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 September 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
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(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 3,737,843 shares of Common Stock outstanding as of November 13,
2000.
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PART I
FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.
GENETIC VECTORS, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
Consolidated Balance Sheet 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 7
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GENETIC VECTORS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET (UNAUDITED)
September 30, 2000
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CURRENT ASSETS:
Cash and cash equivalents $ 434,658
Accounts receivable 36,003
Inventory 23,996
Prepaid expenses 28,981
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TOTAL CURRENT ASSETS 523,638
Equipment and improvements, net 447,993
Patents and license agreement, net 192,247
Restricted cash equivalents 46,130
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$1,210,008
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LIABILITIES AND CAPITAL DEFICIT
CURRENT LIABILITIES
Accrued liabilities:
Accounts payable and accrued liabilities $ 579,878
Accrued interest payable 261,880
Loans payable 3,613,500
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4,455,258
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CAPITAL DEFICIT:
Common stock, $.001 par value, 10,000,000 shares
authorized,
3,737,843 shares issued and outstanding 3,738
Additional paid-in capital 10,987,198
Deficit accumulated during the development stage (14,236,186)
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CAPITAL DEFICIT (3,245,250)
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$1,210,008
=======================================================================
See accompanying notes to the consolidated financial statements
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<TABLE>
GENETIC VECTORS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<CAPTION>
Cumulative
from
January 1, For the For the For the For the
1992 Three Three Nine Nine
(Inception) Months Months Months Months
Through Ended Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2000 2000 1999 2000 1999
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<S> <C> <C> <C> <C> <C>
REVENUE:
Sales 334,412 $ 10,877 $ 11,686 $ 96,132 $ 72,620
Grant income 149,147 - - - -
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Total revenue 483,559 10,877 11,686 96,132 72,620
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COST AND EXPENSES:
Cost of Sales 88,976 1,968 11,064 25,293 48,041
General and administrative 6,916,048 660,146 324,285 1,692,729 924,678
Research and development 3,724,322 258,667 121,299 620,188 398,969
Depreciation and amortization 413,196 37,835 23,892 85,613 78,067
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Total expenses 11,142,542 958,616 480,540 2,423,823 1,449,755
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Amortization of deferred loan cost (1,624,650) (81,769) (119,712) (858,088) (312,280)
Interest income (expense), net (132,553) (92,106) 1,688 (276,577) 4,898
Expense in connection with issuance of
common stock for loan extension (1,820,000) - - (1,820,000) -
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Total other (3,577,203) (173,875) (118,024) (2,954,665) (307,382)
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NET (LOSS) (14,236,186) $(1,121,614) $(586,878) $(5,282,356) $(1,684,517)
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Weighted average number of
common shares outstanding - 3,732,843 3,030,521 3,632,343 3,030,521
Net loss per common share - ($0.30) ($0.19) ($1.45) ($0.56)
See accompanying notes to the consolidated financial statements.
</TABLE>
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<TABLE>
GENETIC VECTORS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
Cumulative from For the For the
January 1, 1992 Nine months Nine months
(inception) ended ended
Through Sept. 30, Sept. 30, Sept. 30,
2000 2000 1999
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<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (14,236,186) $(5,282,356) $(1,684,517)
Adjustments to reconcile net loss to net
cash (used in) operating activities:
Depreciation and amortization 413,196 85,613 78,067
Amortization of deferred loan cost 1,624,650 858,088 312,280
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 (36,003) (26,878) 31,240
(Increase) decrease in inventory (23,996) (16,915) (10,894)
(Increase) decrease in prepaid expenses (28,981) 21,443 87
(Increase) decrease in other assets - - -
(Increase) decrease in restricted cash equivalents (46,130) - -
Increase in accounts payable
and accrued liabilities 984,591 366,248 241,108
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TOTAL ADJUSTMENTS 5,303,795 3,188,545 651,888
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NET CASH USED IN OPERATING ACTIVITIES (8,932,391) (2,093,811) (1,032,629)
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INVESTING ACTIVITIES:
Purchase of equipment and improvements (806,480) (234,621) (7,053)
Insurance proceeds in excess of loss on fixed assets - - 3,854
Patent costs (261,964) - -
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NET CASH USED IN INVESTING ACTIVITIES (1,068,444) (234,621) (3,199)
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FINANCING ACTIVITIES:
Increase due to parent 413,518 - -
Proceeds from notes payable 3,648,500 2,375,000 388,500
Payment on notes payable (35,000) - (20,092)
Net proceeds from issuance of common stock and
exercise of options 5,889,218 166,768 625,000
Capital contribution 500,000 - -
Offering refund 25,500 - -
Offering costs (6,243) - -
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NET CASH PROVIDED BY
FINANCING ACTIVITIES 10,435,493 2,541,768 993,408
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NET INCREASE (DECREASE) IN CASH 434,658 213,336 (42,420)
CASH AT BEGINNING OF PERIOD - 221,322 117,812
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CASH AT END OF PERIOD $ 434,658 $ 434,658 $ 75,392
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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 consolidated financial statements.
</TABLE>
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GENETIC VECTORS, INC.
(A DEVELOPMENT STAGE COMPANY)
GENETIC VECTORS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of the Company, the accompanying unaudited consolidated financial
statements include all adjustments (consisting only of normal recurring
accruals) which are necessary for a fair presentation of the results for the
periods presented. Certain information and footnote disclosures normally
included in the consolidated financial statements prepared in accordance with
generally accepted accounting principles have been omitted. It is suggested that
these consolidated financial statements be read in conjunction with the
Company's Annual Report for the year ended December 31, 1999. The results of
operations for the nine months ended September 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 consolidated financial
statements and management's discussion and analysis of financial condition and
results of operations for the nine month period ended September 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 nine
months ended September 30, 2000.
2. EARNINGS (LOSS) PER SHARE
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
Between July 24 and August 1, 2000, the Company borrowed $1,200,000 from thirty
five private investors from the sale of 48 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 or 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 8,333 shares of common stock at an exercise price of $6.00
per share and 8,333 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 5,000 shares of common stock at an exercise
price of $6.60 per share and 5,000 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 2,500 shares
at
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an exercise price of $5.00 per share for each month that any amounts are
outstanding under the note.
4. SUBSEQUENT EVENT
On November 1, 2000, the Company filed with the Securities and Exchange
Commission a Registration Statement under the Securities Act of 1933 to offer to
sell to the public 1,400,000 shares of common stock at an offering price at or
near the prevailing market price in the closing date of the offering.
7
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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 our 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, risk assessment and certain industrial markets. We plan to
develop and manufacture these tests for sale to pharmaceutical, healthcare and
certain industrial markets. We are currently selling the EPIDNA and the EASYID
product lines and are developing several other products of the EASYID product
line.
FINANCIAL RESOURCES AND CASH REQUIREMENTS
We are dependent on external capital to finance our operations, as we only
generate a nominal amount of cash from operations. As of September 30, 2000, we
had cash and cash equivalents of $435,000. Since that date, we have not raised
any additional capital. These funds are projected to last no longer than
December 31, 2000, at which time we will need to raise additional capital to
continue operations. 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 $350,000, 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 commons 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 warrants 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 and/or when the Company consummates its public
offering.
8
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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 our research and development and the build-out of the
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:
o Continued enhancement of our Juvenile Diabetes Risk Assessment
System.
o Development of new detection systems in collaboration with the
Norwegian Institute of Public Health.
o Continuation of EasyID DNA probe product development for diagnostic
uses, drug discovery and certain industrial applications.
o Continued research and development of products for the detection of
genes involved in cardiovascular diseases.
o Continued research in applications of our nucleic acid labeling
technology.
RECENT COLLABORATION
We recently formed a collaboration with a leading wine producer to develop
a high throughput screening procedure for spoilage microorganisms in wine. The
intent of this collaboration is to develop a screening system that will enable
the producer to dramatically increase quality control accuracy and throughput,
as well as reduce costs associated with warehousing entire lots of wine awaiting
quality control results. If successful, we believe this collaboration will
demonstrate the broad applicability of our 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 eleven employees. If we are successful in raising significant
new capital, then the Company anticipates hiring one new employee in 2000 and
twenty-two new employees in 2001 in connection with our research and
development, 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
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO SEPTEMBER 30, 1999
Our company remains largely a development stage company. We generated
revenues of $96,132 during the nine months ended September 30, 2000 compared to
$72,620 during the nine months ended September 30, 1999. During these same
periods, our cost of sales was $25,293 and $48,041, respectively.
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Research and development expenses increased from $398,969 in the nine
months ended September 30, 2000 to $620,188 in the same period in the current
year. This $221,219 increase is largely attributable to the research and
development costs associated with our San Diego facility, which was closed on
June 30, 2000 and whose operations were transferred to Miami, Florida.
General and administrative expenses increased from $924,678 in the nine
months ended September 30, 1999 to $1,692,729 in the nine-month period ended
September 30, 2000. This $768,051 increase is primarily attributable to
increases in (i) salaries and benefits of $165,000, (ii) professional fees of
$373,000, (iii) consulting fees related to financings of $127,000 and (iv)
travel and lodging expenses of $50,000, most of which were related to the San
Diego facility.
Amortization of deferred loan costs increased to $858,088 in the
nine-month period ended September 30, 2000 from $312,280 in the same period in
the prior year. The increase was directly related to our increased borrowing,
and granting of related warrants, during the nine months ended September 30,
2000. These warrants were valued based on the Black-Scholes Option Pricing Model
and resulted in $858,088 of amortization during the nine months ended September
30, 2000.
Interest expense for the nine months ended September 30, 2000 increased by
$281,475, representing accrued interest on various loans received by us in the
latter part of 1999 and during 2000. As of September 30, 2000, we had
approximately $3.6 million, plus accrued interest, in outstanding notes payable.
During the comparable period in the prior year, our outstanding notes payable
were negligible.
Expense in connection with issuance of common stock for loan extension
increased by $1,820,000 in the nine months ended September 30, 2000 over the
comparable period in 1999. During this period, certain lenders agreed to extend
the maturity date of notes payable to December 31, 2000 in exchange for the
issuance of 280,000 shares of our common stock. On the date of issuance, our
common stock traded at approximately $6.50. Our company recorded an expense of
$1,820,000 upon issuance of such common stock.
LIQUIDITY AND CAPITAL RESOURCES
The net cash used by us in operating activities was $2.1 million in the
nine-month period ended September 30, 2000 compared to $1.0 million in the
comparable period in the prior year. This increase was largely attributable to
increases in general and administrative and research and development expenses.
Our net cash provided by financing activities was $2.5 million during the
nine months ended September 30, 2000, consisting mainly of proceeds from notes
payable and the sale of unregistered securities.
We have experienced extreme cash shortages since the end of November 1998
through the date of this filing. As of September 30, 2000, we had $435,000 of
cash. Substantially all of these proceeds are expected to be spent prior to
December 31, 2000. We are, and after the date of this filing will be, in default
of certain indebtedness with an original principal amount of $350,000.
Additional indebtedness with an original principal amount $3.4 million will
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become due and payable in November and December 2000. Our company does not have
sufficient funds to repay these loans.
As of September 30, 2000, we had a capital deficit of $3,245,250. We have
entered into a non-binding letter of intent with an underwriter to sell
1,400,000 shares of our common stock in a firm-commitment public 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 pubic 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 SFAS 137, is effective for all
fiscal quarters of fiscal years beginning after June 15, 2001.
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.
In March 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, ACCOUNTING FOR CERTAIN TRANSACTIONS INVOLVING STOCK
COMPENSATION, AN INTERPRETATION OF AFB OPINION NO. 25. The Company adopted the
Interpretation on July 1, 2000. The Interpretation requires, among other things,
that stock opinions 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.
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
materially adversely affected, the trading price of our common stock would
decline and you may lose all or part of your investment.
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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 $3.7
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 by the lenders to December 31, 2000.
o Loans of $175,000 convertible into shares of common stock at a price
of $5.00 per share. The lenders have extended the payment dates of
these loans to December 31, 2000.
o Loan of $100,000 convertible into shares of common stock at a price
of $5.00 per share for which the payment dates have been extended by
the lenders to December 31, 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 $1,250,000 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.
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
risks and uncertainties are described in more detail elsewhere in this "Risk
Factors" section. If we do not successfully address these risks, then our future
business prospects will be significantly limited and, as a result, the trading
price of our common stock would likely decline.
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WE HAVE EXPERIENCED SIGNIFICANT LOSSES AND EXPECT TO INCUR LOSSES IN THE FUTURE
During the years ended December 31, 1999 and 1998, we incurred net losses of
$2.8 million and $2.6 million, respectively. For the nine months ended September
30, 2000, we incurred net losses of $5.3 million. Our cumulative net loss since
our inception on January 1, 1992 has been $14.2 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 manufacturing, marketing and distributing
expenses.
IF WE ARE UNABLE TO OBTAIN ADDITIONAL CAPITAL, WE MAY BE UNABLE TO CONTINUE
OPERATIONS
We had $435,000 of cash-on-hand as of September 30, 2000. We project that
our available cash will last no longer than December 31, 2000. In connection
with their report, on our financial statements for the years ended December 31,
1999 and 1998, 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.
THE INTERESTS OF OUR MANAGEMENT MAY CONFLICT WITH THE INTERESTS OF OUR COMPANY
AND THE INTERESTS OF OUR OTHER SHAREHOLDERS
Our directors and executive officers beneficially own approximately 43% of
our company's outstanding common stock, including 870,215 shares of common stock
pursuant to a voting agreement with Nyer Medical Group. See "Principal
Shareholders." These shareholders, acting together, have the ability to elect at
least a majority of our directors. They will also be able to determine the
outcome of most corporate actions requiring shareholder approval, including our
merger with or into another entity, a sale of substantially all of our assets
and amendments to our articles of incorporation. The decisions of these
shareholders may conflict with our company's interests or those of our other
shareholders.
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.
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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
our product lines will depend, in part, on 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 products,
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
14
<PAGE>
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 will 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.
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
15
<PAGE>
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 "analyte 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
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
16
<PAGE>
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.
17
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We are not aware of any legal proceedings involving our company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
(a), (b), (c) and (d) None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Since November 2, 1998, we received a total of $3.7 million in loans. Of
that total, $0.6 million is due in November 2000 and $2.8 million is due in
December 2000. As of the date of this filing, our company is in default for
failing to pay principal and interest when due on loans in the original
principal amount of $350,000, plus accrued interest. Our company's assets secure
a significant amount of the total loans. Our company's ability to pay interest
or to repay such loans is completely dependent on our ability to raise
additional capital from external sources. Our 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 our company's assets. This would have
a material adverse effect on our company's business, financial condition and
results of operations and would jeopardize our company's ability to continue as
a going concern.
As of November 13, 2000, we owed $55,963 of interest on loans in the
original principal amount of $350,000 which are in default, with interest
accruing at a rate of $115.00 per day.
18
<PAGE>
EXHIBIT
NO. DESCRIPTION LOCATION
--- ----------- --------
1.1 Form of Underwriting Incorporated by reference to
Agreement between Mercer Exhibit No. 1.1 to the
Partners, Inc. and the Registration Statement on Form
Company SB-2 filed with the Securities
and Exchange Commission on
October 20, 2000
1.2 Form of Consulting Agreement Incorporated by reference to
between Mercer Partners, Exhibit No. 1.2 to the
Inc. and the Company Registration Statement on Form
SB-2 filed with the Securities
and Exchange Commission on
October 24, 2000
1.3 Form of Selected Dealers Incorporated by reference to
Agreement between Mercer Exhibit No. 1.3 to the
Partners, Inc. and the Registration Statement on Form
Company SB-2 filed with the Securities
and Exchange Commission on
October 20, 2000
1.4 Form of Agreement among Incorporated by reference to
Underwriters Exhibit No. 1.4 to the
Registration Statement on Form SB-2
filed with the Securities and Exchange
Commission on October 20, 2000
1.5 Form of Underwriter's Incorporated by reference to
Warrant from the Company to Exhibit No. 1.5 to the
Mercer Partners, Inc. Registration Statement on Form
SB-2 filed with the Securities
and Exchange Commission on
October 20, 2000
2.1 Stock Purchase Agreement Incorporated by reference to
dated as of January 15, Exhibit 2.1 to Registrant's
2000, among the Company and Current Report on Form 8-K
shareholders of DNA filed with the SEC on February
Sciences, Inc. 14, 2000
3.1 Articles of Incorporation of Incorporated by reference to
the Company, as amended Exhibit No. 3.1 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 Incorporated by reference to
Company 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 Incorporated by reference to
certificate 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 Incorporated by reference to
Plan Exhibit No. 4.4 to the Annual
Report on Form 10-KSB for the
year ended December 31, 1999
5.1 Opinion re: Legality Incorporated by reference to
Exhibit No. 5.1 to the
Registration Statement on Form
SB-2 filed with the Securities
and Exchange Commission on
August 24, 2000
19
<PAGE>
EXHIBIT
NO. DESCRIPTION LOCATION
--- ----------- --------
10.1 License Agreement dated Incorporated by reference to
September 7, 1990 between Exhibit No. 10.1 to the
the University of Miami and Registration Statement
its School of Medicine and
ProVec, Inc.
10.2 Assignment of License Incorporated by reference to
Agreement dated January 20, Exhibit No. 10.2 to the
1992 between ProVec, Inc. Registration Statement
and EpiDNA, Inc.
10.3 Agreement between University Incorporated by reference to
of Miami and its School of Exhibit No. 10.3 to the
Medicine and the Company Registration Statement
dated August 21, 1996
10.4 Employment Agreement dated Incorporated by reference to
August 15, 1996 between Mead Exhibit No. 10.4 to the
M. McCabe, Sr. and the Registration Statement
Company
10.5 Stock Option Addendum to Incorporated by reference to
Employment Agreement dated Exhibit No. 10.5 to the
August 15, 1996 between Mead Registration Statement
M. McCabe, Sr. and the
Company
10.6 Stock Option Addendum to Incorporated by reference to
Employment Agreement dated Exhibit No. 10.7 to the
August 15, 1996 between Mead Registration Statement
M. McCabe, Sr. and the
Company
10.7 Consulting Agreement dated Incorporated by reference to
June 19, 1996 between James Exhibit No. 10.10 to the
A. Joyce and the Company Registration Statement
10.8 Letter Agreement dated Incorporated by reference to
December 16, 1994 among Nyer Exhibit No. 10.11 to the
Medical Group, Inc., the Registration Statement
Company, Mead M. McCabe, Sr.
And Mead M. McCabe, Jr.
10.9 Investors Finders Agreement Incorporated by reference to
dated June 9, 1994 among Exhibit No. 10.12 to the
Nyer Medical Group, Inc., Registration Statement
and the Company and Gulf
American Trading Company
10.10 Industrial Real Estate Lease Incorporated by reference to
dated June 12, 1997 among Exhibit No. 10.13 to the
the Company and Jetex Group, Company's Quarterly Report on
Inc. Form 10-QSB for the Quarter
ended June 30, 1997
10.11 Letter from University of Incorporated by reference to
Miami dated April 8, 1998 Exhibit No. 10.12 to
the Company's Annual Report on Form
10-KSB for the year ended December 31,
1997
10.12 Promissory Note dated as of Incorporated by reference to
November 2, 1998 in the Exhibit No. 10.13 to the
Original Principal Amount of Company's Annual Report on Form
$50,000 given by the Company 10-KSB for the year ended
to Ms. Patricia A. Gionone December 31, 1998
10.13 Common Stock Purchase Incorporated by reference to
Warrant No. W-2 dated as of Exhibit No. 10.14 to the
November 2, 1998 granted by Company's Annual Report on Form
the Company to Ms. Patricia 10-KSB for the year ended
A. Gionone December 31, 1998
20
<PAGE>
EXHIBIT
NO. DESCRIPTION LOCATION
--- ----------- --------
10.14 Promissory Note dated as of Incorporated by reference to
November 2, 1998 in the Exhibit No. 10.15 to the
Original Principal Amount Company's Annual Report on Form
of $100,000 given by the 10-KSB for the year ended
Company to Jerome P. Seiden December 31, 1998
Irrevocable Trust Dated
April 22, 1998
10.15 Common Stock Purchase Incorporated by reference to
Warrant No. W-1 dated as of Exhibit No. 10.16 to the
November 2, 1998 granted by Company's Annual Report on Form
the Company to Jerome P. 10-KSB for the year ended
Seiden Irrevocable Trust December 31, 1998
Dated April 22, 1998
10.16 Common Stock Purchase Incorporated by reference to
Warrant No. W-5 dated as of Exhibit No. 10.17 to the
September 3, 1998 granted by Company's Annual Report on Form
the Company to Sterling 10-KSB for the year ended
Technology Partners, Ltd. December 31, 1998
10.17 Common Stock Purchase Incorporated by reference to
Warrant No. W-4 dated as of Exhibit No. 10.18 to the
January 19, 1999 granted by Company's Annual Report on Form
the Company to Sterling 10-KSB for the year ended
Technology Partners, Ltd. December 31, 1998
10.18 Common Stock Purchase Incorporated by reference to
Warrant No. W-7 dated as of Exhibit No. 10.19 to the
March 9, 1999 granted by the Company's Annual Report on Form
Company to Sterling 10-KSB for the year ended
Technology Partners, Ltd. December 31, 1998
10.19 Common Stock Purchase Incorporated by reference to
Warrant No. W-3 dated as of Exhibit No. 10.20 to the
January 19, 1999 granted by Company's Annual Report on Form
the Company to Capital 10-KSB for the year ended
Research, Ltd. December 31, 1998
10.20 Promissory Note dated as of Incorporated by reference to
January 19, 1999 in the Exhibit No. 10.21 to the
Original Principal Amount of Company's Annual Report on Form
$163,500 given by the 10-KSB for the year ended
Company to Capital Research, December 31, 1998
Ltd.
10.21 Pledge and Security Incorporated by reference to
Agreement dated as of Exhibit No. 10.22 to the
January 19, 1999 between the Company's Annual Report on Form
Company and Capital 10-KSB for the year ended
Research, Ltd. December 31, 1998
10.22 Registration Rights Incorporated by reference to
Agreement dated as of Exhibit No. 10.23 to the
January 19, 1999 between the Company's Annual Report on Form
Company and Capital 10-KSB for the year ended
Research, Ltd. December 31, 1998
10.23 Promissory Note dated as of Incorporated by reference to
March 9, 1999 in the Exhibit No. 10.24 to the
Original Principal Amount of Company's Annual Report on Form
$125,000 given by the 10-KSB for the year ended
Company to Capital December 31, 1998
Research, Ltd.
10.24 Common Stock Purchase Incorporated by reference to
Warrant No. W-6 dated as of Exhibit No. 10.25 to the
March 9, 1999 granted by the Company's Annual Report on Form
Company to Capital Research, 10-KSB for the year ended
Ltd. December 31, 1998
10.25 Registration Rights Incorporated by reference to
Agreement dated as of March Exhibit No. 10.26 to the
9, 1999 between the Company Company's Annual Report on Form
and Capital Research, Ltd. 10-KSB for the year ended
December 31, 1998
21
<PAGE>
EXHIBIT
NO. DESCRIPTION LOCATION
--- ----------- --------
10.26 Executive Employment Incorporated by reference to
Agreement, together with Exhibit 10.26 to the Company's
Stock Option Addendum, dated Annual Report on Amendment No.
as of July 1, 1999 between 1 to the Form 10 KSB for the
Mead M. McCabe, Jr. and the year ended December 31, 1998
Company
10.27 Executive Employment Incorporated by reference to
Agreement, together with Exhibit 10.27 to the Company's
Stock Option Addendum, dated Annual Report on Amendment No.
as of July 1, 1999 between 1 to the Form 10 KSB for the
Mead M. McCabe, Sr. and the year ended December 31, 1998
Company
10.28 Executive Employment Incorporated by reference to
Agreement, together with Exhibit No. 10.29 to the Annual
Stock Option Addendum, dated Report on Form 10-KSB for the
as of January 17, 2000 year ended December 31, 1999
between Eric Wilkinson and
the Company
10.29 Promissory Note dated as of Incorporated by reference to
April 19, 1999 in the Exhibit No. 10.30 to the Annual
Original Principal Amount of Report on Form 10-KSB for the
$100,000 given by the year ended December 31, 1999
Company to Jack Surgent
10.30 Registration Rights Incorporated by reference to
Agreement dated as of April Exhibit No. 10.31 to the Annual
19, 1999 between the Company Report on Form 10-KSB for the
and Jack Surgent year ended December 31, 1999
10.31 Common Stock Purchase Incorporated by reference to
Warrant dated as of April Exhibit No. 10.32 to the Annual
19, 1999 granted by the Report on Form 10-KSB for the
Company to Jack Surgent year ended December 31, 1999
10.32 Promissory Note dated as of Incorporated by reference to
October 6, 1999 in the Exhibit No. 10.33 to the Annual
Original Principal Amount of Report on Form 10-KSB for the
$200,000 given by the year ended December 31, 1999
Company to Orbiter Fund, Ltd.
10.33 Pledge and Security Incorporated by reference to
Agreement dated as of Exhibit No. 10.34 to the Annual
October 6, 1999 between the Report on Form 10-KSB for the
Company and Orbiter Fund, year ended December 31, 1999
Ltd.
10.34 Registration Rights Incorporated by reference to
Agreement dated as of Exhibit No. 10.35 to the Annual
October 6, 1999 between the Report on Form 10-KSB for the
Company and Orbiter Fund, year ended December 31, 1999
Ltd.
10.35 Common Stock Purchase Incorporated by reference to
Warrant dated as of October Exhibit No. 10.36 to the Annual
6, 1999 granted by the Report on Form 10-KSB for the
Company to Orbiter Fund, Ltd. year ended December 31, 1999
10.36 Promissory Note dated as of Incorporated by reference to
November 19, 1999 in the Exhibit No. 10.37 to the Annual
Original Principal Amount of Report on Form 10-KSB for the
$200,000 given by the year ended December 31, 1999
Company to Orbiter Fund, Ltd.
10.37 Pledge and Security Incorporated by reference to
Agreement dated as of Exhibit No. 10.38 to the Annual
November 19, 1999 between Report on Form 10-KSB for the
the Company and Orbiter year ended December 31, 1999
Fund, Ltd.
22
<PAGE>
EXHIBIT
NO. DESCRIPTION LOCATION
--- ----------- --------
10.38 Registration Rights Incorporated by reference to
Agreement dated as of Exhibit No. 10.39 to the Annual
November 19, 1999 between Report on Form 10-KSB for the
the Company and Orbiter year ended December 31, 1999
Fund, Ltd.
10.39 Common Stock Purchase Incorporated by reference to
Warrant dated as of December Exhibit No. 10.40 to the Annual
22, 1999 granted by the Report on Form 10-KSB for the
Company to Orbiter Fund, Ltd. year ended December 31, 1999
10.40 Promissory Note dated as of Incorporated by reference to
November 19, 1999 in the Exhibit No. 10.41 to the Annual
Original Principal Amount of Report on Form 10-KSB for the
$300,000 given by the year ended December 31, 1999
Company to Orbiter Fund, Ltd.
10.41 Pledge and Security Incorporated by reference to
Agreement dated as of Exhibit No. 10.42 to the Annual
December 22, 1999 between Report on Form 10-KSB for the
the Company and Orbiter year ended December 31, 1999
Fund, Ltd.
10.42 Registration Rights Incorporated by reference to
Agreement dated as of Exhibit No. 10.43 to the Annual
December 22, 1999 between Report on Form 10-KSB for the
the Company and The Orbiter year ended December 31, 1999
Fund, Ltd.
10.43 Common Stock Purchase Incorporated by reference to
Warrant dated as of Exhibit No. 10.44 to the Annual
December 22, 1999 granted by Report on Form 10-KSB for the
the Company to The Orbiter year ended December 31, 1999
Fund, Ltd.
10.44 Promissory Note dated as of Incorporated by reference to
February, 2000 in the Exhibit No. 10.45 to the Annual
Original Principal Amount of Report on Form 10-KSB for the
$250,000 give by the Company year ended December 31, 1999
to The Orbiter Fund, Ltd.
10.45 Pledge and Security Incorporated by reference to
Agreement dated as of Exhibit No. 10.46 to the Annual
February, 2000 between the Report on Form 10-KSB for the
Company and The Orbiter year ended December 31, 1999
Fund, Ltd.
10.46 Registration Rights Incorporated by reference to
Agreement dated as of Exhibit No. 10.47 to the Annual
February, 2000 between the Report on Form 10-KSB for the
Company and The Orbiter year ended December 31, 1999
Fund, Ltd.
10.47 Stock Purchase Agreement Incorporated by reference to
dated as of January 17, 2000 Exhibit No. 10.48 to the Annual
among the Company, DNA Report on Form 10-KSB for the
Sciences, Inc. and the year ended December 31, 1999
shareholders of DNA
Sciences, Inc.
10.48 Common Stock Purchase Incorporated by reference to
Warrant dated as of Exhibit No. 10.49 to the Annual
February, 2000 given by the Report on Form 10-KSB for the
Company to The Orbiter Fund, year ended December 31, 1999
Ltd.
10.49 Convertible Promissory Note Incorporated by reference to
dated as of March 2, 2000 in Exhibit No. 10.50 to the Annual
the Original Principal Report on Form 10-KSB for the
Amount of $75,000 given by year ended December 31, 1999
the Company to Jack Higgins
23
<PAGE>
EXHIBIT
NO. DESCRIPTION LOCATION
--- ----------- --------
10.50 Common Stock Purchase Incorporated by reference to
Warrant dated as of March 2, Exhibit No. 10.513 to the
2000 between the Company and Annual Report on Form 10-KSB
Jack Higgins for the year ended December 31,
1999
10.51 Convertible Promissory Note Incorporated by reference to
dated as of March 7, 2000 in Exhibit No. 10.52 to the Annual
the Original Principal Report on Form 10-KSB for the
Amount of $100,000 given by year ended December 31, 1999
the Company to Frederick &
Company
10.52 Common Stock Purchase Incorporated by reference to
Warrant dated as of March 7, Exhibit No. 10.53 to the Annual
2000 between the Company and Report on Form 10-KSB for the
Frederick & Company year ended December 31, 1999
10.53 Convertible Promissory Note Incorporated by reference to
in the Original Principal Exhibit No. 10.54 to the Annual
Amount of $100,000 dated as Report on Form 10-KSB for the
of May 8, 2000 between the year ended December 31, 1999
Company and Jim Kelly.
10.54 Common Stock Purchase Incorporated by reference to
Warrant dated as of May 8, Exhibit No. 10.55 to the Annual
2000 between the Company and Report on Form 10-KSB for the
Jim Kelly. year ended December 31, 1999
10.55 Convertible Promissory Note Incorporated by reference to
in the Original Principal Exhibit No. 10.56 to the Annual
Amount of $500,000 dated as Report on Form 10-KSB for the
of May 26, 2000 between the year ended December 31, 1999
Company and Jim Kelly.
10.56 Common Stock Purchase Incorporated by reference to
Warrant dated as of May 26, Exhibit No. 10.57 to the Annual
2000 between the Company and Report on Form 10-KSB for the
Jim Kelly. year ended December 31, 1999
10.57 Convertible Promissory Note Incorporated by reference to
in the Original Principal Exhibit 10.57 to the Quarterly
Amount of $100,000 dated as Report on Form 10-QSB for the
of April 4, 2000 between the three months ended March 31,
Company and Donald Heap. 2000
10.58 Common Stock Purchase Incorporated by reference to
Warrant No. W-18 dated as of Exhibit 10.58 to the Quarterly
April 4, 2000 between the Report on Form 10-QSB for the
Company and Donald Heap. three months ended March 31,
2000
10.59 Convertible Promissory Note Incorporated by reference to
in the Original Principal Exhibit 10.59 to the Quarterly
Amount of $50,000 dated as Report on Form 10-QSB for the
of June 9, 2000 between the three months ended March 31, 2000
Company and Michael and
Lois Halbert
10.60 Common Stock Purchase Incorporated by reference to
Warrant dated as of June 9, Exhibit 10.60 to the Quarterly
2000 between the Company and Report on Form 10-QSB for the
Michael and Lois Halbert three months ended March 31, 2000
24
<PAGE>
EXHIBIT
NO. DESCRIPTION LOCATION
--- ----------- --------
10.61 Common Stock Purchase Incorporated by reference to
Warrant No. W-12 dated as of Exhibit 10.61 to the Quarterly
October 6, 1999 between the Report on Form 10-QSB for the
Company and Sterling three months ended March 31,
Technology Partners, Ltd. 2000
10.62 Common Stock Purchase Incorporated by reference to
Warrant No. W-13 dated as of Exhibit 10.62 to the Quarterly
December 22, 1999 between Report on Form 10-QSB for the
the Company and Sterling three months ended March 31,
Technology Partners, Ltd. 2000
11. Statement re: computation of Not applicable
earnings
18. Letter on change in Not applicable
accounting principles
21. Subsidiaries of the Provided herewith
Registrant
22. Published report regarding Not applicable
matters submitted to Vote
23.1 Consent of Independent Not applicable
Accountant
23.2 Consent of Counsel Incorporated by reference to
Exhibit No. 23.2 to the
Registration Statement on Form
SB-2 filed with the Securities
and Exchange Commission on
August 24, 2000
24. Power of Attorney Not applicable
27. Financial Data Schedule Provided herewith
25
<PAGE>
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: November 14, 2000 GENETIC VECTORS, INC.
By: /s/ Mead M. McCabe, Jr.
-----------------------
Mead M. McCabe, Jr.
Chief Executive Officer
26