U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(MARK ONE)
|X| Quarterly Report Pursuant to Section 13 or 15(d) of Securities
Exchange Act of 1934
For the quarterly period ended JUNE 30, 2000
|_| Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______ to _______.
Commission File No. 0-21739
GENETIC VECTORS, INC.
(Name of Small Business Issuer in Its Charter)
FLORIDA 65-0324710
------- ----------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
5201 N.W. 77TH AVENUE, SUITE 100,
MIAMI, FLORIDA 33166
--------------------------------------- --------
(Address of Principal Executive Offices) (Zip Code)
(305) 716-0000
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months, and
(2) has been subject to such filing requirements for the past 90 days. Yes
|_| No |X|
There were 3,732,843 shares of Common Stock outstanding as of August 11,
2000.
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
GENETIC VECTORS, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
PAGE
Balance Sheet 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Financial Statements 6
2
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GENETIC VECTORS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET (UNAUDITED)
June 30, 2000
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CURRENT ASSETS:
Cash and cash equivalents $174,189
Accounts receivable 29,503
Inventory 20,512
Prepaid expenses 30,046
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TOTAL CURRENT ASSETS 254,250
Equipment and improvements, net 254,873
Patents and license agreement, net 192,763
Restricted cash equivalents 46,130
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$748,016
=======================================================================
LIABILITIES AND CAPITAL DEFICIT
CURRENT LIABILITIES
Accrued liabilities:
Accounts payable and accrued liabilities $405,324
Accrued interest payable 161,353
Loans payable, net of unamortized discount 2,331,753
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2,898,430
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CAPITAL DEFICIT:
Common stock, $.001 par value, 10,000,000 shares
authorized, 3,732,843 shares issued and outstanding 3,733
Additional paid-in capital 10,960,433
Deficit accumulated during the development stage (13,114,580)
-----------------------------------------------------------------------
CAPITAL DEFICIT (2,150,414)
-----------------------------------------------------------------------
$ 748,016
=======================================================================
See accompanying notes to the financial statements
3
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<TABLE>
GENETIC VECTORS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS (UNAUDITED)
<CAPTION>
Cumulative
from
January 1, For the For the For the For the
1992 Three Three Six Six
(Inception) Months Months Months Months
Through Ended Ended Ended Ended
June 30, June 30, June 30, June 30, June 30,
2000 2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUE:
Sales 323,525 $ 49,420 $ 49,745 $ 85,245 $ 60,934
Grant income 149,147 - - - -
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Total revenue 472,672 49,420 49,745 85,245 60,934
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COST AND EXPENSES:
Cost of Sales 87,008 14,258 24,048 23,325 36,977
General administration 6,255,902 466,860 335,747 1,032,583 601,282
Research and development 3,465,655 184,319 147,486 361,521 277,669
Depreciation and amortization 375,361 23,889 44,925 47,778 54,175
---------------------------------------------------------------------------------------------------------------------------------
Total expenses 10,183,926 689,326 552,206 1,465,207 970,103
---------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE):
Amortization of deferred loan cost (1,542,881) (308,351) (192,568) (776,319) (192,568)
Interest income (expense), net (40,445) (100,151) 1,598 (184,471) 4,099
Expense in connection with issuance
of common stock for loan extension (1,820,000) (1,068,231) - (1,820,000) -
---------------------------------------------------------------------------------------------------------------------------------
Total other (3,403,326) (1,476,733) (190,970) (2,780,790) (188,469)
---------------------------------------------------------------------------------------------------------------------------------
NET (LOSS) (13,114,580) $(2,116,639) $(693,431) $(4,160,752) $(1,097,638)
=================================================================================================================================
Weighted average number of
common shares outstanding - 3,732,843 2,925,942 3,584,893 2,863,241
Net loss per common share - ($0.57) ($0.24) ($1.16) ($0.38)
See accompanying notes to the financial statements.
</TABLE>
4
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<TABLE>
GENETIC VECTORS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
Cumulative from For the For the
January 1, 1992 Six months Six months
(inception) ended ended
Through June 30, June 30, June 30,
2000 2000 1999
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $(13,114,580) $(4,160,752) $(1,097,638)
Adjustments to reconcile net loss to net
cash (used in) operating activities:
Depreciation and amortization 375,369 47,778 54,175
Amortization of deferred loan cost 1,542,881 776,319 192,568
Write-off of acquired technology 71,250 - -
Common stock issued for loan extension 1,820,000 1,820,000 -
Consulting services provided for common stock 6,000 - -
Warrants issued for loan extension 154,646 80,946 -
Stock options granted for services 364,572 -
(Increase) in accounts receivable (32,688) (23,563) (16,597)
(Increase) (decrease) in inventory (20,512) (13,431) (5,543)
(Increase) decrease in prepaid expenses (30,046) 20,378 20
(Increase) decrease in other assets - - -
(Increase) decrease in restricted cash
equivalents (46,130) - -
Increase in accounts payable
and accrued liabilities 704,595 110,782 141,941
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TOTAL ADJUSTMENTS 4,909,937 2,819,209 366,564
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NET CASH USED IN OPERATING ACTIVITIES (8,204,643) (1,341,543) (731,074)
------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Purchase of equipment and improvements (577,929) (6,070) (1,130)
Insurance proceeds in excess of loss on fixed - - 3,254
assets
Patent costs (261,964) - -
------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (839,893) (6,070) 2,124
------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Increase due to parent 413,518 - -
Proceeds from notes payable 2,448,500 1,175,100 388,500
Payment on notes payable (35,000) - -
Net proceeds from issuance of common stock and
exercise of options 5,872,450 140,000 225,000
Capital contribution 500,000 - -
Offering refund 25,500 - -
Offering costs (6,243) - -
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NET CASH PROVIDED BY
FINANCING ACTIVITIES 9,218,725 1,315,000 613,500
------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH 174,189 (32,613) (115,450)
CASH AT BEGINNING OF PERIOD - 206,802 117,812
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CASH AT END OF PERIOD 174,189 $ 174,189 $ 2,362
==================================================================================================================
SUPPLEMENTAL DISCLOSURES:
Warrants issued in connection with loan financing $1,624,650 $ 425,000 $ 388,500
Conversion of due to parent in exchange for stock $ 413,518 $ - $ -
Conversion of accrued wages for stock $ 132,822 $ - $ -
Issuance of common stock for loan extension $1,820,000 $ 1,820,000 $ -
See accompanying notes to the financial statements.
</TABLE>
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GENETIC VECTORS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. FINANCIAL STATEMENTS
In the opinion of the Company, the accompanying unaudited financial statements
include all adjustments (consisting only of normal recurring accruals) that are
necessary for a fair presentation of the results for the periods presented.
Certain information and footnote disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these financial statements be read in
conjunction with the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1999. The results of operations for the six months ended June 30,
2000 are not necessarily indicative of the results to be expected for the full
year.
On January 17, 2000, the Company acquired DNA Sciences, Inc. in a transaction
that was accounted for as a pooling of interest. The financial statements and
management's discussion and analysis of financial condition and results of
operations for the six month period ended June 30, 2000 includes the results of
operations of DNA Sciences, Inc. as if the acquisition took place on January 1,
1999. The results of operation of DNA Sciences, Inc. are combined to the results
of Genetic Vectors, Inc. for the three and the six months ended June 30, 1999.
2. EARNINGS PER SHARE
The following reconciles the components of the earnings per share (EPS)
computation.
<TABLE>
<CAPTION>
For the six months ended June 30, 2000 For the six months ended June 30, 1999
--------------------------------------------- ---------------------------------------------
Loss Shares Per Share Loss Share Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
---------------------------------- -------------- ---------------- ------------- -- ------------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Loss per common share - basic $(4,160,752) 3,584,893 $(1.16) $(1,097,638) 2,863,241 $(0.38)
---------------------------------- -------------- ---------------- ------------- -- ------------- ---------------- --------------
Effect of Dilutive:
Securities - - - - - -
Options - - - - - -
Warrants - - - - - -
---------------------------------- -------------- ---------------- ------------- -- ------------- ---------------- --------------
Loss per common share,
assuming dilution $(4,160,752) 3,584,893 $(1.16) $(1,097,638) 2,863,241 $(0.38)
</TABLE>
Net loss per share of common stock is based on the weighted average number of
common shares outstanding during each period. Diluted loss per share of common
stock is computed on the basis of the weighted average number of common shares
and diluted options and warrants outstanding. Dilutive options and warrants
having an anti-dilutive effect are excluded from the calculation.
3. NOTES PAYABLE
During the three months ended June 30, 2000, the Company borrowed $750,000 (See
Item 2, Changes in Securities and Use of Proceeds; Item 3, Defaults upon Senior
Securities). These loans bear interest at 12% a year and are due between October
and December 2000. In connection with these borrowings, the Company issued
10,000 warrants at an exercise price $6.20. In connection with this transaction,
the value ascribed to the warrants was $28,600.
6
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GENETIC VECTORS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
Accordingly, the Company has recorded a debt discount and has offset the amounts
borrowed by the value ascribed to these warrants. The Company will amortize the
debt discount over the term of the related borrowings.
3. NOTES PAYABLE (CONTINUED)
<TABLE>
<CAPTION>
<S> <C> <C>
Notes payable as of June 30, 2000 As of June 30, 2000, the Company was past due on
loans with an original principal balance of
$1,488,500. On July 7, 2000, the maturity dates
Notes payable $2,413,522 were extended from June 30, 2000 to September 30,
Debt discount (81,769) 2000 on loans with an original principal balance
---------- of $1,238,500. As of the date hereof, the
Net $2,331,753 Company is in default on loans with an original
========== principal balance of $250,000 for failing to pay
principal and interest when due.
</TABLE>
4. OPTIONS
On June 9, 2000, we granted the following options under our 1999 Stock Option
Plan:
o To Mead M. McCabe, Sr., the Chairman of the Company, options to purchase up
to 100,000 shares of common stock at an exercise price of $6.03125 per share.
These options vest one-third immediately and one-third on each of the second
and third anniversaries of Dr. McCabe's 1999 employment agreement. These
options may be exercised within ten years of the date of grant.
o To Mead M. McCabe, Jr., the Chief Executive Officer of the Company, options
to purchase up to 100,000 shares of common stock at an exercise price of
$6.03125 per share. These options vest one-third immediately and one-third on
each of the second and third anniversaries of Mr. McCabe's 1999 employment
agreement. These options may be exercised within ten years of the date of
grant.
o To Mark Burroughs, a director of the Company, options to purchase 17,500
shares of common stock at an exercise price of $6.03125 per share. 12,500 of
these options vest immediately and 5,000 vest in March 2001. These options
may be exercised within ten years of the date of grant.
o To Jack Fell, a director of the Company, options to purchase 12,500 shares of
common stock at an exercise price of $6.03125 per share. 7,500 of these
options vest immediately and 5,000 vest in March 2001. These options may be
exercised within ten years of the date of grant.
o To Michael Foley, a director of the Company, options to purchase 10,000
shares of common stock at an exercise price of $6.03125 per share. 5,000 of
these options vest immediately and 5,000 vest in January 2001. These options
may be exercised within ten years of the date of grant.
7
<PAGE>
GENETIC VECTORS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
5. NEW ACCOUNTING STANDARDS
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, ACCOUNTING FOR CERTAIN TRANSACTIONS INVOLVING STOCK
COMPENSATION, AN INTERPRETATION OF APB OPINION NO. 25. The Company adopted the
Interpretation on July 1, 2000. The Interpretation requires, among other things,
that stock options that have been modified be accounted for as variable.
Management anticipates the implementation of FASB Interpretation No. 44 will not
have a material effect on the Company's financial position or results of
operations.
6. SUBSEQUENT EVENTS
Between July 24 and August 1, 2000, we borrowed $1,200,000 from thirty-five
private investors from the sale of 50 Units, consisting of a convertible note
and warrant. These loans have an annual interest rate of 12%, simple interest,
payable at maturity. The loans are due in December 2000. Prior to the payment of
the principal balance of the loan, each private investor may convert, at his
option at anytime up to 30 days after the closing of an equity financing by the
Company of $5 million or more, all amounts due into shares of common stock at a
conversion rate of $3.00 per share. In addition, and in the event of a
conversion, each private investor will receive for each Unit purchased warrants
to purchase 16,665 shares of common stock at an exercise price of $6.00 per
share and 16,665 shares of common stock at an exercise price of $7.10 per share.
If no conversion occurs, then each private investor will receive for each Unit
purchased warrants to purchase 10,000 shares of common stock at an exercise
price of $6.60 per share and 10,000 shares of common stock at an exercise price
of $8.00 per share. Additionally, in the event of a default, each investor would
be entitled to receive for each Unit purchased warrants to purchase 5,000 shares
at an exercise price of $5.00 per share for each month that any amounts are
outstanding under the note.
8
<PAGE>
ITEM 2: MANAGEMENT'S PLAN OF OPERATION AND DISCUSSION AND ANALYSIS.
THE FOLLOWING INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED
FINANCIAL STATEMENTS OF THE COMPANY AND THE NOTES THERETO APPEARING ELSEWHERE IN
THIS QUARTERLY REPORT ON FORM 10-QSB.
PLAN OF OPERATION
We specialize in the development of molecular systems in the area of disease
management and risk assessment. We plan to develop and manufacture these tests
for sale to the pharmaceutical and healthcare industries. We are currently
selling the EpiDNA and the EasyID product lines and are developing several other
products of these lines.
FINANCIAL RESOURCES AND CASH REQUIREMENTS
We are dependent on external capital to finance our operations, and have not
generated a significant amount of cash from operations. As of June 30, 2000, we
had cash and cash equivalents of $174,189. Since that date, we have borrowed an
additional $1,200,000. These funds are projected to last no longer than December
1, 2000. We will need to raise additional capital to continue operations beyond
December 1, 2000. This plan of operation assumes that we will be successful in
raising additional capital. Our failure to raise additional capital will, among
other things, cause deviations from the plan of operation described herein and
would likely result in our need to curtail or cease operations.
Since November 1, 1998, we have borrowed $3.7 million to fund our operations. We
are in default on some of these loans for failing to pay principal and interest
when due, a total $250,000, plus interest. See "Risk Factors - We are in default
of some of our outstanding indebtedness and may be unable to repay these loans."
CONTINGENT NON-CASH CHARGES
Our company is obligated to issue additional warrants to purchase a total of
2,008,294 shares of common stock upon the occurrence of certain contingent
events. In particular, we are obligated to issue additional warrants to purchase
775,000 shares of our common stock upon the full repayment of certain loans or
our successful consummation of a financing in an amount equal to or greater than
$1.5 million. In addition, if the holders elect to convert certain indebtedness
into shares of common stock within a specified period, then the holders would be
entitled to additional warrants to purchase (a) 616,647 shares of common stock
at an exercise price of $6.00 per share and (b) 616,647 shares of common stock
at an exercise price of $7.10 per share. If the holders do not elect to so
convert, then the holders would receive warrants to purchase 370,000 shares of
common stock at an exercise price of $6.60 per share and warrants to purchase
370,000 shares of common stock at an exercise price of $8.00 per share. The
issuance of these contingent or any other warrants will result in a significant
non-cash charge to our company in the period in which these additional warrants
are issued.
RESEARCH AND DEVELOPMENT
We will continue our product research and development efforts and continue to
implement what we believe to be a feasible plan for product development. We
intend to complete the build-out of research and development and production
areas in our Florida facility. For the twelve-month period following our receipt
of significant additional capital, our activities will focus on the following:
9
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o Continued enhancement of our EasyID Juvenile Diabetes Risk
Assessment System.
o Development of new EasyID detection systems in collaboration with the
Norwegian Institute of Public Health.
o Continuation of EasyID DNA probe product development for new diagnostic
uses, drug discovery and certain industrial applications.
o Continued research and development of EasyID products for the detection
of genes involved in cardiovascular diseases.
o Continued research in applications of our EpiDNA nucleic acid labeling
technology.
SIGNIFICANT PLANT OR EQUIPMENT PURCHASES
We anticipate the need to purchase and/or lease various equipment valued at
approximately $500,000. Equipment will be used primarily to manufacture the
EasyID line of products currently being marketed and develop additional
products.
CHANGES IN THE NUMBER OF EMPLOYEES
We currently have six employees. If we are successful in raising significant new
capital, then we anticipate hiring fourteen new employees in 2000 in connection
with our research and development and product development, administration, sales
and marketing. We believe that these personnel will be adequate to accomplish
the tasks set forth in our plan.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The Company remains largely a development stage company. The Company generated
revenues of $85,245 during the six months ended June 30, 2000 as compared to
$60,934 during the six months ended June 30, 1999, and had cost of sales of
$23,325 and $36,977, respectively, for the same periods. The Company's
expenditures far exceed its revenues.
Research and development expenses for the six months ended June 30, 2000
increased by $83,852 over the comparable period in the prior year. This increase
is largely attributable to the research and development costs associated with
our San Diego facility, which was closed on June 30, 2000.
Selling, general and administrative expenses increased $431,301 in the six
months ended June 30, 2000 over the comparable period in 1999. This increase is
primarily attributable to salaries of two executives and costs associated with
merger, integration and operations of DNA Sciences, Inc.
Amortization of deferred loan costs increased by approximately $583,751 from the
same period in the prior year. The increase was directly related to our
increased borrowing during the latter part of 1999 and during the six months
ended June 30, 2000 and the granting of related warrants. These warrants were
valued based on the Black-Scholes Option Pricing Model and resulted in $776,319
of amortization during the six months ended June 30, 2000.
10
<PAGE>
Interest expense, net for the six months ended June 30, 2000 increased by
$188,570, representing the interest on various loans obtained by us in the
latter part of 1999 and during 2000. As of June 30, 2000, we had approximately
$2.4 million plus accrued interest and before discount, in outstanding notes
payable. During the comparable period in the prior year we had a minimum amount
of outstanding notes payable.
Expense in connection with issuance of common stock for loan extension increased
by $1,820,000 in the six months ended June 30, 2000 over the comparable period
in 1999. This increase in primarily attributable to the fact that in 2000 the
Company recorded a charge in connection with the issuance of common stock for
the extension of the maturity date of certain loans to June 30, 2000. In this
connection 280,000 shares of the Company's common stock at $6.50 per share were
issued.
LIQUIDITY AND CAPITAL RESOURCES. The net cash used by us in operating activities
aggregated $1.3 million in the six months ended June 30, 2000, as compared with
$0.7 million in the same period in the prior year. This increase was largely
attributable to common stock issued for a loan extension previously due June 30,
2000 and increases pertaining to the merger and integration and operations of
DNA Sciences, Inc. Our net cash provided by financing activities aggregated $1.3
million during the six months ended June 30, 2000, consisting mainly of proceeds
from the sale of unregistered securities and loan transactions.
We have experienced extreme cash shortages since the end of November 1998
through the date of this filing. As of June 30, 2000, we had $174,189 of cash.
Since that date, we have raised a total of $1.2 million in a private placement.
We are and after the date of this filing will be in default of certain
indebtedness. Our company does not have sufficient funds to repay these loans.
These proceeds are expected to last no longer than December 1, 2000. As of June
30, 2000, we had a capital deficit of $2,150,414. We have entered into a
non-binding letter of intent with an underwriter to sell up to $8.4 million of
securities in a firm-commitment registered offering, although no assurances can
be given that such an offering will take place or be successful. Our inability
to raise significant capital in such a registered offering will jeopardize our
ability to continue operations.
GOING CONCERN OPINION. Our independent public accountants have added an
explanatory paragraph to their audit opinion issued in connection with the 1999
and 1998 financial statements which states that our company's dependence on
outside financing and our losses since inception raise substantial doubt about
our ability to continue as a going concern.
IMPACT OF INFLATION. Although inflation has slowed in recent years, it is still
a factor in the United States economy and we continue to seek ways to mitigate
its impact. To the extent permitted by competition, we intend to pass increased
costs on to our customers by increasing sales prices over time. In addition, we
place all of our major supplier purchases out to bid.
NEW FASB PRONOUNCEMENTS. In June 1998, the Financial Accounting Standards Board
issued FASB 133, "Accounting for Derivative Instruments and Hedging Activities."
SFAS 133 requires companies to recognize all derivatives contracts as either
assets or liabilities in the balance sheet and to measure them at fair value. If
certain conditions are met, a derivative may be specifically designated as a
hedge, the objective of which is to match the timing of gain or loss recognition
on the hedging derivative with the recognition of (i) the changes in the fair
value of the hedged asset or liability that are attributable to the hedged risk
or (ii) the earnings effect of the hedged forecasted transaction. For a
derivative not designated as a hedging instrument, the gain or loss is
recognized in operations in the period of change. SFAS 133, as amended by FAS
137, is effective for all fiscal quarters of fiscal years beginning after June
15, 2001.
11
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Historically, we have not entered into derivatives contracts either to hedge
existing risks or for speculative purposes. Accordingly, we do not expect
adoption of the new standard on January 1, 2001 to affect its financial
statements.
12
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CERTAIN BUSINESS RISK FACTORS
You should carefully consider the risks described below before trading the
common stock. Our most significant risks and uncertainties are described below;
however they are not the only ones we face. If any of the following risks
actually occur, our business, financial condition or result of operations would
be materially adversely affected, the trading price of our common stock would
decline and you may lose all or part of your investment.
WE ARE IN DEFAULT OF SOME OF OUR OUTSTANDING INDEBTEDNESS AND MAY BE UNABLE
TO REPAY THESE LOANS
Between November 1, 1998 and August 1, 2000, we borrowed a total of $3.6 million
from various private investors, consisting of:
o Unsecured loans of $150,000, with interest payable quarterly
beginning on April 1, 1999 and the principal payable on November 2,
1999. We are in default of these loans for failing to pay principal
and interest when due.
o Secured loan of $100,000, with interest payable quarterly beginning
on June 1, 1999 and the principal payable on April 18, 2000. We are
in default of this loan for failing to pay principal and interest
when due.
o Secured loans of $1,238,500 for which the payment dates of principal
and interest were extended on March 3, 2000 by the lenders to June
30, 2000 and again on July 7, 2000 to September 30, 2000.
o Loans of $175,000 convertible into shares of common stock at a price
of $5.00 per share, which are due in September 2000.
o Loan of $100,000 convertible into shares of common stock at a price
of $5.00 per share, which is due in October 2000.
o Loans of $600,000 convertible into shares of common stock at a price
of $3.00 per share, which are due in November 2000.
o Loans of $1,200,000 convertible into shares of common stock at a
price of $3.00 per share, which are due in December 2000.
We will not be able to repay these loans unless we raise enough capital from
external sources. Our business operations do not generate sufficient cash flow
to repay these loans. Our inability to repay these loans may result, among other
things, in foreclosure against our assets. This would jeopardize our ability to
continue operations, and our stock price would likely decline.
IF WE ARE UNABLE TO OBTAIN ADDITIONAL CAPITAL, WE MAY BE UNABLE TO CONTINUE
OPERATIONS
We had $174,189 of cash as of June 30, 2000. Since June 30, 2000, we have
borrowed a total of $1.2 million. We project that these proceeds will fund our
operations no longer than December 1, 2000. In connection with our financial
statements for the year ended December 31, 1999, our independent auditors have
noted there is substantial doubt about our ability to continue as a going
concern. This "going concern" opinion is due, in part, to our need to obtain
from external sources additional financing adequate to complete development
activities and to achieve a level of sales adequate to support our cost
structure. In the absence of additional capital, we will be required to
significantly curtail or cease our business activities, and our stock price
would decline.
OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT OR IMPOSSIBLE TO EVALUATE OUR
PERFORMANCE AND MAKE PREDICTIONS ABOUT OUR FUTURE
We were organized in 1991 and are in the development stage. To date, we have
generated very limited revenues from the sale of our products. Our limited
operating history makes an evaluation of our future prospects very difficult. As
a development stage company, we will encounter the types of risks, uncertainties
and difficulties frequently encountered by early-stage companies. Many of these
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risks and uncertainties are described in more detail elsewhere in this "Certain
Business Risk Factors" section. We may not successfully address some or all of
these risks. If we do not successfully address these risks, our future business
prospects will be significantly limited and, as a result, the trading price of
our common stock would likely decline.
WE HAVE EXPERIENCED SIGNIFICANT LOSSES AND EXPECT TO INCUR LOSSES IN THE
FUTURE
In the six months ended June 30, 2000, we incurred a net loss of $4.2 million.
Our cumulative net loss since our inception on January 1, 1992 was $13 million.
We expect to incur substantial losses for the foreseeable future in connection
with our research and development efforts, as well as the expenses associated
with attempting to commercialize our products, including expenses for
manufacturing, marketing and distributing our products.
IF OUR ASSUMPTION ABOUT THE ROLE OF GENES IN DISEASE IS INCORRECT, WE MAY NOT BE
ABLE TO DEVELOP USEFUL PRODUCTS
Certain of our products and the products we hope to develop involve new and
unproven approaches. They are based on the assumption that information about
genes may help scientists better understand complex disease processes.
Scientists generally have a limited understanding of the role of genes in
diseases, and few products based on gene discoveries have been developed. Of the
products that exist, all are diagnostic products. To date, we know of no
therapeutic products based on disease gene discoveries. If our assumption about
the role of genes in the disease process is incorrect, our gene discovery
programs may not result in products, the genetic data collected may not be
useful to our customers and these types of products may lose any competitive
advantage.
ETHICAL AND PRIVACY CONCERNS MAY LIMIT THE USE OF GENETIC TESTING AND
THEREFORE THE COMMERCIAL VIABILITY OF ANY PRODUCTS WE DEVELOP
Other companies have developed genetic predisposition tests that have raised
ethical concerns. It is possible that employers or others could discriminate
against people who have a genetic predisposition to certain diseases. Concern
regarding possible discrimination may result in governmental authorities
enacting restrictions or bans on the use of all, or certain types of, genetic
testing. Similarly, such concerns may lead individuals to refuse to use genetics
tests even if permissible. These factors may limit the market for, and therefore
the commercial viability of, genetic testing products that our collaborators and
we develop.
OUR PRODUCTS MAY NOT GAIN MARKET ACCEPTANCE, WHICH WOULD JEOPARDIZE OUR
ABILITY TO GENERATE REVENUE AND CONTINUE OPERATIONS
We are highly dependent on a limited number of products and our long-term
success may depend on the market acceptance of these products. We currently have
two products lines, the EpiDNA and EasyID product lines. Market acceptance of
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our product lines will depend, in part, on the our ability to demonstrate the
superiority of them with respect to existing techniques, including the products'
accuracy, ease of use, reliability and cost-effectiveness and on the
effectiveness of our marketing efforts. These efforts have been adversely
affected by our working capital shortage. No assurance can be given that we will
gain market acceptance for our product lines. Failure to gain market acceptance
for these product lines will jeopardize our ability to obtain capital, generate
revenue to continue operations, likely resulting in a lower stock price.
THE TECHNOLOGY IN OUR PRODUCTS IS RAPIDLY EVOLVING, AND OUR ABILITY TO EVOLVE
WITH THIS TECHNOLOGY MAY JEOPARDIZE THE COMMERCIAL VIABILITY OF OUR PRODUCTS
The science and technology of the EpiDNA Picogram Assay, DNAMax, EasyID, and
DNAtect are rapidly evolving. The commercial viability of our product lines has
not been proven, as we have only conducted limited marketing efforts for our
existing products and other proposed products are in the early stage of
development. All of our products are subject to the risks of failure inherent in
the development of products based on innovative technologies. These risks
include the possibility that any or all of these products are found to be
ineffective, unsafe, or otherwise fail to receive necessary regulatory
clearances, if any, that these products, though effective, are uneconomical to
market, that third parties hold proprietary rights that preclude us from
marketing them, or that third parties market a superior or equivalent product.
Accordingly, we are unable to predict whether our products will become
commercially viable.
WE WILL NEED TO RELY ON COLLABORATIVE PARTNERS TO FACILITATE THE SALE OF OUR
PRODUCTS AND OUR FAILURE TO ENTER INTO SUCH COLLABORATIVE ARRANGEMENTS WILL
HINDER OUR ABILITY TO SELL OUR PRODUCTS AND SERVICES
In the future we may, in order to facilitate the sale of our systems, enter into
collaborative selling arrangements with one or more other persons. It is
uncertain whether we will be able to negotiate acceptable collaborative
arrangements in the future or that such collaborative arrangements will be
successful. If we are unable to identify collaborative partners to sell certain
of our services and/or products, we may be forced to develop an internal sales
force to market and sell our services and/or products in markets where we are
not intending on developing a direct selling presence. Such a process would take
more time and potentially cost more. As a result, our revenues and earnings
would be reduced. If we do enter into collaborative selling arrangements, our
success may depend upon the efforts of others and may be beyond our control.
Failure of any collaborative selling arrangement could result in reduced
revenues and possible losses.
WE ARE SUBJECT TO RISKS RELATED TO PRODUCT LIABILITY CLAIMS, WHICH ARE EXPENSIVE
TO DEFEND AND MAY RESULT IN NEGATIVE PUBLICITY
The nature of our business exposes us to risk from product liability claims. We
maintain product liability insurance for some of our products with limits of $1
million per occurrence and $2 million in the aggregate per year. Such insurance
coverage is, however, becoming increasingly expensive and there can be no
assurance that our insurance will be adequate to cover future product liability
claims, or that we will be successful in maintaining adequate product liability
insurance at acceptable rates. In addition, due to our working capital shortage,
there can be no assurance that we will be able to fund the premiums for our
existing insurance. Any losses that we may suffer from future liability claims,
and any adverse publicity from product liability litigation, may adversely
affect our business operations and our stock price.
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WE MAY NOT BE ABLE TO SUCCESSFULLY DEVELOP OUR MANUFACTURING PROCESS, WHICH
WOULD JEOPARDIZE OUR ABILITY TO GENERATE REVENUE
We have limited experience in manufacturing our products, and we have not yet
determined whether we will be able to produce sufficient quantities of such
products at commercially reasonable costs. Our inability to produce sufficient
quantities at commercially reasonable costs would jeopardize our ability to
generate revenue sufficient to support our operations. In such event, our stock
price would likely decline.
WE MAY NOT BE ABLE TO SUCCESSFULLY MARKET OUR PRODUCTS IN THE UNITED STATES OR
INTERNATIONALLY
We have limited experience in marketing our products. We intend to market our
products in the United States, Europe and Asia through collaborative selling
arrangements and/or through a network of independent distributors supported by a
direct sales force. We do not currently have a sales force in place and no
distribution agreements have been entered into. Our ability to market our
products in Europe and Asia and other areas will depend on our ability to fund
such efforts as well as our ability to develop strategic alliances with
marketing partners. Our inability to successfully market our products would
jeopardize our ability to generate revenue sufficient to support our operations.
WE FACE RISKS ASSOCIATED WITH GOVERNMENTAL REGULATION
Changes in existing regulations could require advance regulatory approval of
genetic susceptibility tests that may result in a substantial curtailment or
even prohibition of our activities without regulatory approval. If our tests
ever require regulatory approval, the costs of introduction will increase and
marketing and sales may be significantly delayed.
Further, several years ago the FDA proposed to regulate as medical devices the
"active ingredients" (known as "analyze specific reagents" or "ASRs") of certain
tests developed by, or in conjunction with, clinical laboratories. Currently, a
final rule has not been issued. The FDA has specifically stated that it is not
proposing a comprehensive regulatory scheme over the final tests, but rather the
active ingredients ASRs provided to the laboratories that perform them.
According to the FDA, any contemplated additional controls (e.g. submission for
Pre-Market Approval applications) over the tests themselves would likely involve
those tests which identify genes associated with cancer or diseases associated
with dementia. If the FDA requires Pre-Market Approval of our genetic
susceptibility test, our company may be required to conduct pre-clinical
studies, obtain an investigational device exemption to conduct clinical tests,
file a Pre-Market Approval application, and obtain FDA approval. There can be no
assurance such approval would be received on a timely basis, if at all. The
failure to receive such approval could require us to develop alternative testing
methods or utilize approved ASRs, which could result in the delay or cause the
termination of the use of such test. Such a delay or termination could result in
reduced revenues or losses.
WE MAY NOT BE ABLE TO SUCCESSFULLY MAINTAIN OUR CURRENT PATENTS, OBTAIN NEW
PATENTS, OR OPERATE WITHOUT INFRINGING UPON THE PROPRIETARY RIGHTS OF OTHER
PARTIES
Our success will depend in part on our ability to obtain and maintain patent
protection for our products, preserve our trade secrets, and operate without
infringing upon the proprietary rights of other parties. Because of the
substantial length of time and expense associated with bringing new products
through development to the marketplace, the biotechnology industry places
considerable importance on obtaining and maintaining patent and trade secret
protection for new technologies, products and processes. In addition, the laws
of certain countries may not protect our intellectual property. Legal standards
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relating to the scope of claims and the validity of patents in the biotechnology
field are uncertain and evolving. There can be no assurance that patent
applications to which we hold ownership or license rights will result in the
issuance of patents, that any patents issued or licensed to us will not be
challenged and held to be invalid, or that any such patents will provide
commercially significant protection to our technology, products and processes.
In addition, there can be no assurance that others will not independently
develop substantially equivalent proprietary information not covered by patents
to which we have rights or obtain access to our know-how or that others will not
be issued patents which may prevent the sale of one or more of our products, or
require licensing and the payment of significant fees or royalties by us to
third parties in order to enable us to conduct our business. Defense and
prosecution of patent claims can be expensive and time consuming, regardless of
whether the outcome is favorable to us, and can result in the diversion of
substantial financial, management, and other resources from our other
activities. An adverse outcome could subject us to significant liability to
third parties, require us to obtain licenses from third parties, or require us
to cease any related research and development activities or product sales. No
assurance can be given that any licenses required under any such third-party
patents or proprietary rights would be made available on commercially reasonable
terms, if at all. In addition, due to our working capital shortage, there can be
no assurance that we will be able to continue our existing patent applications.
WE MAY NOT BE ABLE TO SUCCESSFULLY PROTECT OUR PROPRIETARY INFORMATION
Our success is also dependent upon the skills, knowledge, and experience of our
scientific and technical personnel. To help protect our rights, we plan to
require all of our employees, consultants, advisors and collaborators to enter
into confidentiality agreements that prohibit the disclosure of confidential
information to anyone outside our company and require disclosure and in most
cases assignment to us of their ideas, developments, discoveries and inventions.
There can be no assurance, however, that these agreements will provide adequate
protection for our trade secrets, know-how or other proprietary information in
the event of any unauthorized use or disclosure.
WE MAY FAIL TO HIRE, RETAIN AND INTEGRATE KEY PERSONNEL
Our ability to successfully manage our growth will substantially depend on our
ability to attract and retain additional qualified management personnel. Because
of our extreme cash shortage, our ability to attract or retain qualified
personnel has been hindered. There is significant competition for qualified
personnel, and there can be no assurance that we will be successful in
recruiting, retaining or training the management personnel we require.
OUR CHARTER DOCUMENTS AND FLORIDA LAW CONTAIN ANTI-TAKEOVER PROVISIONS THAT
MAY MAKE IT MORE DIFFICULT TO ACQUIRE US
Certain provisions in our charter documents and Florida law may have
anti-takeover effects, making it more difficult for a third party to acquire us,
even if a change in control would be beneficial to our shareholders.
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PART II
OTHER INFORMATION.
ITEM 1. LEGAL PROCEEDINGS.
The Company is not aware of any legal proceedings involving the Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
(a), (b) and (d) None.
(c) SALES OF UNREGISTERED SECURITIES.
On April 4, 2000, we borrowed $100,000 from Donald Heap ("Loan No. 1"). The loan
has an annual interest rate of 12%, simple interest, payable at maturity. This
loan is due on October 3, 2000. Prior to the payment of the principal balance of
the loan, the private investor may convert, at his option, all amounts due into
shares of our common stock at a conversion rate of $5.00 per share. In addition,
we issued the private investor warrants to purchase 10,000 shares of common
stock at an exercise price of $6.20 per share. In the event of a default, this
note is convertible into shares of common stock at a conversion rate of $3.00
per share. Additionally, in the event of a default, the investor would be
entitled to warrants to purchase 1,000 shares at an exercise price of $5.00 per
share for each month that any amounts are outstanding under the note. The
offering was exempt from registration pursuant to Section 4(2) of the Act and
Rule 506 promulgated thereunder.
On May 8, 2000, we borrowed $100,000 ("Loan No. 2") and on May 26, 2000 we
borrowed $500,000 from Jim Kelly ("Loan No. 3"). These loans have an annual
interest rate of 12%, simple interest, payable at maturity. The loans are due in
November 2000. Prior to the payment of the principal balance of the loan, the
private investor may convert, at his option at anytime up to 30 days after the
closing of an equity financing by our company of $5 million or more, all amounts
due into shares of our common stock at a conversion rate of $3.00 per share. In
addition, and in the event of a conversion, the private investor will receive
warrants to purchase (a) 33,333 (Loan No. 2) and 166,665 (Loan No. 3) shares of
common stock at an exercise price of $6.00 per share and (b) 33,333 (Loan No. 2)
and 166,665 (Loan No. 3) shares of common stock at an exercise price of $7.10
per share. If no conversion occurs, then the private investor will receive
warrants to purchase (a) 20,000 (Loan No. 2) and 100,000 (Loan No. 3) shares of
common stock at an exercise price of $6.60 per share and (b) 20,000 (Loan No. 2)
and 100,000 (Loan No. 3) shares of common stock at an exercise price of $8.00
per share. Additionally, in the event of a default, the investor would be
entitled to warrants to purchase (a) 10,000 (Loan No. 2) and (b) 10,000 (Loan
No. 3) shares of common stock at an exercise price of $5.00 per share for each
month that any amounts are outstanding under the note. The offering was exempt
from registration pursuant to Section 4(2) of the Act and Rule 506 promulgated
thereunder.
On June 9, 2000, we borrowed $50,000 ("Loan No. 4") from Michael and Lois
Halbert. This loan has an annual interest rate of 12%, simple interest, payable
at maturity. The loan is due in December 2000. Prior to the payment of the
principal balance of the loan, the private investor may convert, at his option
at anytime up to 30 days after the closing of an equity financing by our company
of $5 million or more, all amounts due into shares of our common stock at a
conversion rate of $3.00 per share. In addition, and in the event of a
conversion, the private investor will receive warrants to purchase 16,665 shares
of common stock at an exercise price of $6.00 per share and 16,665 shares of
common stock at an exercise price of $7.10 per share. If no conversion occurs,
then the private investors will receive warrants to purchase 10,000 shares of
common stock at an exercise price of $6.60 per share and 10,000 shares of common
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stock at an exercise price of $8.00 per share. Additionally, in the event of a
default, the investor would be entitled to warrants to purchase 5,000 shares at
an exercise price of $5.00 per share for each month that any amounts are
outstanding under the note. The offering was exempt from registration pursuant
to Section 4(2) of the Act and Rule 506 promulgated thereunder.
Between July 24 and August 1, 2000, we borrowed $1,200,000 ("Loan No. 5") from
thirty-five private investors from the sale of 50 Units, consisting of a
convertible note and warrant. These loans have an annual interest rate of 12%,
simple interest, payable at maturity. The loans are due in December 2000. Prior
to the payment of the principal balance of the loan, each private investor may
convert, at his option at anytime up to 30 days after the closing of an equity
financing by our company of $5 million or more, all amounts due into shares of
our common stock at a conversion rate of $3.00 per share. In addition, and in
the event of a conversion, each private investor will receive for each Unit
purchased warrants to purchase 16,665 shares of common stock at an exercise
price of $6.00 per share and 16,665 shares of common stock at an exercise price
of $7.10 per share. If no conversion occurs, then each private investor will
receive for each Unit purchased warrants to purchase 10,000 shares of common
stock at an exercise price of $6.60 per share and 10,000 shares of common stock
at an exercise price of $8.00 per share. Additionally, in the event of a
default, each investor would be entitled to receive for each Unit purchased
warrants to purchase 5,000 shares at an exercise price of $5.00 per share for
each month that any amounts are outstanding under the note. The offering was
exempt from registration pursuant to Section 4(2) of the Act and Rule 506
promulgated thereunder. The names of the thirty-five private investors are David
A. Brady, Jr., Tom Vinson, John W. McGriff, James Lasbury Mitchell III, C. Frank
Foster, Jr., Anthony Balsamo, Jim Avramovich, Dewayne Truitt, Herman A. Vonhof,
Scott Davis, Dr. Will Brantley, Arthur Dietz, Leo Thompson, L. Scott Stankavage,
Ben Biacchino, Robert L. Stanley, Michael Chatham, Anthony Byrne, Ralph Anderson
III, Bryan Carr, George Levin, Richard Wunderlich, J.R. Frangipane, James
Leiferman, Mark Spector, James Owen, Robert Stranger, The Estate of Milton
Smithloff, Robert Benninger Jr., Bruce Rothmann, Joseph J. Steinkirchner,
Jeffrey Rinde, Will Hendrick, Mark Jesuroga and Thomas Johnston.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Since November 2, 1998, the Company received a total of $3.6 million in loans.
Loans in the original principal amount of $1,488,500 were due on or before June
30, 2000. On July 7, 2000, the maturity dates of loans with an original
principal amount of $1,248,500 were extended from June 30, 2000 to September 30,
2000. As such, the Company is in default on loans with an original principal
amount of $250,000 for failing to pay the required principal and interest
payments when due. A significant amount of the total loans are secured by the
Company's assets. The Company's ability to pay any interest or to repay such
loans is completely dependent on the Company's ability to raise additional
capital from external sources. The Company's failure to raise such capital and
to pay all accrued but unpaid interest and subsequently to repay the loans upon
maturity may result in the foreclosure on the Company's assets. This would have
a material adverse effect on the Company's business, financial condition and
results of operations and would jeopardize the Company's ability to continue as
a going concern.
As of August 11, 2000, the Company owed $47,800 in interest on $250,000 loans in
default with interest accruing at a rate of $82 per day.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT INDEX
<S> <C> <C>
3.1 Articles of Incorporation of the Company, Incorporated by reference to Exhibit No. 3.1
as amended to Registrant's Registration Statement (the
"Registration Statement") on Form SB-2
(Registration Number 333-5530-A)
3.2 By-laws of the Company Incorporated by reference to Exhibit No. 3.2
to the Registration Statement
3.3 Amendment to By-Laws of the Company Incorporated by reference to Exhibit No. 3.3
to the Annual Report on Form 10-KSB for the
year ended December 31, 1999
4.1 Form of Common Stock certificate Incorporated by reference to Exhibit No. 4.1
to the Registration Statement
4.2 Form of Underwriters' Warrant Incorporated by reference to Exhibit No. 4.2
to the Registration Statement
4.3 Form of 1996 Incentive Plan Incorporated by reference to Exhibit No. 4.3
to the Registration Statement
4.4 Form of 1999 Stock Option Plan Incorporated by reference to Exhibit No. 4.4
to the Annual Report on Form 10-KSB for the
year ended December 31, 1999
10.1 License Agreement dated September 7, 1990 Incorporated by reference to Exhibit No. 10.1
between the University of Miami and its to the Registration Statement
School of Medicine and ProVec, Inc.
10.2 Assignment of License Agreement dated Incorporated by reference to Exhibit No. 10.2
January 20, 1992 between ProVec, Inc. and to the Registration Statement
EpiDNA, Inc.
10.3 Agreement between University of Miami and Incorporated by reference to Exhibit No. 10.3
its School of Medicine and the Company to the Registration Statement
dated August 21, 1996
10.4 Employment Agreement dated August 15, 1996 Incorporated by reference to Exhibit No. 10.4
between Mead M. McCabe, Sr. and the Company to the Registration Statement
10.5 Stock Option Addendum to Employment Incorporated by reference to Exhibit No. 10.5
Agreement dated August 15, 1996 between to the Registration Statement
Mead M. McCabe, Sr. and the Company
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10.6 Stock Option Addendum to Employment Incorporated by reference to Exhibit No. 10.7
Agreement dated August 15, 1996 between to the Registration Statement
Mead M. McCabe, Sr. and the Company
10.7 Consulting Agreement dated June 19, 1996 Incorporated by reference to Exhibit No. 10.10
between James A. Joyce and the Company to the Registration Statement
10.8 Letter Agreement dated December 16, 1994 Incorporated by reference to Exhibit No. 10.11
among Nyer Medical Group, Inc., the to the Registration Statement
Company, Mead M. McCabe, Sr. And Mead M.
McCabe, Jr.
10.9 Investors Finders Agreement dated Incorporated by reference to Exhibit No. 10.12
June 9, 1994 among Nyer Medical Group, to the Registration Statement
Inc., and the Company and Gulf American
Trading Company
10.10 Industrial Real Estate Lease dated June Incorporated by reference to Exhibit No. 10.13
12, 1997 among the Company and Jetex to the Company's Quarterly Report on Form
Group, Inc. 10-QSB for the Quarter ended June 30, 1997
10.11 Letter from University of Miami dated Incorporated by reference to Exhibit No. 10.12
April 8, 1998 to the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1997
10.12 Promissory Note dated as of November 2, Incorporated by reference to Exhibit No. 10.13
1998 in the Original Principal Amount of to the Company's Annual Report on Form 10-KSB
$50,000 given by the Company to Ms. for the year ended December 31, 1998
Patricia A. Gionone
10.13 Common Stock Purchase Warrant No. W-2 Incorporated by reference to Exhibit No. 10.14
dated as of November 2, 1998 granted by to the Company's Annual Report on Form 10-KSB
the Company to Ms. Patricia A. Gionone for the year ended December 31, 1998
10.14 Promissory Note dated as of November 2, Incorporated by reference to Exhibit No. 10.15
1998 in the Original Principal Amount of to the Company's Annual Report on Form 10-KSB
$100,000 given by the Company to Jerome P. for the year ended December 31, 1998
Seiden Irrevocable Trust Dated April 22,
1998
10.15 Common Stock Purchase Warrant No. W-1 Incorporated by reference to Exhibit No. 10.16
dated as of November 2, 1998 granted by to the Company's Annual Report on Form 10-KSB
the Company to Jerome P. Seiden for the year ended December 31, 1998
Irrevocable Trust Dated April 22, 1998
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10.16 Common Stock Purchase Warrant No. W-5 Incorporated by reference to Exhibit No. 10.17
dated as of September 3, 1998 granted by to the Company's Annual Report on Form 10-KSB
the Company to Sterling Technology for the year ended December 31, 1998
Partners, Ltd.
10.17 Common Stock Purchase Warrant No. W-4 Incorporated by reference to Exhibit No. 10.18
dated as of January 19, 1999 granted by to the Company's Annual Report on Form 10-KSB
the Company to Sterling Technology for the year ended December 31, 1998
Partners, Ltd.
10.18 Common Stock Purchase Warrant No. W-7 Incorporated by reference to Exhibit No. 10.19
dated as of March 9, 1999 granted by the to the Company's Annual Report on Form 10-KSB
Company to Sterling Technology Partners, for the year ended December 31, 1998
Ltd.
10.19 Common Stock Purchase Warrant No. W-3 Incorporated by reference to Exhibit No. 10.20
dated as of January 19, 1999 granted by to the Company's Annual Report on Form 10-KSB
the Company to Capital Research, Ltd. for the year ended December 31, 1998
10.20 Promissory Note dated as of January 19, Incorporated by reference to Exhibit No. 10.21
1999 in the Original Principal Amount of to the Company's Annual Report on Form 10-KSB
$163,500 given by the Company to Capital for the year ended December 31, 1998
Research, Ltd.
10.21 Pledge and Security Agreement dated as of Incorporated by reference to Exhibit No. 10.22
January 19, 1999 between the Company and to the Company's Annual Report on Form 10-KSB
Capital Research, Ltd. for the year ended December 31, 1998
10.22 Registration Rights Agreement dated as of Incorporated by reference to Exhibit No. 10.23
January 19, 1999 between the Company and to the Company's Annual Report on Form 10-KSB
Capital Research, Ltd. for the year ended December 31, 1998
10.23 Promissory Note dated as of March 9, 1999 Incorporated by reference to Exhibit No. 10.24
in the Original Principal Amount of to the Company's Annual Report on Form 10-KSB
$125,000 given by the Company to Capital for the year ended December 31, 1998
Research, Ltd.
10.24 Common Stock Purchase Warrant No. W-6 Incorporated by reference to Exhibit No. 10.25
dated as of March 9, 1999 granted by the to the Company's Annual Report on Form 10-KSB
Company to Capital Research, Ltd. for the year ended December 31, 1998
10.25 Registration Rights Agreement dated as of Incorporated by reference to Exhibit No. 10.26
March 9, 1999 between the Company and to the Company's Annual Report on Form 10-KSB
Capital Research, Ltd. for the year ended December 31, 1998
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10.26 Executive Employment Agreement, together Incorporated by reference to Exhibit 10.26 to
with Stock Option Addendum, dated as of the Company's Annual Report on Amendment No. 1
July 1, 1999 between Mead M. McCabe, Jr. to the Form 10 KSB for the year ended December
and the Company 31, 1998
10.27 Executive Employment Agreement, together Incorporated by reference to Exhibit 10.27 to
with Stock Option Addendum, dated as of the Company's Annual Report on Amendment No. 1
July 1, 1999 between Mead M. McCabe, Sr. to the Form 10 KSB for the year ended December
and the Company 31, 1998
10.28 Executive Employment Agreement, together Incorporated by reference to Exhibit No. 10.29
with Stock Option Addendum, dated as of to the Annual Report on Form 10-KSB for the
January 17, 2000 between Eric Wilkinson year ended December 31, 1999
and the Company
10.29 Promissory Note dated as of April 19, 1999 Incorporated by reference to Exhibit No. 10.30
in the Original Principal Amount of to the Annual Report on Form 10-KSB for the
$100,000 given by the Company to Jack year ended December 31, 1999
Surgent
10.30 Registration Rights Agreement dated as of Incorporated by reference to Exhibit No. 10.31
April 19, 1999 between the Company and to the Annual Report on Form 10-KSB for the
Jack Surgent year ended December 31, 1999
10.31 Common Stock Purchase Warrant dated as of Incorporated by reference to Exhibit No. 10.32
April 19, 1999 granted by the Company to to the Annual Report on Form 10-KSB for the
Jack Surgent year ended December 31, 1999
10.32 Promissory Note dated as of October 6, Incorporated by reference to Exhibit No. 10.33
1999 in the Original Principal Amount of to the Annual Report on Form 10-KSB for the
$200,000 given by the Company to Orbiter year ended December 31, 1999 Fund, Ltd.
10.33 Pledge and Security Agreement dated as of Incorporated by reference to Exhibit No. 10.34
October 6, 1999 between the Company and to the Annual Report on Form 10-KSB for the
Orbiter Fund, Ltd. year ended December 31, 1999
10.34 Registration Rights Agreement dated as of Incorporated by reference to Exhibit No. 10.35
October 6, 1999 between the Company and to the Annual Report on Form 10-KSB for the
Orbiter Fund, Ltd. year ended December 31, 1999
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10.35 Common Stock Purchase Warrant dated as of Incorporated by reference to Exhibit No. 10.36
October 6, 1999 granted by the Company to to the Annual Report on Form 10-KSB for the
Orbiter Fund, Ltd. year ended December 31, 1999
10.36 Promissory Note dated as of November 19, Incorporated by reference to Exhibit No. 10.37
1999 in the Original Principal Amount of to the Annual Report on Form 10-KSB
$200,000 given by the Company to Orbiter for the year ended December 31, 1999 Fund,
Ltd.
10.37 Pledge and Security Agreement dated as of Incorporated by reference to Exhibit No. 10.38
November 19, 1999 between the Company and to the Annual Report on Form 10-KSB for the
Orbiter Fund, Ltd. year ended December 31, 1999
10.38 Registration Rights Agreement dated as of Incorporated by reference to Exhibit No. 10.39
November 19, 1999 between the Company and to the Annual Report on Form 10-KSB for the
Orbiter Fund, Ltd. year ended December 31, 1999
10.39 Common Stock Purchase Warrant dated as of Incorporated by reference to Exhibit No. 10.40
December 22, 1999 granted by the Company to the Annual Report on Form 10-KSB for the
to Orbiter Fund, Ltd. year ended December 31, 1999
10.40 Promissory Note dated as of November 19, Incorporated by reference to Exhibit No. 10.41
1999 in the Original Principal Amount of to the Annual Report on Form 10-KSB for the
$300,000 given by the Company to Orbiter year ended December 31, 1999 Fund,
Ltd.
10.41 Pledge and Security Agreement dated as of Incorporated by reference to Exhibit No. 10.42
December 22, 1999 between the Company and to the Annual Report on Form 10-KSB for the
Orbiter Fund, Ltd. year ended December 31, 1999
10.42 Registration Rights Agreement dated as of Incorporated by reference to Exhibit No. 10.43
December 22, 1999 between the Company and to the Annual Report on Form 10-KSB for the
The Orbiter Fund, Ltd. year ended December 31, 1999
10.43 Common Stock Purchase Warrant dated as of Incorporated by reference to Exhibit No. 10.44
December 22, 1999 granted by the Company to the Annual Report on Form 10-KSB for the
to The Orbiter Fund, Ltd. year ended December 31, 1999
10.44 Promissory Note dated as of February, 2000 Incorporated by reference to Exhibit No. 10.45
in the Original Principal Amount of to the Annual Report on Form 10-KSB for the
$250,000 give by the Company to The year ended December 31, 1999
Orbiter Fund, Ltd.
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10.45 Pledge and Security Agreement dated as of Incorporated by reference to Exhibit No. 10.46
February, 2000 between the Company and The to the Annual Report on Form 10-KSB for the
Orbiter Fund, Ltd. year ended December 31, 1999
10.46 Registration Rights Agreement dated as of Incorporated by reference to Exhibit No. 10.47
February, 2000 between the Company and The to the Annual Report on Form 10-KSB for the
Orbiter Fund, Ltd. year ended December 31, 1999
10.47 Stock Purchase Agreement dated as of Incorporated by reference to Exhibit No. 10.48
January 17, 2000 among the Company, DNA to the Annual Report on Form 10-KSB for the
Sciences, Inc. and the shareholders of DNA year ended December 31, 1999
Sciences, Inc.
10.48 Common Stock Purchase Warrant dated as of Incorporated by reference to Exhibit No. 10.49
February, 2000 given by the Company to The to the Annual Report on Form 10-KSB for the
Orbiter Fund, Ltd. year ended December 31, 1999
10.49 Convertible Promissory Note dated as of Incorporated by reference to Exhibit No. 10.50
March 2, 2000 in the Original Principal to the Annual Report on Form 10-KSB for the
Amount of $75,000 given by the Company to year ended December 31, 1999
Jack Higgins
10.50 Common Stock Purchase Warrant dated as of Incorporated by reference to Exhibit No.
March 2, 2000 between the Company and Jack 10.51 to the Annual Report on Form 10-KSB for
Higgins the year ended December 31, 1999
10.51 Convertible Promissory Note dated as of Incorporated by reference to Exhibit No. 10.52
March 7, 2000 in the Original Principal to the Annual Report on Form 10-KSB for the
Amount of $100,000 given by the Company to year ended December 31, 1999
Frederick & Company
10.52 Common Stock Purchase Warrant dated as of Incorporated by reference to Exhibit No. 10.53
March 7, 2000 between the Company and to the Annual Report on Form 10-KSB for the
Frederick & Company year ended December 31, 1999
10.53 Convertible Promissory Note in the Incorporated by reference to Exhibit No. 10.54
Original Principal Amount of $100,000 to the Annual Report on Form 10-KSB for the
dated as of May 8, 2000 between the year ended December 31, 1999
Company and Jim Kelly.
25
<PAGE>
10.54 Common Stock Purchase Warrant dated as of Incorporated by reference to Exhibit No. 10.55
May 8, 2000 between the Company and Jim to the Annual Report on Form 10-KSB for the
Kelly. year ended December 31, 1999
10.55 Convertible Promissory Note in the Incorporated by reference to Exhibit No. 10.56
Original Principal Amount of $500,000 to the Annual Report on Form 10-KSB for the
dated as of May 26, 2000 between the year ended December 31, 1999
Company and Jim Kelly.
10.56 Common Stock Purchase Warrant dated as of Incorporated by reference to Exhibit No. 10.57
May 26, 2000 between the Company and Jim to the Annual Report on Form 10-KSB for the
Kelly. year ended December 31, 1999
10.57 Convertible Promissory Note in the Incorporated by reference to Exhibit 10.57 to
Original Principal Amount of $100,000 the Quarterly Report on Form 10-QSB for the
dated as of April 4, 2000 between the three months ended March 31, 2000 Company and
Donald Heap.
10.58 Common Stock Purchase Warrant No. W-18 Incorporated by reference to Exhibit 10.58 to
dated as of April 4, 2000 between the the Quarterly Report on Form 10-QSB for the
Company and Donald Heap. three months ended March 31, 2000
10.59 Convertible Promissory Note in the Incorporated by reference to Exhibit 10.59 to
Original Principal Amount of $50,000 dated the Quarterly Report on Form 10-QSB for
the as of June 9, 2000 between the Company three months ended March 31, 2000
and Michael and Lois Halbert
10.60 Common Stock Purchase Warrant dated as of Incorporated by reference to Exhibit 10.60
to June 9, 2000 between the Company and the Quarterly Report on Form 10-QSB for the
Michael and Lois Halbert three months ended March 31, 2000
10.61 Common Stock Purchase Warrant No. W-12 Incorporated by reference to Exhibit 10.61 to
dated as of October 6, 1999 between the the Quarterly Report on Form 10-QSB for the
Company and Sterling Technology Partners, three months ended March 31, 2000
Ltd.
10.62 Common Stock Purchase Warrant No. W-13 Incorporated by reference to Exhibit 10.62 to
dated as of December 22, 1999 between the the Quarterly Report on Form 10-QSB for the
Company and Sterling Technology Partners, three months ended March 31, 2000 Ltd.
11. Statement re: computation of earnings Not applicable
26
<PAGE>
18. Letter on change in accounting principles Not applicable
21. Subsidiaries of the Registrant Provided herewith
22. Published report regarding matters Not applicable
submitted to Vote
23. Consent of Independent Accountant Not applicable
24. Power of Attorney Not applicable
27. Financial Data Schedule Provided herewith
</TABLE>
27
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: August 14, 2000 GENETIC VECTORS, INC.
By: /s/ Mead M. McCabe, Jr.
------------------------
Mead M. McCabe, Jr.
President