and may be required to make in the future, substantial investments in our technology infrastructure. If we do not make such investments or do not effectively make such investments, our business, financial condition and results of operations may be materially adversely affected.

 

The method of delivering our products is subject to technological change. Over the past several years, we have made significant investments in technology, including spending on computer hardware, software, electronic systems, telecommunications infrastructure and digitization of our content. We expect our investment in technology to continue at significant levels. Additional capital will be necessary in order to make these investments. If we do not make such investments or do not effectively make such investments, our business, financial condition and results of operations may be materially adversely affected. In addition, we cannot predict whether technological innovations will, in the future, make some of our products, particularly those printed in traditional formats, wholly or partially obsolete. If we are unable to identify, develop and successfully integrate technological innovations, or our competitors are able to better integrate technological innovations, we may not be able to effectively compete, and, therefore, we may experience a loss in sales or we may be required to invest additional significant resources to further adapt to the changing competitive environment.

 

Our intellectual property and proprietary rights may not be adequately protected under current laws which could harm our competitive position and materially adversely affect our business, financial condition and results of operations.

 

Our success depends, in part, on our proprietary content. Our products are largely comprised of intellectual property content delivered through a variety of media, including textbooks, digital learning solutions and the Internet. We rely on copyright, trademark and other intellectual property laws to establish and protect our proprietary rights in these products. However, our proprietary rights may be challenged, invalidated or circumvented. Our intellectual property rights in the United States, the primary jurisdiction in which we conduct business, are well-established. However, we also conduct business in other countries, such as China and India, where the extent of effective legal protection for intellectual property rights is uncertain, and this uncertainty could affect our current performance and future growth. Moreover, despite copyright and trademark protection, third parties may be able to copy, infringe, illegally distribute, import or resell or otherwise profit from our proprietary rights without our authorization. These unauthorized activities may be more easily facilitated by the Internet. In addition, the lack of Internet-specific legislation relating to intellectual property protection creates an additional challenge for us in protecting our proprietary rights relating to our online business processes and other digital technology rights. The steps taken by us to protect our proprietary information may not be adequate to prevent misappropriation of our content or technology. In addition, our proprietary rights may not be adequately protected because:

 

people may not be deterred from misappropriating our technologies despite the existence of laws or contracts prohibiting such actions,
policing unauthorized use of our intellectual property can be difficult, expensive and time-consuming (which may divert our management from implementing our business strategy), and we may be unable to determine the extent of any unauthorized use, and
the laws of other countries in which we may market our products may offer little or no effective protection for our proprietary technologies.

 

We may also be required to initiate expensive and time-consuming litigation to defend our intellectual property or to maintain our intellectual property. If we are not able to adequately protect our intellectual property rights and proprietary rights, our competitive position may be harmed and our business, financial condition and results of operations could be materially adversely affected.

 

As a result of sales outside of the United States, we face additional risks, which may harm our results of operations.

 

A portion of our sales are outside of the United States and, as a result, we are subject to foreign business, political and economic risks. Additionally, a portion of our customers are located outside of the United States, which further exposes us to foreign risks.

 

 

 

 

 

 

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Our non-U.S. sales are directly influenced by the political and economic conditions of the region in which they are located. Accordingly, we are subject to risks associated with international sales, including:

 

    political, social and economic instability, including wars, terrorism, political unrest, boycotts, curtailment of trade and other business restrictions;
    compliance with domestic and foreign export and import regulations, and difficulties in obtaining and complying with domestic and foreign export, import and other governmental approvals, permits and licenses;
    local laws and practices that favor local companies, including business practices that we are prohibited from engaging in by the Foreign Corrupt Practices Act and other anti-corruption laws and regulations;
    natural disasters, including earthquakes, tsunamis and floods;
    trade restrictions or higher tariffs;
    transportation delays;
    difficulties of managing distributors;
    less effective protection of intellectual property than is afforded to us in the United States or other developed countries;
    inadequate local infrastructure; and
    exposure to local banking, currency control and other financial-related risks.

 

As a result of having global sales, the sudden disruption of the supply chain and/or the manufacture of our products caused by events outside of our control could impact our results of operations by impairing our ability to timely and efficiently deliver our products. Moreover, the international nature of our business subjects us to risk associated with the fluctuation of the U.S. dollar versus foreign currencies. Decreases in the value of the U.S. dollar versus currencies in jurisdictions where we have large fixed costs or our third-party manufacturers have significant cost will increase the cost of such operations, which could harm our results of operations.

 

We may face intellectual property infringement claims that could be time-consuming and costly to defend and could result in our loss of significant rights.

 

Litigation regarding copyrights and other intellectual property rights is extensive in the publishing industry, including claims involving the terms by which photographs and other content are licensed to us for inclusion in our textbooks and other products. We may be subject to such claims in the future. Our third-party suppliers may also become subject to infringement claims, which in turn could negatively impact our business.

 

Litigation is expensive and time-consuming and could divert management’s attention from our business and could have an adverse effect on our business, financial condition and results of operations. If there is a successful claim of infringement against us, our customers or our third-party intellectual property providers, we may be required to pay substantial damages to the party claiming infringement, stop selling products or using technology that contains the allegedly infringing intellectual property, or enter into royalty or license agreements that may not be available on acceptable terms, if at all. All of these requirements could damage our business. We may have to develop non-infringing technology and our failure in doing so or obtaining licenses to the proprietary rights on a reasonable or timely basis could have an adverse effect on our business, financial condition and results of operations.

 

We may not be willing or able to maintain the availability of information obtained through licensing arrangements or the terms of our licensing arrangements may change, which may reduce our profit margins or our market share.

 

We obtain significant information through licensing arrangements with content providers. Some content providers may seek to increase licensing fees for providing their proprietary content to us. In such case, our profit margins may be reduced if we are unable to pass along such price increases to our customers. If we are unable to renegotiate acceptable licensing arrangements with these content providers or find alternative sources of equivalent content, the quality of our content may decline and as a result we may experience a reduction in our market share, and our business, financial condition and results of operations may be materially adversely affected.

 

 

 

 

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Our business relies on our hosting facilities and electronic delivery systems and any failures or disruptions may adversely affect our ability to serve our customers.

 

We depend on the capacity, reliability and security of our hosting facilities and electronic delivery systems to provide our online library reference materials and other online products to our customers. Certain events, such as loss of service from third parties, operational failures, sabotage, break-ins, and similar disruptions from unauthorized tampering or hacking, human error, national disasters, power loss, or computer viruses, could cause our electronic delivery systems to operate slowly or interrupt their availability for periods of time. Any back-up systems or facilities we maintain may also experience interruptions and loss of service. We do not have a back-up facility for some of our online products. If disruptions, failures or slowdowns of our facilities, electronic delivery systems, or back-up systems or facilities occur, our ability to distribute our products and services effectively and to serve our customers may be adversely affected and we may experience harm to our reputation and loss of revenues.

 

A security breach involving our products and services or our customers’ credit, debit card or private data could subject us to material claims and additional costs and could harm our reputation.

 

Our customers depend on our products and services to collect, secure, store and transmit confidential information. In connection with credit card sales, we transmit and store confidential credit and debit card information. We also have access to, collect or maintain private or confidential information regarding our customers and employees, as well as our business. Third parties may attempt to breach the security of our systems, products and services. Any security breach for which we are, or are perceived to be, responsible, in whole or in part, could subject us to claims that could harm our reputation and result in significant costs to defend, settle or satisfy. Any imposition of liability, particularly liability that is not covered by insurance or is in excess of insurance coverage, could materially harm our operating results. Computer viruses, physical or electronic break-ins and similar disruptions could lead to interruptions and delays in customer processing or a loss of data. We might be required to expend significant financial and other resources to protect against further security breaches or to rectify problems caused by any security breach.

 

We have and may continue to outsource certain functions to third parties and these arrangements may not be successful, thereby resulting in increased costs, or may materially adversely affect service levels, results of operations and our financial reporting.

 

We rely on third party providers of outsourced services to provide services on a timely and effective basis. These services include, among others, printing of textbooks, payroll and benefits administration and specific activities related to general accounting, fixed asset and accounts payable functions. We do not ultimately control the performance of our outsourcing partners and the failure of third-party providers of outsourced services to perform as required by contract or to our expectations could result in significant disruptions and costs to our operations, which could materially adversely affect our business, financial condition and results of operations and our ability to report financial information accurately and in a timely manner.

 

If we do not adequately manage and develop our operational and managerial systems and processes, our ability to manage and grow our business may be harmed.

 

We need to continue to improve existing, and implement new, operational and managerial systems to manage our business effectively. Any delay in the implementation of, or disruption in the transition to, our new or enhanced systems, could adversely affect our business, financial condition and results of operations.

 

limitations on the repatriation of funds to the United States,
challenges in enforcing agreements and collecting receivables under certain foreign legal systems,
lack of local acceptance or knowledge of our products and services,
lack of recognition of our brands, unavailability of joint venture partners or local companies for acquisition,
instability of international economies and governments,
changes in legal, regulatory and tax requirements,
exposure to varying legal standards, including intellectual property protection laws, in other jurisdictions,
general economic and political conditions in the countries in which we operate, and
changes in foreign governmental regulations or other governmental actions that would have a direct or indirect adverse impact on our business and market opportunities.

 

We are also subject to the United States Foreign Corrupt Practices Act which generally prohibits companies and their intermediaries from making payments to foreign officials for the purpose of obtaining or keeping business. While we have procedures designed to ensure our compliance with such laws, these procedures may fail or may not protect us against liability as a result of actions that may be taken in the future by our agents and other intermediaries, including those over whom we may have limited or no control.

 

Our success will depend, in part, on our ability to anticipate and effectively manage these and other risks associated with our operations outside the United States.

 

 

 

  10  
 

 

If we are unable to identify, complete and successfully integrate acquisitions, our ability to grow our business may be limited and our business, financial condition and results of operations may be adversely impacted.

 

Our acquisition strategy involves a number of risks, including:

 

our ability to find suitable businesses to acquire at affordable valuations or on other acceptable terms,
competition for acquisition targets may lead to higher purchase prices or one of our competitors acquiring one of our acquisition targets,
prohibition of future acquisitions under United States or foreign antitrust laws,
the diversion of management’s attention from existing operations to the integration of acquired companies,
our inability to realize expected cost savings and synergies,
expenses, delays and difficulties of integrating acquired businesses into our existing business structure, and
difficulty in retaining key customers and management personnel.

 

If we are unable to continue to acquire and efficiently integrate suitable acquisition candidates, our ability to increase revenues and fully implement our business strategy may be adversely impacted, which could adversely affect our business, financial condition and results of operations.

 

Changes to laws and regulations may have an adverse effect on our business.

 

Our business and customers’ businesses are subject to United States federal, state and local and international laws and regulations, including laws and regulations relating to intellectual property, libel, privacy, accessibility, product offerings and financial aid eligibility and laws and regulations applicable generally to businesses. New laws and regulations and changes to existing laws and regulations applicable to us and our customers may restrict or require a change to how we and our customers conduct business and could have an adverse effect on our business.

 

We may not be able to attract or retain key employees.

 

Our future success depends on the continued services of key employees and our ability to attract and retain new employees with the experience and capabilities necessary to support our needs. The loss of any of the key employees or the failure to attract and retain suitably skilled new employees could adversely affect our business, financial condition and our results of operations.

 

There are risks associated with our indebtedness.

 

As of July 31, 2016, we had unsecured term loans with an aggregate principal balance of $726,384 (excluding amortization of discount). We may incur additional indebtedness in the future through offerings of debt securities or through traditional debt agreements. Our outstanding indebtedness and any additional indebtedness we incur may have significant consequences, including, without limitation, any of the following:

 

we will be required to use cash reserves to pay the principal of and interest on our indebtedness;
our indebtedness and leverage may increase our vulnerability to adverse changes in general economic and industry conditions, as well as to competitive pressure;
our ability to obtain additional financing for working capital, capital expenditures, acquisitions or for general corporate and other purposes may be limited; and
our flexibility in planning for, or reacting to, changes in our business and our industry may be limited.

 

 

 

  11  
 

 

Our ability to make payments of principal of and interest on our indebtedness depends upon our future performance, which will be subject to general economic conditions, industry cycles and financial, business and other factors affecting our consolidated results of operations and financial condition, many of which are beyond our control. If we are unable to generate sufficient cash flow from operations in the future to service our debt, we may be required to, among other things:

 

seek additional capital through the sale of equity securities;
seek additional financing in the debt markets;
refinance or restructure all or a portion of our indebtedness;
sell selected assets; or
reduce or delay planned capital or operating expenditures.

 

Such measures might not be sufficient to enable us to service our debt. Our failure to satisfy our obligations under the agreements governing our indebtedness could result in an event of default, which could permit our secured lenders to foreclose on our assets and stock securing such indebtedness. In addition, any such financing, refinancing or sale of assets might not be available on economically favorable terms or at all.

 

The price of our common stock is highly volatile and could decline regardless of our operating performance.

 

The market price of our common stock could fluctuate in response to, among other things:

 

· changes in economic and general market conditions;
· changes in the outlook and financial condition of certain of our significant customers and industries in which we have a concentration of business;
· changes in financial estimates, treatment of our tax accounting or liabilities or investment recommendations by securities analysts following our business;
· changes in accounting standards, policies, guidance, interpretations or principles;
· sales of common stock by our directors, officers and significant stockholders;
· our failure to achieve operating results consistent with projections; and
· the operating and stock price performance of competitors.

 

These factors may adversely affect the trading price of our common stock and prevent you from selling your common stock at or above the price at which you purchased it. In addition, in recent periods, the stock market has experienced significant price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies, including ours and others in our industry. These changes can occur without regard to the operating performance of the affected companies. As a result, the price of our common stock could fluctuate based upon factors that have little or nothing to do with our company, and these fluctuations could materially reduce our share price.

 

Our financial results are subject to quarterly fluctuations, which may result in volatility or declines in our stock price.

 

We experience, and expect to continue to experience, fluctuations in quarterly operating results. Consequently, you should not deem our results for any particular quarter to be necessarily indicative of future results. Factors that may affect quarterly operating results in the future include:

 

· the overall level of services and products sold;
· the volume of publications shipped by our Sandy Training & Marketing segment each quarter, because revenue and cost of publications contracts are recognized in the quarter during which the publications ship;
· fluctuations in project profitability;
· the gain or loss of material clients;
· the timing, structure and magnitude of acquisitions;
· participant training volume and general levels of outsourcing demand from clients in the industries that we serve;
· the budget and purchasing cycles of our customers.
· the commencement or completion of client engagements or services and products in a particular quarter; and
· the general level of economic activity.

 

Accordingly, it is difficult for us to forecast our growth and results of operations on a quarterly basis. If we fail to meet expectations of investors or analysts, our stock price may fall rapidly and without notice. Furthermore, the fluctuation of quarterly operating results may render less meaningful period-to-period comparisons of our operating results.

 

 

 

  12  
 

 

We may continue making acquisitions as part of our growth strategy, which subjects us to numerous risks that could have a material adverse effect on our business, financial condition and results of operations.

 

As part of our growth strategy, we may continue to pursue selective acquisitions of businesses that broaden our service and product offerings, deepen our capabilities and allow us to enter attractive new domestic and international markets. Pursuit of acquisitions exposes us to many risks, including that:

 

· acquisitions may require significant capital resources and divert management’s attention from our existing business;
· acquisitions may not provide the benefits anticipated;
· acquisitions could subject us to contingent or other liabilities, including liabilities arising from events or conduct predating the acquisition of a business that were not known to us at the time of the acquisition;
· we may incur significantly greater expenditures in integrating an acquired business than had been initially anticipated;
· acquisitions may create unanticipated tax and accounting problems; and
· acquisitions may result in a material weakness in our internal controls if we are not able to successfully establish and implement proper controls and procedures for the acquired business.

 

Our failure to successfully accomplish future acquisitions or to manage and integrate completed or future acquisitions could have a material adverse effect on our business, financial condition or results of operations. We can provide no assurances that we:

 

· will identify suitable acquisition candidates;
· can consummate acquisitions on acceptable terms;
· can successfully compete for acquisition candidates against larger companies with significantly greater resources;
· can successfully integrate any acquired business into our operations or successfully manage the operations of any acquired business; or
· will be able to retain an acquired company’s significant client relationships, goodwill and key personnel or otherwise realize the intended benefits of any acquisition.

 

In addition, acquisitions might involve our entry into new businesses that might not be as profitable as we expect. We can provide no assurances that our expectations regarding the profitability of future acquisitions will prove to be accurate. Acquisitions might also increase our exposure to the risks inherent in certain markets or industries.

 

As a result of completed and possible future acquisitions, our past performance is not indicative of future performance, and investors should not base their expectations as to our future performance on our historical results.

 

Future acquisitions may require that we incur debt or issue dilutive equity.

 

Future acquisitions may require us to incur additional debt, under our existing credit facility or otherwise, or issue equity, resulting in additional leverage or dilution of ownership.

 

Difficulties in integrating acquired businesses could result in reduced revenues and income.

 

We might not be able to integrate successfully any business we have acquired or could acquire in the future. The integration of the businesses could be complex and time consuming and will place a significant strain on our management, administrative services personnel and information systems. This strain could disrupt our business. Furthermore, we could be adversely impacted by liabilities of acquired businesses. We could encounter substantial difficulties, costs and delays involved in integrating common accounting, information and communication systems, operating procedures, internal controls and human resources practices, including incompatibility of business cultures and the loss of key employees and customers. Also, depending on the type of acquisition, a key element of our strategy may include retaining management and key personnel of the acquired business to operate the acquired business for us. Our inability to retain these individuals could materially impair the value of an acquired business. In addition, small businesses acquired by us may have greater difficulty competing for new work as a result of being part of our larger entity. These difficulties could reduce our ability to gain customers or retain existing customers, and could increase operating expenses, resulting in reduced revenues and income and a failure to realize the anticipated benefits of acquisitions.

 

 

 

  13  
 

 

Competition could materially and adversely affect our performance.

 

The training industry is highly fragmented and competitive, with low barriers to entry and no single competitor accounting for a significant market share. Our competitors include divisions of several large publicly traded and privately held companies, vocational and technical training schools, degree-granting colleges and universities, continuing education programs and thousands of small privately held training providers and individuals. Moreover, we expect to face additional competition from new entrants into the training and performance improvement market due, in part, to the evolving nature of the market and the relatively low barriers to entry. 

 

We cannot provide any assurance that we will be able to compete successfully in the industries or markets in which we compete, and the failure to do so could materially and adversely affect our business, results of operations and financial condition.

 

Failure to keep pace with technology and changing market needs could harm our business.

 

Our future success will depend upon our ability to adapt to changing client needs, to gain expertise in technological advances rapidly and to respond quickly to evolving industry trends and market needs. We may not be able to expand our operations into all geographic areas into which we seek to expand our services and may not be able to attract and retain qualified personnel to provide our services in all such geographic areas. We may not be successful in adapting to advances in technology or marketing our products in advanced formats. In addition, products delivered in the newer formats might not provide comparable training results. Furthermore, subsequent technological advances might render moot any successful expansion of the methods of delivering our products. If we are unable to develop new means of delivering our products due to capital, personnel, technological or other constraints, our business, results of operations and financial condition could be materially and adversely affected.

 

We have only a limited ability to protect the intellectual property rights that are important to our success, and we face the risk that our services or products may infringe upon the intellectual property rights of others.

 

Our future success depends, in part, upon our ability to protect our proprietary methodologies and other intellectual property. Existing laws of some countries in which we provide or license or intend to provide or license our services or products may offer only limited protection of our intellectual property rights. We rely upon a combination of trade secrets, confidentiality policies, non-disclosure and other contractual arrangements and copyright and trademark laws to protect our intellectual property rights. The steps we take in this regard might not be adequate to prevent or deter infringement or other misappropriation of our intellectual property, and we may not be able to detect unauthorized use or take appropriate and timely steps to enforce our intellectual property rights. Protecting our intellectual property rights might also consume significant management time and resources.

 

Our services and products, or the products of others that we offer to our clients, may infringe on the intellectual property rights of third parties, and we might have infringement claims asserted against us or against our clients. These claims might harm our reputation, result in financial liabilities and prevent us from offering some services or products. We have generally agreed in our contracts to indemnify our clients against expenses or liabilities resulting from claimed infringements of the intellectual property rights of third parties. In some instances, the amount of these indemnities could be greater than the revenues we receive from the client. Any claims or litigation in this area, whether we ultimately win or lose, could be time-consuming and costly, injure our reputation or require us to enter into royalty or licensing arrangements. We might not be able to enter into these royalty or licensing arrangements on acceptable terms. Any limitation on our ability to provide or license a service or product could cause us to lose revenue-generating opportunities and require us to incur additional expenses to develop new or modified solutions for future projects.

 

Our information technology systems are subject to risks that we cannot control.

 

Our information technology systems are dependent upon global communications providers, web browsers, telephone systems, and other aspects of the Internet infrastructure that have experienced system failures and electrical outages in the past. Our systems are susceptible to slow access and download times, outages from fire, floods, power loss, telecommunications failures, hacking, and similar events. Our servers are vulnerable to computer viruses, hacking, and similar disruptions from unauthorized tampering with our computer systems. The occurrence of any of these events could disrupt or damage our information technology systems and inhibit our internal operations, our ability to provide services to our customers, and the ability of our customers to access our information technology systems. This could result in our loss of customers, loss of revenue or a reduction in demand for our services.

 

 

 

 

  14  
 

 

A breach of our security measures could harm our business, results of operations and financial condition.

 

Our databases contain confidential data of our clients and our clients’ customers, employees and vendors, including sensitive personal data. As a result, we are subject to numerous laws and regulations designed to protect this information and various U.S. federal and state laws governing the protection of health or other personally identifiable information. These laws and regulations are increasing in complexity and number, change frequently and sometimes conflict among the various countries in which we operate. A party, including our employees, who is able to circumvent our security measures could misappropriate such confidential information or interrupt our operations. Many of our contracts require us to comply with specific data security requirements. If we are unable to maintain our compliance with these data security requirements or any person, including any of our current or former employees, penetrates our network security or misappropriates sensitive data, we could be subject to significant liabilities to our clients for breaching these data security requirements or other contractual confidentiality provisions. These liabilities might not be subject to a contractual limit of liability or an exclusion of consequential or indirect damages and could be significant. Furthermore, unauthorized disclosure of sensitive or confidential data of our clients or other parties, whether through breach of our computer systems, systems failure or otherwise, could also damage our reputation and cause us to lose existing and potential clients. We may also be subject to civil actions, regulatory enforcement actions, and criminal prosecution for breaches related to such data or need to expend significant capital and other resources to continue to protect against security breaches or to address any problem they may cause. In addition, our liability insurance, which includes cyber insurance, might not be sufficient in type or amount to cover us against claims related to security breaches, cyberattacks and other related breaches.

 

We have a limited operating history and expect to continue to incur losses for an indeterminable period of time.

 

We have a limited operating history with our current business plan. Companies in their initial stages of development face substantial business risks and may suffer significant losses. We face challenges and uncertainties in financial planning as a result of the unavailability of historical data and uncertainties regarding the nature, scope and results of our future activities. New companies must develop successful business relationships, establish operating procedures, hire staff, install management information and other systems, establish facilities and obtain licenses, as well as take other measures necessary to conduct their intended business activities. We may not be successful in implementing our business strategies or in completing the development of the infrastructure necessary to conduct our business as planned. As a result of industry factors or factors relating specifically to us, we may have to change our methods of conducting business, which may cause a material adverse effect on our results of operations and financial condition. As a result, we may not be able to achieve or sustain profitability or positive cash flows provided by our operating activities in the future.

 

We do not presently intend to pay any cash dividends on or repurchase any shares of our common stock.

 

We do not presently intend to pay any cash dividends on our common stock or to repurchase any shares of our common stock. Any payment of future dividends will be at the discretion of the Board of Directors and will depend on, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations that our Board of Directors deems relevant. Cash dividend payments in the future may only be made out of legally available funds and, if we experience substantial losses, such funds may not be available. Accordingly, you may have to sell some or all of your common stock in order to generate cash flow from your investment, and there is no guarantee that the price of our common stock that will prevail in the market will ever exceed the price paid by you.

 

Shareholders may be diluted significantly through our efforts to obtain financing and satisfy obligations through the issuance of additional shares of our common stock.

 

We may attempt to use non-cash consideration to satisfy obligations moving forward. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock or convertible securities, convertible into shares of our common stock. Our directors have authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued shares of common stock. In addition, we may attempt to raise capital by selling shares of our common stock (either restricted shares in private placements or registered shares), possibly at a discount to market in the future. These actions will result in dilution of the ownership interests of existing shareholders, may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing management’s ability to maintain control of the Company because the shares may be issued to parties or entities committed to supporting existing management.

 

Investors may face significant restrictions on the resale of our common stock due to federal regulations of penny stocks.

 

Our common stock will be subject to the requirements of Rule 15g-9, promulgated under the Securities Exchange Act of 1934, as amended, as long as the price of our common stock is below $5.00 per share. Under such rule, broker-dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser’s consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 also requires additional disclosure in connection with any trades involving a stock defined as a penny stock.

 

 

  15  
 

 

Generally, the Commission defines a penny stock as any equity security not traded on an exchange or quoted on NASDAQ that has a market price of less than $5.00 per share. The required penny stock disclosures include the delivery, prior to any transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities and the ability of purchasers to sell their securities in the secondary market.

 

In addition, various state securities laws impose restrictions on transferring “ penny stocks”  and as a result, investors in the common stock may have their ability to sell their shares of the common stock impaired.

 

Financial Information

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Brown

 

The following discussion should be read in conjunction with the financial statements of Brown and notes thereto included elsewhere in this filing.

 

Results of Operations of Brown

 

For the three months ended July 31, 2016 compared to the three months ended July 31, 2015

 

Revenue

 

Revenue for the three months ended July 31, 2016 increased $49,511, from $624,288 during the three months ended July 31, 2015, to $673,799 during the three months ended July 31, 2016. The increase was due to an increase in website sales during the period as a result of increased advertising and marketing efforts.

 

Cost of sales

 

Cost of sales for the three months ended July 31, 2016 decreased $51,659, from $468,355 during the three months ended July 31, 2015, to $416,696 during the three months ended July 31, 2016.

 

Gross profit

 

Gross profit for the three months ended July 31, 2016 increased $101,170, from $155,933 during the three months ended July 31, 2015 to $257,103 during the three months ended July 31, 2016. The increase was due to higher cost of goods sold in the prior year’s period as a result of the write-off of obsolete inventory during that period. Gross margins for the three months ended July 31, 2016 increased from 25% in the three months ended July 31, 2015 to 38% during the three months ended July 31, 2016. In addition, we began obtaining better margins on our products by improving our purchasing operations.

 

General and administrative expenses

 

General and administrative expenses for the three months ended July 31, 2016 increased $35,864, from $162,487 during the three months ended July 31, 2015, to $198,351 during the three months ended July 31, 2106. The increase was due to increased advertising costs of $14,344, increased credit card processing fees of $4,837 and increased payroll of $19,185, offset by a decrease in meals and entertainment of $2,809.

 

Professional fees

 

Professional fees for the three months ended July 31, 2016 increased $289, from $65,453 during the three months ended July 31, 2015, to $65,742 during the three months ended July 31, 2016. Professional fees consist of software development and management consulting fees. The change is inconsequential.

 

Other income and expense

 

Interest expense for the three months ended July 31, 2016 increased $55,588, from $39,505 during the three months ended July 31, 2015, to $95,093 during the three months ended July 31, 2016 due to higher levels of borrowing during the three months ended July 31, 2016.

 

 

 

 

  16  
 

 

Net income or loss

 

Net loss for the three months ended July 31, 2016 decreased $9,429, from $114,947 during the three months ended July 31, 2015, to $105,518 during the three months ended July 31, 2016 primarily due to improved gross margins.

 

For the nine months ended July 31, 2016 compared to the nine months ended July 31, 2015

 

Revenue

 

Revenue for the nine months ended July 31, 2016 increased $717,569, from $1,515,421 during the nine months ended July 31, 2015, to $2,232,990 during the nine months ended July 31, 2016. The increase was due to an increase in website sales during the period as a result of increased advertising and marketing efforts.

 

Cost of sales

 

Cost of sales for the nine months ended July 31, 2016 increased $711,253, from $927,145 during the nine months ended July 31, 2015, to $1,638,398 during the nine months ended July 31, 2016. The increase was due to increased sales as a result of an increase in website sales during the period. Our cost of sales was 61% of sales during the period ending July 31, 2015 and 73% of sales during the period ending July 31, 2016. The cost of sales percentage increased over the prior year due to temporary promotions run in order to boost sales during the nine months ended July 31, 2016, thus increasing cost of sales during that period.

 

Gross profit

 

Gross profit for the nine months ended July 31, 2016 increased $6,316, from $588,276 during the nine months ended July 31, 2015 to $594,592 during the nine months ended July 31, 2016. The decrease was due to temporary promotions run in order to boost sales. Gross margins fell from 39% in the nine months ended July 31, 2016 to 27% during the nine months ended July 31, 2015.

 

General and administrative expenses

 

General and administrative expenses for the nine months ended July 31, 2016 increased $69,869, from $475,854 during the nine months ended July 31, 2015, to $545,723 during the nine months ended July 31, 2106. The increase was due to increased advertising costs of $40,352, increased credit card processing fees of $18,306 and increased bad debt expense of $10,407.

 

Professional fees

 

Professional fees for the nine months ended July 31, 2016 decreased $56,448, from $197,177 during the nine months ended July 31, 2015, to $140,729 during the nine months ended July 31, 2016. Professional fees consist of software development and consulting fees. The decrease was due to a reduction in the use of outside software development firms.

 

Other income and expense

 

Interest expense for the nine months ended July 31, 2016 increased $83,376, from $57,341 during the nine months ended July 31, 2015, to $140,717 during the nine months ended July 31, 2016, due to higher levels of borrowing during the nine months ended July 31, 2016. Gain on the sale of intangible property decreased $60,100, from $60,100 during the nine months ended July 31, 2015 to zero during the nine months ended July 31, 2016 due to the one-time gain realized from the sale of intellectual property during the nine months ended July 1, 2015 that was not repeated during the nine months ended July 31, 2016.

 

Net income or loss

 

Net loss for the nine months ended July 31, 2016 increased $149,607, from $92,301 during the nine months ended July 31, 2015 to $241,908 during the nine months ended July 31, 2016 primarily due to higher interest costs of $83,376 and the reduction in gain on sale of intangible property of $60,100.

 

For the year ended October 31, 2015 compared to the period from January 21, 2014 through October 31, 2014

 

Revenue

 

Revenue increased $719,131, from $1,418,727 during the period from January 21, 2014 through October 31, 2014 to $2,137,858 during the year ended October 31, 2015. The increase was due to an increase in web site sales during the period, as a result of increased advertising, marketing and sales efforts.

 

 

 

  17  
 

 

Cost of sales

 

Cost of sales increased $624,519, from $792,706 during the period from January 21, 2014 through October 31, 2014 to $1,417,225 during the year ended October 31, 2015. Cost of sales are variable with sales. The increase was due to the increased sales during the period. Our costs as a percentage of sales increased during this period also as a result of temporary sales promotions run during 2016.

 

Gross profit

 

Gross profit increased $94,612, from $626,021 during the period from January 21, 2014 through October 31, 2014 to $720,633 during the year ended October 31, 2015. The decrease in gross margins was due to a write off of obsolete inventory during the year ended October 31, 2015. Gross margins fell from 44% in the year ended October 31, 2015 to 34% during the period from January 21, 2014 through October 31, 2014.

 

General and administrative expenses

 

General and administrative expenses increased $143,794, from $501,529 during the period from January 21, 2014 through October 31, 2014 to $645,323 during the year ended October 31, 2015. The increase was due to increased advertising costs of $40,352, increased credit card processing fees of $18,306 and increased bad debt expense of $10,407.

 

Professional fees

 

Professional fees for the year ended October 31, 2015 decreased $4,046, from $238,073 during the period from January 21, 2014 through October 31, 2014 to $234,027 during the year ended October 31, 2015. Professional fees consist of software development costs and consulting fees. The decrease was due to decreased spending on software development during the year ended October 31, 2015 compared to 2014.

 

Other income and expense

 

Interest expense increased $50,895, from $18,343 during the year ended October 31, 2014 to $69,238 during the year ended October 31, 2015 due to higher levels of borrowing during the year ended October 31, 2015. Gain on sale of intangible property increased $60,100, from zero during the period from January 21, 2014 through October 31, 2014 to $60,100 during the year ended October 31, 2015 due to the one-time gain realized during the year ended October 31, 2015.

 

Net income or loss

 

Net loss for the year increased $39,366, from $142,228 during the year ended October 31, 2014 to $181,594 during the year ended October 31, 2015 primarily due to higher interest costs of $50,895 and increased general and administrative costs of $143,794, offset by the gain on sale of intangible property of $60,100 and the increase in gross margin of $94,612.

 

Liquidity and Capital Resources

 

Brown had total assets of $663,483 as of July 31, 2016, including $553,174 of current assets. Brown had total liabilities of $959,946 as of July 31, 2016, which included $802,660 of current liabilities. Included in current liabilities was $130,612 owed to related parties and $467,257 owed in notes payable, net. The amount owed to related parties consists of costs for the reimbursements for the purchase of inventory that were paid for with the personal credit cards of one of the shareholders. Notes payable are discussed in greater detail in our financial statements, as disclosed in the exhibits to this filing.

 

Brown has negative working capital of $249,486 as of July 31, 2016 and had net cash used in operations of $186,588 during the nine months ended July 31, 2016.

 

The Company has funded operations through short term credit card debt and advances against future credit card receipts. During the period from August 1, 2016 through October 31, 2016, the Company raised $212,000 from the private placement of notes and equity sales. We plan to raise additional capital by the end of calendar year 2016 to fund ongoing operations and planned acquisitions. We intend to fund acquisitions primarily through the issuance of our common stock.

 

 

 

  18  
 

 

Cash flows

 

Brown had $186,588 of net cash used in operating activities for the nine months ended July 31, 2016, which mainly included net loss of $241,908 and decrease in accounts payable of $144,979, offset by $85,282 of increase in accrued expenses – related parties.

 

Brown had $43,466 of net cash used in investing activities for the nine months ended July 31, 2016, which was solely due to the purchase of an investment in an urgent care center located in Houston, Texas.

 

Brown had $195,803 of net cash provided by financing activities for the nine months ended July 31, 2016, which was mainly due to $1,245,707 of proceeds from notes payable offset by $1,039,229 of repayments of notes payable.

 

Notes Payable

 

Brown had the following notes payable outstanding as of July 31, 2016:

 

    Balance as of
July 31, 2016
 
Note payable dated March 31, 2015, bearing interest at 15.9% due July 20, 2017.   $ 51,306  
Note payable dated May 14, 2015, bearing interest at 18%, due October 2016, and guaranteed by the officers of Brown. As of the filing date, the note was repaid in full.     98,480  
Notes payable dated May 19, 2015, bearing interest at 33%, due May 19, 2016, and guaranteed by the officers of Brown. Brown refinanced the note payable on November 12, 2015 and again on June 14, 2016 to provide additional funding and extend the maturity date to September 14, 2017. Brown recorded a debt discount of $139,140 at inception and has amortized $59,179 for the nine months ended July 31, 2016. As of July 31, 2016, $79,961 remains unamortized. The effective interest rate is 35.6%.     218,371  
Note payable dated October 23, 2014, bearing interest at 10%, due in August 2017, and guaranteed by the officers of Brown. Brown recorded a debt discount of $17,100 at inception and has amortized $2,983 for the nine months ended July 31, 2016. As of July 31, 2016, $14,117 remains unamortized. The effective interest rate is 12.5%.     142,178  
Note payable dated March 16, 2015, bearing interest at 9%, due December 31, 2016.     51,000  
Total notes payable     561,335  
Less: Unamortized debt discount     (94,078 )
Notes payable, net   $ 467,257  

 

On August 31, 2016, the Company sold a convertible promissory in the amount of $50,000 to an investor. The note bears interest at 10% per annum and may be converted into the common stock of the Company upon the completion of a capital raise of $500,000 by December 31, 2016 (a “Qualified Raise”). The note may be converted into common stock at 75% of the price of the capital raised in the Qualified Raise. The note is due on December 31, 2016.

 

On October 14, 2016, the Company sold two convertible promissory notes totaling $37,000 to two investors in a private transaction. The notes bear interest at 10% per annum and may be converted into the common stock of the Company upon the completion of a Qualified Raise. The notes may be converted into common stock at 75% of the price of the capital raised in the Qualified Raise. The notes are due on December 31, 2016.

 

On October 31, 2016, the Company sold a convertible promissory in the amount of $50,000 to an investor in a private transaction. The note bears interest at 10% per annum and may be converted into the common stock of the Company upon the completion of a Qualified Raise. The note may be converted into common stock at 75% of the price of the capital raised in the Qualified Raise. The note is due on December 31, 2016.

 

 

 

 

  19  
 

 

Plan of Operations

 

The Company is currently comprised of two divisions, (1) an online aggregator of eLearning, standards, and codes for professional industries (Brown) and (2) a developer of Transferrin Doxorubicin, a conjugate of Transferrin Glycoproteins and Doxorubicin for the treatment of cancer (Panther). The management team will manage both divisions concurrently with the intent of maximizing overall shareholder value. The Company is considering adding additional divisions in different industries to grow into a global conglomerate as discussed below.

 

Moving forward the Company intends to grow the Company into one of the leading eLearning companies through both organic growth and strategic acquisitions. Organic growth is expected through efforts of:

 

· increasing the online footprint,
· increasing eLearning offerings,
· improving efficiencies in staffing, process, inventory management and margins,
· publishing original content, and
· private labeling additional content.

 

Management is currently pursuing acquisitions, strategic partnerships, new dedicated synergistic web site launches, new titles and content, new training opportunities and new online services. Management is also actively seeking a financial partner to continue the development of Transferrin Doxorubicin.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

 

Recent Accounting Pronouncements

 

The Company does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows.

 

Properties

 

Our principal administrative office is located at 1517 San Jacinto Street, Houston, Texas 77002. We lease 13,199 square feet under a lease that calls for monthly lease payments of $7,506 per month and expires on September 30, 2019. We sub lease 3,073 square feet to tenants at $4,289 per month.

 

We also maintain a business address at 888 Prospect Street, Suite 200, La Jolla, California 92037 on a month to month lease at a cost of $200 per month.

 

The Company does not currently have any investments or interests in any real estate, nor do we have investments or an interest in any real estate mortgages or securities of persons engaged in real estate activities.

 

 

 

 

  20  
 

 

Security Ownership of Certain Beneficial Owners and Management

 

The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of the date of this filing by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities; (ii) each of our directors; (iii) each of our named executive officers; and (iv) officers and directors as a group. Unless otherwise indicated, the shareholder listed possesses sole voting and investment power with respect to the shares shown.

 

Title of Class   Name and Address of Beneficial Owner (6)  

Amount and Nature of

Beneficial Ownership

 

Percentage of

Common Stock (2)

DIRECTORS AND EXECUTIVE OFFICERS
Common Stock  

Evan M. Levine

Chief Executive Officer and Director (3)

  6,600,000 Shares   16.30%
   

Noah I. Davis

President, Chief Operating Officer and Director (4)

  7,175,522 Shares   17.70 %
   

Steven M. Plumb

Chief Financial Officer and Director (5)

  11,649,785 Shares   28.70%
    Richard Corbin, Director and Vice Chairman of the Board (6)   1,452,112 Shares   3.6%
             
    Total, all officers and directors as a group (four persons)   26,877,419 Shares   66.3%

  

5% STOCKHOLDERS

None.            

 

Notes:

 

  (1) Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the number of shares outstanding is deemed to include the number of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on November 8, 2016.

 

  (2) Based on 40,564,717 shares of our common stock issued and outstanding as of November 8, 2016.
     
  (3) Mr. Levine beneficially owns 5,600,001 shares directly, and the following shares indirectly: 999,9999 held in the names of his minor children, which shares he is deemed to beneficially own.
     
  (4) Mr. Davis beneficially owns 3,912,504 shares directly, and the following shares indirectly: 3,263,018 held in the name of his wife, Hillary Davis. The following shares are owned by other family members of Mr. Davis, and are deemed not to be beneficially owned by Mr. Davis; 1,071,954 shares held in a trust for the benefit of his minor children of which Mr. Davis is not the trustee; 503,926 held in the name of Robert and Rachel Davis, his parents, 5,039 held in the name of his brother, Joseph Davis,50,393 held in the name of his brother, Jacob Davis, 5,039 held in the name of Hannah Weissman, his sister; 37,518 in the name of his sister, Courtney Rosenthal, 37,518 shares in the name of Stephanie Deutsch, the sister of his wife, and 2,894,278 held in the name of the 2009 Noah Davis Family Trust, of which Mr. Davis is not the trustee.

 

  (5) Mr. Plumb owns 10,041,854 shares directly, and the following shares indirectly: 1,607,931 shares held in the names of his minor children which shares he is deemed to beneficially own.
     
  (6) Mr. Corbin beneficially owns 444,236 shares directly, and the following shares indirectly: 548,779 shares held in the name of Corbin Capital, LLC of which Mr. Corbin is managing member, 25,764 shares held in the name of Midland IRA Inc FBO Richard Corbin IRA of which Mr. Corbin is the beneficiary, and 433,333 in the name of Corbin Living Trust, of which Mr. Corbin is the trustee, which shares he is deemed to beneficially own.

 

  (7) The address of each entity or person listed in the table is 1517 San Jacinto Street, Houston, Texas 77002.

 

 

 

 

  21  
 

 

Changes in Control

 

The Company is not aware of any pending or contemplated arrangements which may at a subsequent date result in a change of control of the Company.

 

Equity Compensation Plans

 

We have no equity compensation program, including no stock option plan.

 

Warrants and Options

 

We have outstanding warrants to purchase 32,000 shares of our common stock at an exercise price of $6.00 per share outstanding. The warrants were issued on August 28, 2015 and expire on August 28, 2020.

 

Directors and Executive Officers

 

The current directors and officers of the Company are set forth below. The directors hold office for their respective term and until their successors are duly elected and qualified. Vacancies in the existing Board of Directors are filled by a majority vote of the remaining directors. The officers serve at the will of our Board of Directors.

 

  Name Position Held with the Company Age Date First Elected or Appointed
  Richard Corbin, Jr. Director and Vice Chairman of the Board 38 January 12, 2015
  Noah I. Davis President, Chief Operating Officer and Director 34 November 8, 2016
  Steven M. Plumb, CPA Chief Financial Officer, Secretary, Treasurer and Director 57 March 16, 2016
  Evan M. Levine Chairman of the Board and Chief Executive Officer 51 February 4, 2015
                   

Background of Officer and Directors

 

The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of our company, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out. 

 

Richard Corbin – Director

 

Mr. Corbin is a co-founder of Panther Biotechnology, Inc. and has over 16 years of investment analysis and operational experience with early stage companies. From September 2014 to the present, Mr. Corbin has served as the Chief Financial Officer and co-founder of Level Funded Health Partners, an institutionally backed national health insurance agency focused on bringing innovative healthcare cost solutions to small businesses. From August 2013 to August 2014, Mr. Corbin was the CFO for ForeverCar, a venture-backed start-up focused on improving and bringing transparency to the vehicle service contract industry. From April 2008 to January 2012, Mr. Corbin performed financial analysis on capital raises with early state private and public companies while at Daybreak Special Situations Fund. In addition, Mr. Corbin manages Corbin Capital LLC, a fund focused on early stage and seed round investments. Mr. Corbin holds a BBA from Mendoza College of Business at the University of Notre Dame and an MBA from DePaul’s Kellstadt Graduate School for Business.

 

 

 

 

  22  
 

 

Evan M. Levine – Chairman of the Board, and Chief Executive Officer

 

Mr. Levine has served as a Director and our President and Chief Executive Officer since February 2015. Mr. Levine also became the Chairman of the Board on June 1, 2015. Mr. Levine has over two decades plus of in-depth expertise in strategic ventures, executive supervision, asset management and the institutional investment business. He is also the Founder and Managing Partner of Mark Capital LLC, a family office focused on microcap restructuring investment and management. Prior to joining the Company, from February 2013 until February 2015, Mr. Levine served as the Chairman of the Board and Chief Executive Officer of Valley Forge Composite Technologies, an entity in the aerospace and securities industries, where he architected and implemented a sophisticated bankruptcy restructuring and reorganization while managing multifarious complex litigation actions designed to return value to the decimated stakeholders. Prior thereto, as Founder and Managing Partner of Mark Capital LLC, Mr. Levine has executed and orchestrated multiple corporate restructurings and changes in management. From 2002 until 2008, Mr. Levine served in multiple roles including Chief Operating Officer, President, Chief Executive Officer, and Vice Chairman at Adventrx Pharmaceuticals, a publicly traded biotech company focused on oncology and antiviral drug development.

 

Steven M. Plumb – Chief Financial Officer

 

Steven M. Plumb has over 25 years of experience in accounting, operations, finance and marketing. Mr. Plumb has served as our Chief Financial Officer since March 2016. From March 2001 to the present, Mr. Plumb has served as the President of Clear Financial Solutions, Inc., an accounting and consulting firm based in Houston, Texas, which he founded. During his tenure as President of Clear Financial Solutions, Inc., Mr. Plumb served as the CFO for a number of public and private companies, including Bering Exploration, Inc., Hyperdynamics Corp., Panther Biotechnology, Inc., Complexa, Inc. and HoustonPharma, Inc. From June 2002 to December 2004, Mr. Plumb was the Chief Financial Officer of ADVENTRX Pharmaceuticals Inc. He also held various roles with the “Big 4” accounting firms and was the Chief Financial Officer for DePelchin Children’s Center, a Houston-based nonprofit organization that offers mental health, foster care and adoption services in Texas. Mr. Plumb earned his Bachelor’s Degree in Business Administration in Accounting from the University of Texas at Austin in 1981. Mr. Plumb is a Certified Public Accountant.

 

Noah I. Davis – President and Chief Operating Officer

 

Noah I. Davis is an experienced internet and real estate executive. From January 2014 to the present, he has served as the President and Chief Executive Officer of Brown Technical Media Corp. From July 2013 to January 2014, Mr. Davis served as the contract general manager of Brown Book Shop, Inc. In January 2014, Mr. Davis was part of the investor group that purchased Brown Book Shop. From August 2011 to July 2013, he has been involved in several restructuring and turnaround projects in the healthcare and transportation industries. From July 2008 to September 2012, he successfully created, built and sold, Remington Moving and Storage, an online web based moving and storage application. From April 2008 to January 2013, he was a member of senior management of Caltex Capital which structured other investments in various businesses and was installed as CFO and CEO in various industries. Mr. Davis is proficient in financial analysis, deal syndication, business development, project management and traditional and internet based marketing. Mr. Davis graduated from Yeshiva University with a degree in Accounting and Finance in 2004.

 

Employment Agreements and Stock Option Plans

 

In November 2015, the Company authorized the payment of $15,000 per month to Mr. Levine, effective January 15, 2016, and $1,000 per month as healthcare reimbursement, as compensation for his services as CEO. In February 2014, Brown entered into consulting agreements with Mr. Davis and Mr. Plumb. The agreements were modified on May 1, 2016 such that Mr. Davis, the President and Chief Operating Officer is paid $11,000 per month and Mr. Plumb, the Chief Financial Officer, is paid $4,500 per month. The contracts expire on December 19, 2017. The Brown employment agreements were assumed by the Company as part of the Business Combination.

 

We currently do not have any stock option plans outstanding in favor of any employee or director.

 

Director Qualifications

 

The Board of Directors believes that each of our directors is highly qualified to serve as a member of the Board of Directors. Each of the directors has contributed to the mix of skills, core competencies and qualifications of the Board of Directors. When evaluating candidates for election to the Board of Directors, the Board of Directors seeks candidates with certain qualities that it believes are important, including integrity, an objective perspective, good judgment, and leadership skills. Our directors are highly educated and have diverse backgrounds and talents and extensive track records of success in what we believe are highly relevant positions.

 

 

 

  23  
 

 

Term of Office

 

Our directors are appointed for a one-year term to hold office until their respective successors are duly elected and qualified. Our officers are appointed by our Board of Directors and hold office until they resign or are removed from office by the Board of Directors.

 

CORPORATE GOVERNANCE

 

The Company promotes accountability for adherence to honest and ethical conduct; endeavors to provide full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with the SEC and in other public communications made by the Company; and strives to be compliant with applicable governmental laws, rules and regulations.

 

Board Leadership Structure

 

Our Board of Directors has the responsibility for selecting the appropriate leadership structure for the Company. In making leadership structure determinations, the Board of Directors considers many factors, including the specific needs of the business and what is in the best interests of the Company’s stockholders. Our current leadership structure is comprised of a combined Chairman of the Board and Chief Executive Officer (“CEO”), Mr. Levine. The Board of Directors believes that this leadership structure is the most effective and efficient for the Company at this time. Mr. Levine possesses detailed and in-depth knowledge of the issues, opportunities, and challenges facing the Company, and is thus best positioned to develop agendas that ensure that the Board of Directors’ time and attention are focused on the most critical matters. Combining the Chairman of the Board and CEO roles promotes decisive leadership, fosters clear accountability and enhances the Company’s ability to communicate its message and strategy clearly and consistently to our stockholders, particularly during periods of turbulent economic and industry conditions.

 

Risk Oversight

 

Effective risk oversight is an important priority of the Board of Directors. Because risks are considered in virtually every business decision, the Board of Directors discusses risk throughout the year generally or in connection with specific proposed actions. The Board of Directors’ approach to risk oversight includes understanding the critical risks in the Company’s business and strategy, evaluating the Company’s risk management processes, allocating responsibilities for risk oversight among the full Board of Directors, and fostering an appropriate culture of integrity and compliance with legal responsibilities. The Board of Directors exercises direct oversight of strategic risks to the Company, including reviewing and assessing the Company’s processes to manage business and financial risk and financial reporting risk; reviewing the Company’s policies for risk assessment and assessing steps management has taken to control significant risks; overseeing risks relating to compensation programs and policies; recommending the slate of director nominees for election at the annual stockholder meetings; reviewing, evaluating and recommending changes to the Company’s corporate governance guidelines; and establishing the process for conducting the review of the Chief Executive Officer’s performance.

 

Family Relationships

 

None of our directors are related by blood, marriage, or adoption to any other director, executive officer, or other key employees.

 

Arrangements between Officers and Directors

 

To our knowledge, there is no arrangement or understanding between any of our officers and any other person, including directors, pursuant to which the officer was selected to serve as an officer.

 

Other Directorships

 

No directors of the Company are also directors of issuers with a class of securities registered under Section 12 of the Exchange Act (or which otherwise are required to file periodic reports under the Exchange Act).

 

 

 

 

  24  
 

 

Involvement in Certain Legal Proceedings

 

To the best of our knowledge, during the past ten years, none of our directors or executive officers were involved in any of the following: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being a named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, (5) being the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of (i) any Federal or State securities or commodities law or regulation; (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or (6) being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

Code of Ethics

 

We have adopted a Code of Business Conduct and Ethics that applies to, among other persons, members of our Board of Directors, our company’s officers including our president, chief executive officer and chief financial officer, employees, consultants and advisors. As adopted, our Code of Business Conduct and Ethics sets forth written standards that are designed to deter wrongdoing and to promote:

 

  1. honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
  2. full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission and in other public communications made by us;
  3. compliance with applicable governmental laws, rules and regulations;
  4. the prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons identified in the Code of Business Conduct and Ethics; and
  5. accountability for adherence to the Code of Business Conduct and Ethics.

 

Our Code of Business Conduct and Ethics requires, among other things, that all of our Company’s senior officers commit to timely, accurate and consistent disclosure of information; that they maintain confidential information; and that they act with honesty and integrity.

 

In addition, our Code of Business Conduct and Ethics emphasizes that all employees, and particularly senior officers, have a responsibility for maintaining financial integrity within our Company, consistent with generally accepted accounting principles, and federal and state securities laws. Any senior officer, who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to our Company. Any failure to report such inappropriate or irregular conduct of others is to be treated as a severe disciplinary matter. It is against our Company policy to retaliate against any individual who reports in good faith the violation or potential violation of our Company’s Code of Business Conduct and Ethics by another.

 

We will provide a copy of the Code of Business Conduct and Ethics to any person without charge, upon request. Requests can be sent to: Panther Biotechnology, Inc., 1517 San Jacinto Street, Houston, Texas 77002.

 

Stockholder Communications with the Board

 

Our stockholders and other interested parties may communicate with members of the Board of Directors by submitting such communications in writing to our Secretary, Steven M. Plumb, who, upon receipt of any communication other than one that is clearly marked “Confidential,” will note the date the communication was received, open the communication, make a copy of it for our files and promptly forward the communication to the director(s) to whom it is addressed. Upon receipt of any communication that is clearly marked “Confidential,” our Secretary will not open the communication, but will note the date the communication was received and promptly forward the communication to the director(s) to whom it is addressed. If the correspondence is not addressed to any particular board member or members, the communication will be forwarded to a board member to bring to the attention of the Board of the Directors.

 

 

 

  25  
 

 

Nomination Process

 

Our Board of Directors does not have a policy with regards to the consideration of any director candidates recommended by our shareholders. Our Board of Directors has determined that it is in the best position to evaluate our Company’s requirements as well as the qualifications of each candidate when the board considers a nominee for a position on our Board of Directors. If shareholders wish to recommend candidates directly to our board, they may do so by sending communications to the President of our Company at the address on the cover of this current report.

 

Board and Committee Meetings

 

The Board held 7 formal meetings during the year ended May 31, 2016. As our Company develops a more comprehensive Board of Directors, all proceedings will be conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Nevada Revised Statutes and our Bylaws, as valid and effective as if they had been passed at a meeting of the directors duly called and held. On February 2, 2015, the Board of Directors created the Audit Committee, the Nominating and Governance Committee and the Compensation Committee. The members of each committee are as follows: Audit Committee consists of Messrs. Levine and Plumb; the Nominating and Governance Committee consists of Messrs. Levine, Plumb, and Corbin; and, the Compensation Committee consists of Messrs. Levine, Plumb, and Corbin. Each committee is to create their own charter, which have not been completed nor approved by the date hereof.

 

Audit Committee and Audit Committee Financial Expert

 

Our Board of Directors has determined that it does not have a member of the audit committee that qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K, and is “independent” as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act. Our Audit Committee is capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome, at this time, and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material revenues to date.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of our outstanding common stock, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock. Officers, directors and greater than 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.

 

Based solely upon a review by us of Forms 3 and 4 relating to fiscal years 2015 and 2014 as furnished to us under Rule 16a-3(d) under the Securities Act, and Forms 5 and amendments thereto furnished to us with respect to fiscal year 2015, we believe that during the fiscal years ended May 31, 2016 and 2015, we determined that no director, executive officer, or beneficial owner of more than 10% of our Class A common stock failed to file a report on a timely basis during 2015, except for: (i) Steven M. Plumb failed to report one transaction, (ii) Evan Levine failed to report one transaction; (iii) Phillip Ruben failed to report one transaction, (iv) Richard Corbin failed to report three transactions; (v) Irwin Zalcberg failed to report one transaction; (vi) John Norton failed to report one transaction; (vii) David Barshis failed to report one transaction; (viii) Hienz-Josef Lenz failed to report one transaction; and (ix) James Sapirstein failed to report one transaction. We expect these reporting individuals to make these filings shortly after the filing of this report.

 

Executive Compensation

 

See the information contained in Part III, Item 11, “Executive Compensation”, of the Company’s Annual Report on Form 10-K for the year ended May 31, 2016, filed with the Securities and Exchange Commission on September 13, 2016, which information is incorporated herein by this reference.

 

 

 

  26  
 

 

Certain Relationships and Related Transactions, and Director Independence

 

Related Party Transactions

 

None of the directors or executive officers of the Company, nor any person who owned of record or was known to own beneficially more than 5% of the Company’s outstanding shares of its common stock, nor any associate or affiliate of such persons or companies, has any material interest, direct or indirect, in any transaction that has occurred during the past two fiscal years, or in any proposed transaction, which has materially affected or will affect the Company, except as described in Item 2.01, Evan M. Levine, our Chief Executive Officer and director (6,000,000 shares of common stock) and Steven M. Plumb, our Chief Financial Officer (11,791,371 shares of common stock), were issued shares of common stock in connection with the closing of the transactions contemplated by the Exchange Agreement and except as otherwise disclosed in “Recent Sales of Unregistered Securities”.

 

With regard to any future related party transaction, we plan to fully disclose any and all related party transactions in the following manner:

 

· Disclosing such transactions in reports where required;
· Disclosing in any and all filings with the SEC, where required;
· Obtaining disinterested directors consent when deemed necessary; and
· Obtaining shareholder consent where required.

 

Director Independence

 

The OTCPink market on which shares of the Company’s common stock is quoted does not have any director independence requirements.

 

Legal Proceedings

 

From time to time, the Company is party to various legal proceedings that arise in the ordinary course of its business, which include commercial, intellectual property, employment, tort and other litigation matters. Currently, the Company is party to one legal proceeding relating to a dispute with a former employee. The Company believes that it will prevail in this matter and does not believe that there is a reasonable possibility that any material loss will be recognized for this proceeding and matter. However, the ultimate resolution of the proceeding and matter is inherently unpredictable.

 

Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters

 

Market Information

 

Our common stock is quoted on the pink sheets market operated by OTC Markets Group (OTCPink) under the symbol “PBYA”. 

 

The following table sets forth the approximate high and low bid prices for our common stock as reported by the OTCPink for the periods indicated. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

 

Period   High     Low  
                 
June 1, 2015 through August 31, 2015   $ 6.39     $ 4.64  
September 1, 2015 through November 30, 2015     5.85       1.40  
December 1, 2015 through February 28, 2016     1.70       0.99  
March 1, 2016 through May 31, 2016     1.57       0.48  
June 1, 2016 through August 31, 2016     0.24       0.99  
September 1, 2016 through November 8, 2016     0.35       0.80  
                 
June 1, 2014 through August 31, 2014   $ 24.00     $ 7.00  
September 1, 2014 through November 30, 2014     31.00       3.25  
December 1, 2014 through February 28, 2015     4.35       2.01  
March 1, 2015 through May 31, 2015     8.15        3.46  

 

 

 

  27  
 

 

Dividends

 

There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

 

  1. we would not be able to pay our debts as they become due in the usual course of business; or
     
  2. our total assets would be less than the sum of our total liabilities, plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.

 

We have not declared any dividends. We do not plan to declare any dividends in the foreseeable future.

 

Equity Compensation Plans

 

We have no equity compensation program, including no stock option plan, and none are planned for the foreseeable future.

 

Recent Sales of Unregistered Securities

 

During July and August 2013, we sold 1,025,000 shares at $0.02 per share for total proceeds of $20,500 under an S-1 Registration Statement filed on May 21, 2013. On August 15, 2013, the Company closed its offering and has not sold any additional shares under the prospectus included in the registration statement.

 

On July 6, 2015, the Company issued 50,000 shares of its common stock to Faulk Pharmaceuticals, Inc. in accordance with a license agreement. The fair market value of the stock on the date of grant was $274,000.

 

On July 6, 2015, the Company issued 25,437 shares of its common stock to the University of Rochester in accordance with a license agreement. The fair market value of the stock, $200,000, on the date of grant, was accrued in stock payable on May 31, 2015.

 

On September 3, 2015, the Company closed a Stock Purchase Agreement with a private non-affiliated investor to sell 33,000 shares of the Company’s common stock, at a price of $5.00 per share. The investor paid $125,000 of the purchase price at closing, giving rise to a stock subscription receivable of $40,000. During the year ended May 31, 2016, the subscription receivable was collected. The investor also received a common stock purchase warrant for the right to purchase 33,000 shares at a purchase price of $6.00 per share. The fair market value of the warrant was $171,600 on the date of grant. The warrant expires on August 27, 2020. 

 

On September 12, 2015, Irwin Zalcberg, a shareholder of the Company transferred 674,622 shares of his own on the Company’s behalf for the settlement of $3,231,217 of stock payable recorded as of May 31, 2015. Of these shares, 488,340 were related to services and 186,282 were for the Company’s license purchase from Northwestern University.

 

In May 2016, the Company sold 833,333 shares of its common stock to Richard Corbin, a member of the board of directors, at $0.15 per share for gross proceeds of $125,000.

 

In May 2016, a convertible note holder submitted a notice of conversion of $29,250 in principal. The Company issued 250,000 shares of its common stock to the note holder in conjunction with the conversion notice.

 

During the year ended May 31, 2016, the Company issued:

 

  · 320,511 common shares for the settlement of $1,186,881 of stock payable recorded as of May 31, 2015 for share-based compensation and purchase of intangibles.
  · 34,873 common shares to related parties for services. The fair value of the stock on grant date was $184,734, and was recorded as share-based compensation.
  · 1,644,873 common shares for services. The fair value of the stock on grant date was $6,537,913 and was recorded as share-based compensation. This includes share based compensation of $986,880 which was accrued as a stock payable as of May 31, 2015.

 

In June 2016, the Company entered into stock purchase agreements with four private investors to sell 350,000 shares of its common stock for gross proceeds of $52,500 at a price of $0.15 per share.

 

 

  28  
 

 

In July 2016, the Company entered into a stock purchase agreement with a Richard Corbin, a member of the board of directors to sell 100,000 shares of its common stock for gross proceeds of $15,000 at a price of $0.15 per share.

 

On August 31, 2016, the Company sold a convertible promissory in the amount of $50,000 to an investor. The note bears interest at 10% per annum and may be converted into the common stock of the Company upon the completion of a capital raise of $500,000 by December 31, 2016 (a “Qualified Raise”). The note may be converted into common stock at 75% of the price of the capital raised in the Qualified Raise. The note is due on December 31, 2016.

 

On October 14, 2016, the Company sold two convertible promissory notes totaling $37,000 to two investors in a private transaction. The notes bear interest at 10% per annum and may be converted into the common stock of the Company upon the completion of a Qualified Raise. The notes may be converted into common stock at 75% of the price of the capital raised in the Qualified Raise. The notes are due on December 31, 2016.

 

On October 31, 2016, the Company sold a convertible promissory in the amount of $50,000 to an investor in a private transaction. The note bears interest at 10% per annum and may be converted into the common stock of the Company upon the completion of a Qualified Raise. The note may be converted into common stock at 75% of the price of the capital raised in the Qualified Raise. The note is due on December 31, 2016.

 

On October 19, 2016, the Company issued 85,574 shares of its common stock to a consultant in exchange for services rendered.

 

In October 2016, the Company sold 500,000 shares of its restricted common stock to two investors for gross proceeds of $75,000.

 

On November 7, 2016, the Company agreed to issue 500,000 shares of its restricted common stock to the incoming Vice Chairman of the Board, Richard Corbin.

 

On November 7, 2016, the Company formed a Scientific Advisory Board (“SAB”) comprised of David Barshis, John Norton, and Heinz-Josef Lenz. The Company agreed to issue 150,000 shares of its restricted common stock to each member of the SAB as compensation for their service on the SAB.

 

On November 7, 2016, the Company agreed to issue 75,000 shares of restricted common stock to James Sapirstein, a former director of the Company, for his service as a director.

 

As described above under “Item 2.01 Completion of Acquisition or Disposition of Assets”, in connection with the Exchange Agreement, the Company issued 32,000,000 shares of restricted common stock to the owners of Brown.

 

The Company claims an exemption from registration for such issuances described above pursuant to Section 4(2) and/or Rule 506 of Regulation D of the Securities Act since the foregoing issuances and grants did not involve a public offering, the recipients took the securities for investment and not resale, we took appropriate measures to restrict transfer, and the recipients were either (a) an “accredited investor”; and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Securities Act. With respect to the transactions described above, no general solicitation was made either by us or by any person acting on our behalf. The transactions were privately negotiated. No underwriters or agents were involved in the foregoing issuance or grant and the Company paid no underwriting discounts or commissions. The securities sold are subject to transfer restrictions, and the certificate(s) evidencing the securities contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom.

 

Description of Registrant’s Securities

 

We have authorized capital stock consisting of 100,000,000 shares of common stock, $0.001 par value per share and 10,000,000 shares of preferred stock, $0.001 par value per share (“ Preferred Stock ”). We have 40,564,717 shares of common stock issued and outstanding, held by 57 stockholders of record, and no shares of Preferred Stock issued and outstanding.

 

 

 

  29  
 

 

Common Stock

 

Voting Rights . Holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders. Directors are appointed by a plurality of the votes present at any special or annual meeting of stockholders (by proxy or in person), and a majority of the votes present at any special or annual meeting of stockholders (by proxy or in person) shall determine all other matters. There is no cumulative voting of the election of directors then standing for election. The common stock is not entitled to pre-emptive rights and is not subject to conversion or redemption.

 

Dividend Rights . The holders of outstanding shares of common stock are entitled to receive dividends out of assets or funds legally available for the payment of dividends at such times and in such amounts as the board from time to time may determine.

 

Liquidation . Upon liquidation, dissolution or winding up of the Company, the assets legally available for distribution to stockholders are distributable ratably among the holders of the common stock after payment of liquidation preferences, if any, on any outstanding payment of other claims of creditors.

 

Other Rights . All of our outstanding shares of common stock are fully paid and non-assessable. The holders of our common stock have no preemptive rights and no rights to convert their common stock into any other securities, and our common stock is not subject to any redemption or sinking fund provisions.

 

Preferred Stock

 

Shares of Preferred Stock may be issued from time to time in one or more series, each of which shall have such distinctive designation or title as shall be determined by our Board prior to the issuance of any shares thereof. Preferred Stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in such resolution or resolutions providing for the issue of such class or series of Preferred Stock as may be adopted from time to time by the Board prior to the issuance of any shares thereof. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all the then outstanding shares of our capital stock entitled to vote generally in the election of the directors, voting together as a single class, without a separate vote of the holders of the Preferred Stock, or any series thereof, unless a vote of any such holders is required pursuant to any Preferred Stock Designation.

 

Additionally, while it is not possible to state the actual effect of the issuance of any additional shares of Preferred Stock on the rights of holders of the common stock until the Board determines the specific rights of the holders of any additional shares of Preferred Stock, such rights may be superior to those associated with our common stock, and may include:

 

· Restricting dividends on the common stock;
· Rights and preferences including dividend and dissolution rights, which are superior to our common stock;
· Diluting the voting power of the common stock;
· Impairing the liquidation rights of the common stock; or
· Delaying or preventing a change in control of the Company without further action by the stockholders.

 

Anti-Takeover Provisions Under The Nevada Revised Statutes

 

Business Combinations

 

Sections 78.411 to 78.444 of the Nevada revised statues (the “ NRS ”) prohibit a Nevada corporation from engaging in a “ combination ” with an “ interested stockholder ” for three years following the date that such person becomes an interested shareholder and place certain restrictions on such combinations even after the expiration of the three-year period. With certain exceptions, an interested stockholder is a person or group that owns 10% or more of the corporation’s outstanding voting power (including stock with respect to which the person has voting rights and any rights to acquire stock pursuant to an option, warrant, agreement, arrangement, or understanding or upon the exercise of conversion or exchange rights) or is an affiliate or associate of the corporation and was the owner of 10% or more of such voting stock at any time within the previous three years.

 

A Nevada corporation may elect not to be governed by Sections 78.411 to 78.444 by a provision in its articles of incorporation or bylaws. We have such a provision in our Articles of Incorporation, as amended and Bylaws, as amended, pursuant to which we have elected to opt out of Sections 78.411 to 78.444; therefore, these sections do not apply to us.

 

 

 

 

  30  
 

 

Control Shares

 

Nevada law also seeks to impede “ unfriendly ” corporate takeovers by providing in Sections 78.378 to 78.3793 of the NRS that an “ acquiring person ” shall only obtain voting rights in the “ control shares ” purchased by such person to the extent approved by the other shareholders at a meeting. With certain exceptions, an acquiring person is one who acquires or offers to acquire a “ controlling interest ” in the corporation, defined as one-fifth or more of the voting power. Control shares include not only shares acquired or offered to be acquired in connection with the acquisition of a controlling interest, but also all shares acquired by the acquiring person within the preceding 90 days. The statute covers not only the acquiring person but also any persons acting in association with the acquiring person.

 

A Nevada corporation may elect to opt out of the provisions of Sections 78.378 to 78.3793 of the NRS. We have a provision in our Articles of Incorporation, as amended, pursuant to which we have elected to opt out of Sections 78.378 to 78.3793; therefore, these sections do not apply to us.

 

Removal of Directors

 

Section 78.335 of the NRS provides that 2/3rds of the voting power of the issued and outstanding shares of the Company are required to remove a Director from office. As such, it may be more difficult for shareholders to remove directors due to the fact the NRS requires greater than majority approval of the shareholders for such removal.

 

Dividend Policy

 

We have never paid any cash dividends on our capital stock and do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. We intend to retain future earnings to fund ongoing operations and future capital requirements. Any future determination to pay cash dividends will be at the discretion of our Board of Directors and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems relevant.

 

Indemnification of Directors and Officers

 

We may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney’s fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.

 

Regarding indemnification for liabilities arising under the Securities Act, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the SEC, indemnification is against public policy, as expressed in the Securities Act and is, therefore, unenforceable.

 

Financial Statements and Supplementary Data

 

The Audited Financial Statements of Brown Technical Media Corporation for year ended October 31, 2015 compared to the period from January 21, 2014 through October 31, 2014; Unaudited and Reviewed Financial Statements of Brown Technical Media Corporation for the three and nine months ended July 31, 2016 and 2015; and Pro Forma Financial Statements, are included herewith as exhibits 99.1, 99.2 and 99.3, respectively, and incorporated by reference herein.

 

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 

None.

 

Financial Statements and Exhibits

 

The Audited Financial Statements of Brown Technical Media Corporation for year ended October 31, 2015 compared to the period from January 21, 2014 through October 31, 2014; Unaudited and Reviewed Financial Statements of Brown Technical Media Corporation for the three and nine months ended July 31, 2016 and 2015; and Pro Forma Financial Statements, are included herewith as exhibits 99.1, 99.2 and 99.3, respectively, and incorporated by reference herein.

 

The information provided below in Item 9.01 of this Current Report on Form 8-K is incorporated by reference into this section.

 

 

 

  31  
 

 

Item 9.01 Financial Statements and Exhibits.

 

(a) Financial Statements of Business Acquired

 

Filed herewith as Exhibit 99.1 and incorporated herein by reference are the audited financial statements of Brown for the years’ ended October 31, 2015 and 2014. Also attached are the unaudited and reviewed financial statements of Brown for the three and nine months ended July 31, 2016 and 2015 filed as Exhibit 99.2.

 

(b) Pro Forma Financial Information

 

Filed herewith as Exhibit 99.3 and incorporated herein by reference are the unaudited pro forma financial statements of the Company and Brown for the period ended July 31, 2016, which give effect to the Business Combination.

 

(d) Exhibits.  The following exhibits are either filed as a part hereof or are incorporated by reference. Exhibit numbers correspond to the numbering system in Item 601 of Regulation S-K.

 

Exhibit      
Number Description of Exhibit   Filing
2.1 Share Exchange Agreement by and among the Company, Brown Technical Media Corporation and the shareholders of Brown Technical Media Corporation dated November 8, 2016   Filed herewith.
3.1 Articles of Incorporation and Amendments   Filed with the SEC on February 6, 2013, as part of our Registration Statement on Form S-1
3.2 Amendment to Articles of Incorporation   Filed with the SEC on June 12, 2014, as part of our Current Report on Form 8- K filed on the same date
3.3 Bylaws   Filed with the SEC on February 6, 2013, as part of our Registration Statement on Form S-1
10.1 Form of Stock Subscription Agreement   Filed herewith.
10.2 Form of Convertible Note Payable   Filed herewith.
10.3 Employment agreement of Plumb dated April 8, 2013   Filed herewith.
10.4 Employment agreement of Davis dated February 1, 2014   Filed herewith.
10.5 Amendment No. 1 to employment agreement of Plumb dated July 9, 2013   Filed herewith.
10.6 Amendment No. 2 to employment agreement of Plumb dated February 1, 2014   Filed herewith.
10.7 Amendment No. 3 to employment agreement of Plumb dated May 1, 2016   Filed herewith.
10.8 Amendment No. 1 to employment agreement of Davis dated May 1, 2016   Filed herewith.
10.9 Consulting agreement with Levine dated September 30, 2016   Filed herewith.
10.10 Form of Note Payable issued in conjunction with the purchase of Brown Book Shop, Inc.   Filed herewith.
14.1 Code of Ethics   Incorporated by reference and previously filed as an exhibit with the Company’s Form 10-K for the year ended May 31, 2013, filed on August 29, 2013.
21.1 Subsidiaries   Filed herewith.
99.1 Audited Financial Statements of Brown Technical Media Corporation   Filed herewith.
99.2 Unaudited and Reviewed Financial Statements of Brown Technical Media Corporation for the three and nine months ended July 31, 2016 and 2015   Filed herewith.
99.3 Pro Forma Financial Statements   Filed herewith.

 

 

 

 

  32  
 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  Panther Biotechnology Inc.
   
   
Date: November 14, 2016 By: /s/ Evan M. Levine                          
  Evan M. Levine, Chief Executive Officer

 

 

 

 

  33  
 

 

EXHIBIT INDEX

 

Exhibit      
Number Description of Exhibit   Filing
2.1 Share Exchange Agreement by and among the Company, Brown Technical Media Corporation and the shareholders of Brown Technical Media Corporation dated November 8, 2016   Filed herewith.
3.1 Articles of Incorporation and Amendments   Filed with the SEC on February 6, 2013, as part of our Registration Statement on Form S-1
3.2 Amendment to Articles of Incorporation   Filed with the SEC on June 12, 2014, as part of our Current Report on Form 8- K filed on the same date
3.3 Bylaws   Filed with the SEC on February 6, 2013, as part of our Registration Statement on Form S-1
       
10.1 Form of Stock Subscription Agreement   Filed herewith.
10.2 Form of Convertible Note Payable   Filed herewith.
10.3 Employment agreement of Plumb dated April 8, 2013   Filed herewith.
10.4 Employment agreement of Davis dated February 1, 2014   Filed herewith.
10.5 Amendment No. 1 to employment agreement of Plumb dated July 9, 2013   Filed herewith.
10.6 Amendment No. 2 to employment agreement of Plumb dated February 1, 2014   Filed herewith.
10.7 Amendment No. 3 to employment agreement of Plumb dated May 1, 2016   Filed herewith.
10.8 Amendment No. 1 to employment agreement of Davis dated May 1, 2016   Filed herewith.
10.9 Consulting agreement with Levine dated September 30, 2016   Filed herewith.

10.10

Form of Note Payable issued in conjunction with the purchase of Brown Book Shop, Inc.  

Filed herewith.

14.1 Code of Ethics   Incorporated by reference and previously filed as an exhibit with the Company’s Form 10-K for the year ended May 31, 2013, filed on August 29, 2013.
21.1 Subsidiaries   Filed herewith.
99.1 Audited Financial Statements of Brown Technical Media Corporation   Filed herewith.
99.2 Unaudited and Reviewed Financial Statements of Brown Technical Media Corporation for the three and nine months ended July 31, 2016 and 2015   Filed herewith.
99.3 Pro Forma Financial Statements   Filed herewith.

 

 

 

 

  34  

Exhibit 2.1

 

 

 

 

 

 

 

 

 

SHARE EXCHANGE AGREEMENT

 

BY AND BETWEEN

 

PANTHER BIOTECHNOLOGY, INC.,

 

A NEVADA CORPORATION

 

BROWN TECHNICAL MEDIA CORPORATION,

 

A TEXAS CORPORATION

 

AND

 

THE SHAREHOLDERS OF BROWN TECHNICAL MEDIA CORPORATION

 

DATED

 

OCTOBER 31, 2016

 

 

 

 

 

 

 

 

 

     

 

 

TABLE OF CONTENTS

 

ARTICLE I. REPRESENTATIONS, COVENANTS, AND WARRANTIES OF BROWN AND THE BROWN SHAREHOLDERS 2
1.1.   Organization. 2
1.2.   Capitalization. 2
1.3.   Subsidiaries and Predecessor Corporations. 2
1.4.   Other Information. 3
1.5.   Options, Warrants, Convertible Securities. 3
1.6.   Absence of Certain Changes or Events. 3
1.7.   Brown and Related Matters. 4
1.8.   Litigation and Proceedings. 4
1.9.   Contracts. 5
1.10.   Material Contract Defaults. 5
1.11.   No Conflict With Other Instruments. 6
1.12.   Governmental Authorizations. 6
1.13.   Compliance With Laws and Regulations. 6
1.14.   Approval of Agreement. 6
1.15.   Material Transactions or Affiliations. 6
1.16.   The Brown Schedules. 7
1.17.   Valid Obligation. 8
1.18.   Acquisition of the Shares. 8
1.19.   Exemption from Registration. 8
1.20.   Representations, Acknowledgements and Warranties of the Brown Shareholders. 8
1.21.   Intellectual Property. 11
1.22.   Compliance With Laws. 14
1.23.   Environmental Matters. 15
1.24.   Insurance Coverage. 15
1.25.   Customer, Supplier and Employee Relations. 16
1.26.   Product and Service Matters. 16
1.27.   Compliance with United States Foreign Corrupt Practices Act. 16
1.28.   Insider Trading. 17
1.29.   Closing Date Releases. 17
1.30.   No Other Representations or Warranties. 18
1.31.   No Untrue Representation or Warranty. 18
ARTICLE II. REPRESENTATIONS, COVENANTS, AND WARRANTIES OF THE COMPANY 18
2.1.   Organization. 18
2.1.   Trading Status. 19
2.2.   Capitalization. 19
2.3.   No Conflict or Violation; Default; Confirmations. 19
2.4.   Convertible Securities, Options or Warrants. 20
2.5.   Title and Related Matters. 21

 

 

 

  i  

 

 

2.6.   Litigation and Proceedings. 21
2.7.   Approval of Agreement. 21
2.8.   Valid Obligation. 21
2.9.   Director and Officer Indemnification. 22
2.10.   No Other Representations or Warranties. 22
2.11.   No Untrue Representation or Warranty. 22
ARTICLE III. PLAN OF EXCHANGE 22
3.1.   The Exchange. 22
3.2.   Closing. 22
3.3.   Tradability of Shares. 24
3.4.   Termination. 24
3.5.   Effect of Termination. 25
ARTICLE IV. SPECIAL COVENANTS 25
4.1.   Access to Properties and Records. 25
4.2.   Delivery of Books and Records and Bank Accounts. 26
4.3.   Third Party Consents and Certificates. 26
4.4.   Actions Prior to Closing. 26
4.5.   Post-Closing Conditions. 27
4.6.   Potential For Earn-Out Consideration. 27
ARTICLE V. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY 29
5.1.   Ownership of Brown. 29
5.2.   Accuracy of Representations and Performance of Covenants. 29
5.3.   Officer’s Certificate. 29
5.4.   No Material Adverse Change. 29
5.5.   Approval by Brown. 29
5.6.   No Governmental Prohibition. 30
5.7.   Consents. 30
5.8.   Due Diligence. 30
5.9.   Employment and Related Agreements. 30
5.10.   Financial Statements. 30
5.11.   Other Closing Conditions. 30
ARTICLE VI. CONDITIONS PRECEDENT TO OBLIGATIONS OF BROWN AND THE BROWN SHAREHOLDERS 31
6.1.   Accuracy of Representations and Performance of Covenants. 31
6.2.   Officer’s Certificate. 31
6.3.   No Material Adverse Change. 31
6.4.   No Governmental Prohibition. 31
6.5.   Consents. 31
6.6.   Private Placement. 31
6.7.   Stock Incentive Plan. 32
6.8.   Fully-Diluted Capitalization. 32

 

 

 

  ii  

 

 

6.9.   Employment Agreements With The Officers. 32
6.10.   Other Closing Conditions. 32
ARTICLE VII. INDEMNIFICATION 32
7.1.   Indemnification by the Brown Shareholders. 32
7.2.   Indemnification by the Company. 33
7.3.   Survival of Representations, Warranties and Covenants. 33
7.4.   Notice and Opportunity to Defend. 33
7.5.   Remedies Exclusive. 34
7.6.   Emergency Relief. 34
7.7.   Right to Set Off. 34
ARTICLE VIII. CONFIDENTIALITY 34
8.1.   Confidentiality. 34
8.2.   Enforceability. 35
ARTICLE IX. DEFINITIONS 35
9.1.   Certain Definitions. 35
9.2.   Other Definitional Provisions. 38
ARTICLE X. MISCELLANEOUS 39
10.1.   No Bankruptcy and No Criminal Convictions. 39
10.2.   Broker/Finder’s Fee. 40
10.3.   Governing Law and Jurisdiction. 40
10.4.   Notices. 40
10.5.   Attorney’s Fees. 42
10.6.   Confidentiality. 42
10.7.   Publicity. 42
10.8.   Schedules and Exhibits. 43
10.9.   Schedules; Knowledge. 43
10.10.   Third Party Beneficiaries. 43
10.11.   Expenses. 43
10.12.   Entire Agreement. 43
10.13.   Survival; Termination. 43
10.14.   Counterparts. 43
10.15.   Amendment or Waiver. 43
10.16.   Best Efforts. 44
10.17.   Remedies. 44
10.18.   Severability. 44
10.19.   Independent Nature of Sellers’ Obligations and Rights. 44
10.20.   No Presumption from Drafting. 45
10.21.   Review and Construction of Documents. 45
10.22.   Headings; Gender. 45
10.23.   Transaction Expenses. 45
10.24.   Cooperation Following the Closing. 45
10.25.   Counterparts, Effect of Facsimile, Emailed and Photocopied Signatures. 46

 

 

 

 

  iii  

 

 

 

 

SHARE EXCHANGE AGREEMENT

 

THIS SHARE EXCHANGE AGREEMENT (this “ Agreement ”) is entered into as of this 31st day of October 2016, by and among Panther Biotechnology, Inc. , a Nevada corporation, having an address at 888 Prospect Street, Suite 200, La Jolla, California 92037 (the “ Company ”) and Brown Technical Media Corporation , a Texas corporation, having an address at 1517 San Jacinto Street, Houston, Texas 77002 (“ Brown ”), and the persons executing this Agreement listed on the signature page hereto under the heading “ Brown Shareholders ” (referred to as the “ Brown Shareholders ”), each a “ Party ” and collectively the “ Parties, ” upon the following premises:

 

PREMISES

 

WHEREAS , the Brown Shareholders own 29,852,308 shares of common stock, $0.001 par value per share (“ Brown Common Stock ”), totaling one-hundred percent (100%) of the issued and outstanding capital stock of Brown;

 

WHEREAS , the Company is a publicly held corporation organized under the laws of the State of Nevada, whose common stock trades on the OTC Pink Sheets Market under the symbol “ PBYA ”;

 

WHEREAS , Brown is a privately held corporation organized under the laws of the state of Texas;

 

WHEREAS , the Company desires to acquire 100% of the issued and outstanding securities of Brown in exchange for unissued shares of the Company’s common stock (the “ Exchange Offer ” or the “ Exchange ”), so that Brown will become a wholly-owned subsidiary of the Company;

 

WHEREAS , the Parties intend for the Exchange to be afforded tax free treatment under United States Internal Revenue Code; and

 

WHEREAS , the Brown Shareholders desire to exchange all of their shares of common stock of Brown in exchange for shares of authorized but unissued shares of common stock of the Company as set forth below.

 

CERTAIN CAPITALIZED TERMS USED HEREIN HAVE THE MEANINGS GIVEN TO SUCH TERMS IN ARTICLE IX .

 

AGREEMENT

 

NOW THEREFORE , on the stated premises and for and in consideration of the mutual covenants and agreements hereinafter set forth and the mutual benefits to the Parties to be derived herefrom, the receipt and sufficiency of which is hereby acknowledged, it is hereby agreed as follows:

 

 

 

 

 

 

 

 

 

 

  1  

 

 

 

 

Share Exchange Agreement

Brown, Brown Shareholders and Panther

 

ARTICLE I.
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF BROWN AND THE BROWN SHAREHOLDERS

 

As an inducement to and to obtain the reliance of the Company, except as set forth on the Brown Schedules (as hereinafter defined, which shall contain any exceptions or qualifications to the representations and warranties are set forth below), Brown and the Brown Shareholders represent and warrant as follows (which shall be re-confirmed at Closing):

 

1.1.           Organization. Brown is a corporation duly organized, validly existing, and in good standing under the laws of Texas. Brown has the corporate power and is duly authorized, qualified, franchised, and licensed under all applicable Laws, regulations, ordinances, and orders of public authorities to own all of its properties and assets and to carry on its business in all material respects as it is now being conducted, including qualifications to do business as a foreign corporation in the states or countries in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualification, except where failure to be so qualified would not have a material adverse effect on its business. Included in the Brown Schedules are complete and correct copies of the Certificate of Formation and Bylaws (or similar organizational documents) of Brown as in effect on the date hereof. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of Brown’s Certificate of Formation (or similar organizational documents) or Bylaws. Brown has taken all actions required by Law, its Certificate of Formation and Bylaws (or similar organizational documents), or otherwise to authorize the execution and delivery of this Agreement. Brown has full power, authority, and legal right and has taken all action required by Law, its Certificate of Formation and Bylaws (or similar organizational documents), and otherwise to consummate the transactions herein contemplated.

 

1.2.           Capitalization.

 

1.2.1        The auth orized capitalization of Brown consists of (a) 500,000,000 shares of Brown Common Stock, of which 29,852,308 shares of Brown Common Stock are currently issued and outstanding; and (b) 100,000,000 shares of preferred stock, $0.001 par value per share, of which no shares are issued and outstanding.

 

1.2.2        All issued and outstanding shares of Brown Common Stock are legally issued, fully paid, and non-assessable and not issued in violation of the preemptive or other rights of any person.

 

1.3.           Subsidiaries and Predecessor Corporations . Brown does not have any predecessor corporation(s) or subsidiaries other than as set forth on Schedule 1.3 .

 

 

 

 

 

 

 

 

 

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Share Exchange Agreement

Brown, Brown Shareholders and Panther

 

1.4.           Other Information.

 

1.4.1        Brown has no liabilities with respect to the payment of any federal, provincial, state, county, local or other Taxes (including any deficiencies, interest or penalties), except for Taxes accrued but not yet due and payable or as provided in the Brown Schedules.

 

1.4.2        Brown has filed all federal, provincial, state or local income and/or franchise Tax returns required to be filed by it from inception to the date hereof. Each of such income Tax returns reflects the Taxes due for the period covered thereby, except for amounts which, in the aggregate, are immaterial.

 

1.4.3        The books and records of Brown are in all material respects complete and correct and have been maintained in accordance with good business and accounting practices.

 

1.4.4        Brown has no material liabilities, direct or indirect, matured or unmatured, contingent or otherwise in excess of Ten Thousand Dollars ($10,000) except as disclosed in writing to the Company on Schedule 1.4.4 , which liabilities in aggregate shall not exceed $25,000, including payables, on the Closing Date, but exclusive of professional fees and expenses related to the transactions contemplated herein.

 

1.5.           Options, Warrants, Convertible Securities. Other than as set forth on Schedule 1.5 , there are no outstanding subscriptions, options, calls, contracts, commitments, understandings, restrictions, arrangements, rights or warrants, including any right of conversion or exchange under any outstanding security, instrument or other agreement and also including any rights plan or other antitakeover agreement, obligating Brown to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of the capital stock of Brown or obligating Brown to grant, extend or enter into any such agreement or commitment and there are no outstanding stock appreciation rights or similar derivative securities or rights of Brown.

 

1.6.           Absence of Certain Changes or Events. Except as set forth in this Agreement or the Brown Schedules, since January 1, 2016:

 

1.6.1        There has not been (i) any material adverse change in the proposed business, operations, properties, assets, or condition of Brown or (ii) any damage, destruction, or loss to Brown (whether or not covered by insurance) materially and adversely affecting the business or financial condition of Brown;

 

1.6.2        Brown has not (i) amended its Certificate of Formation or Bylaws (or similar documents;); (ii) declared or made, or agreed to declare or make, any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to purchase or redeem, any of its capital stock; (iii) waived any rights of value which in the aggregate are outside of the ordinary course of business or material considering the business of Brown; (iv) made any material change in its method of management, operation or accounting; (v) entered into any other material transaction other than sales in the ordinary course of its business; (vi) made any accrual or arrangement for payment of bonuses or special compensation of any kind or any severance or termination pay to any present or former officer or employee; (vii) increased the rate of compensation payable or to become payable by it to any of its officers or directors or any of its salaried employees whose monthly compensation exceeds Ten Thousand Dollars ($10,000); or (viii) made any increase in any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement made to, for, or with its officers, directors, or employees;

 

 

 

 

 

 

 

 

 

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Share Exchange Agreement

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1.6.3        Brown has not (i) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) in excess of $10,000 except as disclosed herein and except liabilities incurred in the ordinary course of business; (ii) paid or agreed to pay any material obligations or liability (absolute or contingent) other than current liabilities, and current liabilities incurred in the ordinary course of business and professional and other fees and expenses in connection with the preparation of this Agreement and the consummation of the transactions contemplated hereby; (iii) sold or transferred, or agreed to sell or transfer, any of its assets, properties, or rights (except assets, properties, or rights not used or useful in its business which, in the aggregate have a value of less than Ten Thousand Dollars ($10,000), or canceled, or agreed to cancel, any debts or claims (except debts or claims which in the aggregate are of a value of less than Ten Thousand Dollars ($10,000); or (iv) made or permitted any amendment or termination of any contract, agreement, or license to which they are a party if such amendment or termination is material, considering the business of Brown, other than in the ordinary course of business; and

 

1.6.4        To the best Knowledge of the Brown Shareholders, Brown has not become subject to any Law or regulation which materially and adversely affects, or in the future may adversely affect, the business, operations, properties, assets, or condition of Brown.

 

1.7.           Brown and Related Matters. No third party has any right to, and Brown has not received any notice of infringement of or conflict with asserted rights of others with respect to, any product, technology, data, trade secrets, know-how, proprietary techniques, trademarks, service marks, trade names, or copyrights which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a materially adverse effect on the proposed business, operations, financial condition, income, or business prospects of Brown or any material portion of its properties, assets, or rights.

 

1.8.           Litigation and Proceedings. Other than as set forth on Schedule 1.8 , there are no actions, suits, or proceedings pending or, to the Knowledge of the Brown Shareholders after reasonable investigation, threatened by or against Brown or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind. The Brown Shareholders do not have any Knowledge of any material default with respect to any judgment, order, injunction, decree, award, rule, or regulation of any court, arbitrator, or governmental agency or instrumentality or of any circumstances which, after reasonable investigation, would result in the discovery of such a default.

 

 

 

 

 

 

 

 

 

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1.9.           Contracts.

 

1.9.1        Except as disclosed on Schedule 1.9.1 , there are no material contracts, agreements, franchises, license agreements, debt instruments or other commitments to which Brown is a party or by which any of its assets, products, technology, or properties are bound other than those incurred in the ordinary course of business (as used in this Agreement, a “ material ” contract, agreement, franchise, license agreement, debt instrument or commitment is one which (i) will remain in effect for more than six (6) months after the date of this Agreement and (ii) involves obligations of at least One Hundred Thousand Dollars ($100,000) unless otherwise disclosed pursuant to this Agreement);

 

1.9.2        All contracts, agreements, franchises, license agreements, and other commitments, if any, to which Brown is a party and which are material to the operations or proposed operations of Brown taken as a whole are valid and enforceable by Brown in all material respects, except as limited by bankruptcy and insolvency laws and by other laws affecting the rights of creditors generally;

 

1.9.3        Brown is not a party to or bound by, and the properties of Brown are not subject to, any contract, agreement, other commitment or instrument; any charter or other corporate restriction; or any judgment, order, writ, injunction, decree, or award which materially and adversely affects, the business operations, properties, assets, or condition of Brown; and

 

1.9.4        Except as included or described in the Brown Schedules, Brown is not a party to any oral or written (i) contract for the employment of any officer or employee which is not terminable on thirty (30) days, or less notice; (ii) profit sharing, bonus, deferred compensation, stock option, severance pay, pension benefit or retirement plan; (iii) agreement, contract, or indenture relating to the borrowing of money; (iv) guaranty of any obligation, other than one on which Brown is a primary obligor, for the borrowing of money or otherwise, excluding endorsements made for collection and other guaranties of obligations which, in the aggregate do not exceed more than one (1) year or providing for payments in excess of Ten Thousand Dollars ($10,000) in the aggregate; (v) collective bargaining agreement; or (vi) agreement with any present or former officer or director of Brown.

 

1.10.        Material Contract Defaults. Brown is not in default in any material respect under the terms of any outstanding material contract, agreement, lease, or other commitment which is material to the business, operations, properties, assets or condition of Brown, and there is no event of default in any material respect under any such contract, agreement, lease, or other commitment in respect of which Brown has not taken adequate steps to prevent such a default from occurring.

 

 

 

 

 

 

 

 

 

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Share Exchange Agreement

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1.11.        No Conflict With Other Instruments. The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, constitute an event of default under, or terminate, accelerate or modify the terms of any material indenture, mortgage, deed of trust, or other material contract, agreement, or instrument to which Brown is a party or to which any of its properties or operations are subject as of the date of this Agreement and/or as of the Closing Date.

 

1.12.        Governmental Authorizations. Except as set forth in the Brown Schedules, Brown has all licenses, franchises, permits, and other governmental authorizations that are legally required to enable it to conduct its business in all material respects as conducted on the date hereof. Except for compliance with federal, provincial and state securities and corporation laws, as hereinafter provided, no authorization, approval, consent, or order of, or registration, declaration, or filing with, any court or other Governmental Body is required in connection with the execution and delivery by Brown and the Brown Shareholders of this Agreement and the consummation by Brown and the Brown Shareholders of the transactions contemplated hereby.

 

1.13.        Compliance With Laws and Regulations. Except as set forth in the Brown Schedules, to the best Knowledge of the Brown Shareholders, Brown has complied with all applicable statutes and regulations of any federal, provincial, state, or other governmental entity or agency thereof, except to the extent that noncompliance would not materially and adversely affect the business, operations, properties, assets, or condition of Brown or except to the extent that noncompliance would not result in the occurrence of any material liability for Brown.

 

1.14.        Approval of Agreement. The Board of Directors of Brown shall have authorized the execution and delivery of this Agreement by Brown and approved this Agreement and the transactions contemplated hereby.

 

1.15.        Material Transactions or Affiliations. Set forth in the Brown Schedules is a description, if applicable, of every contract, agreement, or arrangement between Brown and any predecessor and any person who was at the time of such contract, agreement, or arrangement an officer, director, or person owning of record, or known by any Brown Shareholder to own beneficially, five percent (5%) or more of the issued and outstanding securities of Brown and which is to be performed in whole or in part after the date hereof or which was entered into not more than three (3) years prior to the date hereof. Except as disclosed in the Brown Schedules or otherwise disclosed herein, no officer, director, or five percent (5%) shareholder of Brown has, or has had since formation, any known interest, direct or indirect, in any transaction with Brown which was material to the business of Brown. There are no commitments by Brown, whether written or oral, to lend any funds, or to borrow any money from, or enter into any other transaction with, any such affiliated person.

 

 

 

 

 

 

 

 

 

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Share Exchange Agreement

Brown, Brown Shareholders and Panther

 

1.16.        The Brown Schedules. Brown will deliver to the Company the following schedules, if such schedules are applicable to the business of Brown, which are collectively referred to as the “ The Brown Schedules ” and which consist of separate schedules dated as of the date of execution of this Agreement, all certified by the principal executive officer of Brown as complete, true, and correct as of the date of this Agreement in all material respects, which schedules shall be delivered within 10 days following the execution of this Agreement:

 

1.16.1     a schedule containing complete and correct copies of the Certificate of Formation and Bylaws or similar organizational documents of Brown in effect as of the date of this Agreement;

 

1.16.2     a schedule containing any Corporate Resolutions of the shareholders of Brown;

 

1.16.3     a schedule containing Minutes of meetings of the Board of Directors of Brown;

 

1.16.4     a schedule containing a list indicating the name and address of each shareholder of Brown together with the number of shares owned by him, her or it;

 

1.16.5     a schedule listing any and all federal, provincial, state and local Tax identification numbers of Brown and containing complete and correct copies of all federal, provincial, state and local Tax returns filed by Brown;

 

1.16.6     a schedule setting forth any other information, together with any required copies of documents, required to be disclosed by Brown. Any fact known to be, or to the best Knowledge of the Brown Shareholders or after reasonable investigation, reasonably believed to be, contrary to any of the representations, covenants, and warranties made in ARTICLE I are required to be disclosed in the Brown Schedules pursuant to this Section 1.16 ; and

 

1.16.7     a schedule of any and all limitations or qualifications or exceptions to the representations, covenants and warranties of Brown and Brown Shareholders contained in ARTICLE I of this Agreement, if any.

 

Brown shall cause the Brown Schedules and the instruments and data delivered to the Company hereunder to be promptly updated after the date hereof up to and including the Closing Date.

 

 

 

 

 

 

 

 

 

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Share Exchange Agreement

Brown, Brown Shareholders and Panther

 

1.17.        Valid Obligation. This Agreement and all agreements and other documents executed by Brown and Brown Shareholders in connection herewith constitute the valid and binding obligation of Brown and Brown Shareholders, enforceable in accordance with its or their terms, except as may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and subject to the qualification that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefor may be brought.

 

1.18.        Acquisition of the Shares. The Brown Shareholders are acquiring the Shares (as defined in ARTICLE III ) for their own account without the participation of any other person and with the intent of holding the Shares for investment and without the intent of participating, directly or indirectly, in a distribution of the Shares, or any portion thereof, and not with a view to, or for resale in connection with, any distribution of the Shares, or any portion thereof. The Brown Shareholders have read, understood and consulted with their legal counsel regarding the limitations and requirements of Section 5 of the Securities Act. The Brown Shareholders will offer, sell, pledge, convey or otherwise transfer the Shares, or any portion thereof, only if: (i) pursuant to an effective registration statement under the Securities Act and any and all applicable state securities or Blue Sky laws or in a transaction which is otherwise in compliance with the Securities Act and such laws; or (ii) pursuant to a valid exemption from registration.

 

1.19.        Exemption from Registration. The Exchange and the transactions contemplated thereby, meet an exemption from registration pursuant to Section 4(a)(2) of the Securities Act, Rule 506 of Regulation D promulgated under the Securities Act and/or Regulation S of the Securities Act.

 

1.20.        Representations, Acknowledgements and Warranties of the Brown Shareholders . The Brown Shareholders (each a “ Share Recipient ”), represent, acknowledge and warrant the following to the Company, except as set forth on the Brown Schedules (as hereinafter defined, which shall contain any exceptions or qualifications to the representations and warranties are set forth below), and agree that such representations, acknowledgements and warranties shall be automatically reconfirmed on the Closing Date:

 

1.20.1     Each Share Recipient recognizes that the Shares have not been registered under the Securities Act, nor under the securities laws of any state and, therefore, cannot be resold unless the resale of the Shares is registered under the Securities Act or unless an exemption from registration is available. Each Share Recipient may not sell the Shares without registering them under the Securities Act and any applicable state securities laws unless exemptions from such registration requirements are available with respect to any such sale;

 

1.20.2     Each Share Recipient is acquiring the Shares for its own account for long-term investment and not with a view toward resale, fractionalization or division, or distribution thereof, and it does not presently have any reason to anticipate any change in its circumstances, financial or otherwise, or particular occasion or event which would necessitate or require the sale or distribution of the Shares. No one other than the Share Recipient will have any beneficial interest in said securities. Each Share Recipient agrees to set forth the terms of its ownership, record address and tax id number if applicable on the Form of Stock Registration Form, attached hereto as Exhibit A ;

 

 

 

 

 

 

 

 

 

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Share Exchange Agreement

Brown, Brown Shareholders and Panther

 

1.20.3     Each Share Recipient acknowledges that it:

 

(i)               is a “ sophisticated investor ”, and

 

(ii)             is aware of, has received and had an opportunity to review (A) the (i) Company’s Annual Report on Form 10-K for the year ended May 31, 2016; and (ii) the Company’s current reports on Form 8-K (which filings can be accessed by going to https://www.sec.gov/search/search.htm, typing “ Panther Biotechnology ” in the “ Company name ” field, and clicking the “ Search ” button), from May 31, 2016, to the date of such Share Recipient’s entry into this Agreement, in each case (i) through (ii), including the audited and unaudited financial statements, description of business, risk factors, results of operations, certain transactions and related business disclosures described therein (collectively the “ Disclosure Documents ”) and an independent investigation made by it of the Company; (B) has, prior to the date of this Agreement, been given an opportunity to review material contracts and documents of the Company and has had an opportunity to ask questions of and receive answers from the Company’s officers and Directors and has no pending questions as of the date of this Agreement; and (C) is not relying on any oral representation of the Company or any other person, nor any written representation or assurance from the Company; in connection with each Share Recipient’s acceptance of the Shares and investment decision in connection therewith. Each Share Recipient acknowledges that due to its receipt of and review of the information described above, it has received similar information as would be included in a Registration Statement filed under the Securities Act;

 

1.20.4     Each Share Recipient has such knowledge and experience in financial and business matters such that the Share Recipient is capable of evaluating the merits and risks of an investment in the Shares and of making an informed investment decision, and does not require a representative in evaluating the merits and risks of an investment in the Shares;

 

1.20.5     Each Share Recipient has had an opportunity to ask questions of and receive satisfactory answers from the Company, or any person or persons acting on behalf of the Company, concerning the terms and conditions of the Exchange and the Company, and all such questions have been answered to the full satisfaction of such Share Recipient;

 

1.20.6     Each Share Recipient recognizes that an investment in the Company is a speculative venture and that the total amount of consideration tendered in connection with the Exchange Offer is placed at the risk of the business and may be completely lost. The ownership of the Shares as an investment involves special risks. Each Share Recipient has had a reasonable opportunity to ask questions of and receive answers regarding the Company and to request additional relevant information from a person or persons acting on behalf of the Company regarding such information; and has no pending questions as of the date of this Agreement;

 

 

 

 

 

 

 

 

 

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Share Exchange Agreement

Brown, Brown Shareholders and Panther

 

1.20.7     Each Share Recipient realizes that the Shares cannot readily be sold as they will be restricted securities and therefore the Shares must not be accepted in the Exchange Offer unless such Share Recipient has liquid assets sufficient to assure that such purchase will cause no undue financial difficulties and such Share Recipient can provide for current needs and possible personal contingencies;

 

1.20.8     Each Share Recipient confirms and represents that it is able (i) to bear the economic risk of its investment, (ii) to hold the Shares for an indefinite period of time, and (iii) to afford a complete loss of its investment. Each Share Recipient also represents that it has (i) adequate means of providing for its current needs and possible personal contingencies, and (ii) has no need for liquidity in this particular investment;

 

1.20.9     All information which each Share Recipient has provided to the Company concerning such Share Recipient’s financial position and knowledge of financial and business matters is correct and complete as of the date hereof, and if there should be any material change in such information prior to the Closing Date, such Share Recipient will immediately provide the Company with such information;

 

1.20.10                     Each Share Recipient has carefully considered and has, to the extent it believes such discussion necessary, discussed with its professional, legal, tax and financial advisors, the suitability of an investment in the Shares for its particular tax and financial situation and its advisers, if such advisors were deemed necessary, have determined that the Shares are a suitable investment for him, her, or it;

 

1.20.11 Each Share Recipient has not become aware of and has not been offered the Shares by any form of general solicitation or advertising, including, but not limited to, advertisements, articles, notices or other communications published in any newspaper, magazine, or other similar media or television or radio broadcast or any seminar or meeting where, to such Share Recipient’s Knowledge, those individuals that have attended have been invited by any such or similar means of general solicitation or advertising;

 

1.20.12    Each Share Recipient confirms and acknowledges that the Company is under no obligation to register or seek an exemption under any federal and/or state securities acts for any sale or transfer of the Shares by Share Recipients, and each Share Recipient is solely responsible for determining the status, in his, her or its hands, of the Shares acquired in connection herewith and the availability, if required, of exemptions from registration for purposes of sale or transfer of the Shares;

 

 

 

 

 

 

 

 

 

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Share Exchange Agreement

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1.20.13    Each Share Recipient confirms and acknowledges that no federal or state agency has made any finding or determination as to the fairness of the Shares for investment or any recommendation or endorsement of the Shares. The Shares have not been registered under the Securities Act or the securities laws of any State and are being offered and sold in reliance on exemptions from the registration requirements of the Securities Act and such state laws;

 

1.20.14      Each Share Recipient represents, acknowledges and warrants his, her or its understanding that, pursuant to Rule 144 of the Act (“ Rule 144 ”), a “ shell company ” is defined as a company that has no or nominal operations; and, either no or nominal assets; assets consisting solely of cash and cash equivalents; or assets consisting of any amount of cash and cash equivalents and nominal other assets. As such, the Company is a “ shell company ” pursuant to Rule 144, and resales of its securities pursuant to Rule 144 may not be made until all of the following criteria set forth in Rule 144(i)(2) have been met: (1) the Company has ceased to be a shell company, (2) the Company is subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), (3) the Company has filed all of its required periodic reports (other than Form 8-K’s) for the prior one year period, and (4) a period of at least twelve months has elapsed from the date “ Form 10 like information ” was filed with the SEC reflecting the Company’s status as a non-shell company. As a result, because none of the Company’s securities can be resold pursuant to Rule 144 until at least a year after the Company has complied with Rule 144(i)(2), no non-registered or “ restricted ” shares of the Company’s common stock, including, but not limited to the Shares, will be able to be sold pursuant to Rule 144 until and unless such securities are registered with the Commission, an exemption for the sales can be relied upon other than Rule 144 and/or until a year after the Company has complied with the requirements of Rule 144(i)(2) as described above. As a result, the Share Recipient may never be able to sell any Securities. Furthermore, as the Company may not ever comply with Rule 144(i)(2), the Share Recipient may be forced to hold such Securities indefinitely; and

 

1.20.15    Each Share Recipient agrees and confirms that such Share Recipient may have Section 16 and Schedule 13D filing obligations with the SEC immediately upon the consummation of the transactions contemplated herein and such Share Recipient agrees to take whatever action necessary to make and file such required filings with the SEC.

 

1.21.        Intellectual Property.

 

1.21.1     Brown owns all right, title and interest in the intellectual property assets set forth in Schedule 1.21.3 , Schedule 1.21.4 and Schedule 1.21.7 and such ownership is free and clear of all Liens and Encumbrances, obligatory payments to others and the obligation to grant rights to others. Except as set forth on Schedule 1.21.1 , Brown owns all right, title and interest in, or possesses adequate licenses or other valid rights to use (without the making of any payment to others or the obligation to grant rights to others in exchange), free and clear of all Liens and Encumbrances, all other Intellectual Property owned by Brown or used in connection with the operation of its business as currently conducted, including without limitation the intellectual property set forth on Schedule 1.21.3 , Schedule 1.21.4 and Schedule 1.21.7 . Brown has taken all necessary and desirable action to maintain each item of Intellectual Property that Brown owns or uses with respect to its business. All maintenance fees of patents set forth in Schedule 1.21.3 which become due (without the payment of a surcharge) prior to the Closing shall be paid by Brown prior to the Closing.

 

 

 

 

 

 

 

 

 

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Share Exchange Agreement

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1.21.2     Brown has not interfered with, infringed upon, misappropriated or otherwise come into conflict with any Intellectual Property rights of any other Person, and none of the directors and officers (and employees with responsibility for Intellectual Property matters) of Brown has ever received any charge, complaint, claim, demand or notice from any Governmental Body or other Person alleging any such interference, infringement, misappropriation or conflict (including any claim that Brown must license or refrain from using any Intellectual Property rights of any other Person). To Brown’s Knowledge, no Person has interfered with, infringed upon, misappropriated or otherwise come into conflict with any Intellectual Property rights of Brown.

 

1.21.3     Schedule 1.21.3 identifies (i) each patent or patent registration which has been issued to Brown in the United States and all jurisdictions worldwide with respect to any item of Intellectual Property, and (ii) each patent application or application for patent registration which Brown has filed with respect to any item of Intellectual Property anywhere in the world (together with any exceptions). Brown has delivered to the Company correct and complete copies of all such patents, registrations and applications (as amended to date) and has made available to the Company correct and complete copies of all other written documentation evidencing prosecution (if applicable) of each such item of Intellectual Property (the “ Patents ”). Prior to Closing, Brown shall deliver to designated counsel of the Company all files in the possession of Brown and its attorneys relating to the prosecution and maintenance of assets set forth in Schedule 1.21.3 (the “ Patent Documentation ”).

 

1.21.4     Schedule 1.21.4 identifies each registered and unregistered trademark, including product names and domain names, used by Brown in connection with its business. Brown has delivered to the Company correct and complete copies of all written documentation evidencing ownership and use of each such product name and domain name as set forth on Schedule 1.21.4 . Brown represents that it owns no trademark registrations or applications for registration in any jurisdiction and no such applications have been filed by Brown, any Affiliate thereof or its predecessor-in-interest.

 

1.21.5     Brown represents that it owns no copyright registrations or applications in any jurisdiction and no such applications have been filed by Brown, any Affiliate thereof or its predecessor-in-interest.

 

 

 

 

 

 

 

 

 

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Share Exchange Agreement

Brown, Brown Shareholders and Panther

 

1.21.6     Brown represents that neither itself, any Affiliate thereof nor its predecessor-in-interest is a party to any license, agreement or other permission which Brown has granted to any other Person with respect to any item of Intellectual Property in the United States and any jurisdictions worldwide and that no such licenses, agreements or other permissions exist.

 

1.21.7     Schedule 1.21.7 identifies trade secrets and confidential business information of Brown.

 

1.21.8     With respect to each item of Intellectual Property required to be identified on Schedule 1.21.3 , Schedule 1.21.4 and Schedule 1.21.7 :

 

(i)               except as set forth on Schedule 1.21.1 , Brown owns all right, title and interest in and to such item, free and clear of any Liens and Encumbrances;

 

(ii)             except as set forth in Schedule 1.21.1 , Brown is unaware of any transfers of ownership or title of Intellectual Property;

(iii)           such item is not subject to any outstanding injunction, judgment, order, decree, ruling or charge;

 

(iv)            no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or, to Brown’s or any Brown Shareholder’s Knowledge, threatened which challenges the legality, validity, enforceability, use or ownership of such item;

 

(v)              no prior art or activity is known by Brown which would affect the validity or enforceability of the claimed subject matter set forth in Schedule 1.21.3 , or the validity or enforceability of the trademarks set forth in Schedule 1.21.4 ;

 

(vi)            Brown has not agreed to indemnify any Person for or against any interference, infringement, misappropriation or other conflict with respect to such item;

 

(vii)          all licenses, agreements and other permissions pertaining to such item and all other rights to which Brown is entitled with respect thereto are in compliance in all respects with all applicable Laws in all jurisdictions worldwide, including those pertaining to remittance of foreign exchange and Taxes; and

 

(viii)        Brown has not made a previous assignment, sale, transfer or agreement constituting a present or future assignment, sale or transfer of, or granted any Lien on such item; nor has Brown granted any release, covenant not to sue or other non-assertion assurance to any Person with respect to such item which could reasonably be expected to have an adverse effect on the aggregate value of the Intellectual Property.

 

 

 

 

 

 

 

 

 

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1.21.9     Brown represents that it does not use any computer software or Intellectual Property owned by any Person other than Brown pursuant to any license, sublicense, agreement or permission and that no such licenses, sublicenses, agreements or permissions exist.

 

1.21.10    To Brown’s Knowledge, the continued operation of its business as currently conducted do not and will not interfere with, infringe upon, misappropriate or otherwise come into conflict with, any Intellectual Property rights of any Person.

 

1.21.11    Brown has no Knowledge of any new products, inventions, procedures, or methods of manufacturing or processing that any competitors or other Persons have developed which reasonably could be expected to supersede or make obsolete any product or process of Brown.

 

1.22.        Compliance With Laws.

 

1.22.1     Brown is not in violation of any laws, governmental orders, rules or regulations, whether federal, state or local Laws, to which it or any of its assets or properties are subject, which may have a material adverse effect on its business or operations. Except as set forth in Schedule 1.22.1 , Brown has not received notice of any violation of any Law, or any potential liability under any Law, relating to the operation of Brown or its business or operations, Brown is not aware of any such violation or potential liability.

 

1.22.2     Schedule 1.22.2 sets forth a list of each government or regulatory license, authorization, permit, franchise, consent and approval (the “ Permits ”) issued and held by or on behalf of Brown or, required to be so issued and held in connection with its business or operations as currently conducted by Brown. Except as disclosed in Schedule 1.22.2 , Brown is the authorized legal holder of the Permits, and each Permit is valid and in full force and effect. Brown is not in default under, and no condition exists that with notice or lapse of time or both could constitute a default or could give rise to a right of termination, cancellation or acceleration under, any Permit held by Brown.

 

1.22.3     No officer, director or greater than 20% shareholder of Brown is considered a ‘bad actor’ under, or subject to disqualification under, Rule 506(d) of the Securities Act or has been subject to any event which would require disclosure by Brown under Rule 506(e) of the Securities Act in any offering under Regulation D.

 

 

 

 

 

 

 

 

 

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Brown, Brown Shareholders and Panther

 

1.23.        Environmental Matters.

 

1.23.1     The operations of Brown are currently and have been in compliance in all material respects with all applicable Environmental Laws and all licenses and permits issued pursuant to Environmental Laws or otherwise (“ Environmental Permits ”);

 

1.23.2     Brown has obtained and currently maintains all Environmental Permits required under all applicable Environmental Laws necessary to operate;

 

1.23.3     Brown is not the subject of any outstanding written order or contract with any Governmental Body or other Person respecting any Environmental Laws or any Release or threatened Release of a hazardous material. “ Release ” means any actual or threatened release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, migration or leaching into the indoor or outdoor environment, or into or out of any property;

 

1.23.4     Brown has not received any written communication alleging either that it may be in violation of any Environmental Law or Environmental Permit or that it may have any liability under any Environmental Law;

 

1.23.5     Brown has not incurred, assumed or undertaken any contingent liability in connection with any Release of any hazardous materials into the indoor or outdoor environment (whether on-site or off-site) and there are no facts, circumstances or conditions relating to, arising out of or attributable to it that could give rise to material liability under Environmental Laws;

 

1.23.6     To the Knowledge of Brown and the Brown Shareholders, there is not located at any of the properties of Brown any (i) underground storage tanks, (ii) asbestos or asbestos-containing material, (iii) equipment containing polychlorinated biphenyls, (iv) lead-based paint, or (v) mold; and

 

1.23.7     Brown has provided to the Company all environmentally related audits, studies, reports, analyses, and results of investigations that have been performed within the previous five years with respect to the currently or previously owned, leased or operated properties of Brown.

 

1.24.        Insurance Coverage. Schedule 1.24 contains a list of all of the insurance policies and fidelity bonds covering the assets, businesses, operations, employees, officers and agents of Brown. There is no material claim by Brown pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds. All premiums due and payable under all of such policies and bonds have been paid, and Brown has complied in all material respects with the terms and conditions of all of such policies and bonds. Such policies of insurance and bonds are in full force and effect. Neither Brown nor any of the Brown Shareholders have Knowledge of any threatened termination of, or premium increase with respect to, any of such policies or bonds.

 

 

 

 

 

 

 

 

 

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Share Exchange Agreement

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1.25.        Customer, Supplier and Employee Relations. Schedule 1.25 includes a complete and correct list of (a) all customers of Brown who have made aggregate purchases in excess of 5% of the total revenues of Brown in calendar year 2016, and (b) all suppliers from whom Brown has purchased in excess of $50,000 in equipment or supplies in calendar year 2016. The relationships of Brown with such customers and suppliers and the employees of Brown are good commercial working relationships and, except as disclosed in Schedule 1.25 , none of such customers, suppliers or employees has canceled, terminated or otherwise materially altered or notified Brown of any intention to cancel, terminate or materially alter its relationship with Brown since December 31, 2015 and there will not be any such change as a result of the transactions contemplated by this Agreement.

 

1.26.        Product and Service Matters. Except as disclosed in Schedule 1.26 , each product manufactured, sold, leased, delivered or installed or services performed by Brown prior to the Closing has, in all respects, complied with and conformed to all applicable federal, state, local or foreign laws and regulations, contractual commitments and all applicable warranties of Brown. Schedule 1.26 includes copies of the standard terms and conditions of sale, lease, delivery or installation for the products and services of Brown (containing applicable guaranty, warranty, and indemnity provisions). Except as disclosed in Schedule 1.26 , none of such products or services is subject to any guaranty, warranty, or other indemnity beyond the applicable standard terms and conditions of sale or lease.

 

1.27.        Compliance with United States Foreign Corrupt Practices Act.

 

(a)       Brown is in compliance with and has not made any payments that would be in violation of the United States Foreign Corrupt Practices Act (15 U.S.C. §§ 78dd-1, et seq.) (“ FCPA ”).

 

(b)       In connection with its compliance with the FCPA, there are no adverse or negative past performance evaluations or ratings by the U.S. Government, or any voluntary disclosures under the FCPA, any enforcement actions and, to the Knowledge of any Brown Shareholder, there are no threats of enforcement actions, or any facts that could result in any adverse or negative performance evaluation related to the FCPA for Brown.

 

(c)       Neither the U.S. Government nor any other Person has notified Brown of any actual or alleged violation or breach of the FCPA.

 

(d)       Brown has not undergone and is not undergoing any audit, review, inspection, investigation, survey or examination of records relating to Brown’s compliance with the FCPA and, to the Knowledge of each Brown Shareholder, there is no basis for any such audit, review, inspection, investigation, survey or examination of records.

 

 

 

 

 

 

 

 

 

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(e)       Brown has not been and is not now under any administrative, civil or criminal investigation or indictment involving alleged false statements, false claims or other improprieties relating to Brown’s compliance with the FCPA and, to the Knowledge of each Brown Shareholder, there is no basis for any such investigation or indictment.

 

(f)       Brown has not been and is not now a party to any administrative or civil litigation involving alleged false statements, false claims or other improprieties relating to Brown’s compliance with the FCPA and, to the Knowledge of each Brown Shareholder, there is no basis for any such proceeding.

 

1.28.        Insider Trading. Each Brown Shareholder certifies and confirms that it has not personally, nor through any third parties, purchased, nor caused to be purchased in the public marketplace any publicly-traded shares of the Company. Each Brown Shareholder further certifies and confirms that it has not communicated the nature of the transactions contemplated herein, is not aware of any disclosure of non-public information regarding the Company or the transactions contemplated herein, and is not a party to any insider trading in the Company’s securities. Each Brown Shareholder further certifies and confirms that it has not “ tipped ” any related parties nor third parties regarding the transactions contemplated herein, and/or advised any parties to purchase, sell or otherwise trade shares of the Company’s securities in the marketplace.

 

1.29.        Closing Date Releases.

 

1.29.1         Effective on the Closing Date, the Brown Shareholders for themselves and their successors and assigns, hereby release, acquit and forever discharge Brown and its respective Affiliates, officers, directors, employees and agents and its respective successors and assigns of and from any and all Claims, demands, liabilities, responsibilities, disputes, causes of action and obligations of every nature whatsoever, liquidated or unliquidated, known or unknown, matured or unmatured, fixed or contingent, that the Brown Shareholders have, own or hold as of the Closing Date, or have at any time previously had, owned or held against such parties, including, without limitation, all Liabilities created as a result of the, gross negligence and willful acts of Brown or the negligence of any of Brown or its employees and agents, or under a theory of strict liability, existing as of the Closing Date;  provided however , that such release shall not cover (a) any Claims against the Brown or any of its Affiliates (other than Brown) unrelated in any way to Brown; (b) any Claims arising under any agreement between such Brown Shareholder and Brown, previously disclosed to the Company, to be continued after the Closing Date; or (c) any Claims arising under this Agreement. Notwithstanding the foregoing, the releases and other agreements set forth in this  Section 1.29  shall not apply to or otherwise limit, restrict or affect the indemnification, exculpation and other obligations set forth in ARTICLE VII  or in any other document or agreement.

 

 

 

 

 

 

 

 

 

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Share Exchange Agreement

Brown, Brown Shareholders and Panther

 

1.29.2         As of the date of this Agreement, each of the Brown Shareholders hereby represent and warrant that such Brown Shareholder has not previously assigned or transferred, or purported to assign or transfer, to any Person or entity whatsoever all or any part of the Claims, demands, liabilities, responsibilities, disputes, causes of action or obligations released in Section 1.29.1 . Each of the Brown Shareholders represent and warrant that such Brown Shareholder has read and understands all of the provisions of this  Section 1.29.1  and that the Shareholder has been represented by legal counsel of the Shareholder’s own choosing in connection with the negotiation, execution and delivery of this Agreement.

 

1.29.3         The release provided by the Brown Shareholders pursuant to  Section 1.29.1  shall apply notwithstanding that the matter for which release is provided may relate to the ordinary, sole or contributory negligence, gross negligence, willful misconduct or violation of Law by a released party, including Brown and its Affiliates, officers, directors, employees and agents, and for liabilities based on theories of strict liability, and shall be applicable whether or not negligence of the released party is alleged or proven, it being the intention of the Parties to release the released party from and against its ordinary, sole and contributory negligence and gross negligence as well as liabilities based on the willful actions or omissions of the released party and Liabilities based on theories of strict liability.

 

1.30.        No Other Representations or Warranties. Except for the representations and warranties contained in this ARTICLE I or in any Brown Schedule, neither Brown, any Brown Shareholder nor any other Person makes any other express or implied representation or warranty on behalf of Brown, the Brown Shareholders, or any of their Affiliates or representatives to the Company.

 

1.31.        No Untrue Representation or Warranty . No representation or warranty contained in this Agreement or any attachment, schedule, exhibit, certificate or instrument furnished to the Company by Brown or the Brown Shareholders pursuant hereto, or in connection with the transactions contemplated hereby, contains any untrue statement of a material fact, or omits to state any material fact necessary to make the statements contained herein or therein not misleading.

 

ARTICLE II.
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF THE COMPANY

 

As an inducement to, and to obtain the reliance of the Brown Shareholders, except as set forth in the Company Schedules (as hereinafter defined), the Company represents and warrants as follows (which shall be re-confirmed at Closing):

 

2.1.           Organization. The Company is a corporation duly organized, validly existing, and in good standing under the laws of Nevada and has the corporate power and is duly authorized, qualified, franchised, and licensed under all applicable laws, regulations, ordinances, and orders of public authorities to own all of its properties and assets, to carry on its business in all material respects as it is now being conducted and as contemplated after the Exchange, and except where failure to be so qualified would not have a material adverse effect on its business, there is no jurisdiction in which it is not qualified in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualification. Included in the Company Schedules are complete and correct copies of the Articles of Incorporation and Bylaws (or similar organizational documents) of the Company as in effect on the date hereof. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of the Company’s Articles of Incorporation or Bylaws (or similar organizational documents). The Company has taken all action required by law, its Articles of Incorporation, its Bylaws (or similar organizational documents), or otherwise to authorize the execution and delivery of this Agreement, and the Company has full power, authority, and legal right and has taken all action required by Law, its Articles of Incorporation, Bylaws, (or similar organizational documents) or otherwise to consummate the transactions herein contemplated.

 

 

 

 

 

 

 

 

 

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Share Exchange Agreement

Brown, Brown Shareholders and Panther

 

2.1.           Trading Status. The Company’s common stock trades on the OTC Pink Sheets Market under the symbol “ PBYA ”. The Company has no Knowledge of any notices of non-compliance with the OTC Pink Sheets Market listing criteria.

 

2.2.           Capitalization. The Company is authorized to issue 100,000,000 shares of common stock and 10,000,000 shares of preferred stock, and has 7,949,143 shares of common stock and no shares of preferred stock outstanding as of the date of this Agreement and shall not issue any additional shares of common stock or preferred stock prior to Closing without the prior written consent of the Brown Shareholders. All issued and outstanding shares are legally issued, fully paid, and non-assessable and not issued in violation of the preemptive or other rights of any person.

 

2.3.           No Conflict or Violation; Default; Confirmations.

 

2.3.1        Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will violate, conflict with or result in a breach of or constitute a default under (a) or result in the termination or the acceleration of, or the creation in any Person of any right (whether or not with notice or lapse of time or both) to declare a default, accelerate, terminate, modify or cancel any indenture, contract, lease, sublease, license, mortgage, indenture, lease, loan agreement, note or other obligation or liability (each, a “ Company Contract ”) to which the Company is a party or by which it is bound, (b) any provision of the certificate of incorporation or Bylaws of the Company, (c) any judgment, order, decree, rule or regulation of any Governmental Body to which the Company or Company’s business is subject or (d) any applicable laws or regulations. There is no (with or without the lapse of time or the giving of notice or both) violation or default or, to the knowledge of the Company, threatened violation or default of or under any Company Contract.

 

 

 

 

 

 

 

 

 

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Share Exchange Agreement

Brown, Brown Shareholders and Panther

 

2.3.2        The Company has complied with all applicable federal and state securities laws and regulations, including being current in all of its reporting obligations under federal securities laws and regulations; and all prior issuances of securities have been either registered under the Securities Act, or exempt from registration. The Company has no Knowledge of any outstanding SEC or FINRA comments and has not received any comments from the SEC or FINRA in the last three years, except as the Company has already provided copies of to Brown.

 

2.3.3        No order suspending the effectiveness of any registration statement of the Company under the Securities Act or the Exchange Act has been issued by the SEC and, to the Company’s Knowledge, no proceedings for that purpose have been initiated or threatened by the SEC.

 

2.3.4        The Company is not and has not during the past ten years, and the present officers, directors and Affiliates of the Company are not, and have not for the past ten years, been the subject of, nor does any officer or director of the Company have any reason to believe that the Company or any of its officers, directors or Affiliates will be the subject of, any civil or criminal proceeding or investigation by any federal or state agency alleging a violation of securities laws.

 

2.3.5        The Company is not and has not been for the past ten years, the subject of any voluntary or involuntary bankruptcy proceeding, nor is it or has it been a party to any material litigation or, within the past four years, the subject of any threat of material litigation; litigation shall be deemed “ material ” if the amount at issue exceeds the lesser of $10,000 per matter or $25,000 in the aggregate.

 

2.3.6        The Company has not, and the past and present officers, directors and Affiliates of the Company have not, during the last ten years, been the subject of, nor does any officer or director of the Company have any reason to believe that the Company or any of its officers, directors or affiliates will be the subject of, any civil, criminal or administrative investigation or proceeding brought by any federal or state agency.

 

2.3.7        No officer, director or greater than 20% shareholder of the Company is considered a ‘bad actor’ under, or subject to disqualification under, Rule 506(d) of the Securities Act or has been subject to any event which would require disclosure by the Company under Rule 506(e) of the Securities Act in any offering under Regulation D.

 

2.4.           Convertible Securities, Options or Warrants. There are no existing convertible securities, options, warrants, calls, or commitments of any character relating to the authorized and unissued stock of the Company, except as otherwise set forth in the Company Schedules or the Company’s filings with the SEC on EDGAR (which filings can be accessed by going to https://www.sec.gov/search/search.htm, typing “ Panther Biotechnology ” in the “ Company name ” field, and clicking the “ Search ” button).

 

 

 

 

 

 

 

 

 

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Share Exchange Agreement

Brown, Brown Shareholders and Panther

 

2.5.           Title and Related Matters. The Company has good and marketable title to all of its properties, inventory, interest in properties, and assets, real and personal, free and clear of all Liens, pledges, charges, or Encumbrances except (a) statutory liens or claims not yet delinquent; (b) such imperfections of title and easements as do not and will not materially detract from or interfere with the present or proposed use of the properties subject thereto or affected thereby or otherwise materially impair present business operations on such properties; and (c) as described in the Company Schedules. Except as set forth in the Company Schedules, the Company owns, free and clear of any liens, claims, encumbrances, royalty interests, or other restrictions or limitations of any nature whatsoever, any and all products it is currently manufacturing, including the underlying technology and data, and all procedures, techniques, marketing plans, business plans, methods of management, or other information utilized in connection with the Company’s business. Except as set forth in the Company Schedules, no third party has any right to, and the Company has not received any notice of infringement of or conflict with asserted rights of others with respect to any product, technology, data, trade secrets, know-how, proprietary techniques, trademarks, service marks, trade names, or copyrights which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a materially adverse effect on the business, operations, financial condition, income, or business prospects of the Company or any material portion of its properties, assets, or rights.

 

2.6.           Litigation and Proceedings. There are no actions, suits, proceedings or investigations pending or, to the Knowledge of the Company after reasonable investigation, threatened by or against the Company or affecting the Company or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind. The Company has no Knowledge of any default on its part with respect to any judgment, order, writ, injunction, decree, award, rule or regulation of any court, arbitrator, or governmental agency or instrumentality, or any circumstance which after reasonable investigation would result in the discovery of such default.

 

2.7.           Approval of Agreement. The Board of Directors of the Company will authorize the execution and delivery of this Agreement by the Company and approve this Agreement and the transactions contemplated hereby prior to the Closing Date.

 

2.8.           Valid Obligation. This Agreement and all agreements and other documents executed by the Company in connection herewith constitute the valid and binding obligation of the Company, enforceable in accordance with its or their terms, except as may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and subject to the qualification that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefor may be brought.

 

 

 

 

 

 

 

 

 

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Share Exchange Agreement

Brown, Brown Shareholders and Panther

 

2.9.           Director and Officer Indemnification. The Company agrees that all rights to indemnification, advancement of expenses and exculpation by Brown now existing in favor of each Person who is now, or was at any time before the date hereof, an officer or director of Brown, as provided in the certificate of formation, bylaws or other governing document of Brown, in each case as in effect on the date of this Agreement, shall survive the Closing Date and shall continue in full force and effect in accordance with their respective terms to the extent permitted by applicable Law.

 

2.10.        No Other Representations or Warranties. Except for the representations and warranties contained in this ARTICLE II or in any Company Schedule neither the Company, nor any other Person, makes any other express or implied representation or warranty on behalf of the Company nor any of their Affiliates or representatives to Brown or the Brown Shareholders.

 

2.11.        No Untrue Representation or Warranty. No representation or warranty contained in this Agreement or any attachment, schedule, exhibit, certificate or instrument furnished to Brown or the Brown Shareholders pursuant hereto, or in connection with the transactions contemplated hereby, contains any untrue statement of a material fact, or omits to state any material fact necessary to make the statements contained herein or therein not misleading.

 

ARTICLE III.
PLAN OF EXCHANGE

 

3.1.           The Exchange.

 

3.1.1        On the terms and subject to the conditions set forth in this Agreement, on the Closing Date (as defined below), Brown and the Brown Shareholders shall accept the Exchange Offer described herein and shall assign, transfer and deliver, free and clear of all liens, pledges, encumbrances, charges, restrictions or known claims of any kind, nature, or description, the shares of Brown set forth herein, in the aggregate constituting no less than One Hundred Percent (100%) of the issued and outstanding securities of Brown to the Company at the Closing.

 

3.1.2        The Company shall accept the Exchange Offer, and shall, on the terms and conditions set forth in this Agreement issue the Brown Shareholders an aggregate of 32,000,000 shares of the Company’s common stock, issuable pro rata with the Brown Shareholders’ ownership of Brown (the “ Exchange Shares ”), which shall be in consideration for One Hundred Percent (100%) of the ownership interests of Brown. The Exchange Shares shall have a value of $0.15 per share or $4,800,000 in aggregate for the purposes of this Agreement.

 

3.2.           Closing. The closing (“ Closing ”) of the transaction contemplated by this Agreement shall occur automatically, and without any further required action from any Party, upon the satisfaction of the Closing Conditions (described below) (the “ Closing Date ”) which date shall in no event be later than December 31, 2016 (the “ Required Closing Date ”), unless such date is extended in writing by the mutual consent of all Parties.

 

 

 

 

 

 

 

 

 

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Share Exchange Agreement

Brown, Brown Shareholders and Panther

 

3.2.1        The following “ Closing Conditions ” shall have occurred, or have been waived by Brown and the Company in writing, prior to the Closing Date:

 

(i)               The Exchange shall have been approved, and the Exchange Shares delivered in accordance with Section 3.1 . The Board of Directors of the Company shall have approved the transactions contemplated by this Agreement;

 

(ii)             The Brown Shareholders shall surrender the certificates evidencing One Hundred Percent (100%) of the securities of Brown, duly endorsed with stock powers or notarized signatures of the holders thereof so as to make the Company the sole owner thereof;

 

(iii)           Brown shall supply the Company with Minutes of the Board of Directors of Brown approving and consenting to this Agreement and the transactions contemplated herein;

 

(iv)            Brown shall have delivered documentation and agreements relating to and evidencing the assets of Brown and Subsidiary and the Intellectual Property to the Company, and all corporate records (including minutes) of Brown and Subsidiary;

 

(v)              Brown shall have obtained the Financial Statements (defined in Section 5.1 ) and delivered the same to the Company;

 

(vi)            The Parties shall have delivered all officers certificates, Schedules, exhibits and other documentation and information required pursuant to the terms and conditions of this Agreement; and

 

(vii)          The Company shall have complied with all of the requirements of ARTICLE VI , below and Brown shall have complied with all of the requirement of ARTICLE V , below.

 

3.2.2        Promptly following Closing, the following will occur:

 

(i)               The Company and Brown shall execute, acknowledge, and deliver (or shall ensure to be executed, acknowledged, and delivered) any and all certificates, schedules, agreements, resolutions, rulings or other instruments required by this Agreement to be so delivered at or prior to the Closing, together with such other items as may be reasonably requested by the Parties hereto and their respective legal counsel in order to effectuate or evidence the transactions contemplated hereby.

 

 

 

 

 

 

 

 

 

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Share Exchange Agreement

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3.3.           Tradability of Shares. The Shares have not been registered under the Securities Act, nor registered under any state securities Law, and are “ restricted securities ” as that term is defined in Rule 144 under the Securities Act. The securities may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Securities Act, or pursuant to an exemption from registration under the Securities Act. The Shares will bear the following restrictive legend:

 

‘‘THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED WITHOUT EITHER: i) REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR ii) SUBMISSION TO THE CORPORATION OF AN OPINION OF COUNSEL, SATISFACTORY TO THE CORPORATION THAT SAID SHARES AND THE TRANSFER THEREOF ARE EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS.’’

 

3.4.           Termination.

 

3.4.1        The transactions contemplated hereby may be terminated or abandoned at any time prior to the Closing Date:

 

(i)               by the mutual written consent of the Company and Brown.

 

(ii)             by either the Company, or Brown, on written notice to the other Party if the Closing shall not have occurred on or prior to the Required Closing Date; provided, however, that the right to terminate this Agreement under this Section 3.4.1(ii) shall not be available to any Party whose breach of any provision of this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before the Required Closing Date; provided, further, that notwithstanding the previous limitation, the Required Closing Date shall not be extended in perpetuity until such breach is cured, and the non-breaching Party shall be obligated to elect: (x) to close regardless of such breach following a reasonable period of time necessary to cure such breach, or (y) to terminate this Agreement on a date certain to not exceed 12 months from the date hereof, and upon any failure to make such election, this Agreement shall automatically terminate as of the date that is 12 months from the date hereof; or

 

(iii)           by (1) Brown or the Brown Shareholders, upon written notice to the Company if any of the conditions set forth in ARTICLE VI shall have become incapable of fulfillment and shall not have been waived by Brown and where applicable, the Brown Shareholders, or (2) by the Company on written notice to Brown if any of the conditions set forth in ARTICLE V shall have become incapable of fulfillment and shall not have been waived by the Company; provided that the right to terminate this Agreement pursuant to this Section 3.4.1(iii) shall not be available if the failure of the Party so requesting termination to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of such condition to be satisfied on or prior to such date.

 

 

 

 

 

 

 

 

 

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Share Exchange Agreement

Brown, Brown Shareholders and Panther

 

3.4.2        This Agreement may be terminated by either the Board of Directors of the Company, the Board of Directors of Brown or the Brown Shareholders at any time prior to the Closing Date if:

 

(i)       there shall be any actual or threatened action or proceeding before any court or any Governmental Body which shall seek to restrain, prohibit, or invalidate the transactions contemplated by this Agreement and which, in the judgment of such Board of Directors or shareholders, made in good faith and based upon the advice of its legal counsel, makes it inadvisable to proceed with the Exchange; or

 

(ii)             any of the transactions contemplated hereby are disapproved by any regulatory authority whose approval is required to consummate such transactions (which does not include the SEC) or in the judgment of such Board of Directors or shareholders, made in good faith and based on the advice of counsel, there is substantial likelihood that any such approval will not be obtained or will be obtained only on a condition or conditions which would be unduly burdensome, making it inadvisable to proceed with the Exchange.

 

In the event of termination pursuant to this paragraph, no obligation, right or liability shall arise hereunder, and each Party shall bear all of the expenses incurred by it in connection with the negotiation, drafting, and execution of this Agreement and the transactions herein contemplated.

 

3.5.           Effect of Termination. In the event of the termination of this Agreement in accordance, this Agreement shall become null and void and of no further force or effect except for ARTICLE VII and ARTICLE VIII which shall survive the termination of this Agreement for any reason. Termination of this Agreement shall not relieve a breaching Party from all breaches of this Agreement that occurred prior to such termination. In no event shall any Party be liable for punitive damages.

 

ARTICLE IV.
SPECIAL COVENANTS

 

4.1.           Access to Properties and Records. The Company and Brown will each afford to the officers and authorized representatives of the other Parties reasonable access to the properties, books and records of the Company or Brown, as the case may be, in order that each may have a full opportunity to make such reasonable investigation as it shall desire to make of the affairs of the other, and each will furnish the other with such additional financial and operating data and other information as to the business and properties of the Company or Brown, as the case may be, as the other shall from time to time reasonably request. Any such investigation and examination shall be conducted at reasonable times and under reasonable circumstances, and each Party hereto shall cooperate fully therein. No investigation by a Party hereto shall, however, diminish or waive in any way any of the representations, warranties, covenants or agreements of the other Party under this Agreement. In order that each Party may investigate as it may wish the business affairs of the other, each Party shall furnish the other during such period with all of such information and copies of such documents concerning the affairs of it as the other Party may reasonably request, and cause its officers, employees, consultants, agents, accountants, and attorneys to cooperate fully in connection with such review and examination, and to make full disclosure to the other Parties all material facts affecting its financial condition, business operations, and the conduct of operations.

 

 

 

 

 

 

 

 

 

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4.2.           Delivery of Books and Records and Bank Accounts. At the Closing, Brown shall deliver to the Company copies of the corporate minute books, books of account, contracts, records, and all other books or documents including the bank accounts of Brown now in the possession of Brown or its representatives.

 

4.3.           Third Party Consents and Certificates. The Company and Brown agree to cooperate with each other in order to obtain any required third party consents to this Agreement and the transactions herein contemplated.

 

4.4.           Actions Prior to Closing.

 

4.4.1        From and after the date of this Agreement until the Closing Date and except as set forth in the Company Schedules or the Brown Schedules, or as permitted or contemplated by this Agreement, the Company and Brown, respectively (subject to paragraph (b) below), will each:

 

(i)               carry on its business in substantially the same manner as it has heretofore;

 

(ii)             maintain and keep its properties in states of good repair and condition as at present, except for depreciation due to ordinary wear and tear and damage due to casualty;

 

(iii)           maintain in full force and effect insurance comparable in amount and in scope of coverage to that now maintained by it;

 

(iv)            use good faith efforts to perform in all material respects all of its obligations under material contracts, leases, and instruments relating to or affecting its assets, properties, and business;

 

 

 

 

 

 

 

 

 

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(v)              use its good faith efforts to maintain and preserve its business organization intact, to retain its key employees, and to maintain its relationship with its material suppliers and customers; and

 

(vi)            fully comply with and perform in all material respects all obligations and duties imposed on it by all federal, provincial and state laws and all rules, regulations, and orders imposed by federal, provincial or state governmental authorities.

 

4.4.2        From and after the date of this Agreement until the Closing Date, neither the Company nor Brown will:

 

(i)               make any changes in their Articles of Incorporation or Bylaws, except as otherwise provided in this Agreement;

 

(ii)             take any action described in Section 1.6 in the case of Brown (all except as permitted therein or as disclosed in Brown’s schedules);

 

(iii)           enter into or amend any contract, agreement, or other instrument of any of the types described in such Party’s schedules, except that a Party may enter into or amend any contract, agreement, or other instrument in the ordinary course of business involving the sale of goods or services; or

 

(iv)            sell any assets or discontinue any operations, sell any shares evidencing capital stock (other than as contemplated in this Section 4.4 ), issue any convertible securities or conduct any similar transactions other than in the ordinary course of business.

 

4.5.           Post-Closing Conditions.

 

4.5.1        On the Closing Date, those mutually agreed upon officers and directors of the Company shall resign and, simultaneously therewith, (a) the new Board of Directors shall be appointed as described above; and (b) such officers shall be appointed as shall be determined by Brown, to include Levine as Chief Executive Officer and Executive Chairman, Noah Davis as President and Chief Operating Officer and Steven M. Plumb as Chief Financial Officer (collectively referred to herein as the “ Officers ”).

 

4.5.2        In connection with the Transactions, the Company will change its name to such name as is specified by Brown.

 

4.6.           Potential For Earn-Out Consideration.

 

4.6.1        As additional consideration for the Company agreeing to the Exchange and the transactions contemplated herein, and subject to the terms and conditions of this Section 4.6 , the Company shall use its commercially reasonable best efforts to (a) set the Closing Date (or a date as close to the Closing Date as possible) as a record date (the “ Record Date ”) for Company shareholders who are eligible to receive the Earn-Out Consideration (defined below)(the “ Earn-Out Shareholders ”); and (b) issue the Earn-Out Shareholders, pro rata with their ownership of the Company as of the Record Date:

 

 

 

 

 

 

 

 

 

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(i)               6,000,000 shares of common stock of the Company, in the event that Transferrin Doxorubicin meets the primary endpoint for Phase 2 clinical trials;

 

(ii)             8,000,000 shares of common stock of the Company, in the event that Transferrin Doxorubicin meets the primary endpoint for Phase 3 clinical trials; and

 

(iii)           10,000,000 shares of common stock of the Company, in the event that Transferrin Doxorubicin receives FDA Approval/clearance to market (collectively, the shares of common stock described in (i) through (iii) above, the “ Earn-Out Shares ”). Each of the milestones described in (i) through (iii) above shall be defined herein as the “ Earn-Out Milestones ”). The Earn-Out Shares shall be adjusted as determined by the reasonable determination of the Board of Directors in the event of a stock split or subdivision of the Company’s outstanding common stock prior to the issuance of such applicable Earn-Out Shares.

 

4.6.2        The Earn-Out Shareholders shall be issued the applicable Earn-Out Shares as soon as practicable, subject to applicable rules and regulations and the remainder of this Section 4.6 , after the date that each applicable Earn-Out Milestone is met.

 

4.6.3        In the event the Earn-Out Milestones are not met by December 31, 2020, the right of the Earn-Out Shareholders to receive any unissued Earn-Out Shares shall expire and be terminated.

 

4.6.4        In the event that the Company’s Board of Directors, reasonably believes, in good faith, on advice of counsel, that issuing the Earn-Out Shares to the Earn-Out Shareholders is too costly or would unduly burden the Company, the Board of Directors of the Company shall have the right to (a) extend the deadline for the issuance of any Earn-Out Shares; (b) issue cash consideration to the Earn-Out Shareholders in lieu of the Earn-Out Shares, based on the Board of Directors’ reasonable determination of the value of the Earn-Out Shares which would have been received by the Earn-Out Shareholders; and/or (c) terminate the obligation of the Company to issue such Earn-Out Shares to the Earn-Out Shareholders (the “ Earn-Out Termination ”). In the event the Earn-Out Termination is determined in good faith by the Board of Directors, based on the criteria set forth above, the Company and the Board of Directors shall have no liability to the Earn-Out Shareholders and the Company shall have no obligation to issue the Earn-Out Shares or otherwise compensate such Earn-Out Shareholders for the value of such securities.

 

 

 

 

 

 

 

 

 

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4.6.5        Nothing herein shall constitute an obligation on the part of the Company to take any specific actions to maximize the Earn-Out Milestones in the event such transactions would not be commercially reasonable or would not be in the Company’s bests interests, as determined in the reasonable determination of the Board of Directors.

 

ARTICLE V.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY

 

The obligations of the Company under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions, to the extent not waived by the Company in writing:

 

5.1.           Ownership of Brown. Prior to the Closing Date, the Brown Shareholders shall have demonstrated to the Company, with evidence reasonably satisfactory to the Company, that the Brown Shareholders are the owners of One Hundred Percent (100%) of the outstanding securities of Brown.

 

5.2.           Accuracy of Representations and Performance of Covenants . The representations and warranties made by Brown and the Brown Shareholders in this Agreement were true when made and shall be true at the Closing Date with the same force and effect as if such representations and warranties were made at and as of the Closing Date (except for changes therein permitted by this Agreement). Brown and the Brown Shareholders shall have performed or complied with all covenants and conditions required by this Agreement to be performed or complied with by Brown or the Brown Shareholders prior to or at the Closing. The Company shall be furnished with a certificate, signed by a duly authorized executive officer of Brown and dated the Closing Date, to the foregoing effect.

 

5.3.           Officer’s Certificate. The Company shall have been furnished with a certificate dated the Closing Date and signed by a duly authorized officer of Brown to the effect that no litigation, proceeding, investigation, or inquiry is pending, or to the best Knowledge of Brown threatened, which might result in an action to enjoin or prevent the consummation of the transactions contemplated by this Agreement, or, to the extent not disclosed in the Brown Schedules, by or against Brown, which might result in any material adverse change in any of the assets, properties, business, or operations of Brown.

 

5.4.           No Material Adverse Change. Prior to the Closing Date, there shall not have occurred any material change in the financial condition, business, or operations of Brown nor shall any event have occurred which, with the lapse of time or the giving of notice, is determined to be unacceptable by the Company in its reasonable discretion.

 

5.5.           Approval by Brown. The Exchange shall have been approved, and securities delivered in accordance with Section 3.1 , by Brown and the Brown Shareholders. The Board of Directors of Brown shall have approved the transactions contemplated by this Agreement.

 

 

 

 

 

 

 

 

 

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5.6.           No Governmental Prohibition. No order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality which prohibits the consummation of the transactions contemplated hereby.

 

5.7.           Consents. All consents, approvals, waivers or amendments pursuant to all contracts, licenses, permits, trademarks and other intangibles in connection with the transactions contemplated herein, or for the continued operation of the Company and Brown after the Closing Date on the basis as presently operated shall have been obtained.

 

5.8.           Due Diligence. The Company shall have conducted due diligence on Brown and verified among other things, the rights and liabilities associated with the assets and operations of Brown (the “ Due Diligence ”), which Due Diligence shall be satisfactory to the Company in its sole and absolute discretion. In the event that the Due Diligence is unsatisfactory to the Company, the Company shall have the right to terminate this Agreement and the transactions contemplated hereby without any liability to the Company whatsoever. Brown agrees to afford to the officers and authorized representatives of the Company, reasonable access to the properties, books and records of Brown, as the case may be, in order that it may have a full opportunity to make such reasonable investigation as it shall desire to make of the affairs of Brown and will furnish Company with such additional financial and operating data and other information as to the business, operations and assets of Brown as the Company shall from time to time reasonably request. Any such investigation and examination shall be conducted at reasonable times and under reasonable circumstances, and each Party hereto shall cooperate fully therein. No investigation by a Party hereto shall, however, diminish or waive in any way any of the representations, warranties, covenants or agreements of the other Party under this Agreement.

 

5.9.           Employment and Related Agreements. The Company shall have entered into employment agreements, consulting agreements or other agreements or understandings with such owners of and employees of Brown as the Company may desire in its sole authority, with such non-compete and non-solicitation provisions as the Company shall desire in its sole authority.

 

5.10.        Financial Statements. Brown shall have obtained a PCAOB approved audit of its operations, pro forma financial information and such other interim financial information as required by Item 2.01(f) and/or Item 5.01(a)(8) of Form 8-K and Regulation S-X of the Securities Act, in acceptable form to the Company, (the “ Financial Statements ”).

 

5.11.        Other Closing Conditions. The closing conditions set forth in Section 3.2.1 shall have occurred.

 

 

 

 

 

 

 

 

 

 

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ARTICLE VI.
CONDITIONS PRECEDENT TO OBLIGATIONS OF BROWN AND THE BROWN SHAREHOLDERS

 

The obligations of Brown and the Brown Shareholders under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions, , to the extent not waived by the Company and the Brown Shareholders, in writing:

 

6.1.           Accuracy of Representations and Performance of Covenants. The representations and warranties made by the Company in this Agreement were true when made and shall be true as of the Closing Date (except for changes therein permitted by this Agreement) with the same force and effect as if such representations and warranties were made at and as of the Closing Date. Additionally, the Company shall have performed and complied with all covenants and conditions required by this Agreement to be performed or complied with by the Company and shall have satisfied all conditions set forth herein prior to or at the Closing. Brown shall have been furnished with certificates, signed by duly authorized executive officers of the Company and dated the Closing Date, to the foregoing effect.

 

6.2.           Officer’s Certificate. Brown shall have been furnished with a certificate dated the Closing Date and signed by the duly authorized executive officer of the Company, to the effect that no litigation, proceeding, investigation or inquiry is pending, or to the best Knowledge of the Company threatened, which might result in an action to enjoin or prevent the consummation of the transactions contemplated by this Agreement or, to the extent not disclosed in the Company Schedules, by or against the Company, which might result in any material adverse change in any of the assets, properties or operations of the Company.

 

6.3.           No Material Adverse Change. Prior to the Closing Date, there shall not have occurred any change in the financial condition, business or operations of the Company nor shall any event have occurred which, with the lapse of time or the giving of notice, is determined to be unacceptable by Brown or the Brown Shareholders.

 

6.4.           No Governmental Prohibition. No order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality which prohibits the consummation of the transactions contemplated hereby.

 

6.5.           Consents. All consents, approvals, waivers or amendments pursuant to all contracts, licenses, permits, trademarks and other intangibles in connection with the transactions contemplated herein, or for the continued operation of the Company and Brown after the Closing Date on the basis as presently operated shall have been obtained.

 

6.6.           Private Placement. The Company shall have raised a minimum of $250,000 through a private placement offering of equity securities, exempt from registration pursuant to Section 4(a)(2) and/or Rule 506 of Regulation D of the Securities Act.

 

 

 

 

 

 

 

 

 

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6.7.           Stock Incentive Plan. The Board of Directors and the shareholders of the Company shall have adopted a 6,000,000 share Stock Incentive Plan for the future issuance, at the discretion of the Board, of incentive awards to officers, key employees, consultants and directors, in such form as reasonably acceptable to Brown.

 

6.8.           Fully-Diluted Capitalization. The actual and fully-diluted capitalization of the Company shall be acceptable to Brown in its sole discretion.

 

6.9.           Employment Agreements With The Officers. The Officers, shall, upon the Closing, each have an employment agreement with the Company (with a minimum term of four (4) years) mutually satisfactory to Brown, the Company and the employee.

 

6.10.        Other Closing Conditions. The closing conditions set forth in Section 3.2.1 shall have occurred.

 

ARTICLE VII.
INDEMNIFICATION

 

7.1.           Indemnification by the Brown Shareholders. Subject to the provisions of this Article, the Brown Shareholders agree to jointly and severally indemnify, defend and hold the Company and its Affiliates, parents, stockholders, subsidiaries, officers, directors, employees, agents, successors and assigns (such indemnified persons are collectively hereinafter referred to as “ the Company Indemnified Persons ”), harmless from and against any and all loss, liability, damage or deficiency (including interest, penalties, judgments, costs of preparation and investigation, and attorneys’ fees) (collectively, “ Losses ”) that any of the Company Indemnified Person may suffer, sustain, incur or become subject to arising out of or due to: (a) the non-fulfillment of any covenant, undertaking, agreement or other obligation of Brown or any other Party (other than the Company) under this Agreement or any Schedule hereto; (b) any action taken by Brown prior to the Closing Date, or the operations of Brown prior to Closing; (c) any misstatement, breach of or inaccuracy of any representation of Brown or any Brown Shareholder in this Agreement; (d) the breach of any representation, warranty or covenant of Brown or Brown Shareholder in this Agreement; or (e) any liabilities of Brown which are not disclosed to the Company at or prior to Closing and which the Company is required to satisfy subsequent to Closing (including all fees and expenses associated therewith); provided however, that Brown and the Brown Shareholders will not be liable under clause (d) of this Section 7.1 unless the aggregate amount of Losses exceeds $10,000 (the “ Threshold ”), in which event Brown or Brown Shareholders shall be liable for all Losses up to, including and exceeding the amount of the Threshold. “ Losses ” as used in this Article is not limited to matters asserted by third parties, but includes Losses incurred or sustained in the absence of third party claims. Payment is not a condition precedent to recovery of indemnification for Losses.

 

 

 

 

 

 

 

 

 

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7.2.           Indemnification by the Company. Subject to the provisions of this Article, the Company agrees to indemnify, defend and hold the Brown Shareholders (the “ Brown Indemnified Persons ”), harmless from and against any and all Losses that any Brown Indemnified Person may suffer, sustain, incur or become subject to arising out of or due to: (a) the non-fulfillment of any covenant, undertaking, agreement or other obligation of the Company under this Agreement or; (b) any action taken by Brown and/or the operations of Brown after the Closing; which, however, does not include any action that was caused by or as a fault of an action which originally occurred prior to the Closing Date or could be partially attributed as a Loss to the Company under Section 7.1 of this Agreement; (c) any misstatement, breach of or inaccuracy of any material representation of the Company in this Agreement; or (d) the breach of any representation, warranty or covenant of the Company in this Agreement provided however, that the Company will not be liable under clause (d) of this Section 7.2 unless the aggregate amount of Losses exceeds the Threshold, in which event the Company shall be liable for all Losses up to, including and exceeding the amount of the Threshold. The Company shall in no event be responsible for indemnifying or defending any affiliates, officers, directors, employees, agents, successors or assigns of Brown or the Brown Shareholders following the Closing for any matter whatsoever.

 

7.3.           Survival of Representations, Warranties and Covenants. The representations, warranties, covenants and other provisions of this Agreement which by their terms or by implication are to have continuing effect after the expiration or termination of this Agreement shall survive the Closing Date or the termination of this Agreement for any reason whatsoever, and shall remain in full force and effect.

 

7.4.           Notice and Opportunity to Defend. If a Claim for Losses is to be made by any Company Indemnified Person or Brown Indemnified Person (any such indemnified person, hereinafter a “ Claimant ”) seeking indemnification hereunder, such Claimant shall notify the indemnifying party or parties (any such indemnifying party, a “ Respondent ”) promptly. If such event involves (a) any claim or (b) the commencement of any action or proceeding by a third person, Claimant shall give Respondent written notice of such claim or the commencement of such action or proceeding as provided above. Delay or failure to so notify Respondent shall only relieve Respondent of its obligation to the extent, if at all, that Respondent is prejudiced by reason of such delay or failure. Respondent shall have a period of 30 days within which to respond thereto. If Respondent accepts responsibility or does not respond within such 30 day period, then Respondent shall be obligated to compromise or defend, at its own expense and by counsel chosen by Respondent, which counsel shall be acceptable to such Company Indemnified Person or Brown Indemnified Person, as the case may be, such matter, and Respondent shall provide Claimant with such assurances as may be reasonably required by Claimant to assure that Respondent will assume and be responsible for the entire liability at issue. If Respondent fails to assume the defense of such matter within said 30 day period, Claimant will (upon delivering notice to such effect to Respondent) have the right to undertake, at Respondent’s cost and expense, the defense, compromise or settlement of such matter on behalf of such Claimant. The Claimant agrees to cooperate with Respondent and its counsel in the defense against any such asserted liability. In any event, Claimant shall have the right to participate at its own expense in the defense of such asserted liability. Any compromise of such asserted liability by Respondent shall require the prior written consent of Claimant, which consent will not be unreasonably withheld and in the event Claimant defends any such asserted liability, then any compromise of such asserted liability by Claimant shall require the prior written consent of Respondent, which consent shall not be unreasonably withheld.

 

 

 

 

 

 

 

 

 

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7.5.           Remedies Exclusive. The remedies conferred by this Article are intended to be exclusive of and shall supersede any other remedy available under law or at equity.

 

7.6.           Emergency Relief. Notwithstanding anything in this Article to the contrary, any Party may seek emergency relief from a court for any remedy that may be necessary to protect any rights or property of such Party pending the establishment of the arbitral tribunal or its determination of the merits of the controversy.

 

7.7.           Right to Set Off. In the event that the Company shall have a claim against any Brown Shareholder for which the Company has not been fully indemnified as contemplated above, the Company shall have the right to set off the amount of such claim against any Brown Shareholder, against any amounts due such Brown Shareholder hereunder or any other agreement or understanding by and between the Company and any Brown Shareholder.

 

ARTICLE VIII.
CONFIDENTIALITY

 

8.1.           Confidentiality. At all times after the Closing, each Brown Shareholder shall retain in strictest confidence, and shall not disclose to any third parties or use for their benefit (other than in order to fulfill the terms and conditions of this Agreement and the transactions contemplated by this Agreement) or for the benefit of others any confidential information comprising or related to the Company or any of the Company’s Affiliates, Brown, or Brown’s property, including its Intellectual Property, including, without limitation, trade secrets, source code, customer lists, marketing plans or strategies, product development techniques or plans, or technologies (collectively “ Confidential Information ”). Confidential Information shall not include information which (i) is or becomes part of the public domain without breach of this Agreement, (ii) was known to the receiving party on a non-confidential basis prior to disclosure by the other party (except in connection with information of Brown, which shall be considered Confidential Information for all purposes), (iii) is independently received by the receiving party without the use of confidential information, or (iv) is explicitly approved for release by written authorization of the disclosing party. In the event that the receiving party is legally required to disclose any confidential information, the receiving party shall promptly notify the disclosing party of such requirement and, if requested by the disclosing party, shall reasonably cooperate in the disclosing party’s efforts to prevent or limit such disclosure.

 

 

 

 

 

 

 

 

 

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8.2.           Enforceability.

 

8.2.1        It is the desire and intent of the Parties that the provisions of ARTICLE VIII shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. If any particular provision or portion of ARTICLE VIII shall be adjudicated to be invalid or unenforceable in any jurisdiction, ARTICLE VIII shall be deemed amended to delete therefrom such provision or portion adjudicated to be invalid or unenforceable, such amendment to apply only with respect to the operation of this Section 8.2 in the particular jurisdiction in which such adjudication is made. Brown and each Brown Shareholder agrees that it would be difficult to measure the damages to Company and its affiliates from the breach by Brown or Brown Shareholders of the provisions of ARTICLE VIII , that injury to the Company from such breach would be impossible to calculate, and that monetary damages would therefore be an inadequate remedy; accordingly, Brown and the Brown Shareholders agree that the Company shall be entitled, in addition to all other remedies it might have, to injunctions or other appropriate orders to restrain any such breach without showing or proving any actual damages.

 

8.2.2        The undertakings and covenants of Brown and the Brown Shareholders contained in ARTICLE VIII are an integral part of the transactions set forth in this Agreement and the consideration paid by the Company pursuant to this Agreement shall be consideration to include consideration for such undertakings and covenants.

 

ARTICLE IX.
DEFINITIONS

 

9.1.           Certain Definitions. In addition to other terms defined throughout this Agreement, the following terms have the following meanings when used herein:

 

9.1.1        Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person, and in the case of any natural Person shall include all relatives and family members of such Person. For purposes of this definition, a Person shall be deemed to control another Person if such first Person and/or any relatives or family members of such first Person directly or indirectly owns or holds five percent (5%) or more of the ownership interests in such other Person. In the case of Brown, each Brown Shareholder is considered an Affiliate of Brown.

 

9.1.2        Claim means any claim (including any product liability, malpractice or errors or omission claim), demand, complaint, cause of action, investigation, inquiry, suit, action, hearing, notice of violation or legal, administrative, arbitrative or other Proceeding.

 

9.1.3        Encumbrance ” means any charge, claim, community or other marital property interest, condition, equitable interest, Lien, option, pledge, security interest, mortgage, right of way, easement, encroachment, servitude, right of first option, right of first refusal or similar restriction, including any restriction on use, voting (in the case of any security or equity interest), transfer, receipt of income or exercise of any other attribute of ownership.

 

 

 

 

 

 

 

 

 

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9.1.4        Environmental Law(s) ” means any foreign, federal, state or local statute, regulation, ordinance, or rule of common law as now or hereafter in effect in any way or any other legally binding requirement relating to the environment, natural resources or protection of human health and safety including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.), the Emergency Planning and Right-To-Know Act (42 U.S.C. § 11101 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. App. § 1801 et seq.), the Solid Waste Disposal Act (42 U.S.C. § 6901 et seq.) (including the Resource Conservation and Recovery Act), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq.), the Safe Drinking Water Act (42 U.S.C. § 300(f) et seq.), the Lead-Based Paint Exposure Reduction Act (42 U.S.C. § 2681 et seq.), and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), and all laws of a similar nature, and the rules and regulations promulgated pursuant thereto, each as amended.

 

9.1.5        Governmental Body ” means any:

 

(i)               nation, state, county, city, town, borough, village, district or other jurisdiction;

 

(ii)             federal, state, local, municipal, foreign or other government;

 

(iii)           governmental or quasi-governmental authority of any nature (including any agency, branch, department, board, commission, court, tribunal or other entity exercising governmental or quasi-governmental powers);

 

(iv)            multinational organization or body;

 

(v)              body exercising, or entitled or purporting to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power; or

 

(vi)            official of any of the foregoing.

 

9.1.6        Intellectual Property ” means (i) all inventions, whether patentable or not patentable, all improvements thereto, and all patents, patent applications (including those listed on Schedule 1.21.3 and patent disclosures, together with all reissues, continuations, continuations-in-part, divisionals, revisions, utility models, extensions and reexaminations thereof, (ii) the websites, URLs, domain names, trade names and trademarks (including registered and unregistered trademarks, service marks and applications thereof used in the business of Brown) including those set forth in Schedule 1.21.3 together with all translations, adaptations, derivations and combinations thereof and including all goodwill associated therewith, and all applications, registrations and renewals in connection therewith, (iii) all copyrightable works, all copyrights and all applications, registrations, renewals and derivatives in connection therewith, (iv) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, certifications, compositions, manufacturing and production processes and techniques, technical data, designs including advertising designs, logos, drawings, packaging, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals, (v) all other proprietary rights, and (vii) all copies and tangible embodiments thereof (in whatever form or medium).

 

 

 

 

 

 

 

 

 

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9.1.7        Knowledge ” means that:

 

(i)               A natural Person will be deemed to have Knowledge of a particular fact or other matter if such Person is actually aware of the fact or matter.

 

(ii)             A Person, other than a natural person, will be deemed to have Knowledge of a particular fact or other matter if any natural Person who is serving, or who has at any time served, as a director, officer, partner, employee, agent, executor or trustee of that Person (or in any similar capacity) has, or at any time had, Knowledge of that fact or other matter (as set forth in (i) above).

 

9.1.8        Law ” means any federal, state, local or foreign law (including common law), statute, code, ordinance, rule, regulation or other requirement or rule of law (including but not limited to as related to revenue, labor, or ERISA) of any Governmental Body.

 

9.1.9        Levine ” means Evan Levine.

 

9.1.10     Liability ” means with respect to any Person, any liability or obligation of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, and whether or not the same is required to be accrued on the financial statements of such Person.

 

9.1.11     Liens ” means all liens, pledges, mortgages, security interests, claims, covenants, leases, subleases, charges, conditions, options, rights of first refusal, licenses, easements, servitudes, rights of way, encumbrances or any other restriction or limitation whatsoever.

 

9.1.12     PCAOB ” means Public Company Accounting Oversight Board.

 

 

 

 

 

 

 

 

 

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9.1.13     Person ” means an individual, partnership, corporation, business trust, limited liability company, limited liability partnership, joint stock company, trust, unincorporated association, joint venture or other entity or a Governmental Body.

 

9.1.14     Revenue ” means the Company’s annual revenue as set forth under the line item “ Revenue ” or “ Revenues ” (or any similar heading) in the Company’s (a) unaudited quarterly financial statements; or (b) its audited financial statements, each as filed from time to time in its filings with the SEC (or in the event the Company is no longer filing with the SEC, audited financial statements, which shall be prepared no later than 105 days following the end of the Company’s fiscal year end).

 

9.1.15     SEC ” means the United States Securities and Exchange Commission.

 

9.1.16     Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

9.1.17     Tax ” means any income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental, windfall profit, customs, vehicle, airplane, boat, vessel or other title or registration, capital stock, franchise, employees’ income withholding, foreign or domestic withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, value added, alternative, add-on minimum and other tax, fee, assessment, levy, tariff, charge or duty of any kind whatsoever and any interest, penalty, addition or additional amount thereon imposed, assessed or collected by or under the authority of any Governmental Body or payable under any tax-sharing agreement or any other contract.

 

9.2.           Other Definitional Provisions. The Parties acknowledge, confirm and agree that:

 

9.2.1        The language in all parts of this Agreement shall be construed, in all cases, according to its fair meaning.

 

9.2.2        Each Party and its counsel have reviewed and revised this Agreement and that any rule of construction to the effect that any ambiguities are to be resolved against the drafting Party shall not be employed in the interpretation of this Agreement.

 

9.2.3        Terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa.

 

9.2.4        References to any gender include the other genders.

 

 

 

 

 

 

 

 

 

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9.2.5        The words “ include, ” “ includes ” and “ including ” do not limit the preceding terms or words and shall be deemed to be followed by the words “ without limitation ”.

 

9.2.6        The terms “ hereof ”, “ herein ”, “ hereunder ”, “ hereto ” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement.

 

9.2.7        The terms “ day ” and “ days ” mean and refer to calendar day(s).

 

9.2.8        The terms “ year ” and “ years ” mean and refer to calendar year(s).

 

9.2.9        All references in this Agreement to “ dollars ” or “ $ ” shall mean United States Dollars.

 

9.2.10     Unless otherwise set forth herein, references in this Agreement to (i) any document, instrument or agreement (including this Agreement) (A) includes and incorporates all exhibits, schedules and other attachments thereto, (B) includes all documents, instruments or agreements issued or executed in replacement thereof and (C) means such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified or supplemented from time to time in accordance with its terms and in effect at any given time, and (ii) a particular Law means such Law as amended, modified, supplemented or succeeded, from time to time and in effect at any given time.

 

9.2.11     In the event of any conflict between the provisions of this Agreement and any such Exhibit or Schedule, the provisions of this Agreement shall control.

 

9.2.12     All Article, Section, Exhibit and Schedule references herein are to Articles, Sections, Exhibits and Schedules of this Agreement, unless otherwise specified.

 

ARTICLE X.
MISCELLANEOUS

 

10.1.        No Bankruptcy and No Criminal Convictions. None of the Parties to this Agreement, or their officers, directors or affiliates, promoters, beneficial shareholders or control persons, nor any predecessor thereof have been subject to the following (unless otherwise disclosed in the Brown Schedules or Company Schedules):

 

10.1.1     Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer within the past ten (10) years;

 

10.1.2     Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

 

 

 

 

 

 

 

 

 

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10.1.3     Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and

 

10.1.4     Being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal, provincial or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

 

10.2.        Broker/Finder’s Fee. No broker’s or finder’s fee will be paid in connection with the transaction contemplated by this Agreement. The Company, and Brown, each agree to indemnify the other against any claim by any third person for any commission, brokerage, or finder’s fee arising from the transactions contemplated hereby based on any alleged agreement or understanding between the indemnifying party and such third person, whether express or implied from the actions of the indemnifying party.

 

10.3.        Governing Law and Jurisdiction. This Agreement shall be governed by, enforced, and construed under and in accordance with the laws of the United States of America and, with respect to the matters of state law, with the laws of the State of Texas without giving effect to principles of conflicts of law thereunder. Each of the Parties hereby: (a) irrevocably submits to the non-exclusive personal jurisdiction of any Texas court, over any claim arising out of or relating to this Agreement and irrevocably agrees that all such claims may be heard and determined in such Texas court; and (b) irrevocably waives, to the fullest extent permitted by applicable Law, any objection it may now or hereafter have to the laying of venue in any proceeding brought in a Texas court.

 

10.4.        Notices. All notices and other communications hereunder (“ Notices ”) shall be in writing and shall be deemed given if delivered personally, mailed by registered or certified mail (return receipt requested), sent via facsimile or e-mail (with confirmation of transmission) or sent by a nationally recognized overnight courier (providing proof of delivery) to the Parties at the following addresses (or at such other address for a Party as shall be specified by like notice):

 

if to the Company, to:

 

Panther Biotechnology, Inc.

Attn: Evan Levine

888 Prospect Street, Suite 200

La Jolla, California 92037

Phone: 858-263-2744

Fax: none

Email: info@pantherbiotechnology.com

 

 

 

 

 

 

 

 

 

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with a copy to (which shall not constitute notice hereunder):

 

The Loev Law Firm, PC

Attn: David M. Loev, Esq. or John S. Gillies, Esq.

6300 West Loop South, Suite 280

Bellaire, Texas 77401

Phone: (713) 524-4110

Fax: (713) 524-4122

Email: dloev@loevlaw.com; john@loevlaw.com

 

if to Brown, to:

 

Brown Technical Media Corporation

1517 San Jacinto Street

Houston, Texas 77002

Attn: Noah Davis

Phone: 713-652-3937

Fax: 888-702-9019

Email: noah@brownbookstore.com

 

with a copy to (which shall not constitute notice hereunder):

 

Law Offices of Jay Dushkin

Attn: Jay Dushkin

Phone: 713-961-3600

Fax: 713-626-0185

Email: jay@jaydushkin.com

 

if to a Brown Shareholder, to:

 

The address for notice set forth on the signature page hereof

 

or at such other address or number as shall be designated by a Party in a notice to the other Party given in accordance with this Section. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given: (A) in the case of a notice sent by regular or registered or certified mail, three Business Days after it is duly deposited in the mails; (B) in the case of a notice delivered by hand, when personally delivered; (C) in the case of a notice sent by facsimile, upon transmission subject to telephone confirmation of receipt; (D) in the case of a notice sent by email that the computer of the Person sending the email message has generated a receipt evidencing that the recipient has read the email message, upon telephone confirmation of receipt, or upon email reply from the Person to whom the email was sent (i) confirming receipt of the email, or (ii) responding to the email and including the text thereof in the body of the response; and (E) in the case of a notice sent by overnight mail or overnight courier service, upon confirmation of delivery thereof by the United States Postal Service or the reputable overnight courier service, as applicable.

 

 

 

 

 

 

 

 

 

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10.5.        Attorney’s Fees. In the event that any Party institutes any action or suit to enforce this Agreement or to secure relief from any default hereunder or breach hereof, the prevailing Party shall be reimbursed by the losing Party for all costs, including reasonable attorney’s fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein.

 

10.6.        Confidentiality. Each Party hereto agrees with the other that, unless and until the transactions contemplated by this Agreement have been consummated, it and its representatives will hold in strict confidence all data and information obtained with respect to another Party or any subsidiary thereof from any representative, officer, director or employee, or from any books or records or from personal inspection, of such other Party, and shall not use such data or information or disclose the same to others (which information shall include the existence of this Agreement and the transactions contemplated herein), except (i) to the extent such data or information is published, is a matter of public knowledge (through no fault or action of the Party holding such information on behalf of the other Party), or is required by a court of competent jurisdiction to be published; or (ii) to the extent that such data or information must be used or disclosed in order to consummate the transactions contemplated by this Agreement. In the event of the termination of this Agreement, each Party shall return to the other Party all documents and other materials obtained by it or on its behalf and shall destroy all copies, digests, work papers, abstracts or other materials relating thereto, and each Party will continue to comply with the confidentiality provisions set forth herein. Brown further agrees and consents to the disclosure by the Company of any material information regarding Brown which the Company or its counsel deems necessary for disclosure in the Company’s public filings on EDGAR in connection with the Company’s current or periodic report filings. The Company shall be required to obtain the prior consent of Brown to publicly disclose such information, which consent shall not be unreasonably withheld, and shall be provided in a timely manner consistent with the Company’s filing obligations under Form 8-K and/or the Securities Act of 1933, as amended or the Securities Act of 1934, as amended, if necessary. The Company shall use its best efforts to avoid the disclosure of any competitive pricing or specific customer information to the public.

 

10.7.        Publicity. Prior to or after the Closing of the transaction contemplated herein, any announcement, or press or news release by Brown or its shareholders, Board of Directors, employees, officers, or agents shall be reviewed and approved by the Company prior to its release, subject to any requirements of Law. The Company shall be allowed to make any announcements relating to this Agreement or the transactions contemplated herein, and shall be allowed to file this Agreement and any exhibits or related agreements as may be required pursuant to the Company’s public reporting obligations with the SEC, subject to prior approval by Brown, which approval shall not be unreasonably withheld. Prior to the Closing and prior to the Closing Date, Brown shall make no announcements relating to this Agreement, the Company or the transactions contemplated herein without the prior written consent of the Company, which approval will not be unreasonably withheld.

 

 

 

 

 

 

 

 

 

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10.8.        Schedules and Exhibits. The Schedules and Exhibits are hereby incorporated into this Agreement and are hereby made a part hereof as if set out in full herein.

 

10.9.        Schedules; Knowledge. Each Party is presumed to have full Knowledge of all information set forth in the other Party’s schedules delivered pursuant to this Agreement and Brown and the Brown Shareholders are deemed to have knowledge of the information set forth in the Company’s EDGAR filings.

 

10.10.     Third Party Beneficiaries. This contract is strictly between the Company, Brown and the Brown Shareholders, and, except as specifically provided, no director, officer, stockholder, employee, agent, independent contractor or any other person or entity shall be deemed to be a third party beneficiary of this Agreement.

 

10.11.     Expenses. The Company and Brown each hereto agree to pay their own costs and expenses incurred in negotiating this Agreement including legal, accounting and professional fees, incurred in connection with the Exchange or any of the other transactions contemplated hereby, and those costs and expenses incurred in consummating the transactions described herein.

 

10.12.     Entire Agreement. This Agreement represents the entire agreement between the Parties relating to the subject matter thereof and supersedes all prior agreements, letters of intent, term sheets, understandings and negotiations, written or oral, with respect to such subject matter.

 

10.13.     Survival; Termination. The representations, warranties, and covenants of the respective Parties shall survive the Closing Date and the consummation of the transactions herein contemplated for a period of two (2) years, unless the terms of this Agreement provide for a longer period of survival.

 

10.14.     Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument.

 

10.15.     Amendment or Waiver. Every right and remedy provided herein shall be cumulative with every other right and remedy, whether conferred herein, at law, or in equity, and may be enforced concurrently herewith, and no waiver by any Party of the performance of any obligation by the other shall be construed as a waiver of the same or any other default then, theretofore, or thereafter occurring or existing. At any time prior to the Closing Date, this Agreement may be amended by a writing signed by all Parties hereto, with respect to any of the terms contained herein, and any term or condition of this Agreement may be waived or the time for performance may be extended by a writing signed by the Party or Parties for whose benefit the provision is intended.

 

 

 

 

 

 

 

 

 

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10.16.     Best Efforts. Subject to the terms and conditions herein provided, each Party shall use its reasonable best efforts to perform or fulfill all conditions and obligations to be performed or fulfilled by it under this Agreement so that the transactions contemplated hereby shall be consummated as soon as practicable. Each Party also agrees that it shall use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective this Agreement and the transactions contemplated herein.

 

10.17.     Remedies. The Parties agree that the covenants and obligations contained in this Agreement relate to special, unique and extraordinary matters and that a violation of any of the terms hereof or thereof would cause irreparable injury in an amount which would be impossible to estimate or determine and for which any remedy at law would be inadequate. As such, the Parties agree that if any Party fails or refuses to fulfill any of its obligations under this Agreement or to make any payment or deliver any instrument required hereunder or thereunder, then any other Party shall have the remedy of specific performance, which remedy shall be cumulative and nonexclusive and shall be in addition to any other rights and remedies otherwise available under any other contract or at law or in equity and to which such Party might be entitled.

 

10.18.     Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Agreement so as to affect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible.

 

10.19.     Independent Nature of Sellers’ Obligations and Rights . The obligations of each Brown Shareholder under this Agreement are several and not joint with the obligations of any other Brown Shareholder, and no Brown Shareholder shall be responsible in any way for the performance or non-performance of the obligations of any other Brown Shareholder under this Agreement. Nothing contained herein, and no action taken by any Brown Shareholder pursuant hereto, shall be deemed to constitute the Brown Shareholders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Brown Shareholders are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement, and each Brown Shareholder has conducted its own diligence review. Each Brown Shareholder shall be entitled to independently protect and enforce its rights including, without limitation, the rights arising out of this Agreement, and it shall not be necessary for any other Brown Shareholder to be joined as an additional party in any proceeding for such purpose, subject in each case to the terms and conditions hereof. Each Brown Shareholder has been represented by its own separate legal counsel in its review and negotiation of this Agreement.

 

 

 

 

 

 

 

 

 

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10.20.     No Presumption from Drafting . This Agreement has been negotiated at arm’s-length between Persons knowledgeable in the matters set forth within this Agreement. Accordingly, given that all Parties have had the opportunity to draft, review and/or edit the language of this Agreement, no presumption for or against any Party arising out of drafting all or any part of this Agreement will be applied in any action relating to, connected with or involving this Agreement. In particular, any rule of law, legal decisions, or common law principles of similar effect that would require interpretation of any ambiguities in this Agreement against the Party that has drafted it, is of no application and is hereby expressly waived. The provisions of this Agreement shall be interpreted in a reasonable manner to affect the intentions of the Parties.

 

10.21.     Review and Construction of Documents. Each Party herein expressly represents and warrants to all other Parties hereto that (a) before executing this Agreement, said Party has fully informed itself of the terms, contents, conditions and effects of this Agreement; (b) said Party has relied solely and completely upon its own judgment in executing this Agreement; (c) said Party has had the opportunity to seek and has obtained the advice of its own legal, tax and business advisors before executing this Agreement; (d) said Party has acted voluntarily and of its own free will in executing this Agreement; and (e) this Agreement is the result of arm’s length negotiations conducted by and among the Parties and their respective counsel.

 

10.22.     Headings; Gender. The paragraph headings contained in this Agreement are for convenience only, and shall in no manner be construed as part of this Agreement. All references in this Agreement as to gender shall be interpreted in the applicable gender of the Parties.

 

10.23.     Transaction Expenses. Until Closing, in the event this Agreement is terminated prior to Closing and/or in the event the Exchange does not close, each Party shall be responsible for the payment of any and all of its own expenses, including without limitation the fees and expenses of counsel, accountants and other advisers, arising out of or relating directly or indirectly to the transactions contemplated by this Agreement (“ Transaction Expenses ”).

 

10.24.     Cooperation Following the Closing. Following the Closing, each Party shall deliver to the other Party such further information and documents and shall execute and deliver to the other Party such further instruments and agreements as the other Party shall reasonably request to consummate or confirm the transactions provided for herein, to accomplish the purpose hereof or to assure to the other Party the benefits hereof.

 

 

 

 

 

 

 

 

 

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10.25.     Counterparts, Effect of Facsimile, Emailed and Photocopied Signatures. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments hereto or thereto, may be executed in one or more counterparts, all of which shall constitute one and the same instrument. Any such counterpart, to the extent delivered by means of a facsimile machine or by .pdf, .tif, .gif, .peg or similar attachment to electronic mail (including email) or as an electronic download (any such delivery, an “ Electronic Delivery ”) shall be treated in all manner and respects as an original executed counterpart and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any Party, each other Party shall re execute the original form of this Agreement and deliver such form to all other Parties. No Party shall raise the use of Electronic Delivery to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of Electronic Delivery as a defense to the formation of a contract, and each such Party forever waives any such defense, except to the extent such defense relates to lack of authenticity.

 

 

 

[Remainder of page left intentionally blank. Signature pages follow.]

 

 

 

 

 

 

 

 

 

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IN WITNESS WHEREOF , the corporate parties hereto have caused this Agreement to be executed by their respective officers, hereunto duly authorized, as of the date first-above written.

 

THE COMPANY

 

PANTHER BIOTECHNOLOGY, INC.

 

 

By: /s/ Evan Levine               

Name:  Evan Levine

Title:Chief Executive Officer

 

“BROWN”

 

BROWN TECHNICAL MEDIA CORP.

 

 

By: /s Noah Davis               

Name:  Noah Davis

Title: President

 

 

 

 

 

 

[Signature Pages of Brown Shareholders Follow On Attached Pages]

 

 

 

 

 

 

 

 

 

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Brown Shareholders:

 

/s/ Steven M. Plumb_________________________________

Steven M. Plumb

9,200,000 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

/s/ Steven Plumb for minor child__________________________________

Nathan S. Plumb

500,000 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

/s/ Steven Plumb for minor child__________________________________

Jacob B. Plumb

500,000 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

/s/ Steven Plumb for minor child__________________________________

Sarah L. Plumb

500,000 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

/s/ Lucy Borosh /s/ Itshak Borosh_________________________________

Lucy and Itshak Borosh

200,000 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

 

 

 

 

 

 

 

 

 

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/s/ Robin Stein__________________________________

Robin Stein

100,000 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

/s/ Evan Levine__________________________________

Evan Levine

4,597,001 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

/s/ Evan Levine for minor child__________________________________

Alexander S. Levine

333,333 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

/s/ Evan Levine for minor child __________________________________

Nathaniel O. Levine

333,333 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

/s/ Evan Levine for minor child __________________________________

Elinor P. Levine

333,333 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

/s/ Noah Davis__________________________________

Noah Davis

3,650,000 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

 

 

 

 

 

 

 

 

 

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/s/ Hillary Davis_________________________________

Hillary Davis

3,043,988 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

/s/ Robert Davis__________________________________

Robert Davis CUST Jack Davis UTMA

500,000 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

/s/ Robert Davis __________________________________

Robert Davis CUST Jordan Davis UTMA

500,000 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

/s/ Robert Davis

/s/ Rachel Davis__________________________________

Robert and Rachel Davis

470,100 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

/s/ Joseph Davis__________________________________

Joseph Davis

4,701 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

/s/ Jacob Davis__________________________________

Jacob Davis

47,010 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

 

 

 

 

 

 

 

 

 

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/s/ Hannah Weisman__________________________________

Hannah Weisman

4,701 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

/s/ Courtney Rosenthal__________________________________

Courtney Rosenthal

35,000 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

/s/ Stephanie Deutsch__________________________________

Stephanie Deutsch

35,000 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

/s/ Robert Davis, trustee__________________________________

The Noah Davis 2009 Family Trust

2,700,000 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

/s/ Sam Mitchell_________________________________

Sam Mitchell

9,500 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

/s/ Robert Rhodes__________________________________

Robert Rhodes

1,100,000 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

 

 

 

 

 

 

 

 

 

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/s/ Jonathan Ellis__________________________________

Jonathan Ellis

1,155,000 Shares of Common Stock

Address for notice:______________________________________________

Facsimile for notice:______________________________________________

Email for notice:________________________________________________

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT A

FORM OF STOCK REGISTRATION FORM

(CHECK ONE):

 

_____ INDIVIDUAL OWNERSHIP (one signature required)

 

_____ TRUST (please include name of trust, name of trustee, and date trust was formed and copy of the Trust Agreement or other authorization)

 

_____ PARTNERSHIP (please include a copy of the Partnership Agreement authorizing signature)

 

_____ CORPORATION (please include a certified corporate resolution authorizing signature)

 

_____ LIMITED LIABILITY COMPANY (please include a certified corporate resolution authorizing signature)

 

 

________________________________________________________________________

Please print here the exact name (registration)

Such Shareholder desires to appear in the records of the Company

 

 

________________________________________________________________________

Please print here the exact address

Such Shareholder desires to appear in the records of the Company

 

Signature:

 

By: _________________________

Printed Name: ______________________

 

If on behalf of Entity:

 

Entity Name: ___________________

Signatory’s Position with Entity: ___________________

Beneficial Owner(s) of Shares To Be Owned by Entity: _____________________

 

Address: ____________________________________________________________

 

SS#/Tax Id Number: ______________________________

 

Telephone Number: ( ) - _____ - _______

 

Email:____________________

 

 

 

 

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Exhibit 10.1

 

COMMON STOCK SUBSCRIPTION AGREEMENT

PANTHER BIOTECHNOLOGY, INC.

 

Panther Biotechnology, Inc., a Nevada corporation (the “ Company ”), is offering for purchase to a limited number of qualified investors up to an aggregate of $750,000.00 (the “ Maximum Amount ”) in shares of common stock of the Company (the “ Shares ” or the “ Securities ”) (the “ Offering ”) for $0.15 per Share. The Shares are being offered on a “ best efforts, no minimum ” basis to a limited number of accredited investors and non- U.S. Persons ”. The Offering is made in reliance upon an exemption from registration under the federal securities laws provided by Rule 506(b) of Regulation D and Regulation S of the Securities Act of 1933, as amended. The minimum investment is $25,000.00, although the Company may, in its discretion, accept subscriptions for a lesser amount. The Company reserves the right to reject orders for the purchase of Shares in whole or in part, and if a subscription is rejected the subscriber’s funds will be returned without interest the next business day after rejection. There is no minimum amount required for an initial closing, and all proceeds will be available for immediate use by the Company. Additionally, the Company, in its sole discretion, may waive or increase the Maximum Amount, without notice to prospective investors or subscribers in the Offering.

 

INSTRUCTIONS TO INVESTORS

 

Persons wishing to subscribe for Shares in the Company must perform the following:

 

1. Thoroughly read and review (a) the Common Stock Subscription Agreement attached hereto; and (b) the Information for Residents of Certain States, attached hereto as Exhibit A .

 

2. Complete page 2, being certain to indicate, your name, entity type, the number of Shares you will purchase and the total purchase price.

 

3. Complete and execute pages 14 to 18 (as applicable), and 19 to 26, as applicable. These pages must be fully completed as applicable and signed.

 

4. Wire funds to the Company:

 

Wells Fargo Bank, N.A.

420 Montgomery

San Francisco, CA 94104

ABA# 121000248

For the Account of: Panther Biotechnology, Inc.

888 Prospect Street, Suite #200, La Jolla, CA 92037

Account # 6694628568

 

Or mail funds to the Company at the following address:

 

Panther Biotechnology, Inc.

Attn: Evan Levine

888 Prospect Street, Suite #200, La Jolla, CA 92037

 

5. FedEx original signature pages to:

 

Panther Biotechnology, Inc.

Attn: Evan Levine

888 Prospect Street, Suite #200, La Jolla, CA 92037

 

Note to Partnership, Corporate and Trust Subscribers :

 

Partnerships provide a copy of the partnership agreement, as amended to date, showing the date of formation and giving evidence of the authority of the person(s) signing the subscription documentation to do so.
Corporations provide a copy and the filing date of the articles of incorporation and bylaws, as amended to date, and a corporate resolution authorizing the purchase of the Shares and giving authority to the person(s) signing the subscription documents to do so.
Limited Liability Companies provide a copy and the filing date of the articles of organization and operating agreement, as amended to date, and a resolution authorizing the purchase of the Shares and giving authority to the person(s) signing the subscription documents to do so.
Trusts provide a copy of the trust agreement as amended to date, showing the date of formation and giving evidence of the authority of the person(s) signing the subscription documentation to do so.

 

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COMMON STOCK SUBSCRIPTION AGREEMENT

IN

PANTHER BIOTECHNOLOGY, INC.

 

Panther Biotechnology, Inc.

Attn: Evan Levine

888 Prospect Street

Suite #200

La Jolla, CA 92037

 

A.      Subscription . This Agreement has been executed by __________________________, a/an ______________________(Individual/Corporation/LLC/Trust/Partnership), residing and/or having a principal place of business in ____________________(Country/State and City) (“ Purchaser ”, or “ Subscriber ”) in connection with the subscription to purchase ____________ shares of the common stock (the “ Common Stock ”, the “ Shares ” or the “ Securities ”) of Panther Biotechnology, Inc., a Nevada corporation (the “ Company ”). This Common Stock Subscription Agreement is referred to herein as the “ Agreement ”. The sale of the Shares is part of an offering of an aggregate of $750,000.00 (the “ Maximum Amount ”), in Shares to multiple investors, as part of a “ best efforts, no minimum ” offering, defined herein as the “ Offering ”) by the Company. The minimum investment is $25,000.00, although the Company may, in its discretion, accept subscriptions for a lesser amount. The Company reserves the right to reject orders for the purchase of Shares in whole or in part, and if a subscription is rejected the subscriber’s funds will be returned without interest the next business day after rejection. There is no amount required for an initial closing, and all proceeds will be available for immediate use by the Company. The Shares shall be purchased for a $0.15 per Share (the “ Purchase Price ”). The Company, in its sole discretion, may waive or increase the Maximum Amount, without notice to prospective investors or subscribers in the Offering.

 

When the context in which words are used in this Agreement indicates that such is the intent, singular words shall include the plural, and vice versa, and masculine words shall include the feminine and neuter genders, and vice versa. Any reference to a person shall include an individual, trust, estate, or any incorporated or unincorporated organization, including general or limited partnerships, limited liability companies, corporations, joint ventures and cooperatives, and all heirs, executors, administrators, legal representatives, successors and assigns of such person where permitted or required by the context. Captions are inserted for convenience only, are not a part of this Agreement, and shall not be used in the interpretation of this Agreement.

 

B.      Acceptance of Subscription . It is understood and agreed that the Company shall have the right to accept or reject this subscription (the “ Subscription ”), in whole or in part, and that the same shall be deemed to be accepted by the Company only when it is signed by the Company.

 

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C.      Representations and Warranties of Subscriber . Subscriber hereby represents and warrants to the Company as follows:

 

i)     Subscriber has such knowledge and experience in financial and business matters that Subscriber is capable of evaluating the merits and risks of an investment in the Company and the suitability of the Securities as an investment for Subscriber;

 

ii)

 

(1)     Subscriber is an Accredited Investor; “ Accredited Investor ” means:

 

(A) an individual who has a net worth (either individually or jointly with spouse) in excess of $1,000,000 (excluding the individual’s principal residence); or an individual who had an individual income (NOT including joint income with spouse) in excess of $200,000 in each of the two most recent tax years and reasonably expects individual income in excess of $200,000 during the current tax year; or an individual who had an income (including joint income with spouse) in excess of $300,000 in each of the two most recent tax years and reasonably expects individual income in excess of $300,000 during the current tax year. “ Income ” for this purpose is computed by adding the following items to adjusted gross income for federal income tax purposes: (a) the amount of any tax-exempt interest income received; (b) the amount of losses claimed as a limited partner in a limited partnership; (c) any deduction claimed for depletion; (d) deductions for alimony paid; (e) deductible amounts contributed to an IRA or Keogh retirement plan; and (f) any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income pursuant to the provisions of Section 1202 of the Code; or

 

(B) an entity which is one of the following, not formed solely for the purpose of subscribing for the Securities:

 

(a) A bank, as defined in Section 3(a)(2) of the Securities Act of 1933, as amended (the “ Act, ” the “ Securities Act ” or the “ 1933 Act ”) or a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act of 1933, whether acting in an individual or a fiduciary capacity;

 

(b) An insurance company, as defined in Section 2(13) of the Securities Act of 1933;

 

(c) An investment company registered under the Investment Company Act of 1940;

 

(d) A business development company, as defined in Section 2(a) (48) of the Investment Company Act of 1940;

 

(e) A small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958;

 

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(f) An employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974 and the investment is made by Subscriber as a plan fiduciary, as defined in Section 3(21) of such Act, and Subscriber is a bank, insurance company or a registered investment advisor, or has total assets in excess of $5 million;

 

(g) A private business development company as defined in Section 202(a) (22) of the Investment Advisers Act of 1940;

 

(h) An organization described in Section 501 (c)(3) of the Internal Revenue Code, a corporation, a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring Securities, with total assets in excess of $5 million;

 

(i) An irrevocable trust with total assets in excess of $5,000,000 not formed for the specific purpose of acquiring Securities, whose purchase is directed by a person with such knowledge and experience in financial and business matters that (s)he is capable of evaluating the merits and risks of the prospective investment;

 

(j) A revocable trust that is revocable by its grantors, each of whose grantors is an accredited investor, qualifies as an accredited investor for the purposes of the subscription (each grantor should complete the individual accredited information questionnaire, and describe the fact that they are grantors of the trust on such individual questionnaire below); or

 

(k) An entity in which all of the equity owners are Accredited Investors; or

 

(2) a non “ U.S. person ” as such term is defined under Regulation S as promulgated by the Securities and Exchange Commission (“ SEC ”) under authority of the Securities Act; resides outside of the United States; was not solicited for an investment in this Offering by the Company or any person or entity acting on its behalf while he, she or it, was located within the United States; has not entered into this Agreement inside the United States; and certifies under penalty of perjury that it is neither a citizen nor a resident of the United States and the following definitions and acknowledgements are applicable to the current purchase.

 

(A) A “ U.S. person ” is defined by Regulation S of the Securities Act as:

 

Any natural person resident in the United States;

 

Any partnership or corporation organized or incorporated under the laws of the United States;

 

Any estate of which any executor or administrator is a U.S. person;

 

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Any trust of which any trustee is a U.S. person;

 

Any agency or branch of a foreign entity located in the United States;

 

Any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person;

 

Any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident in the United States; and

 

Any partnership or corporation if organized or incorporated under the laws of any foreign jurisdiction; and formed by a U.S. person principally for the purpose of investing in securities not registered under the Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a)) who are not natural persons, estates or trusts;

 

(B) At the time the buy order for the Securities was originated, Subscriber was outside the United States;

 

(C) Subscriber is purchasing the Securities for his, her or its own account and not on behalf of any U.S. person, and the sale has not been pre-arranged with a purchaser in the United States;

 

(D) All offering documents received by the Subscriber include statements to the affect that the securities have not been registered under the 1933 Act and may not be offered or sold in the United States or to U.S. persons unless the securities are registered under the 1933 Act or an exemption from the registration requirement is available;

 

(E) Subscriber has been informed that the Securities will not be registered in the United States under the 1933 Act, and are being offered and sold pursuant to this Agreement in reliance on an exemption from the registration requirements of the 1933 Act for non-public offerings;

 

(F) The “ United States ” means the United States of America, its territories and possessions, any State of the United States, and the District of Columbia; and

 

(G) The Subscriber will comply with all of the requirements of Regulation S of the 1933 Act.

 

iii)     The Subscriber is acquiring the Securities for his, her or its own account for long-term investment and not with a view toward resale, fractionalization or division, or distribution thereof, and he, she or it does not presently have any reason to anticipate any change in his, her or its circumstances, financial or otherwise, or particular occasion or event which would necessitate or require his, her or its sale or distribution of the Securities. No one other than the Subscriber has any beneficial interest in said securities. No person has made to the Subscriber any written or oral representations: (x) that any person will resell or repurchase any of the Securities; (y) that any person will refund the purchase price of any of the Securities, or (z) as to the future price or value of any of the Securities;

 

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iv)     Subscriber has received no representations or warranties from the Company, or its affiliates, employees or agents regarding the Securities or suitability of an investment in the Securities or the Company other than those set forth herein and attached hereto;

 

v)     Subscriber is able to bear the economic risk of the investment in the Securities and Subscriber has sufficient net worth to sustain a loss of Subscriber’s entire investment in the Company without economic hardship if such a loss should occur;

 

vi)     Subscriber has had an opportunity to inspect relevant documents relating to the organization and operations of the Company. Subscriber acknowledges that all documents, records and books pertaining to this investment which Subscriber has requested have been made available for inspection by Subscriber and Subscriber’s attorney, accountant or another adviser(s);

 

vii)     Subscriber has had an opportunity to ask questions of and receive satisfactory answers from the Company, or any person or persons acting on behalf of the Company, concerning the terms and conditions of this investment and the Offering and the Securities, and all such questions have been answered to the full satisfaction of Subscriber. The Company has not supplied Subscriber any information for investment purposes other than as contained in this Agreement and the attachments hereto, and Subscriber is relying on its own investigation and evaluation of the Company and the Securities in making an investment hereunder and not on any other information whatsoever, including, but not limited to, any presentations or other materials, other than this Agreement, provided to the Subscriber by the Company;

 

viii)     The Subscriber recognizes that the investment herein is a speculative venture and that the total amount of funds tendered to purchase Securities is placed at the risk of the business and may be completely lost. The purchase of Securities as an investment involves special risks;

 

ix)     The Subscriber: (i) if a natural person, represents that the Subscriber has reached the age of 21 and has full authority, legal capacity and competence to enter into, execute and deliver this Agreement and all other related agreements or certificates and to take all actions required pursuant hereto and thereto and to carry out the provisions hereof and thereof, or (ii) if a corporation, partnership, or limited liability company or partnership, or association, joint stock company, trust, unincorporated organization or other entity, represents that such entity was not formed for the specific purpose of acquiring the Shares and such entity is duly organized, validly existing and in good standing under the laws of the state of its organization. Subscriber is a bona fide resident and domiciliary of the state set forth in the Investor Application (the “ Qualification Questionnaire ”) and has no present intention to become a resident of any other state or jurisdiction;

 

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x)     Subscriber acknowledges and is aware of the following:

 

(1)     There are substantial restrictions on the transferability of the Securities; the Securities will not be, and investors in the Company have no right to require that the Securities be registered under the 1933 Act; there may not be any public market for the Securities; Subscriber may not be able to use the provisions of Rule 144 of the 1933 Act with respect to the resale of the Securities; and accordingly, Subscriber may have to hold the Securities indefinitely and it may not be possible for Subscriber to liquidate Subscriber’s investment in the Company. Subscriber agrees that the Securities shall not be sold, transferred, pledged or hypothecated unless such sale is exempt from registration under the 1933 Act. Subscriber also acknowledges that Subscriber shall be responsible for compliance with all conditions on transfer imposed by any blue sky or securities law administrator and for any expenses incurred by the Company for legal or accounting services in connection with reviewing a proposed transfer;

 

(2)     No federal or state agency has made any finding or determination as to the fairness of the Offering of the Securities for investment or any recommendation or endorsement of the Securities;

 

(3)      The Securities have not been approved or registered under any Blue Sky law or with any State Securities Division, and as such, there may be restrictions on the sale or transfer of such Securities under State law; and

 

(4)      The purchase of Securities under this Subscription Agreement is expressly conditioned upon the exemption from qualification of the offer and sale of the Securities from applicable Federal, state and provincial securities laws. The Company shall not be required to qualify this transaction under the securities laws of any jurisdiction and, should qualification be necessary, the Company shall be released from any and all obligations to maintain its offer, and may rescind any sale contracted, in the jurisdiction; provided, however, that upon any such rescission, the Company shall promptly return to Subscriber all funds received by the Company from the Subscriber prior to such rescission.

 

xi)     The Subscriber has carefully considered and has, to the extent he, she or it believes such discussion is necessary, discussed with his, her or its professional, legal, tax and financial advisors, the suitability of an investment in the Securities for his, her or its particular tax and financial situation and that the Subscriber and his, her or its advisers, if such advisors were deemed necessary, have determined that the Securities are a suitable investment for him, her or it;

 

xii)     The Subscriber has not become aware of this Offering and has not been offered Securities by any form of general solicitation or advertising, including, but not limited to, advertisements, articles, notices or other communications published in any newspaper, magazine, or other similar media or television or radio broadcast or any seminar or meeting where, to the Subscriber’s knowledge, those individuals that have attended have been invited by any such or similar means of general solicitation or advertising;

 

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xiii)     The Subscriber realizes that the Securities cannot readily be sold and will be restricted securities and therefore the Securities must not be purchased unless the Subscriber has liquid assets sufficient to assure that such purchase will cause no undue financial difficulties and the Subscriber can provide for current needs and possible personal contingencies;

 

xiv)     The Subscriber confirms and represents that he, she or it is able (i) to bear the economic risk of his, her or its investment, (ii) to hold the Securities for an indefinite period of time, and (iii) to afford a complete loss of his, her or its investment. The Subscriber also represents that he, she or it has (i) adequate means of providing for his, her or its current needs and possible personal contingencies, and (ii) has no need for liquidity in this particular investment;

 

xv)     The Subscriber understands that the Securities are being offered and sold to he, she, or it in reliance on specific exemptions from or non-application of the registration requirements of federal and state securities laws and that the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Subscriber set forth herein in order to determine the applicability of such exemptions and the suitability of the Subscriber to acquire the Securities. All information which the Subscriber has provided to the Company concerning the Subscriber’s financial position and knowledge of financial and business matters is correct and complete as of the date hereof, and if there should be any material change in such information prior to acceptance of this Agreement by the Company, the Subscriber will immediately provide the Company with such information;

 

xvi)     The Subscriber has the requisite power and authority to enter into and perform the transactions contemplated by this Agreement and the purchase of the Securities. The execution, delivery and performance of this Agreement by the Subscriber and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate, partnership or other entity action, and no further consent or authorization of the Subscriber or its Board of Directors, managers, stockholders, members, trustees, holders or partners, as the case may be, as required. When executed and delivered by the Subscriber, this Agreement shall constitute a valid and binding obligation of the Subscriber enforceable against the Subscriber in accordance with its terms;

 

xvii)     The Subscriber has not agreed to act with any of the other investors for the purpose of acquiring, holding, voting or disposing of the Securities purchased hereunder for purposes of Section 13(d) under the Securities Exchange Act of 1934, as amended, and the Subscriber is acting independently with respect to its investment in the Securities;

 

xviii)     The Subscriber is a bona fide resident or operates its principal place of business as set forth in this Subscription Agreement and Qualification Questionnaire, which Qualification Questionnaire Subscriber has completed completely and honestly;

 

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xix)     The Subscriber confirms and certifies that:

 

(a) Subscriber is in receipt of and has carefully and thoroughly read and reviewed and understands the Information for Residents of Certain States, attached hereto as Exhibit A .

 

(b) Prior to the Subscriber’s entry into this Agreement, Subscriber has had an opportunity to review the Company’s reports, schedules, forms, statements and other documents filed by the Company with the United States Securities and Exchange Commission (the “ SEC Reports ”) (which filings can be accessed by going to http://www.sec.gov/edgar/searchedgar/companysearch.html, typing “ Biotechnology ” in the “ Company name ” field, and clicking the “ Search ” button), including, but not limited to (A) the Form 10-K for the year ended May 31, 2016 (the “ Annual Report ”); (B) the Form 10-Qs for any and all quarters following the Annual Report filed with the Securities and Exchange Commission after May 31, 2016, and prior to the Subscriber’s execution of this Agreement (if any); and (C) the Form 8-Ks filed with the Securities and Exchange Commission on September 2, 2016 and September 22, 2016 and any other Form 8-Ks (or Form 8-K/As) filed with the Securities and Exchange Commission after September 22, 2016, and prior to the Subscriber’s execution of this Agreement.

 

(c) The Subscriber is aware of and understands the risks regarding the Company’s announced planned business combination transaction with Brown Technical Media Corporation, including, but not limited to the fact that such transaction may be delayed, may not close at all, may close on less favorable terms than announced, may require the Company to assume significant liabilities and/or incur significant costs and expenses, may result in a change of control of the Company, and that even if such transaction closes, such transaction may not be beneficial or accretive to the Company.

 

  (d) The Subscription hereunder is irrevocable by Subscriber, and, except as required by law, Subscriber is not entitled to cancel, terminate or revoke this Agreement or any agreements of Subscriber hereunder and that this Subscription Agreement and such other agreements shall survive the death or disability of Subscriber and shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, legal representatives and permitted assigns. If Subscriber is more than one person, the obligations of Subscriber hereunder shall be joint and several and the agreements, representations, warranties and acknowledgments herein contained shall be deemed to be made by and be binding upon each such person and his or her heirs, executors, administrators, successors, legal representatives and permitted assigns.

 

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  (e) No federal or state agency has made any findings or determination as to the fairness of the terms of this Offering for investment purposes; or any recommendations or endorsements of the Securities.

 

  (f) The Offering is intended to be exempt from registration under the Securities Act by virtue of Section 4(2) of the Securities Act and the provisions of Rule 506(b) of Regulation D and/or Regulation S thereunder, which is in part dependent upon the truth, completeness and accuracy of the statements made by the Subscriber herein.

 

  (g) It is understood that in order not to jeopardize the Offering’s exempt status under Section 4(2) of the Securities Act and Regulation D or Regulation S, any transferee may, at a minimum, be required to fulfill the investor suitability requirements thereunder.

 

  (h) The Company will not pay any brokers, dealers or finders fees in connection with the Offering.

 

  (i) Subscriber, as required by the Internal Revenue Code, certifies under penalty of perjury that 1) the Social Security Number or Federal Identification Number provided below is correct and 2) Subscriber is not subject to backup withholding either because Subscriber has not been notified that Subscriber is subject to backup withholding as a result of a failure to report interest or dividends, or because the Internal Revenue Service has notified Subscriber that Subscriber is no longer subject to backup withholding.

 

  (j) IN MAKING AN INVESTMENT DECISION, SUBSCRIBER MUST RELY ON HIS, HER, OR ITS OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

(k) THIS SUBSCRIPTION DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT PERMITTED UNDER APPLICABLE LAW OR TO ANY FIRM OR INDIVIDUAL THAT DOES NOT POSSESS THE QUALIFICATIONS PRESCRIBED IN THIS SUBSCRIPTION.

 

xx)     The Subscriber confirms and acknowledges that this is a “ best efforts, no minimum ” Offering; that the Company need not raise any certain level of funding; that regardless of the amount of funding raised in the Offering, the Company will not return any of the undersigned’s investment herein assuming the Subscription is accepted by the Company; and the Company is not required to use the funds raised in this Offering for any particular purpose or towards any specific use of proceeds. The Subscriber further confirms that the Company may undertake additional offerings in the future and/or may issue shares to consultants or employees at offering prices below that of the Offering, which may cause dilution to the Subscriber; and

 

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xxi)     The Subscriber expressly represents and warrants to the Company that (a) before executing this Agreement, he, she or it has fully informed itself, himself or herself of the terms, contents, conditions and effects of this Agreement, and the Shares; (b) the Subscriber has relied solely and completely upon its own judgment in executing this Agreement; (c) the Subscriber has had the opportunity to seek and has obtained the advice of its own legal, tax and business advisors before executing this Agreement; and (d) the Subscriber has acted voluntarily and of its, his or her own free will in executing this Agreement.

 

D.      Indemnification . Subscriber acknowledges that Subscriber understands the meaning and legal consequences of the representations and warranties in paragraph C hereof, and Subscriber hereby agrees to indemnify and hold harmless the Company and its affiliates, partners, officers, directors, agents, attorneys, and employees from and against any and all loss, damage or liability due to or arising out of a breach of any such representations or warranties and the breach of any representations and warranties whatsoever made herein. Notwithstanding the foregoing, however, no representation, warranty, acknowledgment or agreement made herein by Subscriber shall in any manner be deemed to constitute a waiver of any rights granted to Subscriber under federal or state securities laws. The representations and warranties set forth herein shall survive the date upon which the Subscriber becomes a shareholder of the Company and/or the date of this Agreement in the event the Company does not accept the Subscriber’s subscription. No representation, warranty or covenant in this Agreement, nor the Qualification Questionnaire, contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances under which they were or are to be made, not misleading.

 

E.      Compliance with Securities Laws . Subscriber understands and agrees that a legend has been or will be placed on any certificate(s) or other document(s) evidencing the Securities in substantially the following form:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES ACT. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS (I) THEY SHALL HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE SECURITIES ACT, OR (II) THE CORPORATION SHALL HAVE BEEN FURNISHED WITH AN OPINION OF COUNSEL, SATISFACTORY TO COUNSEL FOR THE CORPORATION, THAT REGISTRATION IS NOT REQUIRED UNDER ANY SUCH ACTS.

 

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F.      Future Financings and Offerings . Subscriber recognizes that the Company may seek to raise additional financing and working capital through a variety of sources in the future, and that although the Company may undertake one or more public or private offerings of its debt or equity securities, there can be no assurance that any such offering will be made or, if made, that it will be successful. Moreover, Subscriber understands and agrees that the Company reserves the right to make future offers, either public or private, of securities, including, but not limited to, promissory notes, shares of common stock, preferred stock or warrants, on terms that may be more than or less favorable than the Shares. Subscriber further confirms that Subscriber has no right to purchase any securities in any future offerings.

 

G.      Confidentiality . Subscriber agrees to maintain in confidence all information furnished by the Company or its agents that may be deemed to be material nonpublic information, including, but not limited to the fact that the Offering is being made and the terms and conditions of this Offering.

 

H.      Anti-Dilution Protection . In the event that the Company consummates a sale of Common Stock for cash consideration (a “ Financing ”) prior to January 1, 2018 (such applicable period, the “ Anti-Dilution Period ”), and the price per share of such Common Stock shares sold in such Financing (the “ Per Share Price ”) is less than $0.15 per share (the “ Anti-Dilution Price ”)(each as adjusted for stock splits, dividends, recapitalizations and the like), the Subscriber who purchased Shares hereunder shall receive such additional number of Shares equal to (i) the aggregate Purchase Price paid by the Subscriber, divided by (ii) the price that Common Stock was sold at in the Financing (or any subsequent Financing where the Per Share Price is less than the prior Anti-Dilution Price), minus (iii) the total aggregate Shares issued to the Subscriber at the time of his, her or its entry into this Agreement plus any additional Shares previously issued to the Subscriber pursuant to the terms of this Section H . Each time that additional Shares are issued to the Subscriber under this Section H , the “ Anti-Dilution Price ” shall be deemed to reset and equal the lowest Per Share Price for all Financings to date through the Anti-Dilution Period, immediately after such applicable issuance of Shares. Notwithstanding the above, no Shares will be issued to the Subscriber pursuant to this Section H and no anti-dilution rights hereunder will apply (i) upon the exercise of any warrants, options or convertible securities granted, issued and outstanding on the date of this Agreement; (ii) upon the grant or exercise of any stock or options which may hereafter be granted or exercised under any employee benefit plan, stock option plan or restricted stock plan of the Company now existing or to be implemented in the future; (iii) upon the issuance of any securities in connection with an acquisition by the Company; (iv) upon the issuance of any securities pursuant to a commitment by the Company that has been previously disclosed prior to the date hereof; (v) in connection with any public offering of securities; (vi) in connection with the sale, exercise or conversion of any convertible securities, warrants or options; or (vii) in connection with the issuance of shares of Common Stock other than for cash consideration.

 

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I.      Piggyback Registration Rights . The Company covenants and agrees that if, at any time prior to the Registration Rights Expiration Date (defined below), it proposes to file a registration statement with respect to any class of equity or equity-related securities (other than in connection with an offering to the Company’s employees or in connection with an acquisition, merger or similar transaction) under the Securities Act in a primary registration on behalf of the Company and/or in a secondary registration on behalf of holders of such securities, and the registration form to be used may be used for the issuance or resale of the Shares, the Company will either include the Shares in such registration statement or give prompt written notice to Subscriber of its intention to file such registration statement and will offer to include in such registration statement, such number of Shares with respect to which the Company has received written requests for inclusion therein within twenty (20) days after the giving of notice by the Company (the “ Piggyback Registration Rights ”). The Subscriber shall also provide the Company customary and reasonable representations and confirmations regarding the Shares held by the Subscriber, information relating to the beneficial ownership of other securities of the Company held by such Subscriber, information regarding the persons with voting and dispositive control over the Subscriber and such other information as the Company or its legal counsel may reasonably request. The Subscriber acknowledges and understands that the Company shall not be required to include Shares in a registration statement relating solely to an offering by the Company of securities for its own account if the managing underwriter or placement agent shall have advised the Company in writing that the inclusion of such securities will have a material adverse effect upon the ability of the Company to sell securities for its own account, and provided further that the Subscriber is not treated less favorably than others seeking to have their securities included in such registration statement. Notwithstanding the obligations set forth above, if any Securities and Exchange Commission guidance sets forth a limitation on the number of securities permitted to be registered on a particular registration statement as a secondary offering, the number of Shares to be registered on such registration statement will be reduced pro rata between the Subscriber (or other parties) whose securities are included in such registration statement. The “ Registration Rights Expiration Date ” is January 1, 2018.

 

J.      U.S.A. Patriot Act and Anti-Money Laundering Representations . Subscriber represents and warrants that Subscriber is not and is not acting as an agent, representative, intermediary or nominee for, a person identified on the list of blocked persons maintained by the Office of Foreign Assets Control, U.S. Department of Treasury. In addition, Subscriber is in full compliance with all applicable U.S. laws, regulations, directives, and executive orders imposing economic sanctions, embargoes, export controls or anti-money laundering requirements, including but not limited to the following laws: (1) the International Emergency Economic Powers Act, 50 U.S.C. 1701-1706; (2) the National Emergencies Act, 50 U.S.C. 1601-1651; (3) section 5 of the United Nations Participation Act of 1945, 22 U.S.C. 287c; (4) Section 321 of the Antiterrorism Act, 18 U.S.C. 2332d; (5) the Export Administration Act of 1979, as amended, 50 U.S.C. app. 2401-2420; (6) the Trading with the Enemy Act, 50 U.S.C. app. 1 et seq.; (7) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56; and (8) Executive Order 13224 (Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism) of September 23, 2001. The Subscriber represents that the amounts invested by it in the Company in the Offering were not and are not directly or indirectly derived from activities that contravene federal, state or international laws and regulations, including anti-money laundering laws and regulations. To the best of the Subscriber’s knowledge, none of: (1) the Subscriber; (2) any person controlling or controlled by the Subscriber; (3) if the Subscriber is a privately-held entity, any person having a beneficial interest in the Subscriber; or (4) any person for whom the Subscriber is acting as agent or nominee in connection with this investment is a country, territory, individual or entity named on an Office of Foreign Assets Control (“ OFAC ”) list, or a person or entity prohibited under the OFAC Programs.

 

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K.      Entire Agreement . This Subscription is the entire and fully integrated agreement of the parties regarding the subject matter hereof, and there are no oral representations, warranties, agreements, or promises pertaining to this Subscription, or the Securities, whether set forth in any presentations other documents or information provided to the Subscriber or otherwise.

 

L.      Construction . The parties acknowledge that each of them has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review this Agreement with its legal counsel and that this Agreement shall be construed as if jointly drafted by the parties hereto. All references in this Agreement as to gender shall be interpreted in the applicable gender of the parties.

 

M.      Purchase Payment . The Purchase Price shall be paid to the Company in cash, check or via wire transfer simultaneously with the Subscriber’s entry into this Agreement.

 

N.      Construction of Terms . As used in this Agreement, the terms “ herein, ” “ herewith, ” “ hereof ” and “ hereunder ” are references to this Agreement, taken as a whole; the term “ includes ” or “ including ” shall mean “ including, without limitation; ” the word “ or ” is not exclusive; and references to a “ Section, ” “ subsection, ” “ clause, ” “ Exhibit, ” “ Appendix, ” “ Schedule, ” “ Annex ” or “ Attachment ” shall mean a Section, subsection, clause, Exhibit, Appendix, Schedule, Annex or Attachment of this Agreement, as the case may be, unless in any such case the context requires otherwise. Exhibits, Appendices, Schedules, Annexes or Attachments to any document shall be deemed incorporated by reference in such document. All references to or definitions of any agreement, instrument or other document (a) shall include all documents, instruments or agreements issued or executed in replacement thereof, and (b) except as otherwise expressly provided, shall mean such agreement, instrument or document, or replacement or predecessor thereto, as modified, amended, supplemented and restated through the date as of which such reference is made.

 

O.      Effect of Facsimile and Photocopied Signatures . This Agreement may be executed in several counterparts, each of which is an original. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. A copy of this Agreement signed by one party and (a) faxed to another party or (b) scanned and emailed to another party, shall be deemed to have been executed and delivered by the signing party as though an original. A photocopy or PDF of this Agreement shall be effective as an original for all purposes.

 

P.      Severability . The holding of any provision of this Subscription Agreement to be invalid or unenforceable by a court of competent jurisdiction shall not affect any other provision of this Subscription Agreement, which shall remain in full force and effect.

 

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Q.      Further Assurances . The parties agree to execute and deliver all such further documents, agreements and instruments and take such other and further action as may be necessary or appropriate to carry out the purposes and intent of this Subscription Agreement.

 

R.      Governing Law . This Agreement shall be interpreted in accordance with the laws of the State of Texas. In the event of a dispute concerning this Agreement, the parties agree that venue lies in a court of competent jurisdiction in Harris County, Texas.

 

S.      Collection of Personal Information . The Subscriber (on its own behalf and, if applicable, on behalf of any person for whose benefit the Subscriber is subscribing) acknowledges and consents to the fact the Company is collecting the Subscriber’s (and any beneficial purchaser’s) personal information pursuant to this Agreement. The Subscriber (on its own behalf and, if applicable, on behalf of any person for whose benefit the Subscriber is subscribing) acknowledges and consents to the Company retaining the personal information for as long as permitted or required by applicable law or business practices. The Subscriber (on its own behalf and, if applicable, on behalf of any person for whose benefit the Subscriber is subscribing) further acknowledges and consents to the fact the Company may be required by applicable securities laws and stock exchange rules to provide regulatory authorities any personal information provided by the Subscriber respecting itself (and any beneficial purchaser). By executing this Agreement, the Subscriber is deemed to be consenting to the foregoing collection, use and disclosure of the Subscriber’s (and any beneficial purchaser’s) personal information. The Subscriber also consents to the filing of copies or originals of any of the Subscriber’s documents described herein as may be required to be filed with any stock exchange or securities regulatory authority in connection with the transactions contemplated hereby. The Subscriber represents and warrants that it has the authority to provide the consents and acknowledgments set out in this paragraph on behalf of all beneficial purchasers.

 

T.      Amount of Subscription. The undersigned hereby subscribes to _____________ Shares for an aggregate amount of $___________.

PURCHASER

 

Check enclosed in the amount of $ ____________ or Wire Transfer Sent in the Amount of $ __________

 

Subscribed for: _______________ Shares.

 

Social Security or Taxpayer I.D. Number [required if applicable]: ____________________________

 

Business Address (including zip code): ____________________________

Business Phone: (  ) ____________________________

 

Residence Address (including zip code) ____________________________

Residence Phone: (   ) ____________________________

 

All communications to be sent to: Business or Residence Address

 

Name Shares should be registered in:_________________________________________________

 

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If different than subscriber name please advise of the reason for such difference:

__________________________________________________________________

 

Address for registration of shares:___________________________________________________

 

Email Address:__________________________________________________________________

 

Please indicate on the following pages the form in which you will hold title to your interest in the securities. PLEASE CONSIDER CAREFULLY. ONCE YOUR SUBSCRIPTION IS ACCEPTED, A CHANGE IN THE FORM OF TITLE CONSTITUTES A TRANSFER OF THE INTEREST IN THE SECURITIES AND MAY THEREFORE BE RESTRICTED BY THE TERMS OF THIS SUBSCRIPTION, THE SECURITIES AND MAY RESULT IN ADDITIONAL COSTS TO YOU. Subscribers should seek the advice of their attorneys in deciding in which of the forms they should take ownership of the interest in the securities, because different forms of ownership can have varying gift tax, estate tax, income tax, and other consequences, depending on the state of the investor’s domicile and his or her particular personal circumstances.

 

Please select one of the following forms of ownership:

___ INDIVIDUAL OWNERSHIP (one signature required)

 

___ JOINT TENANTS WITH RIGHT OF SURVIVORSHIP AND NOT AS TENANTS IN COMMON (both or all parties must sign)

 

___ COMMUNITY PROPERTY (one signature required if interest held in one name, i.e., managing spouse; two signatures required if interest held in both names)

 

___ TENANTS IN COMMON (both or all parties must sign)

 

___ GENERAL PARTNERSHIP (fill out all documents in the name of the PARTNERSHIP, by a PARTNER authorized to sign, and include a copy of the Partnership Agreement)

 

___ LIMITED PARTNERSHIP (fill out all documents in the name of the LIMITED PARTNERSHIP, by a GENERAL PARTNER authorized to sign, and include a copy of the Limited Partnership Agreement and any other document showing that the investment is authorized)

 

___ LIMITED LIABILITY COMPANY (fill out all documents in the name of the LIMITED LIABILITY COMPANY, by a member authorized to sign, and include a copy of the LIMITED LIABILITY COMPANY’s Operating Agreement and any other documents necessary to show the investment is authorized.)

 

___ CORPORATION (fill out all documents in the name of the CORPORATION, by the President or other officer authorized to sign, and include a copy of the Corporation’s Articles and certified Corporate Resolution authorizing the signature)

 

___ TRUST (fill out all documents in the name of the TRUST, by the Trustee, and include a copy of the instrument creating the trust and any other documents necessary to show the investment by the Trustee is authorized. The date of the trust must appear on the Notarial where indicated.)

 

PLEASE ALSO COMPLETE PAGES 16, 17 OR 18 AS APPLICABLE, BELOW, AND

THE QUESTIONNAIRE BEGINNING ON PAGE 19 OF THIS SUBSCRIPTION

AGREEMENT, WHICH IS A REQUIRED PART OF THIS AGREEMENT.

 

  16  

 

 

 

EXECUTION

 

Please execute this Subscription Agreement by completing the appropriate section below.

 

1.     If the subscriber is an INDIVIDUAL , complete the following:

 

_____________________________________________

Signature of Subscriber

 

 

_____________________________________________

Name (please type or print)

 

_____________________________________________

Signature of Spouse or Co-Owner if funds are

to be invested as joint tenants by the entirety

or community property.

 

_____________________________________________

Name (please type or print)

 

 

2.     If the subscriber is a CORPORATION , complete the following:

 

The undersigned hereby represents, warrants and covenants that the undersigned has been duly authorized by all requisite action on the part of the corporation listed below (“ Corporation ”) to acquire the Shares and, further, that the Corporation has all requisite authority to acquire such Shares.

 

The officer signing below represents and warrants that each of the above representations or agreements or understandings set forth herein applies to that Corporation and that he has authority under the articles of incorporation, bylaws, and resolutions of the board of directors of such Corporation to execute this Subscription Agreement. Such officer encloses a true copy of the articles of incorporation, the bylaws and, as necessary, the resolutions of the board of directors authorizing a purchase of the investment herein, in each case as amended to date.

 

 

___________________________________________

Name of Corporation (please type or print)

 

 

By: ________________________________________

 

 

Name: ______________________________________

 

 

Title: _______________________________________

 

 

 

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3.     If the subscriber is a PARTNERSHIP , complete the following:

 

The undersigned hereby represents, warrants and covenants that the undersigned is a general partner of the partnership named below (“ Partnership ”), and has been duly authorized by the Partnership to acquire the Shares and that he has all requisite authority to acquire such Shares for the Partnership.

 

The undersigned represents and warrants that each of the above representations or agreements or understandings set forth herein applies to that Partnership and he is authorized by such Partnership to execute this Subscription Agreement. Such partner encloses a true copy of the partnership agreement of said Partnership, as amended to date, together with a current and complete list of all partners thereof.

 

_____________________________________________

Name of Partnership (please type or print)

 

 

By: __________________________________________

 

Name: ________________________________________

 

Title: _________________________________________

 

 

4.     If the subscriber is a TRUST , complete the following:

 

The undersigned hereby represents, warrants and covenants that he is duly authorized by the terms of the trust instrument (“ Trust Instrument ”) for the (“ Trust ”) set forth below to acquire the Shares and the undersigned, as trustee, has all requisite authority to acquire such Shares for the Trust.

 

The undersigned, as trustee, executing this Subscription Agreement on behalf of the Trust, represents and warrants that each of the above representations or agreements or understandings set forth herein applies to that Trust and he is authorized by such Trust to execute this Subscription Agreement. Such trustee encloses a true copy of the Trust Instrument of said Trust as amended to date.

 

__________________________________

Name of Trust (Please type or print)

 

 

By: _______________________________

Name: _____________________________

Title: ______________________________

 

 

 

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5.     If the subscriber is a LIMITED LIABILITY COMPANY , complete the following:

 

The undersigned hereby represents, warrants and covenants that the undersigned has been duly authorized by all requisite action on the part of the Limited Liability Company listed below (“ Company ”) to acquire the Shares and, further, that the Company has all requisite authority to acquire such Shares.

 

The officer signing below represents and warrants that each of the above representations or agreements or understandings set forth herein applies to that Company and that he has authority under the articles of organization, company agreement, and resolutions of the managers and/or members, as applicable, of such Company to execute this Subscription Agreement. Such officer encloses a true copy of the articles of organization, the operating agreement and, as necessary, the resolutions of the managers and/or members authorizing a purchase of the investment herein, in each case as amended to date.

 

 

___________________________________________

Name of Company (please type or print)

 

 

By: ________________________________________

 

 

Name: ______________________________________

 

 

Title: _______________________________________

 

 

 

 

ACCEPTED BY THE COMPANY this the _____ day of _________, 2016.

 

PANTHER BIOTECHNOLOGY, INC.

 

 

By:______________________________

 

Name:____________________________

 

Title:_____________________________

 

PLEASE ALSO COMPLETE THE QUESTIONNAIRE BEGINNING ON PAGE 18 OF

THIS SUBSCRIPTION AGREEMENT, WHICH IS A REQUIRED PART OF THIS AGREEMENT.

 

 

 

 

 

 

  19  

 

 

Subscription Documents - Continued

PANTHER BIOTECHNOLOGY, INC. (THE “ COMPANY ”)

INVESTOR APPLICATION

(QUALIFICATION QUESTIONNAIRE)

(CONFIDENTIAL)

 

ALL INFORMATION CONTAINED IN THIS APPLICATION WILL BE TREATED CONFIDENTIALLY. The undersigned understands, however, that the Company may present this application to such parties as the Company, in its discretion, deems appropriate when called upon to establish that the proposed offer and sale of the Securities are exempt from registration of the Securities Act of 1933, as amended, or meet the requirements of applicable securities and blue sky laws.

 

PART I - INDIVIDUALS (OTHERS COMPLETE PART II)

 

1.     Name: __________________________________

 

2.     Residence Address: __________________________________

 

Residence Telephone: _____________________________

 

3.     Social Security Number: ______________________________

 

Date of Birth: __________________________________

 

Citizenship: __________________________________

 

4.     Present Employer: __________________________________

 

Business Address: __________________________________

 

Business Telephone: __________________________________

 

Title/Position: __________________________________

 

Length of Time: __________________________________

 

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5.     I prefer to have communications sent to:

 

Home Address or _________Business Address

 

6.      Investment Experience

 

I have made investments, or been involved in activities, of the type indicated below (recognizing that the types of investments listed are not mutually exclusive and certain investments may fall into two or more of the categories listed):

CHECK ALL THAT APPLY

 

  __ (a) Ownership of stocks, bonds, and other securities

 

  __ (b) Investment in partnerships, joint ventures and other syndicates

 

  __ (c) Other direct or partnership investments (such as real estate, oil and gas, equipment leasing, research and development, agriculture or commodities syndications)

 

Do you make your own ultimate decisions on your investments? YES [   ]          NO [   ]

 

7.      Method of Investment Evaluation

 

Each subscriber must have sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of an investment in the Company or must retain the services of a Purchaser Representative(s) (who may be an attorney, accountant or other financial advisor but not a person employed by or associated with the Company or its affiliates) for the purpose of this particular transaction.

 

This item is presented in alternative form. Please cheek the appropriate alternative.

 

____ Alternative One: No Advisor.

 

I have such knowledge and experience in financial and business matters that I am capable of evaluating the merits and risks of an investment in the Company and of making an informed investment decision, and will not require a Purchaser Representative.

 

____ Alternative Two: Purchaser Representative.

 

  21  

 

 

I have relied upon the advice of the following Purchaser Representative (who is not affiliated with the Company or its affiliates) in evaluating the merits and risks of an investment in the Company.

 

Name: _____________________________________

(name of purchaser representative)

 

Address: _____________________________________

 

Relationship: _____________________________________

 

The above-named Purchaser Representative and I together have such knowledge and experience in financial and business matters that we are capable of evaluating the merits and risks of an investment in the Company and of making an informed investment decision.

 

PLEASE COMPLETE 8 OR 9, BELOW

 

8.      Accredited Individual Investor

 

As an individual, I ________________________________________ (PRINT NAME) represent that I (please check all that are applicable):

 

¨ have a net worth (either individually or jointly with spouse) in excess of $1,000,000 in United States Dollars (“ USD ”) (not including my principal residence); or

 

¨ am an individual who had an individual income (NOT including joint income with spouse) in excess of USD $200,000 in each of the two most recent tax years and reasonably expects individual income in excess of $200,000 during the current tax year; or

 

¨ am an individual who had an income (including joint income with spouse) in excess of USD $300,000 in each of the two most recent tax years and reasonably expects individual income in excess of USD $300,000 during the current tax year.

 

Income ” for this purpose is computed by adding the following items to adjusted gross income for federal income tax purposes: (a) the amount of any tax-exempt interest income received; (b) the amount of losses claimed as a limited partner in a limited partnership; (c) any deduction claimed for depletion; (d) deductions for alimony paid; (e) deductible amounts contributed to an IRA or Keogh retirement plan; and (f) any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income pursuant to the provisions of Section 1202 of the Code.

 

I, the undersigned, represent that I do not have any state or federal judicial judgments adverse to me nor are there any state or federal tax liens against me, nor is there any pending or threatened litigation adverse to me. I, the undersigned, undertake to notify the Company immediately of any material change in any of such information occurring prior to the closing of the Offering or, if relevant, any time during the existence of the Company.

 

Date: ___________________              Signature: ________________________________________

 

  22  

 

 

9.      Non-U.S. Person Investor

 

As an individual, I ________________________________________ (PRINT NAME) represent that I reside outside of the United States and am not a “ U.S. person ” as such term is defined under Regulation S as promulgated by the SEC under authority of the 1933 Act. I was not solicited for an investment in the Offering by the Company or any person or entity acting on its behalf while I was located within the United States and has not entered into the Subscription Agreement inside the United States. To enable the Company to avoid withholding interest paid, I certify under penalty of perjury that I am neither a citizen nor a resident of the United States and that its address set forth above is correct. At the time the buy order for the Securities was originated, Subscriber was outside the United States. Subscriber is purchasing the Securities for his or her own account and not on behalf of any U.S. person, and the sale has not been pre-arranged with a purchaser in the United States. I further agree to comply with all of the requirements of Regulation S of the 1933 Act.

 

I, the undersigned, represent that I do not have any state or federal judicial judgments adverse to me nor are there any state or federal tax liens against me, nor is there any pending or threatened litigation adverse to me. I, the undersigned, undertake to notify the Company or the Company immediately of any material change in any of such information occurring prior to the closing of the Offering or, if relevant, any time during the existence of the Company.

 

Date: ___________________              Signature: ________________________________________

 

 

[If individual purchasers are co-tenants, tenants-in-common or joint owners

(including joint owners with such purchaser’s spouse) all co-tenants, tenants-in-common and/or

joint owners shall complete a copy of Part I above]

 

 

 

 

 

 

 

 

 

 

 

 

 

  23  

 

 


PART II-INVESTORS WHO ARE NOT INDIVIDUALS

 

1.      General Information

 

Entity Name (“ Entity ”) : ___________________________________________

 

Address of Principal Office: ___________________________________________

 

Type of Organization: ___________________________________________

 

Date and Place of Organization: ___________________________________________

 

( Please attach a copy of your organizational documents in effect, including any amendments ).

 

2.      Business

 

A brief description of the business conducted by the entity is as follows:

 

Each person involved in making the decision on behalf of the entity, to subscribe to purchase Securities is listed below [NOTE AT LEAST ONE NAME MUST BE LISTED] :

 

Name __________________                    Title __________________

 

Name __________________                    Title __________________

 

Name __________________                    Title __________________

 

[Please list any additional names on a separate page].

 

Each person named above must complete Part I of this questionnaire.

 

  24  

 

 

PLEASE COMPLETE 3 OR 4, BELOW AND PLEASE ALSO COMPLETE SECTION 5

 

3.      Accredited Investor Status of Entity

 

Please cheek the appropriate description which applies to you.

 

_____ (a) A bank, as defined in Section 3 (a)(2) of the Securities Act of 1933, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act of 1933, whether you are acting in an individual or a fiduciary capacity.

 

_____ (b) An insurance company, as defined in Section 2(13) of the Securities Act of 1933.

 

_____ (c) An investment company registered under the Investment Company Act of 1940.

 

_____ (d) A business development company, as defined in Section (a)(48) of the Investment Company Act of 1940.

 

_____ (e) A small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958.

 

_____ (f) An employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974 and the investment is made by you as a plan fiduciary, as defined in Section 3(21) of such Act, and you are a bank, insurance company or a registered investment advisor, or you have total assets in excess of $5 million.

 

_____ (g) A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.

 

_____ (h) An organization described in Section 501 (c)(3) of the Internal Revenue Code, a corporation, a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring Securities, with total assets in excess of $5 million.

 

_____ (i) An entity (other than a trust, which must meet the requirements set forth in Section (j), below) in which all of the equity owners are accredited investors and meet at least one of the criteria listed in Part I, Section 8 of this Questionnaire.

 

_____ (j) A trust with total assets in excess of $5,000,000 not formed for the specific purpose of acquiring Securities, whose purchase is directed by a person with such knowledge and experience in financial and business matters that (s)he is capable of evaluating the merits and risks of the prospective investment.

 

  25  

 

 

If you checked (i), please complete the following part of this question:

 

(1)     List all equity owners: __________________________________

 

(2)     What is the type of entity? _______________________________

 

(3)     Attach a copy of your resolutions or other evidence of the entity’s authority to make this investment.

 

(4)     Represent that each equity owner qualifies individually to Part I, Section 9 of this Questionnaire by printing each equity owners name below (you may include an additional sheet if necessary):

 

_________________________________________________________

 

_________________________________________________________

 

_________________________________________________________

 

(5)     Please confirm that the entity was not formed solely for the purpose of subscribing for Securities in the Offering by initialing below:

 

_________________________________________________________

 

4.      Non “U.S. Person Status”

 

Please initial next to the below paragraph certifying the accuracy of such representations:

 

______ The Entity is organized and has a principal place of business outside of the United States and is not a “ U.S. person ” as such term is defined under Regulation S as promulgated by the SEC under authority of the 1933 Act. The Entity was not solicited for an investment in the Offering by the Company or any person or entity acting on its behalf within the United States and has not entered into the Subscription Agreement inside the United States. To enable the Company to avoid withholding interest paid, the Entity certifies under penalty of perjury that it is neither a citizen nor a resident of the United States and that its address set forth above is correct. At the time the buy order for the Securities was originated, Subscriber was outside the United States. Subscriber is purchasing the Securities for its own account and not on behalf of any U.S. person, and the sale has not been pre-arranged with a purchaser in the United States. The Entity further agrees to comply with Regulation S of the 1933 Act.

 

  26  

 

 

5.      Representations

 

The undersigned represents on behalf of the entity that:

 

(a) The entity has, and its officers, employees, directors or equity owners have, sufficient knowledge and experience in similar programs or investments to evaluate the merits and risks of an investment in the Company (or the entity has retained an attorney, accountant, financial advisor or consultant as a Purchaser Representative); that because of the background and employment experience of the entity’s equity owners, its officers, directors or employees, it has received and has had access to material and relevant information enabling it to make an informed investment decision, and that all data it has requested has been furnished to it.

 

If applicable, the name, employer, address and telephone number of the entity’s Purchaser Representative follows:

 

(b) The information contained herein is complete and accurate and may be relied upon by you.

 

Attached is the requested information (e.g., articles of incorporation, bylaws and resolutions) for your review.

 

The undersigned represents that the information provided above is true and correct and acknowledges such investor’s awareness that the Company, and other investors are relying upon the accuracy of such information to ensure that the sale of any securities by the Company to such investor is in compliance with applicable federal and state securities laws. The undersigned represents that neither the entity it represents nor, its officers, directors or shareholders have any state or federal judicial judgments adverse to them nor are there any state or federal tax liens against them, nor is there any pending or threatened litigation adverse to them. The undersigned undertakes to notify the Company immediately of any material change in any of such information occurring prior to the closing of the Offering, or, if relevant, any time during the existence of the Company.

 

Entity

 

Date: ____________________________________________________

 

Name of Entity Typed or Printed: _________________________________

 

By: ____________________________________________________

 

Name: ____________________________________________________

 

Title: ____________________________________________________

 

 

PLEASE ALSO CONFIRM THAT EACH PERSON NAMED IN PART II, SECTION 2,

ABOVE HAS COMPLETED PART I OF THIS QUESTIONNAIRE.

 

 

  27  

 

 

EXHIBIT A

 

INFORMATION FOR RESIDENTS OF CERTAIN STATES

 

Each prospective purchaser should read the legend and/or state disclosure listed below applicable to the state in which he resides. The state disclosures and/or legends listed below do not in any way constitute or imply that offers or sales may be made in such states. Offers and/or sales may only be made in those states approved by the Company. If any prospective purchaser resides in a state not included below, such prospective investor should request the state legend applicable to such purchaser’s state prior to making an investment in the Company.

 

California Residents :

 

These securities have not been registered under the Securities Act of 1933, as amended, or the California Corporations Code by reason of specific exemptions thereunder relating to the limited availability of the offering. These securities cannot be sold, transferred or otherwise disposed of to any person or entity unless subsequently registered under the Securities Act of 1933, as amended, or the California Corporations Code, if such registration is required.

 

Connecticut Residents :

 

These securities offered herein have not been registered under section 36-485 of the Connecticut Uniform Securities Act (the “ Act ”) and, therefore, cannot be resold unless they are registered under the Act or unless an exemption from registration is available.

 

Florida Residents :

 

These securities have not been registered under the Florida Securities and Investor Protection Act in reliance upon exemption provisions contained therein. Section 5l7.061(11)(a)(5) of the Florida Securities and Investor Protection Act (the “ Florida Act ”) provides when sales are made to five or more purchasers in this state that any purchaser of securities in Florida which are exempted from registration under Section 517.061(11) of the Florida Act may withdraw his subscription agreement and receive a full refund of all monies paid, within three days after the later of (i) the date he tenders consideration for such securities and (ii) the date this statutory right of rescission is communicated to him (which shall be established conclusively by the Company’s provision of this “ Information for Residents of Certain States ”). Any Florida resident who purchases securities is entitled to exercise the foregoing statutory rescission right by telephone, telegram, or letter notice to the Company. Any telegram or letter should be sent or postmarked prior to the end of the third business day. A letter should be mailed by certified mail, return receipt requested, to ensure its receipt and to evidence the time of mailing. Any oral requests should be confirmed in writing.

 

Georgia Residents :

 

The securities sold in the state of Georgia have been issued or sold in reliance on paragraph (I3) of Code section 10-5-9 of the Georgia Securities Act of 1973, and may not be sold or transferred except in a transaction which is exempt under such Act or pursuant to an effective registration under such Act.

 

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Illinois Residents :

 

These securities have not been approved or disapproved by the Secretary of State of Illinois, nor has the Secretary of State of Illinois nor the State of Illinois passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 

Indiana Residents :

 

These securities have not been registered under Section 3 of the Indiana Securities Act and therefore, cannot be resold or transferred unless they are so registered or unless an exemption from registration is available.

 

Maryland Residents :

 

The Securities which are the subject of this offering memorandum have not been registered under the Maryland Securities Act in reliance upon the exemption in section 11-602(9) of such act. Unless these Securities are registered, they may not be re-offered for sale or resold in the State of Maryland, except as security, or in a transaction exempt under such Act.

 

Minnesota Residents :

 

The securities represented by this Memorandum have not been registered under Chapter 80A of the Minnesota Securities Laws and may not be sold, transferred or otherwise disposed of except pursuant to registration or an exemption therefrom.

 

New Jersey Residents :

 

These securities have not been approved or disapproved by the Bureau of Securities of the State of New Jersey, nor has the Bureau passed on or endorsed the merits of this Offering. The filing of the written Offering does not constitute approval of the issue or the sale thereof by the Bureau of Securities. Any representation to the contrary is unlawful.

 

These are speculative securities and involve a high degree of risk. These securities are offered only to bona fide adult residents of the State of New Jersey.

 

New York Residents:

 

This Private Placement Memorandum has not been reviewed by the attorney general of the State of New York (or any other state) prior to its issuance and use. The attorney general of the State of New York has not passed upon or endorsed the merits of this Offering. Any representation to the contrary is unlawful.

 

All purchasers who are offered the Securities within or from the State of New York shall be deemed to automatically confirm and certify the following to the Company in connection with their execution of the Subscription Agreement:

 

“I understand that this offering of Securities in the Company has not been reviewed by the Attorney General of the State of New York because of the issuer’s representations that this is intended to be a nonpublic Offering pursuant to SEC Regulation D and that if all of the conditions and limitations of Regulation D are not complied with, the offering will be resubmitted to the Attorney General for amended exemption. I understand that any offering literature used in connection with this offering has not been pre-filed with the Attorney General and has not been reviewed by the Attorney General. This security is being purchased for his own account for investment, and not for distribution or resale to others. I agree that I will not sell or otherwise transfer these securities unless they are registered under the Federal Securities Act of 1933, or unless an exemption from such registration is available. I represent that I have adequate means of providing for my current needs and possible personal contingencies and that I have no need for liquidity of this investment.”

 

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“It is understood that all documents, records and books pertaining to this investment have been made available for inspection by my attorney and/or my accountant or my offeree representative and myself, and that the books and records of the issuer will be available upon reasonable notice for inspection by investors during reasonable business hours at its principal place of business.”

 

Ohio Residents :

 

These securities have not been approved or disapproved as an investment for any Ohio resident by the Ohio Division of Securities nor has the Division passed upon the accuracy of the offering.

 

Pennsylvania Residents :

 

Residents of the Commonwealth of Pennsylvania can only transfer the Securities offered hereby in accordance with the provisions of section 203(d) of the Pennsylvania Securities Act of 1972 and are subject to the following conditions:

 

A. Under the provisions of the Pennsylvania Securities Act of 1972, a Pennsylvania resident who accepts an offer to purchase securities exempted from registration by section 203(d)(f)(p) or (r) directly from an issuer or affiliate of an issuer shall have the right to withdraw his acceptance without incurring any liability to the seller, underwriter, if any, or any other person, within two business days from the date of receipt by the issuer of this written binding contract to purchase, or in the case of a transaction where there is no written binding contract to purchase, within two business days after he makes the initial payment for the securities being offered.

 

B. Pursuant to Section 203.041(c)(1) of the Pennsylvania Blue Sky Regulations (“ Regulations ”) , the purchaser must acknowledge that he or she agrees not to sell the securities purchased herein within 12 months after the date of purchase except in accordance with Section 204.011 of the Regulations. Section 204.011 provides for an automatic waiver of the 12 month holding period under certain conditions including that the securities purchased are subsequently being registered under the Securities Act of 1933 or 1934.

 

Texas Residents :

 

Each purchaser of Securities must bear the economic risk of an investment in the Company for an indefinite period of time. The Securities have not been registered under the Securities Laws of Texas or the Securities Act of 1933 and may not be transferred or sold by the purchaser thereof except in transactions that are exempt from registration under the Securities Laws of Texas and the Securities Act of 1933 or pursuant to an effective registration thereunder.

 

Virginia Residents :

 

Any predictions and representations, written or oral, which do not conform to those contained in the Memorandum, shall not be permitted.

 

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Wisconsin Residents :

 

The Securities Commission of the State of Wisconsin has not passed upon the merits or qualifications of, or recommended or given approval to, the securities hereby offered, nor has the Securities Commissioner of this state passed upon the adequacy of this Memorandum. Any representation to the contrary is a criminal offense.

 

The investor must rely on his own examination of the person or entity creating the securities and the terms of the Offering, including the merits and risks involved in making an investment decision on these securities.

 

NASAA UNIFORM LEGEND

 

In making an investment decision investors must rely on their examination of the offering, including the merits and risks involved. These securities have not been recommended by a federal or state securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this document. Any representation to the contrary is a criminal offense. These securities are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the Securities Act of 1933, as amended, and the applicable state securities laws, pursuant to registration or exemption therefrom. Investors should be aware that they will be required to bear the investment risks of this investment for an indefinite period of time.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Exhibit 10.2

 

THIS CONVERTIBLE promissory note (this “NOTE”) AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR (B) IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS.

 

CONVERTIBLE promissory note

 

$[___________] _______, 2016

 

FOR VALUE RECEIVED , Brown Technical Media Corp. (the “ Company ”), a Texas Corporation, promises to pay to __________________________ (the “ Holder ”), the principal amount of ____________ Dollars ($___________).

 

This Note is one of a series of substantially identical notes in the aggregate principal amount of up to $75,000 issuable by the Company (collectively the “ Notes ”). The Notes are otherwise being issued on the terms set forth in the “Terms of Convertible Promissory Note Offering” distributed by the Company on or about _______, 2016. Each of the Notes shall rank on a parity with the other Notes in right of payment. All payments made by the Company with respect to any of the Notes shall be made pro rata to the holders of all of the Notes in accordance with the respective principal amounts outstanding thereunder.

 

Unless this Note is earlier converted pursuant to Article 2, the principal amount of this Note and all accrued and unpaid interest hereon shall be payable in full on December 31, 2016.

 

This Note shall bear interest at the rate of 10% per annum, compounded annually.

 

This Note is subject to the following provisions, terms and conditions:

 

Article 1
PREPAYMENT

 

Section 1.1            Prepayment. This Note may be prepaid by the Company in whole or in part.

 

Article 2
CONVERSION

 

Section 2.1            Optional Conversion upon Qualified Equity Financing. If, at any time while this Note shall be outstanding, the Company shall conclude a future equity financing where at least $500,000 in new cash (i.e., not including amounts converted under the Notes) is raised from accredited investors (a “ Qualified Financing ”), the entire unpaid principal amount of and accrued interest on this Note shall be eligible to be converted into shares of the equity security issued by the Company in a Qualified Financing at a price per share equal to 75% of the price per share paid by the purchasers of the security issued in the Qualified Financing and otherwise on the same terms as the security issued in the Qualified Financing. The Holder shall give written notice to the Company prior to the initial closing of the Qualified Financing as to whether the Holder elects that this Note convert into the securities issued in the Qualified Financing and the amount that the Holder wishes to convert.

 

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Section 2.2            Optional Conversion upon Other Equity Financing. If, at any time while this Note shall be outstanding, the Company shall conclude an equity financing that is not a Qualified Financing (each, a “ Non-Qualified Financing ”), the Holder, at the Holder’s sole option, may elect in writing to convert all the outstanding principal of and accrued interest on this Note into the shares of equity securities issued in connection with the Non-Qualified Financing (the “ Non-Qualified Financing Securities ”) at a price per share equal to 75% of the price per share paid by the purchasers of the security issued in the Non-Qualified Financing. The Non-Qualified Financing Securities shall otherwise be issued on the same terms and conditions that apply to the Non-Qualified Financing.

 

Section 2.3            Surrender of Note; Issuance of Stock Certificates. As promptly as practicable after the conversion of this Note as provided in Sections 2.1 through 2.2 above, the Holder shall surrender this Note to the Company for cancellation, whereupon the Company shall, as applicable, issue and deliver to the Holder, in the name of the Holder, a certificate or certificates for the number of shares issuable upon the conversion of this Note as set forth in Sections 2.1 or 2.2.

 

Section 2.4            Notice by the Company. The Company shall notify the Holder of a Qualified Financing or Non-Qualified Financing, as applicable, in writing at least 10 days prior to the initial closing of such event.

 

Section 2.5            No Fractional Shares. If conversion to this Note would result in the issuance of a fractional share, the amount payable under this Note that therefore cannot be applied to the purchase of the shares purchasable upon conversion shall be paid to the holder in cash.

 

Article 3
COVENANTS

 

Section 3.1            Negative Covenants. The Company hereby agrees that, as long as this Note shall remain outstanding, the Company shall not take any of the following actions without the consent of the holders of at least a majority of the outstanding principal amount of the Notes (the “ Requisite Holders ”):

 

(a)                The Company shall not incur additional indebtedness for borrowed money in excess of $100,000, except for (i) any indebtedness already existing as of the date hereof, and (ii) the indebtedness under the Notes.

 

(b)                The Company shall not enter into any agreement that would impair, interfere with or conflict with the Company’s obligations hereunder.

 

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(c)                The Company shall not sell, lease, transfer or otherwise dispose of (including, without limitation, through licensing or partnering arrangements) any material assets of the Company, other than in the ordinary course of business.

 

(d)                The Company shall not declare or pay any dividends or make any distributions of cash, property or securities of the Company with respect to any shares of its common stock, preferred stock or any other class or series of its stock, or, directly or indirectly (except for repurchases of common stock by the Company in accordance with the terms of employee benefit plans or written agreement between the Company and any of its employees approved by the Board of Directors of the Company), redeem, purchase, or otherwise acquire for any consideration any shares of its common stock or any other class of its stock.

 

Article 4
REMEDIES OF HOLDER IN EVENT OF DEFAULT

 

Section 4.1            Events of Default Defined. Any of the following that shall occur and be continuing for any reason whatsoever (and whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or otherwise) shall constitute an event of default (each an “ Event of Default ”):

 

(a)                any default occurs in the payment of any principal of or accrued interest on this Note when due and such failure continues uncured for at least 10 days after written notice thereof is received by the Company from the Requisite Holders; or

 

(b)                the Company shall fail to perform or observe any covenant or agreement set forth in this Note in any material respect and such failure continues uncured for at least 30 days after written notice thereof is received by the Company from the Requisite Holders; or

 

(c)                if an order, judgment or decree is entered adjudicating the Company bankrupt or insolvent; or if the Company shall commence any case, proceeding or other action relating to it in bankruptcy or seeking reorganization, liquidation, dissolution, winding-up, arrangement, composition or readjustment of its debts, or for any other relief, under any bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement, composition, readjustment of debt or other similar act or law of any jurisdiction, domestic or foreign, now or hereafter existing; or if the Company shall apply for a receiver, custodian or trustee of it or for all or a substantial part of its property; or

 

(d)                if any case, proceeding or other action against the Company shall be commenced in bankruptcy or seeking reorganization, liquidation, dissolution, winding-up, arrangement, composition or readjustment of its debts, or any other relief, under any bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement, composition, readjustment of debt or other similar act or law of any jurisdiction, domestic or foreign, now or hereafter existing; or if a receiver, custodian or trustee of the Company or for all or a substantial part of its properties shall be appointed; or if a warrant of attachment, execution or distraint, or similar process, shall be issued against any substantial part of the property of the Company; and if, in each such case, such condition shall continue for a period of 90 days undismissed, undischarged or unbonded.

 

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Section 4.2            Remedies. When any Event of Default described in Section 4.1 has occurred, then the Requisite Holders may, by notice in writing sent by registered or certified mail to the Company, declare the entire principal amount and all interest accrued and unpaid on this Note to be, and this Note and all other Notes shall thereupon become, forthwith due and payable, without any presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived. No course of dealing on the part of the holder of this Note or the Requisite Holders nor any delay or failure on the part of the holder of this Note or the Requisite Holders to exercise any right shall operate as a waiver of such right or otherwise prejudice such holder’s rights, powers and remedies. The holder of this Note shall not, absent the approval of the Requisite Holders, be entitled to invoke the acceleration remedy set forth in this Section 4.2.

 

Article 5

AMENDMENTS, WAIVERS AND CONSENTS

 

Section 5.1            Amendment and Waiver. Any provision of the Notes, including this Note, may be amended, modified or supplemented, and waiver or consents to departures from the provisions of the Notes may be given, if the Company and the Requisite Holders consent thereto. Such consent may be effected by any available legal means, including without limitation at a special or regular meeting, by written consent or otherwise. Notwithstanding anything to the contrary set forth herein, any provision of this Note may also be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may be given, the result of which shall not materially or adversely affect any other holder of the Notes, upon the written agreement of the Company and the holder of this Note.

 

Section 5.2            Effect of Amendment or Waiver. Any amendment, modification, supplement or waiver effected in accordance with Section 5.1 shall apply to and be binding upon the holder of this Note, upon each future holder of this Note and upon the Company, whether or not this Note shall have been marked to indicate such amendment, modification, supplement or waiver. No such amendment, modification, supplement or waiver shall extend to or affect any obligation not expressly amended, modified, supplemented or waived or impair any right consequent thereon.

 

Article 6
TRANSFER, ETC.

 

Section 6.1            Instruments of Transfer. This Note, if presented or surrendered for exchange or transfer, shall, if so required by the Company, be accompanied by a written instrument or instruments of transfer and investment representations, in form satisfactory to the Company, duly executed by the registered holder.

 

Section 6.2            Loss, Theft, etc. Upon receipt of evidence satisfactory to the Company of the loss, theft, mutilation or destruction of this Note, and in the case of such loss, theft or destruction upon delivery of a bond of indemnity in such form and amount as shall be reasonably satisfactory to the Company, or in the event of such mutilation upon surrender and cancellation of this Note, the Company shall make and deliver without expense to the holder thereof, a new Note, of like tenor, in lieu of such lost, stolen, destroyed or mutilated Note. At the discretion of the Company, the Company may accept in lieu of a bond of indemnity, the affidavit of the holder that sets forth the fact of loss, theft or destruction and of his or her ownership of this Note at the time of such loss, theft or destruction as satisfactory evidence thereof and no further indemnity shall be required as a condition to the execution and delivery of a new Note other than the written agreement of such owner to indemnify the Company.

 

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Section 6.3            Person Deemed Owner. Prior to due presentation of this Note for registration of transfer, the Company may deem and treat the person in whose name this Note shall be issued as the absolute owner of this Note (whether or not this Note shall be overdue and notwithstanding any notation of ownership or other writing hereon) for the purpose of receiving payment of or on account of the principal thereof and interest due thereon and for all other purposes, and the Company shall not be affected by any notice to the contrary.

 

Article 7
MISCELLANEOUS

 

Section 7.1            Section and Other Headings. The section and other headings contained in this Note are for reference purposes only and shall not affect the meaning or interpretation of this Note.

 

Section 7.2            Notice. All notices given hereunder shall be in writing, shall be sent in accordance with Section 10(a) of the Subscription Agreement entered into by the Holder relating to the purchase of this Note.

 

Section 7.3            Governing Law. This Note shall be governed by, and construed and enforced in accordance with, the laws of the State of Texas.

 

IN WITNESS WHEREOF , the Company has caused this Note to be signed by a duly authorized officer as of the day and year first above written.

 

BROWN TECHNICAL MEDIA CORP.

 

By: /s/ Noah Davis

      Noah Davis

      President and Chief Executive Officer

 

 

 

 

 

 

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Exhibit 10.3

   
  CFS LOGO COLOR

Helping You Do More of What You Do Well!

 

 

5300 N. Braeswood, #370          Phone 713 780 0806

Houston, TX 77096-3317          Fax 800 861 1175

www.clearfinancials.com          E mail steven@clearfinancials.com

   
   
   
  April 9, 2013

 

 

Pat Ginther

Owner

Brown Book Shop, Inc.

1517 San Jacinto

Houston, TX 77002

 

Dear Pat:

 

It was a pleasure to meet you last week in my office and learn more about the Brown Book Shop, Inc. It is our understanding that the Brown Book Shop, Inc. (the “Client” or “Brown”) would like to retain Clear Financial Solutions, Inc. (the “Firm”) to assist you in evaluating the profitability and sustainability of Brown. We have prepared this proposal (hereinafter referred to as the “Agreement”) based upon our understanding of your needs. If this Agreement meets with your expectations, you will need to sign in the space below demonstrating your acceptance thereto.

 

We anticipate that these services will be performed by Steven M. Plumb, CPA and the staff of the Firm. The standard billing rates for our partners and staff are as follows:

 

  Partner Level $250 per hour  
  Manager Level $125 - $175 per hour  
  Staff Level $100 per hour  
  Bookkeeper $65 per hour  

 

During our meeting we discussed the following matters:

 

Ø Prepare our Clear Power Reports for the past 5 fiscal years. A CPR report will provide ratio and key performance indicators about your business and how it compares to industry peers, and;
Ø Analyze sales volume by title, segment and industry with a goal of determining where to focus marketing efforts

 

After talking to my team, we also believe that marketing is the key to the sustainability of Brown. Accordingly, I also suggest that you consider expanding the scope of work to include the following:

 

Ø Provide guidance on developing an Internet sales strategy

 

Firm reports to the Chief Executive Officer and to the Audit Committee of the Board of Directors. If an Audit Committee is not in place then the Firm reports to the Board of Directors. Firm has the responsibility, authority and freedom to report to the Audit Committee independent of management.

 

Please be aware, however, that none of the services provided can be relied upon to detect errors, irregularities, or illegal acts that may exist. However, we will inform the appropriate level of management of any errors that come to our attention or any irregularities or illegal acts that come to our attention.

 

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Compensation

Consulting Services

 

Gather data and prepare Clear Power Reports (ratio analysis)   $ 2,500  
Analyze sales and inventory activity     2,000  
Preliminary market research     2,500  
         
Total   $ 7,000  

 

If you are in agreement, please sign the agreement and remit a retainer equal to 50% of the total, or $3,500. If you do not require the preliminary market research to be done, please deduct this from the total and remit a retainer of $2,250. The balance of any fees will be due upon delivery of the reports.

 

We are prepared to begin this work immediately upon receipt of a backup of your Quickbooks database file.

 

In addition, Client will reimburse Firm for reasonable expenses such as travel, mileage, photocopies, long distance, postage and supplies.

 

From time to time the Firm may bring technology or transactions to the attention of the Client. If a transaction occurs as a result of these efforts, the Firm will be paid a fee equal to 5% of the value of the technology or transaction.

 

Client agrees to allow Firm to announce them as a new client in the Firm’s newsletter.

 

All invoices are due 15 days from the date of the invoice.

 

Confidentiality

 

The Firm and its agents agree to treat the Client’s information as confidential.

 

Other

 

The Firm has not been engaged to provide, nor will it provide, any attestation services, such as auditing, review or compilation services under this contract.

 

Client and its subsidiaries or affiliates, agree not to solicit for employment or outside contracting any employee or contractor of the Firm. Client must request permission from the Firm to discuss possible employment opportunities with a Firm employee or contractor. If Client hires an employee or contractor of the Firm without seeking permission to speak to the Firm contractor or employee, Client will pay the Firm a fee equal to the 100% of the annual full time compensation of the employee or contractor hired by the Client. If Client seeks permission to speak to a Firm employee or contractor prior to initiating conversations with said employee or contractor, and Client subsequently hires the Firm employee or contractor, Client will pay Firm a fee of 75% of the annual full time compensation of the employee or contractor. Any fees due under this clause are payable prior to the first day of employment of the Firm employee or contractor with Client.

 

The effective date of this contract is the date first referenced above and is for a period of one year. If the Client cancels the contract or fails to perform for any reason, then it shall pay the Firm damages equal to the balance that it would have paid had the contract been fully performed. The retainers will be applied to the last month’s billing. Should the contract be renewed, the applicable retainer shall be rolled forward and will apply to the last billing of the renewed contract. If the Firm is unable to perform due to circumstances beyond its control, then the Firm is released from this contract and the Firm has no liability under this Agreement.

 

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Guarantee

 

Firm represents and warrants to Company that all services, work and deliverables to be performed hereunder shall be performed in a professional and workmanlike manner to the highest industry standards. Firm makes no guarantees or representations regarding any particular result or outcome based on services provided.

 

Other Matters

 

Based upon the terms and conditions contained in this Agreement, you are engaging Firm to perform business and management consulting services at such places and times as may be reasonably agreed to by Firm. It is expressly understood and agreed that no provisions of this Agreement, nor any act of the parties, shall be interpreted to create any relationship between Firm and Client other than that of independent contractor. Each party agrees to keep confidential the proprietary information of the other party that may be learned during the course of providing or receiving services under this Agreement. Firm agrees he will not disclose any proprietary or confidential information acquired from the Company under this Agreement, including trade secrets, business plans and confidential or other information which may be proprietary to the Client. This Agreement shall commence on first date referenced above and shall continue indefinitely until such time as either Firm or the Client terminates the Agreement as provided below. Client shall process payments to Firm bi-weekly for all undisputed invoices presented by Firm under this Agreement but in no case shall Firm be paid later than thirty (30) days after the receipt of such undisputed invoices.

 

In the case of a dispute, such representative as the Client may designate will discuss the controversial items with Firm and attempt to resolve the dispute. The parties will attempt to resolve any controversy or claim arising out of this Agreement by mediation prior to commencing any legal action. The maximum recovery for any damages attributable to work performed, regardless of the cause of action, will be limited to the return of unearned fees paid to Firm.

 

The parties agree that this Agreement constitutes the entire Agreement between the Client and the Firm and that it supersedes any and all prior or contemporaneous Agreements between the parties, either written or oral, with respect to the transactions contemplated within this Agreement. This Agreement may be modified or amended only by an instrument in writing and signed by all the parties to this Agreement. Any waiver of the terms and conditions of this Agreement must be in writing and signed by all the parties to this Agreement and any such waiver will not be construed as a waiver of any other terms and conditions of this Agreement. A waiver by either party as to any particular breach will not constitute or be considered as a waiver of any similar or other breach or default thereafter.

 

The Client expressly understands and agrees that the Firm, or any of its employees, will not be prevented or barred from rendering services of the same nature as or a similar nature to those described in this Agreement, or of any nature whatsoever, for or on behalf of any person, firm, corporation or entity other than the Client regardless of the nature of the business of the other person, The Client understands and agrees that the Firm will not be prevented or barred from retaining other persons or entities to provide services of the same nature as or similar nature to those described in this Agreement or of any nature whatsoever.

 

This Agreement is governed exclusively by Texas substantive law without reference to Texas choice of law rules. The parties agree that all disputes arising out of or related to this Agreement must be litigated in the state district courts of Harris County, Texas, which the parties agree shall be the exclusive forum for any and all litigation between them. The Client expressly agrees that it is subject to personal jurisdiction in Texas for any and all disputes between the parties. The Client further agrees that subject matter jurisdiction for any and all disputes between the parties lies exclusively in the Texas state courts.

 

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Please indicate your acceptance of the above understanding by signing below. A copy is enclosed for your records. If your needs change during the year, the nature of our services can be adjusted appropriately. Likewise, if you have special projects with which we can assist, please let us know. We look forward to a long-term and mutually-beneficial relationship with Brown Book Shop, Inc.

 

Sincerely,

Clear Financial Solutions, Inc. by

 

 

 

Steven M. Plumb, CPA

 

Reviewed and accepted:

 

 

 

/s/ Pat Ginther

Pat Ginther

Owner

Date ________________  

 

 

 

 

 

 

 

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Exhibit 10.4

 

February 1, 2014

 

Noah Davis

President

Brown Book Shop, Inc.

1517 San Jacinto

Houston, TX 77002

 

Dear Brown Book Shop Inc:

 

NHJJ Enterprises LLC. (“Firm”) will provide the following services to Brown Book Shop, Inc. (“Client”), effective February 1, 2014:

 

Ø Management
Ø Sales Growth and Analysis

 

1. Our fee for these services would be as follows:

 

1.1. Base management fee of $9,500 per month, due on the 1 st of the month, plus reasonable expenses as defined below, plus;

 

1.2. Monthly Bonus fee equal to 3.5 per cent of all book sales in excess of the Base Sales (“Book Sales Bonus”). During 2013, the Base Sales will exclude sales to ASME and NEC. Therefore, if no additional sales are produced beyond the Base Sales, taking into account ASME and NEC activity, then no bonus is paid, plus;

 

1.3. The Base Sales is defined as the average of the sales recorded in the months of April 2013, May 2013 and June 2013 which is equal to $111,492.00.

 

1.4. In addition, Client will reimburse Firm up to $200 per month for reasonable expenses such as travel, mileage, photocopies, long distance, postage and supplies. This does not include airfare between Los Angeles and Houston, which is included in the base fee.

 

The term of the contract is for one year and is automatically renewed unless written notice is provided to Firm 60 days in advance of the end of the term.

 

5. Confidentiality

 

The Firm and its agents agree to treat the Client’s information as confidential.

 

6. Other

 

6.1    The Firm has not been engaged to provide, nor will it provide, any attestation services, such as auditing, review or compilation services under this contract.

 

6.2    Client and its subsidiaries or affiliates, agree not to solicit for employment or outside contracting any employee or contractor of the Firm. Client must request permission from the Firm to discuss possible employment opportunities with a Firm employee or contractor. If Client hires an employee or contractor of the Firm without seeking permission to speak to the Firm contractor or employee, Client will pay the Firm a fee equal to the 100% of the annual full time compensation of the employee or contractor hired by the Client. If Client seeks permission to speak to a Firm employee or contractor prior to initiating conversations with said employee or contractor, and Client subsequently hires the Firm employee or contractor, Client will pay Firm a fee of 75% of the annual full time compensation of the employee or contractor. Any fees due under this clause are payable prior to the first day of employment of the Firm employee or contractor with Client.

 

  1  

 

 

  7. Guarantee

 

Firm represents and warrants to Company that all services, work and deliverables to be performed hereunder shall be performed in a professional and workmanlike manner to the highest industry standards. Firm makes no guarantees or representations regarding any particular result or outcome based on services provided.

 

8. Other Matters

 

8.1. Based upon the terms and conditions contained in this Agreement, you are engaging Firm to perform business and management consulting services at such places and times as may be reasonably agreed to by Firm. It is expressly understood and agreed that no provisions of this Agreement, nor any act of the parties, shall be interpreted to create any relationship between Firm and Client other than that of independent contractor. Each party agrees to keep confidential the proprietary information of the other party that may be learned during the course of providing or receiving services under this Agreement. Firm agrees he will not disclose any proprietary or confidential information acquired from the Company under this Agreement, including trade secrets, business plans and confidential or other information which may be proprietary to the Client. This Agreement shall commence on first date referenced above and shall continue indefinitely until such time as either Firm or the Client terminates the Agreement as provided below. Client shall process payments to Firm bi-weekly for all undisputed invoices presented by Firm under this Agreement but in no case shall Firm be paid later than fifteen (15) days after the receipt of such undisputed invoices.

 

8.2. The parties agree that this Agreement constitutes the entire Agreement between the Client and the Firm and that it supersedes any and all prior or contemporaneous Agreements between the parties, either written or oral, with respect to the transactions contemplated within this Agreement. This Agreement may be modified or amended only by an instrument in writing and signed by all the parties to this Agreement. Any waiver of the terms and conditions of this Agreement must be in writing and signed by all the parties to this Agreement and any such waiver will not be construed as a waiver of any other terms and conditions of this Agreement. A waiver by either party as to any particular breach will not constitute or be considered as a waiver of any similar or other breach or default thereafter. The parties agree that the term of this contract is one year. This contract will automatically renew after one year unless cancelled in writing by Client 60 days in advance of the term of the contract.

 

8.3. The Client expressly understands and agrees that the Firm, or any of its employees, will not be prevented or barred from rendering services of the same nature as or a similar nature to those described in this Agreement, or of any nature whatsoever, for or on behalf of any person, firm, corporation or entity other than the Client regardless of the nature of the business of the other person, The Client understands and agrees that the Firm will not be prevented or barred from retaining other persons or entities to provide services of the same nature as or similar nature to those described in this Agreement or of any nature whatsoever.

 

8.4. This Agreement is governed exclusively by Texas substantive law without reference to Texas choice of law rules. The parties agree that all disputes arising out of or related to this Agreement must be litigated in the state district courts of Harris County, Texas, which the parties agree shall be the exclusive forum for any and all litigation between them. The Client expressly agrees that it is subject to personal jurisdiction in Texas for any and all disputes between the parties. The Client further agrees that subject matter jurisdiction for any and all disputes between the parties lies exclusively in the Texas state courts.

 

8.5. Please be aware, however, that none of the services provided can be relied upon to detect errors, irregularities, or illegal acts that may exist. However, we will inform the appropriate level of management of any errors that come to our attention or any irregularities or illegal acts that come to our attention.

 

8.6. If you are in agreement, please sign the agreement and remit the first month’s fee, of $12,500.

 

8.7. We are prepared to begin this work immediately.

 

8.8. Client agrees to allow Firm to announce them as a new client in the Firm’s newsletter.

 

8.9. All invoices are due 15 days from the date of the invoice.

 

8.10. Attorneys’ Fees. If at any time a Party hereto shall employ counsel to commence, defend or intervene, file a petition, complaint, answer, motion or other pleadings, or to take any other action in or with respect to any suit or proceeding (bankruptcy or otherwise) relating to this Agreement, or to enforce any rights of such Party hereunder, then, in each of such events, the prevailing party, upon entry of a final judgment by a Court having jurisdiction, agrees to pay reasonable attorneys’ fees and any expenses, costs and charges relating thereto.

 

  2  

 

 

Please indicate your acceptance of the above understanding by signing below. A copy is enclosed for your records. If your needs change during the year, the nature of our services can be adjusted appropriately. Likewise, if you have special projects with which we can assist, please let us know. We look forward to a long-term and mutually-beneficial relationship with Brown Book Shop, Inc.

 

Sincerely,

NHJJ Enterprises LLC. by

 

 

/s/ Noah Davis

Noah Davis

 

Reviewed and accepted:

 

 

/s/ Steven Plumb

Steven Plumb

Chairman of the Board

Date 2/1/14  

 

 

 

 

 

 

 

 

 

  3  

 

Exhibit 10.5

   
  CFS LOGO COLOR

Helping You Do More of What You Do Well!

 

 

5300 N. Braeswood, #370          Phone 713 780 0806

Houston, TX 77096-3317          Fax 800 861 1175

www.clearfinancials.com          E mail steven@clearfinancials.com

   
   
   
  July 9, 2013

 

 

Pat Ginther

Owner

Brown Book Shop, Inc.

1517 San Jacinto

Houston, TX 77002

 

Dear Pat:

 

It was a pleasure to meet with you today and discuss the findings in our report. This letter is an amendment (the “Amendment”) to our engagement letter dated April 9, 2013 (the “Agreement”).

 

Clear Financial Solutions, Inc. (“Firm”) will provide the following services to Brown Book Shop, Inc. (“Client”), effective July 15, 2013:

 

Ø Store management services – general manager duties
Ø Bookkeeping services – provided by CFS
Ø Online marketing management
Ø Human resources and payroll management
Ø Logistics – automation, etc
Ø Leasing support and project management
Ø Aggressive sales management

 

Our efforts would be led by Noah Davis and Steven Plumb, with Noah primarily responsible for the day to day performance of these services.

 

1. Our fee for these services would be as follows:

 

1.1. Base management fee of $12,500 per month, due on the 1 st of the month, plus reasonable expenses as defined below, plus;

 

1.2. Quarterly Bonus fee equal to 7 per cent of all book sales in excess of the Base Sales (“Book Sales Bonus”). During 2013, the Base Sales will exclude sales to ASME and NEC. Therefore, if no additional sales are produced beyond the Base Sales, taking into account ASME and NEC activity, then no bonus is paid, plus;

 

1.3. Bonus fee equal to 10 percent of any incremental sub lease income derived from subleasing additional space in the building currently under lease to Client (“Lease Bonus”).

 

1.4. The Base Sales is defined as the average of the sales recorded in the months of April 2013, May 2013 and June 2013 which is equal to $111,492.00.

 

1.5. In addition, Client will reimburse Firm up to $200 per month for reasonable expenses such as travel, mileage, photocopies, long distance, postage and supplies. This does not include airfare between Los Angeles and Houston, which is included in the base fee.

 

  1  

 

 

2. The term of the contract is for one year and is automatically renewed unless written notice is provided to Firm 60 days in advance of the end of the term. Parties agree to maximize their relative positions in 9 months.

 

3. However, either Client or Firm may cancel the contract after 125 days without cause, and all obligations under this agreement shall terminate.

 

4. Offer to Purchase Client

 

4.1. During the first eight months of this Agreement, in the event Client receives a bona fide written offer (the “Purchase Offer”) to purchase either the Client or the majority of the assets of Client and Client wishes to accept such Purchase Offer, Client will forward the same to Firm, who will have 15 days from the date it has received a copy of the Purchase Offer from Client (Offer Period”) to exercise this Right of First Refusal to purchase the Client or majority of the assets of the Client as the case may be in accordance with all of the terms of said Purchase Offer; provided, however, (i.) the feasibility period will be at least 10 days even if a shorter feasibility period is contained in the Purchase Offer; and (ii) any such contract with Firm shall have the following language even if it is not contained in the Purchase Offer:

 

4.2. SELLER AND PURCHASER EACH STIPULATE AND AGREE THAT (A) PURCHASER IS A SOPHISTICATED PURCHASER OF BUSINESSES AND ASSETS SIMILAR TO THOSE OF SELLER, (B) THE TERMS OF THIS SECTION 4 ARE A MATERIAL PART OF THIS AGREEMENT AND HAVE BEEN SPECIFICALLY READ AND UNDERSTOOD BY PURCHASER, (C) THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THIS SECTION 4 HAS BEEN FREELY NEGOTIATED, AND (D) PURCHASER HAS BEEN REPRESENTED BY LEGAL COUNSEL IN CONNECTION WITH THIS AGREEMENT. THE PROVISIONS OF THIS SECTION 4 SHALL SURVIVE CLOSING.

 

4.3. At any time during the Offer Period, Firm may accept the Firm Offer by giving written notice of such acceptance to Client In the event that the Firm Offer is not accepted during the Offer Period and in the manner provided for herein, Client may sell the Client and/or Assets to the Purchaser without regard to this right of first refusal.

 

5. Confidentiality

 

The Firm and its agents agree to treat the Client’s information as confidential.

 

6. Other

 

6.1     The Firm has not been engaged to provide, nor will it provide, any attestation services, such as auditing, review or compilation services under this contract.

 

6.2     Client and its subsidiaries or affiliates, agree not to solicit for employment or outside contracting any employee or contractor of the Firm. Client must request permission from the Firm to discuss possible employment opportunities with a Firm employee or contractor. If Client hires an employee or contractor of the Firm without seeking permission to speak to the Firm contractor or employee, Client will pay the Firm a fee equal to the 100% of the annual full time compensation of the employee or contractor hired by the Client. If Client seeks permission to speak to a Firm employee or contractor prior to initiating conversations with said employee or contractor, and Client subsequently hires the Firm employee or contractor, Client will pay Firm a fee of 75% of the annual full time compensation of the employee or contractor. Any fees due under this clause are payable prior to the first day of employment of the Firm employee or contractor with Client.

 

  2  

 

 

  7. Guarantee

 

Firm represents and warrants to Company that all services, work and deliverables to be performed hereunder shall be performed in a professional and workmanlike manner to the highest industry standards. Firm makes no guarantees or representations regarding any particular result or outcome based on services provided.

 

8. Other Matters

 

8.1. Based upon the terms and conditions contained in this Agreement, you are engaging Firm to perform business and management consulting services at such places and times as may be reasonably agreed to by Firm. It is expressly understood and agreed that no provisions of this Agreement, nor any act of the parties, shall be interpreted to create any relationship between Firm and Client other than that of independent contractor. Each party agrees to keep confidential the proprietary information of the other party that may be learned during the course of providing or receiving services under this Agreement. Firm agrees he will not disclose any proprietary or confidential information acquired from the Company under this Agreement, including trade secrets, business plans and confidential or other information which may be proprietary to the Client. This Agreement shall commence on first date referenced above and shall continue indefinitely until such time as either Firm or the Client terminates the Agreement as provided below. Client shall process payments to Firm bi-weekly for all undisputed invoices presented by Firm under this Agreement but in no case shall Firm be paid later than fifteen (15) days after the receipt of such undisputed invoices.

 

8.2. The parties agree that this Agreement constitutes the entire Agreement between the Client and the Firm and that it supersedes any and all prior or contemporaneous Agreements between the parties, either written or oral, with respect to the transactions contemplated within this Agreement. This Agreement may be modified or amended only by an instrument in writing and signed by all the parties to this Agreement. Any waiver of the terms and conditions of this Agreement must be in writing and signed by all the parties to this Agreement and any such waiver will not be construed as a waiver of any other terms and conditions of this Agreement. A waiver by either party as to any particular breach will not constitute or be considered as a waiver of any similar or other breach or default thereafter. The parties agree that the term of this contract is one year. This contract will automatically renew after one year unless cancelled in writing by Client 60 days in advance of the term of the contract.

 

8.3. The Client expressly understands and agrees that the Firm, or any of its employees, will not be prevented or barred from rendering services of the same nature as or a similar nature to those described in this Agreement, or of any nature whatsoever, for or on behalf of any person, firm, corporation or entity other than the Client regardless of the nature of the business of the other person, The Client understands and agrees that the Firm will not be prevented or barred from retaining other persons or entities to provide services of the same nature as or similar nature to those described in this Agreement or of any nature whatsoever.

 

8.4. This Agreement is governed exclusively by Texas substantive law without reference to Texas choice of law rules. The parties agree that all disputes arising out of or related to this Agreement must be litigated in the state district courts of Harris County, Texas, which the parties agree shall be the exclusive forum for any and all litigation between them. The Client expressly agrees that it is subject to personal jurisdiction in Texas for any and all disputes between the parties. The Client further agrees that subject matter jurisdiction for any and all disputes between the parties lies exclusively in the Texas state courts.

 

  3  

 

 

8.5. Please be aware, however, that none of the services provided can be relied upon to detect errors, irregularities, or illegal acts that may exist. However, we will inform the appropriate level of management of any errors that come to our attention or any irregularities or illegal acts that come to our attention.

 

8.6. If you are in agreement, please sign the agreement and remit the first month’s fee, of $12,500.

 

8.7. We are prepared to begin this work immediately.

 

8.8. Client agrees to allow Firm to announce them as a new client in the Firm’s newsletter.

 

8.9. All invoices are due 15 days from the date of the invoice.

 

8.10. Attorneys’ Fees. If at any time a Party hereto shall employ counsel to commence, defend or intervene, file a petition, complaint, answer, motion or other pleadings, or to take any other action in or with respect to any suit or proceeding (bankruptcy or otherwise) relating to this Agreement, or to enforce any rights of such Party hereunder, then, in each of such events, the prevailing party, upon entry of a final judgment by a Court having jurisdiction, agrees to pay reasonable attorneys’ fees and any expenses, costs and charges relating thereto.

 

Please indicate your acceptance of the above understanding by signing below. A copy is enclosed for your records. If your needs change during the year, the nature of our services can be adjusted appropriately. Likewise, if you have special projects with which we can assist, please let us know. We look forward to a long-term and mutually-beneficial relationship with Brown Book Shop, Inc.

 

Sincerely,

Clear Financial Solutions, Inc. by

 

 

/s/ Steven M. Plumb

Steven M. Plumb, CPA

 

Reviewed and accepted:

 

 

/s/ Pat Ginther

Pat Ginther

Owner

Date 7/9/13  

 

 

 

 

 

  4  

Exhibit 10.6

   
  CFS LOGO COLOR

Helping You Do More of What You Do Well!

 

 

5300 N. Braeswood, #370          Phone 713 780 0806

Houston, TX 77096-3317          Fax 800 861 1175

www.clearfinancials.com          E mail steven@clearfinancials.com

   
   
   
  February 1, 2014

 

 

Noah Davis

President

Brown Book Shop, Inc.

1517 San Jacinto

Houston, TX 77002

 

Dear Noah:

 

It was a pleasure to meet with you today and discuss the findings in our report. This letter is Amendment 2 ( “Amendment 2”) to our engagement letter dated April 9, 2013 (the “Agreement”), as amended on July 9, 2013.

 

Clear Financial Solutions, Inc. (“Firm”) will provide the following services to Brown Book Shop, Inc. (“Client”), effective February 1, 2014:

 

Ø Strategic planning
Ø part-time CFO services

 

Our efforts would be led by Noah Davis and Steven Plumb, with Noah primarily responsible for the day to day performance of these services.

 

1. Our fee for these services would be as follows:

 

1.1. Base management fee of $3,000 per month, due on the 1 st of the month, plus reasonable expenses as defined below, plus;

 

1.2. Monthly Bonus fee equal to 3.5 per cent of all book sales in excess of the Base Sales (“Book Sales Bonus”). During 2013, the Base Sales will exclude sales to ASME and NEC. Therefore, if no additional sales are produced beyond the Base Sales, taking into account ASME and NEC activity, then no bonus is paid, plus;

 

1.3. The Base Sales is defined as the average of the sales recorded in the months of April 2013, May 2013 and June 2013 which is equal to $111,492.00.

 

1.4. In addition, Client will reimburse Firm up to $200 per month for reasonable expenses such as travel, mileage, photocopies, long distance, postage and supplies. This does not include airfare between Los Angeles and Houston, which is included in the base fee.

 

The term of the contract is for one year and is automatically renewed unless written notice is provided to Firm 60 days in advance of the end of the term.

 

5. Confidentiality

 

The Firm and its agents agree to treat the Client’s information as confidential.

 

  1  

 

 

6. Other

 

6.1     The Firm has not been engaged to provide, nor will it provide, any attestation services, such as auditing, review or compilation services under this contract.

 

6.2     Client and its subsidiaries or affiliates, agree not to solicit for employment or outside contracting any employee or contractor of the Firm. Client must request permission from the Firm to discuss possible employment opportunities with a Firm employee or contractor. If Client hires an employee or contractor of the Firm without seeking permission to speak to the Firm contractor or employee, Client will pay the Firm a fee equal to the 100% of the annual full time compensation of the employee or contractor hired by the Client. If Client seeks permission to speak to a Firm employee or contractor prior to initiating conversations with said employee or contractor, and Client subsequently hires the Firm employee or contractor, Client will pay Firm a fee of 75% of the annual full time compensation of the employee or contractor. Any fees due under this clause are payable prior to the first day of employment of the Firm employee or contractor with Client.

 

  7. Guarantee

 

Firm represents and warrants to Company that all services, work and deliverables to be performed hereunder shall be performed in a professional and workmanlike manner to the highest industry standards. Firm makes no guarantees or representations regarding any particular result or outcome based on services provided.

 

8. Other Matters

 

8.1. Based upon the terms and conditions contained in this Agreement, you are engaging Firm to perform business and management consulting services at such places and times as may be reasonably agreed to by Firm. It is expressly understood and agreed that no provisions of this Agreement, nor any act of the parties, shall be interpreted to create any relationship between Firm and Client other than that of independent contractor. Each party agrees to keep confidential the proprietary information of the other party that may be learned during the course of providing or receiving services under this Agreement. Firm agrees he will not disclose any proprietary or confidential information acquired from the Company under this Agreement, including trade secrets, business plans and confidential or other information which may be proprietary to the Client. This Agreement shall commence on first date referenced above and shall continue indefinitely until such time as either Firm or the Client terminates the Agreement as provided below. Client shall process payments to Firm bi-weekly for all undisputed invoices presented by Firm under this Agreement but in no case shall Firm be paid later than fifteen (15) days after the receipt of such undisputed invoices.

 

8.2. The parties agree that this Agreement constitutes the entire Agreement between the Client and the Firm and that it supersedes any and all prior or contemporaneous Agreements between the parties, either written or oral, with respect to the transactions contemplated within this Agreement. This Agreement may be modified or amended only by an instrument in writing and signed by all the parties to this Agreement. Any waiver of the terms and conditions of this Agreement must be in writing and signed by all the parties to this Agreement and any such waiver will not be construed as a waiver of any other terms and conditions of this Agreement. A waiver by either party as to any particular breach will not constitute or be considered as a waiver of any similar or other breach or default thereafter. The parties agree that the term of this contract is one year. This contract will automatically renew after one year unless cancelled in writing by Client 60 days in advance of the term of the contract.

 

8.3. The Client expressly understands and agrees that the Firm, or any of its employees, will not be prevented or barred from rendering services of the same nature as or a similar nature to those described in this Agreement, or of any nature whatsoever, for or on behalf of any person, firm, corporation or entity other than the Client regardless of the nature of the business of the other person, The Client understands and agrees that the Firm will not be prevented or barred from retaining other persons or entities to provide services of the same nature as or similar nature to those described in this Agreement or of any nature whatsoever.

 

  2  

 

 

8.4. This Agreement is governed exclusively by Texas substantive law without reference to Texas choice of law rules. The parties agree that all disputes arising out of or related to this Agreement must be litigated in the state district courts of Harris County, Texas, which the parties agree shall be the exclusive forum for any and all litigation between them. The Client expressly agrees that it is subject to personal jurisdiction in Texas for any and all disputes between the parties. The Client further agrees that subject matter jurisdiction for any and all disputes between the parties lies exclusively in the Texas state courts.

 

8.5. Please be aware, however, that none of the services provided can be relied upon to detect errors, irregularities, or illegal acts that may exist. However, we will inform the appropriate level of management of any errors that come to our attention or any irregularities or illegal acts that come to our attention.

 

8.6. If you are in agreement, please sign the agreement and remit the first month’s fee, of $12,500.

 

8.7. We are prepared to begin this work immediately.

 

8.8. Client agrees to allow Firm to announce them as a new client in the Firm’s newsletter.

 

8.9. All invoices are due 15 days from the date of the invoice.

 

8.10. Attorneys’ Fees. If at any time a Party hereto shall employ counsel to commence, defend or intervene, file a petition, complaint, answer, motion or other pleadings, or to take any other action in or with respect to any suit or proceeding (bankruptcy or otherwise) relating to this Agreement, or to enforce any rights of such Party hereunder, then, in each of such events, the prevailing party, upon entry of a final judgment by a Court having jurisdiction, agrees to pay reasonable attorneys’ fees and any expenses, costs and charges relating thereto.

 

Please indicate your acceptance of the above understanding by signing below. A copy is enclosed for your records. If your needs change during the year, the nature of our services can be adjusted appropriately. Likewise, if you have special projects with which we can assist, please let us know. We look forward to a long-term and mutually-beneficial relationship with Brown Book Shop, Inc.

 

Sincerely,

Clear Financial Solutions, Inc. by

 

 

/s/ Steven M. Plumb

Steven M. Plumb, CPA

 

Reviewed and accepted:

 

 

/s/ Noah Davis

President

Date 2/1/14  

 

 

 

 

 

 

  3  

 

Exhibit 10.7

 

 

May 1, 2016

 

Noah Davis

President

Brown Book Shop, Inc.

1517 San Jacinto

Houston, Texas 77002

 

Dear Brown Book Shop, Inc.,

 

This document shall serve as an amendment for the consulting agreement signed February 1, 2014. The only change shall be from “1.11.” The base management fee shall be changed to $4,500 per month.

 

Sincerely,

 

Clear Financial Solutions, Inc. by:

 

 

/s/ Steven Plumb

 

Steven Plumb

 

 

 

Review and accepted:

 

/s/ Noah Davis

5/1/16  
     
Noah Davis Date  

 

 

 

 

 

 

 

Exhibit 10.8

 

 

May 1, 2016

 

Noah Davis

President

Brown Book Shop, Inc.

1517 San Jacinto

Houston, Texas 77002

 

Dear Brown Book Shop, Inc.,

 

This document shall serve as an amendment for the consulting agreement signed February 1, 2014. The only change shall be from “1.11.” The base management fee shall be changed to $11,000 per month.

 

Sincerely,

 

NHJJ Enterprises, LLC by:

 

 

/s/ Noah Davis

 

Noah Davis

 

 

 

Review and accepted:

 

/s/ Steven Plumb

5/1/16  
     
Steven Plumb Date  

 

 

 

 

 

 

 

Exhibit 10.9

 

Brown Technical Media Corp.

1517 San Jacinto Street

Houston, TX 77002

 

 

September 30, 2016

 

 

Evan Levine

 

La Jolla, CA

 

 

Brown Technical Media Corp. (Brown) has retained Evan Levine (CONSULTANT) to provide Brown with business consulting services. We have prepared this agreement (hereinafter referred to as the “Agreement”) to define the terms of this engagement. If this Agreement meets with your expectations, you will need to sign in the space below demonstrating your acceptance thereto.

 

The effective date of this contract is September 30, 2016.

 

Services

 

CONSULTANT will provide capital formation consulting services and will assist BROWN develop a strategy to attract investors, including developing presentation materials.

 

Compensation

 

The fee for the consulting services is $10,000. BROWN will compensate CONSULTANT for these services by issuing Consultant 5,597,308 shares of BROWN’S $0.001 par value restricted common stock. Compensation is based upon the number of shares issued and is not related to the current or future price of BROWN common stock.

 

Other Matters

 

Based upon the terms and conditions contained in this Agreement, BROWN is engaging CONSULTANT to perform consulting services at such places and times as may be reasonably agreed to by BROWN and CONSULTANT. It is expressly understood and agreed that no provisions of this Agreement, nor any act of the parties, shall be interpreted to create any relationship between BROWN and CONSULTANT other than that of independent contractor. Each party agrees to keep confidential the proprietary information of the other party that may be learned during the course of providing or receiving services under this Agreement. Neither party will disclose any proprietary or confidential information acquired from the other under this Agreement, including trade secrets, business plans and confidential or other information which may be proprietary to either CONSULTANT or BROWN.

 

Please indicate your acceptance of the above understanding by signing below. A copy is enclosed for your records.

 

Sincerely,

Brown Technical Media Corp.

 

By: /s/ Steven M. Plumb

Name: Steven M. Plumb

Title: Chief Financial Officer

 

Reviewed and accepted:

 

 

 

/s/ Evan Levine

Evan Levine

Date 9/30/16  

 

 

 

 

Exhibit 10.10

 

NOTE AGREEMENT

 

 

$_________ Houston, Texas January 31, 2014

 

1.                    For value received, BROWN BOOK SHOP, INC (“Maker”), promises to pay to the order of _________________ (“Lender”), the sum of _______________ DOLLARS ($________), in legal and lawful money of the United States of America, together with interest thereon at the rate of eight percent (8%) per annum. Interest on the unpaid principal balance shall accrue from the date hereof. Interest will be calculated on the basis of a 365-day year and actual number of days elapsed. The note is due on February 1, 2019.

 

2.                    Maker understands that Lender may transfer this Note Agreement. The Lender or anyone who takes this Note by transfer and who is entitled to receive payments under the Note is called the “Note Holder.”

 

3.                    Payments will be made as follows: $_____ per month, including principal and interest, for 59 months, commencing on March 1, 2014, and a final payment of $_____.

 

4.                    Maker shall be in default under this Note if any interest or principal payment required under this Note is not paid when due, and such default is not cured within ten (10) business days after receipt of notice of such late payment, in which case the Lender may declare all sums due under this Note to be immediately due and payable, and may exercise any and all available remedies.

 

5.                    Even if, at a time when Maker is in default, the Note Holder does not require Maker to pay immediately in full as described above, the Note Holder will still have the right to do so if Maker is in default at a later time.

 

6.                    It is the intention of the parties hereto to comply with the usury laws applicable to this Note; accordingly, it is agreed that notwithstanding any provision to the contrary in this Note or in any of the documents securing payment hereof, if any, no such provision shall require the payment or permit the collection of interest in excess of the maximum rate permitted by law. If any excess of interest is provided for, contracted for, charged for, or received or adjudicated to be provided for, or received, then the provisions of this paragraph shall govern and control, and neither Maker hereof nor any other party liable for the payment hereof shall be obligated to pay the amount of such excess interest. Any such excess interest which may have been collected shall be, at the Holder’s option, either (1) applied as credit against the then unpaid principal amount hereof or (2) refunded to Maker. The effective rate of interest shall be automatically subject to reduction to the maximum lawful contract rate allowed under the usury laws of the State of Texas as they are now or subsequently construed by the courts of the State of Texas.

 

  1  

 

 

7.                    If this Note is not paid at Maturity, regardless of how the Maturity may be brought about, or is collected or attempted to be collected through the initiation or prosecution of any suit or through any probate, bankruptcy, or any other judicial proceedings, or is placed in the hands of an attorney for collection, Maker shall pay, in addition to all other amounts owing under this Note, all actual expenses of collection, all court costs, and reasonable attorney’s fees incurred by Lender.

 

8.                    Unless applicable law requires a different method, any notice that must be given to Maker under the Note will be given by delivering it or by mailing it First Class mail to Maker at the address provided by Maker. Maker must give notice to Note Holder of a change of address in writing.

 

The address of Note Holder is:

 

_______________

_______________

_______________

 

The address of Maker is:

 

Brown Book Shop, Inc.

1517 San Jacinto

Houston, Texas 77002

 

9.                    This Note represents the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties. In the event that any provision contained in this Note conflicts with applicable law, such conflict shall not affect the other provisions of this Note that can be given effect without the conflicting provisions. To this end, the provisions of this Note are declared to be severable.

 

10.                This Note shall be governed by the laws of the State of Texas. Any action brought by either party against the other party to enforce or interpret this Note shall be brought in an appropriate court in Houston, Harris County, Texas.

 

 

MAKER: LENDER:
   
BROWN BOOK SHOP, INC. ______________________
   
   
   
By: __________________________ By: __________________________
       Name: Steven M. Plumb, CPA        Name: _____________________
       Title: Chief Financial Officer        Title: ______________________
   

 

  2  

 

Exhibit 21

 

List of Subsidiaries

 

 

Brown Technical Media Corp. (“Brown”)

 

Brown Book Shop, Inc. (“Brown Book Shop”) 

 

Brown Technical Publishing, Inc. (“Brown Publishing”)

 

Pink Professionals, LLC (“Pink”)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 99.1

 

Brown Technical Media Corporation

Consolidated Financial Statements

October 31, 2015 and 2014

 

 

 

 

 

 

  1  
 

 

Brown Technical Media Corporation

 

Index to Financial Statements

 

 
   
  Page
 
Report of Independent Registered Public Accounting Firm 3
   
Consolidated Balance Sheets as of October 31, 2015 and 2014 4
   

Consolidated Statements of Operations for the year ended October 31, 2015 and the period from January 21, 2014 through October 31, 2014

5
   
Consolidated Statements of Stockholders’ Equity (Deficit) for the year ended October 31, 2015 and the period from January 21, 2014 through October 31, 2014 6
   
Consolidated Statements of Cash Flows for the year ended October 31, 2015 and the period from January 21, 2014 through October 31, 2014 7
   
Notes to Consolidated Financial Statements 8 -15

 

 

 

 

 

 

 

 

  2  
 

 

 

Report of Independent Registered Public Accounting Firm

 

To the Board of Directors and Stockholders of Brown Technical Media Corporation

 

We have audited the accompanying consolidated balance sheets of Brown Technical Media Corporation as of October 31, 2015 and 2014, and the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the year ended October 31, 2015 and for the period from January 21, 2014 through October 31, 2014. Brown Technical Media Corporation’s management is responsible for these financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated 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, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Brown Technical Media Corporation as of October 31, 2015 and 2014, and the results of its operations and its cash flows for the year ended October 31, 2015 and for the period from January 21, 2014 through October 31, 2014, in conformity with accounting principles generally accepted in the United States of America.

 

As discussed in Note 3 to the consolidated financial statements, the Company’s recurring losses from operations and its need for additional financing in order to fund its projected loss in 2016 raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 
  /s/ LBB and Associates Ltd., LLP
 

LBB and Associates Ltd., LLP

Houston, Texas

October 27, 2016
  3  
 

BROWN TECHNICAL MEDIA CORP.

CONSOLIDATED BALANCE SHEETS

 

 

 

    October 31,  
    2015     2014  
Assets            
Current assets:                
Cash   $ 74,001     $ 23,552  
Accounts receivable, net     64,810       51,843  
Merchandise inventories, net     492,137       447,173  
Total current assets     630,948       522,568  
Property and equipment, net     68,674       82,413  
Security deposit     7,500       7,500  
Total assets   $ 707,122     $ 612,481  
                 
Liabilities and stockholders’ equity (deficit)                
Current liabilities:                
Current maturities of long-term debt   $ 15,628     $ 14,335  
Accounts payable and accrued expenses     341,506       100,091  
Accrued expenses - related parties     45,330       101,728  
Notes payable     199,220       95,611  
Total current liabilities     601,684       311,765  
Long-term liabilities:                
Long-term debt     152,493       166,677  
Shareholder advance     500        
Other liabilities     7,000       7,000  
Total long-term liabilities     159,993       173,677  
Total liabilities     761,677       485,442  
                 
Commitments and contingencies                
                 
Stockholders’ equity (deficit):                
Preferred stock, $0.001 par value, 100,000,000 shares authorized; no shares issued or outstanding            
Common stock, $0.001 par value, 500,000,000 shares authorized; 22,000,000 shares issued and outstanding     22,000       22,000  
Paid-in capital     20,000       20,000  
Accumulated deficit     (203,703 )     (105,805 )
Total Brown Technical Media Corp. stockholders’ deficit     (161,703 )     (63,805 )
Non-controlling interest     107,148       190,844  
Total stockholders’ equity (deficit)     (54,555 )     127,039  
Total liabilities and stockholders’ equity (deficit)   $ 707,122     $ 612,481  

 

 

The accompanying notes are an integral part of the Consolidated Financial Statements.

 

 

 

  4  
 

 

BROWN TECHNICAL MEDIA CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the year ended October 31, 2015

and the period from January 21, 2014 through October 31, 2014

   

    2015     2014  
Net sales   $ 2,137,858     $ 1,418,727  
Cost of sales     1,417,225       792,706  
Gross profit     720,633       626,021  
                 
Operating expenses:                
General and administrative expenses     645,323       501,529  
Professional fees     234,027       238,073  
Depreciation     13,739       10,304  
Total operating expenses     893,089       749,906  
                 
Loss from operations     (172,456 )     (123,885 )
                 
Other income (expenses)                
Interest expense, net     (69,238 )     (18,343 )
Gain on sale of intangible property     60,100          
Total other income (expenses)     (9,138 )     (18,343 )
                 
Income (loss) before income taxes     (181,594 )     (142,228 )
Income tax expense (benefit)              
                 
Net loss (181,594)     (142,228 )        
Net loss attributable to non-controlling interests     83,696       36,423  
Net loss attributable to Brown Technical Media Corp.   $ (97,898 )   $ (105,805 )
                 
Net loss per common share, basic and diluted:   $ (0.00 )   $ (0.00 )
                 
Weighted-average common shares outstanding, basic and diluted:     22,000,000       21,363,958  

 

 

The accompanying notes are an integral part of the Consolidated Financial Statements.

 

 

  5  
 

 

BROWN TECHNICAL MEDIA CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

For the year ended October 31, 2015

and the period from January 21, 2014 through October 31, 2014

 

 

      Common Stock     Paid-in     Accumulated     Non-controlling     Total Stockholders’ Equity/  
      Shares     Amount     Capital     Deficit     Interest     (Deficit)  
Balance at Inception, January 21, 2014         $     $     $     $     $  
                                                 
Common shares sold for cash     22,000,000       22,000       20,000                   42,000  
                                                 
Non-controlling interest due to acquisition                             227,267       227,267  
                                                 
Net loss                       (105,805 )     (36,423 )     (142,228 )
                                                 
Balance at October 31, 2014     22,000,000       22,000       20,000       (105,805 )     190,844       127,039  
                                                 
Net loss                       (97,898 )     (83,696 )     (181,594 )
                                                 
Balance at October 31, 2015     22,000,000     $ 22,000     $ 20,000     $ (203,703 )   $ 107,148     $ (54,555 )

 

 

 

 

 

The accompanying notes are an integral part of the Consolidated Financial Statements.

 

 

 

 

 

 

 

  6  
 

 

BROWN TECHNICAL MEDIA CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the year ended October 31, 2015

and the period from January 21, 2014 through October 31, 2014

 

 

    2015     2014  
Cash flows from operating activities:            
Net loss   $ (181,594 )   $ (142,228 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation     13,739       10,304  
Changes in assets and liabilities:                
Accounts receivable     (12,967 )     28,950  
Merchandise inventory     (44,964 )     (66,586 )
Accounts payable and accrued liabilities     241,415       (63,636 )
Accrued expenses - related parties     (56,398 )     101,728  
Net cash used in operating activities     (40,769 )     (131,468 )
                 
Cash flows from investing activities:                
Capital expenditures           (21,832 )
Acquisition of Brown Book Shop, Inc.           87,772  
Net cash provided by investing activities           65,940  
                 
Cash flows from financing activities:                
Proceeds from sale of common stock for cash           2,000  
Proceeds from notes payable     1,677,335       338,199  
Repayments of notes payable     (1,573,226 )     (242,588 )
Repayment of long term debt     (12,891 )     (8,531 )
Net cash provided by financing activities     91,218       89,080  
                 
Net increase in cash and cash equivalents     50,449       23,552  
Cash and cash equivalents - beginning of period     23,552        
Cash and cash equivalents - end of period   $ 74,001     $ 23,552  
                 
Supplementary disclosure of cash flow information:                
Interest paid   $ 47,764     $ 13,946  
Taxes paid, net   $     $  

 

 

 

The accompanying notes are an integral part of the Consolidated Financial Statements.

 

 

 

  7  
 

 

BROWN TECHNICAL MEDIA CORP.

NOTES TO CONSOLIDATED STATEMENTS

For the year ended October 31, 2015

and the period from January 21, 2014 through October 31, 2014

 

1. Description of Business and Summary of Significant Accounting Policies

 

Description of Business

 

Brown Technical Media Corp. (“the Company”) is a Texas corporation and a leading provider of codes, standards, training materials and related materials in print and electronically to small, medium and large businesses, government, and non-profit organizations in the United States. The Company was incorporated in January 21, 2014. The Company is authorized to issue 500,000,000 shares of $0.001 par value common stock and 100,000,000 shares of $0.001 par value preferred stock.

 

The Company acquired a 51% interest on January 31, 2014 in Brown Book Shop, Inc., (“Brown”) a Texas corporation that was formed as Brown Book Shop, a sole-proprietorship, in 1946, and on June 8, 1976 was incorporated in Texas as Brown Book Shop, Inc. The Company operates a bookstore in Houston, Texas, as well as operate an e-commerce website www.browntechnical.org.

 

On August 6, 2014, the Company formed Pink Professionals, LLC (“Pink”) to develop and market social networking software aimed at female managers and professionals in certain targeted professions, such as Oil and Gas, Finance and Information Technology. At the time of formation, the Company owned 75% of the membership units of Pink. On October 31, 2014, the Company sold the rights to the use of the software in the Oil and Gas industry to the 25% owner of Pink in exchange for cash consideration and the cancelation of such 25% owner’s membership units. Accordingly, the Company now owns 100% of the equity in Pink.

 

Basis of Presentation

 

The Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”).

 

Principles of Consolidation

 

The Consolidated Financial Statements include the accounts of the Company and its majority owned subsidiaries. All intercompany transactions and accounts are eliminated in consolidation.

 

Use of Estimates

 

The preparation of the Consolidated Financial Statements in accordance with GAAP requires management to make use of certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Consolidated Financial Statements and the reported amounts of revenue and expenses during the reported periods. The Company bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

 

Business Combinations

 

The Company accounts for all business combinations using the acquisition method of accounting, which allocates the fair value of the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions. The Company may utilize third-party valuation specialists to assist the Company in the allocation. Initial purchase price allocations are subject to revision within the measurement period, not to exceed one year from the date of acquisition. Acquisition-related expenses and transaction costs associated with business combinations are expensed as incurred.

 

 

  8  
 

 

BROWN TECHNICAL MEDIA CORP.

NOTES TO CONSOLIDATED STATEMENTS

For the year ended October 31, 2015

and the period from January 21, 2014 through October 31, 2014

 

1. Description of Business and Summary of Significant Accounting Policies (Continued)

 

Cash

 

Cash and cash equivalents include short-term investments with original maturities of 90 days or less. The recorded value of our cash and cash equivalents approximates their fair value.

 

Accounts Receivable

 

Trade accounts receivable are recorded at the invoiced amount and typically do not bear interest. The Company provides allowances for doubtful accounts related to accounts receivable for estimated losses resulting from the inability of its customers to make required payments. The Company takes into consideration the overall quality of the receivable portfolio along with specifically-identified customer risks.

 

Merchandise Inventory

 

Inventory is valued at the lower of cost or market value. Cost is determined using a weighted-average cost method. Price protection is recorded when earned as a reduction to the cost of inventory. The Company decreases the value of inventory for estimated obsolescence equal to the difference between the cost of inventory and the estimated market value, based upon an aging analysis of the inventory on hand, specifically known inventory-related risks, and assumptions about future demand and market conditions. The Company has an allowance of approximately $0 and $95,000 as of October 31, 2015 and 2014, respectively.

 

Property and Equipment

 

Property and equipment are stated at cost, less accumulated depreciation. The Company calculates depreciation expense using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of their useful lives or the initial lease term. Expenditures for major renewals and improvements that extend the useful life of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. The estimated useful lives of property and equipment are as follows:

 

   
     
  Classification

Estimated

Useful Lives

  Equipment 5 to 7 years
  Leasehold improvements 4 to 5 years
  Furniture and fixtures 4 to 7 years

 

Fair Value Measurements

 

Fair value is defined under GAAP as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy has been established for valuation inputs to prioritize the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

 

Level 1 – observable inputs such as quoted prices for identical instruments traded in active markets.

 

Level 2 – inputs are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

 

 

  9  
 

 

NOTES TO CONSOLIDATED STATEMENTS

For the year ended October 31, 2015

and the period from January 21, 2014 through October 31, 2014

 

1. Description of Business and Summary of Significant Accounting Policies (Continued)

 

Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques.

 

Revenue Recognition

 

The Company records revenue from sales transactions when title and risk of loss are passed to the customer, there is persuasive evidence of an arrangement for sale, shipment has occurred and/or services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured. The Company’s shipping terms typically specify F.O.B. origination, at which time title and risk of loss have passed to the customer.

 

The Company leverages drop-shipment arrangements with many of its vendors and suppliers to deliver products to its customers without having to physically hold the inventory at its warehouses, thereby increasing efficiency and reducing costs. The Company recognizes revenue for drop-shipment arrangements upon shipment to the customer with contract terms that typically specify F.O.B. shipping point.

 

The Company records freight billed to its customers as net sales and the related freight costs as a cost of sales.

 

Sales Taxes

 

The State of Texas imposes a sales tax on the Company’s sales to nonexempt customers. The Company collects that sales tax from customers and remits the entire amount to the State. The Company’s accounting policy is to exclude the tax collected and remitted to the State from revenue and cost of revenues.

 

Leases

 

All leases are reviewed for capital or operating classification at their inception under the guidance of Accounting Standards Codification Topic 840, “Leases” (“ASC 840”). We use our incremental borrowing rate in the assessment of lease classification, and define initial lease term to include the construction build-out period, but to exclude lease extension period(s). We conduct operations primarily under operating leases. For leases that contain rent escalations, we record the total rent payable during the lease term, as defined above, on a straight-line basis over the term of the lease and record the difference between the rents paid and the straight-line rent as a deferred rent liability.

 

Advertising Costs

 

We expense advertising costs as incurred and recorded $156,547 and $127,434 during the year ended October 31, 2015 and the period from January 21, 2014 through October 31, 2014, respectively.

 

Income Taxes

 

Deferred income taxes are provided to reflect the differences between the tax bases of assets and liabilities and their reported amounts in the Financial Statements using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company performs an evaluation of the realizability of deferred tax assets on a quarterly basis. This evaluation requires management to make use of estimates and assumptions and considers all positive and negative evidence and factors, such as the scheduled reversal of temporary differences, the mix of earnings in the jurisdictions in which the Company operates, and prudent and feasible tax planning strategies.

 

 

 

  10  
 

 

NOTES TO CONSOLIDATED STATEMENTS

For the year ended October 31, 2015

and the period from January 21, 2014 through October 31, 2014

 

1. Description of Business and Summary of Significant Accounting Policies (Continued)

 

The Company accounts for unrecognized tax benefits based upon its assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. The Company reports a liability for unrecognized tax benefits resulting from unrecognized tax benefits taken or expected to be taken in a tax return and recognizes interest and penalties, if any, related to its unrecognized tax benefits in income tax expense.

 

2. Recent Accounting Pronouncements

 

Balance Sheet Classification of Deferred Taxes

 

In November 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, simplifying the balance sheet classification of deferred taxes by requiring all deferred taxes, along with any related valuation allowance, to be presented as noncurrent. This ASU is effective for the Company beginning in the first quarter of 2017, allows for early adoption and may be applied either prospectively or retrospectively. This ASU is not expected to have a material impact on the Company’s Financial Statements.

 

Accounting for Measurement Period Adjustments in a Business Combination

 

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, eliminating the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Instead, acquirers must recognize measurement-period adjustments during the period in which they determine the amounts, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date. This ASU is effective for the Company beginning in the first quarter of 2016, allows for early adoption and must be applied prospectively to adjustments to provisional amounts occurring after the effective date. This ASU is not expected to have a material impact on the Company’s Financial Statements.

 

Simplifying the Measurement of Inventory

 

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, amending the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value instead of the lower of cost or market value. This ASU is effective for the Company beginning in the first quarter of 2017, allows for early adoption and must be applied prospectively after the date of adoption. This ASU is not expected to have a material impact on the Company’s Financial Statements.

 

Debt Issuance Costs

 

In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, amending the presentation of debt issuance costs by requiring deferred financing costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for deferred financing costs are not affected by the amendments in this ASU. This ASU is effective for the Company beginning in the first quarter of 2016, allows for early adoption permitted and requires retrospective application to all prior periods. This ASU is not expected to have a material impact on the Company’s Financial Statements.

 

 

 

  11  
 

 

NOTES TO CONSOLIDATED STATEMENTS

For the year ended October 31, 2015

and the period from January 21, 2014 through October 31, 2014

 

2. Recent Accounting Pronouncements (Continued)

 

In August 2015, the FASB issued ASU 2015-15, Interest—Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements—Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (SEC Update), clarifying the SEC’s views on the presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. The ASU allows for an entity to defer and present debt issuance costs associated with line-of-credit arrangements as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangements. This ASU is effective upon issuance and the Company adopted it in the third quarter of 2015. This ASU is not expected to have a material impact on the Company’s Financial Statements.

 

Revenue Recognition

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), replacing most existing revenue recognition guidance under GAAP and eliminating industry specific guidance. The core principal of the new guidance is that an entity should recognize revenue for the transfer of goods and services equal to an amount it expects to be entitled to receive for those goods and services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, deferring the effective date by one year. This ASU will be effective for the Company beginning in the first quarter of 2018, allows for early adoption in the first quarter of 2017 and may be applied using either a full retrospective approach or a modified retrospective approach. This ASU is not expected to have a material impact on the Company’s Financial Statements.

 

3. Going Concern

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has a cumulative net loss since inception of $203,703, working capital of $29,264 and relies on short term financing to fund its operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The Company’s continuation as a going concern is dependent upon its ability to generate revenues and its ability to obtain financing from third parties. No assurance can be given that the Company will be successful in these efforts.

 

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

4. Property and Equipment

 

Property and equipment consists of the following:

 

      October 31,  
      2015     2014  
  Equipment   $ 68,182     $ 68,182  
  Leasehold improvements     19,002       19,002  
  Office equipment     5,533       5,533  
  Property and equipment     92,717       92,717  
  Less: accumulated depreciation     24,043       10,304  
  Property and equipment, net   $ 68,674     $ 82,413  

 

 

 

  12  
 

 

NOTES TO CONSOLIDATED STATEMENTS

For the year ended October 31, 2015

and the period from January 21, 2014 through October 31, 2014

 

4. Property and Equipment (Continued)

 

Depreciation expense for the year ended October 31, 2015 and the period from January 21, 2014 through October 31, 2014 is $13,739 and $10,304, respectively.

 

5. Notes Payable

 

Notes payable consists of the following unsecured notes:

 

      October 31,  
      2015     2014  
  Working capital loan dated September 10, 2014, bearing interest at 10% with weekly payments of $3,175 plus accrued interest, due January 8, 2015   $     $ 28,396  
  Note payable dated July 14, 2104, bearing interest at 8.04% with daily repayment from credit card processing receipts, due July 14, 2015.           12,215  
  Note payable to a shareholder dated January 31, 2014, bearing interest at 8%. Principal and accrued interest due on November 30, 2014           50,000  
  Note payable dated August 28, 2014, bearing interest at 6%. Principal and accrued interest due on August 28, 2015           5,000  
  Note payable dated March 31, 2015, bearing interest at 15.9% due March 17, 2016     4,415        
  Note payable date May 14, 2015 bearing interest at 18% due October 2016, guaranteed by the officers of the Company     100,473        
  Note payable dated May 19, 2015 bearing interest at 35.71% due May 19, 2016, guaranteed by the officers of the Company     43,332        
  Note payable dated March 16, 2015 bearing interest at 9%, due December 31, 2016     51,000        
  Total notes payable   $ 199,220     $ 95,611  

 

On March 16, 2015, the Company entered into a Note Agreement with an independent accredited investor relating to the sale of a promissory note and warrant. As a result, the Company issued a promissory note with a total principal balance of $51,000 and warrants to purchase 2,200,000 shares of common stock at an exercise price of $0.25 per share. The promissory note has a relative value of $48,891 and the warrants have a relative fair value of $2,109 at the date of issuance, determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.24%, (ii) estimated volatility of 1,006%, (iii) dividend yield of 0.00%, and (iv) an expected life of the warrants of 3 years.

 

 

 

 

 

  13  
 

 

NOTES TO CONSOLIDATED STATEMENTS

For the year ended October 31, 2015

and the period from January 21, 2014 through October 31, 2014

 

6. Long term debt

 

Long term debt consists of unsecured notes payable to the former shareholders of the Company. The notes bear interest at 8% and are due February 1, 2019 with monthly principal and interest payments of $2,244. The balance on the notes is $168,121 and $181,012 at October 31, 2015 and 2014, respectively.

 

Future maturities of long term debt as of October 31, 2105, are as follows:

 

  Years ending October 31,     Future Principal Payments  
    2016     $ 15,628  
    2017       15,571  
    2018       16,863  
    2019       18,263  
    2020       19,779  
    Thereafter       82,017  
          $ 168,121  

 

The approximate fair values approximate the related carrying values of the Company’s long-term debt, including current maturities.

 

7. Stockholders’ Equity

 

On January 30, 2014, the Company sold 2,000,000 shares of common stock to the founders of the Company for gross proceeds of $2,000.

 

On January 31, 2014, the Company sold 20,000,000 shares of common stock to the founders of the Company for gross proceeds of $40,000.

 

On August 31, 2016, the Company cancelled a warrant previously issued on March 16, 2015 to purchase 2,200,000 shares of common stock at an exercise price of $0.25 per share and issued to the warrant holder 1,100,000 shares of the Company’s common stock.

 

8. Lease Commitments

 

The Company is obligated under a long term lease for office space that generally provide for annual rent of $83,400 per year. The Company sub-leases a portion of this space to third parties and collects $49,800 per year on the sub leases. For the year ended October 31, 2015 and the period from January 21, 2014 through October 31, 2014, net rent expense under these lease arrangements was $17,824 and $21,785, respectively.

 

On October 1, 2016, the Company entered into a lease extension on the office space that expires on September 30, 2019 and calls for annual rent of $90,072.

 

 

 

  14  
 

 

NOTES TO CONSOLIDATED STATEMENTS

For the year ended October 31, 2015

and the period from January 21, 2014 through October 31, 2014

 

8. Lease Commitments, (Continued)

 

Future minimum lease payments under non-cancelable operating leases as of October 31, 2015 are as follows:

 

  Years ending October 31,     Gross Lease Operating Commitments     Sublease Income     Net Minimum Lease Commitments  
  2016     $ 83,956     $ 49,939     $ 34,017  
  2017       90,072       51,468       38,604  
  2018       90,072       51,468       38,604  
  2019       82,566       47,179       35,387  
  2020                    
  Total future minimum lease payments     $ 346,666     $ 200,054     $ 146,612  

 

8. Income Taxes

 

We recognize the financial statement effects of tax positions when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by a taxing authority. Recognized tax positions are initially and subsequently measured as the largest amount of tax benefit that is more likely than not of being realized upon ultimate settlement with a taxing authority. We have not taken a tax position that, if challenged, would have a material effect on the financial statements or the effective tax rate for the year ending October 31, 2015 and the period from January 21, 2014 through October 31, 2014.

 

Each of the tax years the Company has been in operation are subject to examination by the Internal Revenue Service. The Company has net operating losses of approximately $322,000 that begin to expire on October 31, 2031. The change in the Company’s valuation allowance for the year ended October 31, 2015 and the period from January 21, 2014 through October 31, 2014 was $61,400 and $48,200, respectively.

 

The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 34% to the net income/(loss) before provision for income taxes for the following reasons:

 

      October 31, 2015     October 31, 2014  
  Income tax benefit at statutory rate   $ (61,700 )   $ (48,400 )
  Meals and entertainment     300       200  
  Change in valuation allowance     61,400       48,200  
  Income tax expense   $     $  

 

Net deferred tax assets at statutory rates consisted of the following components as of:

 

      October 31, 2015     October 31, 2014  
  NOL carryover   $ 109,600     $ 48,200  
  Valuation allowance     (109,600 )     (48,200 )
  Net deferred tax asset   $     $  

 

 

 

 

 

 

  15  
 

 

NOTES TO CONSOLIDATED STATEMENTS

For the year ended October 31, 2015

and the period from January 21, 2014 through October 31, 2014

 

9. Contingencies

 

The Company is, and from time to time may be, a party to claims and legal proceedings generally incidental to its business. In the opinion of management, after consultation with the Company’s legal counsel, there are no other legal matters that are likely to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

 

10. Acquisition

 

On January 31, 2014, the Company entered into an agreement to acquire 100% of the common stock of Brown Book Shop, Inc., in two tranches. The first tranche, which closed on January 31, 2104, consisted of the sale of 51% of the common stock of Brown in exchange for $40,000 in cash and a note payable in the amount of $196,543. The second tranche was to close on April 30, 2014 for the purchase of the remaining 49% of the common stock of Brown in exchange for $40,000 in cash and a note payable for $188,835. The second tranche has not closed as of the date of this report.

 

The following information summarizes the allocation of the fair values assigned to the assets at the purchase date:

 

  Cash   $ 87,772  
  Accounts receivable     80,793  
  Inventory     380,587  
  Property and equipment     70,885  
  Security deposit     7,500  
  Total identifiable net assets     627,537  
  Less liabilities assumed:        
  Accounts payable     (163,727 )
  Noncontrolling interest     (227,267 )
  Total purchase price   $ 236,543  

 

The Company completed its annual impairment analysis as of October 31, 2015 by utilizing a qualitative assessment methodology. The Company determined that it was more-likely-than-not that the fair value of Brown exceeded its carrying value. As a result of this determination, the quantitative two-step impairment analysis was deemed unnecessary.

 

11. Related Party Transactions

 

In November 30, 2014, a shareholder of the Company advanced $500 to Pink Professionals, LLC, a wholly owned subsidiary of the Company. The advance is interest free and due upon demand.

 

The Company uses credit cards of related parties to pay for certain operational expenses. The Company has agreed to pay the credit card balances, including related interest. As of October 31, 2015 and 2014, the Company has an outstanding balance of $45,330 and $101,728, respectively, on these credit cards.

 

12. Subsequent Events

 

On August 31, 2016, the Company issued 1,100,000 shares of its common stock to a note holder in exchange for the surrender and cancellation of a warrant previously issued to the note holder.

 

On August 31, 2106, the Company issued 1,155,000 shares of its common stock to an employee as compensation.

 

On August 31, 2016, the Company issued a convertible note payable for gross proceeds of $50,000 bearing interest at 10% per annum. The convertible note payable matures on December 31, 2016, and is convertible, at the option of the note holder, into the common stock of the Company at a price equal to 75% of the price per share paid by the purchasers of securities issued in a Qualified Financing of the Company. A Qualified Financing is defined as $500,000 in new cash raised from accredited investors.

 

 

 

  16  
 

 

NOTES TO CONSOLIDATED STATEMENTS

For the year ended October 31, 2015

and the period from January 21, 2014 through October 31, 2014

 

12. Subsequent Events (continued)

 

On September 20, 2016, the Company entered into a binding letter of intent to enter into a share exchange agreement with Panther Biotechnology, Inc. whereby the shareholders of the Company would exchange all of their outstanding common stock in consideration for approximately 12 million shares of Panther Biotechnology, Inc.’s (Panther) common stock, plus certain earn-out rights. The result of the share exchange will be that the Company would become a wholly-owned subsidiary of Panther Biotechnology, Inc. This transaction will be accounted for as a reverse merger with Brown as the surviving entity. The assets of Panther that existed prior to the transaction will be recorded at their fair market value as of the closing of the transaction and will be added to the historical cost basis of the assets of Brown.

 

Effective September 30, 2016, the Company entered into a consulting agreement with the CEO of Panther that calls for the Company to issue 6,000,000 shares of common stock to the Panther CEO.

 

On October 14, 2016, the Company issued two convertible notes payable for gross proceeds of $37,000 bearing interest at 10% per annum. The convertible notes payable mature on December 31, 2016, and are convertible, at the option of the note holder, into the common stock of the Company at a price equal to 75% of the price per share paid by the purchasers of securities issued in a Qualified Financing of the Company. A Qualified Financing is defined as $500,000 in new cash raised from accredited investors in Panther Biotechnology, Inc.

 

 

Exhibit 99.2

 

 

 

Brown Technical Media Corporation

Consolidated Financial Statements

For the three and nine months ended

July 31, 2016 and 2015

 

 

 

 

  1  
 

 

Brown Technical Media Corporation

 

Index to Consolidated Financial Statements (unaudited)

 

 

 

 
   
  Page
   
Consolidated Balance Sheets as of July 31, 2016 and October 31, 2015 (unaudited) 3
   

Consolidated Statements of Operations for the three and nine months ended July 31, 2016 and 2015 (unaudited)

4
   
Consolidated Statements of Cash Flows for the nine months ended July 31, 2016 and 2015 (unaudited) 5
   
Notes to Consolidated Financial Statements (unaudited) 6

 

 

 

 

 

 

 

 

 

 

 

  2  
 

 

BROWN TECHNICAL MEDIA CORP.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

    July 31,
2016
    October 31,
2015
 
Assets            
Current assets:                
Cash   $ 39,750     $ 74,001  
Accounts receivable, net     51,941       64,810  
Merchandise inventories, net     461,483       492,137  
Total current assets     553,174       630,948  
Property and equipment, net     59,343       68,674  
Investments in equity interests, at cost     43,466        
Security deposit     7,500       7,500  
Total assets   $ 663,483     $ 707,122  
                 
Liabilities and stockholders’ equity (deficit)                
Current liabilities:                
Current maturities of long-term debt   $ 15,263     $ 15,628  
Accounts payable and accrued expenses     189,528       341,506  
Accrued expenses – related parties     130,612       45,330  
Notes payable, net     467,257       199,220  
Total current liabilities     802,660       601,684  
Long-term liabilities:                
Long-term debt     149,786       152,493  
Shareholder advance     500       500  
Other liabilities     7,000       7,000  
Total long-term liabilities     157,286       159,993  
Total liabilities     959,946       761,677  
                 
Commitments and contingencies                
                 
Stockholders’ deficit:                
Preferred stock, $0.001 par value, 100,000,000 shares authorized; and no shares issued or outstanding            
Common stock, $0.001 par value, 500,000,000 shares authorized; 22,000,000 shares issued and outstanding     22,000       22,000  
Paid-in capital     20,000       20,000  
Accumulated deficit     (336,616 )     (203,703 )
Total Brown Technical Media Corp. stockholders’ deficit     (294,616 )     (161,703 )
Non-controlling interest     (1,847 )     107,148  
Total stockholders’ deficit     (296,463 )     (54,555 )
Total liabilities and stockholders’ deficit   $ 663,483     $ 707,122  

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

  3  
 

 

 

BROWN TECHNICAL MEDIA CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED JULY 31, 2016 AND 2015

(Unaudited)

           

    Three months ended July 31,     Nine months ended July 31,  
    2016     2015     2016     2015  
Net sales   $ 673,799     $ 624,288     $ 2,232,990     $ 1,515,421  
Cost of sales     416,696       468,355       1,638,398       927,145  
Gross profit     257,103       155,933       594,592       588,276  
                                 
Operating expenses:                                
General and administrative expenses     198,351       162,487       545,723       475,854  
Professional fees     65,742       65,453       140,729       197,177  
Depreciation     3,435       3,435       9,331       10,305  
Total operating expenses     267,528       231,375       695,783       683,336  
                                 
Income (loss) from operations     (10,425 )     (75,442 )     (101,191 )     (95,060 )
                                 
Other income (expenses):                                
Interest expense, net     (95,093 )     (39,505 )     (140,717 )     (57,341 )
Gain on sale of intangible property                       60,100  
Total other income (expenses)     (95,093 )     (39,505 )     (140,717 )     2,759  
                                 
Income (loss) before income taxes     (105,518 )     (114,947 )     (241,908 )     (92,301 )
Income tax expense (benefit)                        
                                 
Net income (loss)     (105,518 )     (114,947 )     (241,908 )     (92,301 )
Net income (loss) attributable to non-controlling interests     67,148       51,424       108,995       43,122  
Net income (loss) attributable to Brown Technical Media Corp.   $ (38,370 )   $ (63,523 )   $ (132,913 )   $ (49,179 )
                                 
Net income (loss) per common share, basic and diluted:   $ (0.00 )   $ (0.00 )   $ (0.00 )   $ (0.00 )
                                 
Weighted-average common shares outstanding, basic and diluted:     22,000,000       22,000,000       22,000,000       22,000,000  

 

 

 

 

 

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

 

 

  4  
 

 

BROWN TECHNICAL MEDIA CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED JULY 31, 2016 AND 2015

(Unaudited)

 

 

    July 31,  
    2016     2015  
Cash flows from operating activities:                
Net loss   $ (241,908 )   $ (92,301 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation     9,331       10,305  
Amortization of debt discount     62,162        
Bad debt expense     10,407        
Changes in assets and liabilities:                
Accounts receivable     2,461       (53,037 )
Merchandise inventory     30,656       45,607  
Accounts payable and accrued liabilities     (144,979 )     (9,649 )
Accrued expenses - related parties     85,282       77  
Net cash provided by (used in) operating activities     (186,588 )     (98,998 )
                 
Cash flows from investing activities:                
Purchase of an investment     (43,466 )      
Net cash used in investing activities     (43,466 )      
                 
Cash flows from financing activities:                
Proceeds from notes payable     1,245,707       1,185,874  
Repayments of notes payable     (1,039,229 )     (1,062,412 )
Proceeds from long term debt            
Repayment of long term debt     (10,675 )     (9,669 )
Proceeds from shareholder advance              
Net cash provided by financing activities     195,803       113,793  
                 
Net (decrease) increase in cash and cash equivalents     (34,251 )     14,795  
Cash and cash equivalents - beginning of period     74,001       23,552  
Cash and cash equivalents - end of period   $ 39,750     $ 38,347  
                 
Supplementary disclosure of cash flow information:                
Interest paid   $ 53,017     $ 37,948  
Taxes paid, net   $     $  

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

  5  
 

 

BROWN TECHNICAL MEDIA CORP.

NOTES TO THE CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED JULY 31, 2016 AND 2015

 

1. Description of Business and Summary of Significant Accounting Policies

 

Description of Business

 

Brown Technical Media Corp. (“the Company”) is a Texas corporation and a leading provider of codes, standards, training materials and related materials in print and electronically to small, medium and large businesses, government, and non-profit organizations in the United States. The Company owns Brown Book Shop, Inc., (“Brown”) a Texas corporation that was formed as Brown Book Shop, a sole-proprietorship, in 1946. On June 8, 1976, Brown was incorporated in Texas as Brown Book Shop, Inc. On January 31, 2014, the Company purchased 51% of the outstanding shares of Brown. The Company intends to purchase the remaining 49% from the noncontrolling interest in exchange for $50,000 cash and a note payable for $188,835. We operate a bookstore in Houston, Texas and an e-commerce website www.browntechnical.org.

 

The Company incorporated on January 21, 2014. The Company is authorized to issue 500,000,000 shares of $0.001 par value common stock and 100,000,000 shares of $0.001 par value preferred stock.

 

On August 6, 2014, the Company formed Pink Professionals, LLC (“Pink”) to develop and market social networking software aimed at female managers and professionals in certain targeted professions, such as Oil and Gas, Finance and Information Technology. At the time of formation, the Company owned 75% of the membership units of Pink. On October 31, 2014, the Company sold the rights to the use of the software in the Oil and Gas industry to the 25% owner of Pink in exchange for cash consideration and the cancelation of the 25% owner’s membership units. Accordingly, the Company now owns 100% of the equity in Pink.

 

On February 2, 2016, the Company formed Brown Technical Publishing, Inc. for the purpose of publishing original books and materials.

 

Basis of Presentation

 

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles of the United States of America (“GAAP”) for interim financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the nine-month period ended July 31, 2016, are not necessarily indicative of the results that may be expected for the year ending October 31, 2016. These financial statements should be read in conjunction with the audited consolidated financial statements for the fiscal year ended October 31, 2015 and notes thereto dated October 27, 2016. 

 

Principles of Consolidation

 

The Consolidated Financial Statements include the accounts of the Company and its majority owned subsidiaries. All intercompany transactions and accounts are eliminated in consolidation.

 

Use of Estimates

 

The preparation of the Consolidated Financial Statements in accordance with GAAP requires management to make use of certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Consolidated Financial Statements and the reported amounts of revenue and expenses during the reported periods. The Company bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

 

 

 

  6  
 

 

BROWN TECHNICAL MEDIA CORP.

NOTES TO THE CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED JULY 31, 2016 AND 2015

 

 

1. Description of Business and Summary of Significant Accounting Policies (continued)

 

Business Combinations

 

The Company accounts for all business combinations using the acquisition method of accounting, which allocates the fair value of the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions. The Company may utilize third-party valuation specialists to assist the Company in the allocation. Initial purchase price allocations are subject to revision within the measurement period, not to exceed one year from the date of acquisition. Acquisition-related expenses and transaction costs associated with business combinations are expensed as incurred.

 

Cash

 

Cash and cash equivalents include short-term investments with original maturities of 90 days or less. The recorded value of our cash and cash equivalents approximates their fair value.

 

Accounts Receivable

 

Trade accounts receivable are recorded at the invoiced amount and typically do not bear interest. The Company provides allowances for doubtful accounts related to accounts receivable for estimated losses resulting from the inability of its customers to make required payments. The Company takes into consideration the overall quality of the receivable portfolio along with specifically-identified customer risks.

 

Merchandise Inventory

 

Inventory is valued at the lower of cost or market value. Cost is determined using a weighted-average cost method. Price protection is recorded when earned as a reduction to the cost of inventory. The Company decreases the value of inventory for estimated obsolescence equal to the difference between the cost of inventory and the estimated market value, based upon an aging analysis of the inventory on hand, specifically known inventory-related risks, and assumptions about future demand and market conditions.

 

Investments in Equity Interests

 

Investments in privately held equity interests in which the Company cannot exercise significant influence are accounted for using the cost method of accounting.

 

The Company reviews its investments for other-than-temporary impairment whenever events or changes in business circumstances indicate that the carrying value of the investment may not be fully recoverable. Investments identified as having an indication of impairment are subject to further analysis to determine if the impairment is other-than-temporary and this analysis requires estimating the fair value of the investment. The determination of fair value of the investment involves considering factors such as current economic and market conditions, the operating performance of the companies including current earnings trends and forecasted cash flows, and other company and industry specific information.

 

Property and Equipment

 

Property and equipment are stated at cost, less accumulated depreciation. The Company calculates depreciation expense using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of their useful lives or the initial lease term. Expenditures for major renewals and improvements that extend the useful life of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. The estimated useful lives of property and equipment are as follows:

 

   
     
  Classification

Estimated

Useful Lives

  Equipment 5 to 7 years
  Leasehold improvements 4 to 5 years
  Furniture and fixtures 4 to 7 years

 

 

 

  7  
 

 

BROWN TECHNICAL MEDIA CORP.

NOTES TO THE CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED JULY 31, 2016 AND 2015

 

1. Description of Business and Summary of Significant Accounting Policies (continued)

 

Fair Value Measurements

 

Fair value is defined under GAAP as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy has been established for valuation inputs to prioritize the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

 

Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

 

Level 1 – observable inputs such as quoted prices for identical instruments traded in active markets.

 

Level 2 – inputs are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar techniques.

 

Revenue Recognition

 

The Company records revenue from sales transactions when title and risk of loss are passed to the customer, there is persuasive evidence of an arrangement for sale, shipment has occurred and/or services have been rendered, the sales price is fixed or determinable, and collectability is reasonably assured. The Company’s shipping terms typically specify F.O.B. origination, at which time title and risk of loss have passed to the customer.

 

The Company leverages drop-shipment arrangements with many of its vendors and suppliers to deliver products to its customers without having to physically hold the inventory at its warehouses, thereby increasing efficiency and reducing costs. The Company recognizes revenue for drop-shipment arrangements on a gross basis upon delivery to the customer with contract terms that typically specify F.O.B. destination.

 

The Company records freight billed to its customers as Net sales and the related freight costs as a Cost of sales.

 

Sales Taxes

 

The State of Texas imposes a sales tax on the Company’s sales to nonexempt customers. The Company collects that sales tax from customers and remits the entire amount to the State. The Company’s accounting policy is to exclude the tax collected and remitted to the State from revenue and cost of revenues.

 

Leases

 

All leases are reviewed for capital or operating classification at their inception under the guidance of Accounting Standards Codification Topic 840, “Leases” (“ASC 840”). We use our incremental borrowing rate in the assessment of lease classification, and define initial lease term to include the construction build-out period, but to exclude lease extension periods. We conduct operations primarily under operating leases. For leases that contain rent escalations, we record the total rent payable during the lease term, as defined above, on a straight-line basis over the term of the lease and record the difference between the rents paid and the straight-line rent as a deferred rent liability.

 

Advertising Costs

 

We expense advertising costs as incurred and recorded $142,194 and $110,416 of advertising expenses during the nine months ended July 31, 2016 and 2015, respectively.

 

 

 

  8  
 

 

BROWN TECHNICAL MEDIA CORP.

NOTES TO THE CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED JULY 31, 2016 AND 2015

 

 

1. Description of Business and Summary of Significant Accounting Policies (continued)

 

Income Taxes

 

Deferred income taxes are provided to reflect the differences between the tax bases of assets and liabilities and their reported amounts in the Financial Statements using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company performs an evaluation of the realizability of deferred tax assets on a quarterly basis. This evaluation requires management to make use of estimates and assumptions and considers all positive and negative evidence and factors, such as the scheduled reversal of temporary differences, the mix of earnings in the jurisdictions in which the Company operates, and prudent and feasible tax planning strategies.

 

The Company accounts for unrecognized tax benefits based upon its assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. The Company reports a liability for unrecognized tax benefits resulting from unrecognized tax benefits taken or expected to be taken in a tax return and recognizes interest and penalties, if any, related to its unrecognized tax benefits in income tax expense.

 

2. Recent Accounting Pronouncements

 

Balance Sheet Classification of Deferred Taxes

 

In November 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, simplifying the balance sheet classification of deferred taxes by requiring all deferred taxes, along with any related valuation allowance, to be presented as noncurrent. This ASU is effective for the Company beginning in the first quarter of 2017, allows for early adoption and may be applied either prospectively or retrospectively. This ASU is not expected to have a material impact on the Company’s Financial Statements.

 

Accounting for Measurement Period Adjustments in a Business Combination

 

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments, eliminating the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Instead, acquirers must recognize measurement-period adjustments during the period in which they determine the amounts, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date. This ASU is effective for the Company beginning in the first quarter of 2016, allows for early adoption and must be applied prospectively to adjustments to provisional amounts occurring after the effective date. This ASU is not expected to have a material impact on the Company’s Financial Statements.

 

Simplifying the Measurement of Inventory

 

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, amending the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value instead of the lower of cost or market value. This ASU is effective for the Company beginning in the first quarter of 2017, allows for early adoption and must be applied prospectively after the date of adoption. This ASU is not expected to have a material impact on the Company’s Financial Statements.

 

Debt Issuance Costs

 

In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, amending the presentation of debt issuance costs by requiring deferred financing costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for deferred financing costs are not affected by the amendments in this ASU. This ASU is effective for the Company beginning in the first quarter of 2016, allows for early adoption permitted and requires retrospective application to all prior periods. This ASU is not expected to have a material impact on the Company’s Financial Statements.

 

 

 

 

  9  
 

 

BROWN TECHNICAL MEDIA CORP.

NOTES TO THE CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED JULY 31, 2016 AND 2015

 

 

2. Recent Accounting Pronouncements (Continued)

 

In August 2015, the FASB issued ASU 2015-15, Interest—Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements—Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (SEC Update), clarifying the SEC’s views on the presentation and subsequent measurement of debt issuance costs related to line-of-credit arrangements. The ASU allows for an entity to defer and present debt issuance costs associated with line-of-credit arrangements as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangements. This ASU is effective upon issuance and the Company adopted it in the third quarter of 2015. This ASU is not expected to have a material impact on the Company’s Financial Statements.

 

Revenue Recognition

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), replacing most existing revenue recognition guidance under GAAP and eliminating industry specific guidance. The core principal of the new guidance is that an entity should recognize revenue for the transfer of goods and services equal to an amount it expects to be entitled to receive for those goods and services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, deferring the effective date by one year. This ASU will be effective for the Company beginning in the first quarter of 2018, allows for early adoption in the first quarter of 2017 and may be applied using either a full retrospective approach or a modified retrospective approach. This ASU is not expected to have a material impact on the Company’s Financial Statements.

 

3. Going Concern

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has a cumulative net loss since inception of $565,731, negative working capital of $249,486 and relies on short term financing to fund its operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The Company’s continuation as a going concern is dependent upon its ability to generate revenues and its ability to obtain financing from third parties. No assurance can be given that the Company will be successful in these efforts.

 

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

 

 

  10  
 

 

BROWN TECHNICAL MEDIA CORP.

NOTES TO THE CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED JULY 31, 2016 AND 2015

 

 

4. Notes Payable

 

Notes payable are unsecured and consist of the following:

 

      July 31, 2016     October 31, 2015  
  Note payable dated March 31, 2015, bearing interest at 15.9% due July 20, 2017.   $ 51,306     $ 4,415  
  Note payable dated May 14, 2015, bearing interest at 18%, due October 2016, and guaranteed by the officers of the Company. As of the filing date, the note was repaid in full.     98,480       100,473  
  Notes payable dated May 19, 2015, bearing interest at 33%, due May 19, 2016, and guaranteed by the officers of the Company. The Company refinanced the note payable on November 12, 2015 and again on June 14, 2016 to provide additional funding and extend the maturity date to September 14, 2017. The Company recorded a debt discount of $139,140 at inception and has amortized $59,179 for the nine months ended July 31, 2016. As of July 31, 2016, $79,961 remains unamortized. The effective interest rate is 35.6%.     218,371       43,332  
  Note payable dated October 23, 2014, bearing interest at 10%, due in August 2017, and guaranteed by the officers of the Company. The Company recorded a debt discount of $17,100 at inception and has amortized $2,983 for the nine months ended July 31, 2016. As of July 31, 2016, $14,117 remains unamortized. The effective interest rate is 12.5%.     142,178        
  Note payable dated March 16, 2015, bearing interest at 9%, due December 31, 2016.     51,000       51,000  
  Total notes payable     561,335       199,220  
  Less: Unamortized debt discount     (94,078 )      
  Notes payable, net   $ 467,257     $ 199,220  

 

On March 16, 2015, the Company entered into a Note Agreement with an independent accredited investor relating to the sale of a promissory note and warrant. As a result, the Company issued a promissory note with a total principal balance of $51,000 and warrants to purchase 2,200,000 shares of common stock at an exercise price of $0.25 per share. The promissory note has a relative value of $48,891 and the warrants have a relative fair value of $2,109 at the date of issuance, determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.24%, (ii) estimated volatility of 1,006%, (iii) dividend yield of 0.00%, and (iv) an expected life of the warrants of 3 years.

 

5. Long term debt

 

Long term debt consists of unsecured notes payable to the former shareholders of the Company. The notes bear interest at 8% and are due February 1, 2019 with monthly principal and interest payments of $2,244. The balance on the notes are $165,049 and $175,121 at July 31, 2016 and October 31, 2015, respectively.

 

 

 

  11  
 

 

BROWN TECHNICAL MEDIA CORP.

NOTES TO THE CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED JULY 31, 2016 AND 2015

 

 

6. Contingencies

 

The Company is party to various legal proceedings that arise in the ordinary course of its business, which include commercial, intellectual property, employment, tort and other litigation matters. The Company is also subject to audit by federal, state, international, national, provincial and local authorities, and by various partners, group purchasing organizations and customers, including government agencies, relating to purchases and sales under various contracts. In addition, the Company is subject to indemnification claims under various contracts. From time to time, certain customers of the Company file voluntary petitions for reorganization or liquidation under the U.S. bankruptcy laws or similar laws of the jurisdictions for the Company’s business activities outside of the United States. In such cases, certain pre-petition payments received by the Company could be considered preference items and subject to return to the bankruptcy administrator.

 

As of July 31, 2016, the Company does not believe that there is a reasonable possibility that any material loss exceeding the amounts already recognized for these proceedings and matters, if any, has been incurred. However, the ultimate resolutions of these proceedings and matters are inherently unpredictable. As such, the Company’s financial condition and results of operations could be adversely affected in any particular period by the unfavorable resolution of one or more of these proceedings or matters.

 

7. Related Party Transactions

 

On November 30, 2014, a shareholder of the Company advanced $500 to Pink Professionals, LLC, a wholly owned subsidiary of the Company. The advance is interest free and due upon demand.

 

The Company uses credit cards of related parties to pay for certain operational expenses. The Company has agreed to pay the credit card balances, including related interest. As of July 31, 2016 and October 31, 2015, the Company has an outstanding balance of $130,612 and $45,330, respectively, on these credit cards.

 

On February 16, 2016, the Company purchased 43,466 units at $1 per unit of a privately held company, in which the executive officers of the Company also serve as management. This represents approximately 5% of the outstanding units at the time of purchase. The investment was accounted for using the cost method of investment.

 

8. Subsequent Events

 

On August 31, 2016, the Company issued 1,100,000 shares of its common stock to a note holder in exchange for the surrender and cancellation of a warrant previously issued to the note holder.

 

On August 31, 2016, the Company issued 1,155,000 shares of its common stock to an employee as compensation.

 

On August 31, 2016, the Company issued a convertible note payable for gross proceeds of $50,000 bearing interest at 10% per annum. The convertible note payable matures on December 31, 2016, and is convertible, at the option of the note holder, into the common stock of the Company at a price equal to 75% of the price per share paid by the purchasers of securities issued in a Qualified Financing of the Company. A Qualified Financing is defined as $500,000 in new cash raised from accredited investors in Panther.

 

 

 

  12  
 

 

BROWN TECHNICAL MEDIA CORP.

NOTES TO THE CONSOLIDATED STATEMENTS

FOR THE NINE MONTHS ENDED JULY 31, 2016 AND 2015

 

8. Subsequent Events (Continued)

 

On September 20, 2016, the Company entered into a binding letter of intent to enter into a share exchange agreement with Panther Biotechnology, Inc. whereby the shareholders of the Company would exchange all of their outstanding common stock in consideration for approximately 12 million shares of Panther Biotechnology, Inc.’s common stock, plus certain earn-out rights. The result of the share exchange will be that the Company would become a wholly-owned subsidiary of Panther Biotechnology, Inc. This transaction will be accounted for as a reverse merger with Brown as the surviving entity. The assets of Panther that existed prior to the transaction will be recorded at their fair market value as of the closing of the transaction and will be added to the historical cost basis of the assets of Brown.

 

Effective September 30, 2016, the Company entered into a consulting agreement with the CEO of Panther that calls for the Company to issue 6,000,000 shares of common stock to the Panther CEO.

 

On October 14, 2016, the Company issued two convertible notes payable for gross proceeds of $37,000 bearing interest at 10% per annum. The convertible notes payable mature on December 31, 2016, and are convertible, at the option of the note holder, into the common stock of the Company at a price equal to 75% of the price per share paid by the purchasers of securities issued in a Qualified Financing of the Company. A Qualified Financing is defined as $500,000 in new cash raised from accredited investors in Panther.

 

On October 31, 2016, the Company issued a convertible note payable for gross proceeds of $50,000 bearing interest at 10% per annum. The convertible note payable matures on December 31, 2016, and is convertible, at the option of the note holder, into the common stock of the Company at a price equal to 75% of the price per share paid by the purchasers of securities issued in a Qualified Financing of Panther Biotechnology, Inc. A Qualified Financing is defined as $500,000 in new cash raised from accredited investors in Panther.

 

On October 31, 2016, the Company acquired an additional 48% of Brown Book Shop, Inc. for $50,000 in cash and a note payable in the amount of $184,981. The note is due October 31, 2026, bears interest at 8% per annum, requires monthly payments of principal and interest of $2,244, and a balloon payment of $110,687 after five years. The note is unsecured. As a result of this transaction, the Company now owns 99% of Brown Book Shop, Inc.

 

In October 2016, the Company sold 500,000 shares of its common stock to two investors for gross proceeds of $75,000.

 

On November 8, 2016, the Company consummated the share exchange agreement with Panther. As a result of the transaction, the Company completed a reverse merger for accounting purposes.

 

 

 

 

  13  

 

Exhibit 99.3

 

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

 

The following unaudited pro forma combined balance sheet is derived from the historical consolidated financial statements of Panther Biotechnology, Inc. (“Panther”) and the historical consolidated financial statements of Brown Technical Media Corp. (“Brown”) that Panther acquired on November 7, 2016 in exchange for 32,000,000 shares of Panther common stock pursuant to the Share Exchange Agreement, dated as of October 31, 2016, between Panther, Brown and the shareholders of Brown (the “Share Exchange Agreement” and the “Brown Acquisition”). The following unaudited pro forma combined balance sheet has been adjusted to reflect the purchase of Brown by Panther and certain other events.

 

The unaudited pro forma combined balance sheet as of July 31, 2016 gives effect to the Brown Acquisition as if it had occurred on July 31, 2016. Unaudited pro forma statement of operations are not presented because the ongoing operations of the Company will reflect those of Brown and resemble the results of Brown. The combination is being accounted for as a reverse merger whereby Brown is the surviving entity.

 

The unaudited pro forma combined balance sheet is presented for illustrative purposes only to reflect the Brown Acquisition, and do not represent what our results of operations or financial position would actually have been had the Brown Acquisition occurred on the date noted above, or project our results of operations or financial position for any future periods. The unaudited pro forma combined financial statements are intended to provide information about the continuing impact of the Brown Acquisition as if it had been consummated earlier. The pro forma adjustments are based on available information and certain assumptions that management believes are factually supportable and are expected to have a continuing impact on our results of operations. In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma combined balance sheet have been made. However, the final allocations of purchase price and effects on the results of operations may differ materially from the preliminary allocations and unaudited pro forma combined amounts included herein.

 

The following unaudited pro forma balance sheet should be read in conjunction with Panther’s consolidated financial statements and related notes and Brown’s consolidated financial statements and related notes. Panther’s financial statements and notes are included in Panther’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on September 13, 2016 and its Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 2016. The consolidated financial statements for Brown and related notes are included elsewhere in this filing.

 

 

 

 

  1  
 

 

PANTHER BIOTECHNOLOGY, INC.

UNAUDITED PRO FORMA COMBINED BALANCE SHEETS

AUGUST 31, 2016

 

    Historical
Panther
August 31,
2016
    Historical
Brown
July 31,
2016
    Eliminate
Panther
July 31,
2016
    Pro Forma     Pro Forma  
    (Unaudited)     (Unaudited)     Historical     Adjustments     Combined  
ASSETS                                        
Current assets:                                        
Cash and cash equivalents   $ 65,526     $ 39,750     $     $ 250,000 (B)   $ 355,276  
Accounts receivable, net           51,941                   51,941  
Inventory           461,483                   461,483  
Total current assets     65,526       553,174             250,000       868,700  
Property and equipment, net           59,343                     59,343  
Long term investment           43,466                   43,466  
Other assets     243,175       7,500             1,500,000 (C)     1,750,675  
Total assets   $ 308,701     $ 663,483     $     $ 1,750,000     $ 2,722,184  
                                         
LIABILITIES AND STOCKHOLDERS’ DEFICIT                          
Current liabilities:                                        
Accounts payable and accrued liabilities   $ 399,286     $ 189,528     $     $     $ 588,814  
Accounts payable - related parties     15,612       130,612                   146,224  
Stock payable     33,668                         33,668  
Stock payable - related party     84,562                         84,562  
Related party advances     87,500                         87,500  
Notes payable           467,257                   467,257  
Convertible note payable, net     80,313                         80,313  
Derivative liability     558,403                         558,403  
Current maturities of long term debt           15,263                   15,263  
                                       
Total current liabilities     1,259,344       802,660                   2,062,004  
                                         
Long term debt           149,786                     149,786  
Other long term liabilities             7,500                     7,500  
                                         
Total liabilities     1,259,344       959,946                   2,219,290  
Commitments and contingencies                              
                                         
Stockholders’ deficit:                                        
Preferred stock, $.001 par value, 100,000,000 shares authorized, no shares issued and outstanding                              
Common stock, $.001 par value, 100,000,000 shares authorized, 7,784,717 shares issued and outstanding at August 31, 2016     7,950       22,000               1,667 (B)     31,617  
                                         
Additional paid-in capital     10,636,450       20,000       (11,595,043 )(A)     248,333 (B)     809,740  
                              1,500,000 (C)        
Accumulated deficit     (11,595,043 )     (336,616 )     11,595,043 (A)           (336,616 )
Total Brown Technical Media Corp. stockholders' deficit     (950,643 )     (294,616 )           1,750,000       504,741  
Non-controlling interest           (1,847 )                     (1,847 )
Total stockholders’ deficit     (950,643 )     (296,463 )           1,750,000       502,894  
                                         
Total liabilities and stockholders’ deficit   $ 308,701     $ 663,483     $     $ 1,750,000     $ 2,722,184  

 

 

 

 

  2  
 

 

A These adjustments reflect the fact that the ongoing business of the Company will be that of Brown. Accordingly, the equity accounts of Panther are eliminated.

 

B Reflects the assumed sale of 1,666,667 shares of the Company’s common stock for gross proceeds of $250,000 in conjunction with the closing of the Share Exchange Agreement. The shares are anticipated to be sold in accordance with the terms of the Share Exchange Agreement. The Company expects to sell these shares at $0.15 per share.

 

C These adjustments reflect the consideration paid by Panther to Brown shareholders. Panther’s acquisition of Brown was accounted for as a reverse merger. This amount represents the estimated fair market value of the assets owned by Panther prior to the reverse merger.  The liabilities of Panther were not adjusted because historical cost reflects fair market value. This preliminary valuation has been used to prepare pro forma adjustments in the pro forma balance sheet. The final valuation will be determined by Panther subsequent to the closing of the Brown Acquisition. The final valuation may differ from these estimates and could differ materially from the preliminary valuation described below until Panther has completed the detailed valuations and necessary calculations. The final valuation will be determined when Panther has completed the detailed valuations and necessary calculations.

   

 

 

 

 

 

 

  3