SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
AMENDMENT NO. 1
To
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of
The Securities Exchange Act of 1934
ELAST TECHNOLOGIES, INC.,
A Nevada corporation
(Exact name of registrant as specified in its charter)
NEVADA 88-0380544
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
2505 Rancho Bel Air, Las Vegas, Nevada 89107
(Address of registrant's principal executive offices) (Zip Code)
702.878.8310
(Registrant's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of Each Exchange on which
to be so registered: each class is to be registered:
-------------------- -------------------------------
None None
Securities to be registered under Section 12(g) of the Act:
Common Stock, Par value $.001
(Title of Class)
Copies to:
Thomas E. Stepp, Jr.
Stepp & Beauchamp LLP
Attorneys-at-Law
1301 Dove Street, Suite 460
Newport Beach, California 92660
949.660.9700
Facsimile 949.660.9010
Page 1 of 48
Exhibit Index is specified on Page 13
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Item 1. Description of Business.
Development of the Company. Med Mark, Inc., a Nevada corporation
("Company"), was incorporated in the State of Nevada on November 5, 1996. The
executive offices of the Company are located at 2505 Rancho Bel Air, Las Vegas,
Nevada 89107. The Company's telephone number is 702.878.8310. Pursuant to a Plan
of Merger filed with the Delaware Secretary of State, on or about June 30, 1998,
Elast Technologies Corporation, a Delaware corporation ("Elast Delaware"),
merged with and into Elast Merger, Inc., a Nevada corporation, which was a
wholly-owned subsidiary of the Company. Shareholders who formerly held stock in
Elast Delaware received 4 shares of the Company's common stock for each share of
their Elast Delaware stock, with the result that the former shareholders of
Elast Delaware now hold a controlling interest in the Company, and Elast
Delaware is now a wholly-owed subsidiary of the Company. On or about June 18,
1998, the Company's Board of Directors approved a resolution amending the
Company's Articles of Incorporation to change the Company's name, which
resolution was approved by the Company's shareholders on June 29, 1998. A
Certificate of Amendment to the Articles of Incorporation of the Company was
filed in the Office of the Secretary of State of the State of Nevada on October
27, 1998 changing the Company's name from Med Mark, Inc. to Elast Technologies,
Inc.
Business of the Company. The Company was organized to engage in the
business of manufacturing and marketing medical equipment and supplies, as well
as health related products, including vitamins and nutritional supplements. The
Company plans to develop its own products and may also obtain marketing and
distribution rights to existing products or products currently in development by
others.
The Company entered into a licensing agreement with Dr. Robert D. Milne and
acquired the rights to develop, test, manufacture, and market Dr. Milne's
patented allergy-testing device ("ELAST Device", U.S. Patent No. 5413113, issued
on or about May 9, 1995). Dr. Milne is a board-certified family practice
physician with experience in allergy testing and preventative medicine. The
Company has spent significant time during its last two fiscal years on research
and development activities relating to the ELAST Device. The licensing
agreements relating to the ELAST Device are also referred to in this
Registration Statement at Item 7, under the subsection entitled Licensing
Agreements Were Not the Result of Arms-Length Negotiations. A copy of the
current licensing agreement is included in this Registration Statement, as a
material contract, market Exhibit 5.1.
The ELAST Device is based on the clinical observation that the human body
loses energy (that is, the body's normal electricity is interrupted) when
exposed to a substance to which that body is sensitive or allergic. The energy
loss is rapid and is measured in micro-voltage. The ELAST Device measures the
body's energy loss and documents it graphically, providing the treating
physician with an accurate assessment of a patient's sensitivity. The Company
intends to clinically test the device under the direction of Dr. Milne. After
clinical testing, the ELAST Device will be submitted to the United States Food
and Drug Administration ("FDA") for approval.
Human therapeutic products are subject to rigorous pre-clinical and
clinical testing and other approval procedures. The FDA and comparable foreign
government regulatory agencies require laboratory and clinical testing and other
costly and time-consuming procedures before medical products such as the ELAST
Device can be marketed. Various federal, state and foreign statutes also govern
or affect the manufacturing, safety, labeling, storage, and marketing of such
products, as well as record-keeping incidental to such marketing. Obtaining such
approvals, and maintaining ongoing compliance with these requirements can
require the expenditure of significant resources. To date, the Company has not
determined what procedures, if any, will be required in this regard and has not
begun any of these procedures. The Company is currently investigating the
possibility that the ELAST Device falls under a category for which FDA approval
has already been given. The Company anticipates that the ELAST Device may be
included in such a category,
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but research is currently being conducted by the Company to determine regulatory
requirements. In addition, regulatory testing and approval would require
significant funding and, in the event that such funding exceeded the present
financial resources of the Company, the Company would have to receive additional
capital to market the ELAST Device.
In the event the FDA or other domestic or foreign regulatory agency
requires approval and testing of the ELAST Device, prior to its commercial
exploitation, the Company cannot provide any assurances that testing procedures
will be successfully completed, or if completed, demonstrate that the ELAST
Device is safe and efficacious. Further, there can be no assurances that any
required government approvals will be obtained. Accordingly, there can be no
assurance that the Company will be able to market the ELAST Device in the United
States or any foreign country. Any failure by the Company, its subsidiary,
collaborators or licensees to obtain any required regulatory approvals or
licenses would adversely affect the ability of the Company to market its
products and would have a significant adverse effect on the Company's revenues.
Employees. The Company currently has 3 employees. Management of the Company
anticipates using consultants for business, accounting, engineering, and legal
services on an as-needed basis. Because the Company anticipates entering into
licensing and manufacturing agreements with third parties, the Company
anticipates that it will require few additional employees during the next fiscal
year.
Competition. Because the ELAST Device is based on a new concept in
diagnostics and is patented, there are currently no direct competitors marketing
a similar product. Once the ELAST Device gains product acceptance in the medical
community, the Company anticipates physicians could prescribe home-testing.
However, competition in the medical products industry, generally, is
intense. The Company and its subsidiary compete directly with other companies
and businesses that have developed and are in the process of developing
technologies and products which will be competitive with the products developed
and offered by the Company and its subsidiary. There can be no assurance that
other technologies or products which are functionally equivalent or similar to
the technologies and products of the Company and its subsidiary have not been
developed or are not in development. The Company expects that companies or
businesses which may have developed or are developing such technologies and
products as well as other companies and businesses which have the expertise
which would encourage them to develop and market products directly competitive
with those developed and marketed by the Company. Many of these competitors have
greater financial and other resources, and more experience in research and
development, than the Company.
For example, according to its 1994 Annual Report, Bayer Corporation
(formerly Miles, Inc.) holds over 50% of the worldwide allergy testing market,
exclusive of in vitro testing. In 1994, Pharmacia (now Pharmacia & Upjohn, Inc.)
held approximately 73% of the worldwide market share for in vitro allergy tests.
The Company's additional competitors in this area include Sanofi, Ciba Corning
and Diagnostic Products Corporation.
There can be no assurance that competitors have not or will not succeed in
developing technologies and products that are more effective than any which have
been or are being developed by the Company or which would render the products of
the Company obsolete and noncompetitive. Most of the competitors of the Company
have substantially greater experience, financial and technical resources and
production, marketing and development capabilities than the Company. If the
Company commences commercial sales of its products, it will also be competing
with respect to manufacturing efficiency and sales and marketing capabilities.
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Compliance with Environmental Laws. The Company's management believes that
no toxic or hazardous materials will be byproducts of the manufacturing
processes of the ELAST Device; accordingly, management of the Company believes
that the Company will not incur unforeseen material expenditures related to the
cost of compliance with applicable environmental laws, rules or regulations. The
Company believes that it is presently in compliance with all applicable federal,
state, and local environmental laws, rules and regulations. Furthermore, in the
event the Company licenses the manufacturing rights, of the ELAST Device, to
third parties, the Company will not become subject to any such restrictions.
However, at some time in the future, the research, development, manufacturing
and production processes of the Company may involve the controlled use of
hazardous materials. The Company may be subject to various laws and regulations
governing the use, manufacture, storage, handling, and disposal of such
materials and certain waste products. The risk of accidental contamination or
injury from hazardous materials cannot be completely eliminated. In the event of
such an accident, the Company could be held liable for any damages that result,
and any such liability could exceed the financial resources of the Company. In
addition, there can be no assurance that in the future the Company will not be
required to incur significant costs to comply with environmental laws and
regulations relating to hazardous materials. The Company cannot estimate the
potential costs of complying with local, state, and federal environmental laws.
Reports to Security Holders. The Company is a reporting company with the
Securities and Exchange Commission ("SEC"). The public may read and copy any
materials filed with the SEC at the SEC's Public Reference Room at 450 Fifth
Street N.W., Washington, D.C. 20549. The public may also obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
The SEC maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC. The address of that site is http://www.sec.gov. The Company
currently maintains its own Internet address at www.elast.com.
Item 2. Plan of Operation
General. The Company manufactures and markets medical devices. The Company
is currently negotiating a proposed marketing agreement for the territories of
Australia and New Zealand and plans to negotiate and enter into additional
marketing agreements with appropriate distributors and marketing agents. Other
than the ELAST Device discussed in Item 1 above, the Company does not currently
have any plans to develop other products; the Company may acquire the right to
sell or distribute existing products, or obtain licensing, marketing,
distribution or other rights to compatible products. Therefore, other than costs
related to the continued development of the ELAST Device, the Company does not
anticipate significant expenditures on acquisition or development of other
products during the current fiscal year.
The Company will focus its initial marketing and distribution efforts on
development and commercial exploitation of the ELAST Device. The Company's
present plan is to lease or license the ELAST Device. The Company believes that
such a plan minimizes variable costs and creates an informed and updated client
base.
The business of the Company will expose the Company to potential product
liability risks that are inherent in the testing, manufacturing and marketing of
medical products. The Company presently has no product liability insurance, and
there can be no assurance that the Company will be able to obtain or maintain
such insurance on acceptable terms or, if obtained, that such insurance will
provide adequate coverage against potential liabilities. The Company faces an
inherent business risk of exposure to product liability and other claims in the
event that the development or use of its technology or products is alleged to
have resulted in adverse effects. Such risk exists even with respect to those
products that are manufactured in licensed and regulated facilities or that
otherwise possess regulatory approval for commercial sale. There can be no
assurance that the Company will avoid significant product liability exposure.
There can be no
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assurance that insurance coverage will be available in the future, on
commercially reasonable terms; or that such insurance will be adequate to cover
potential product liability claims; or that a loss of insurance coverage would
not materially adversely affect the Company's business, financial condition and
results of operations. While the Company has taken, and will continue to take,
what it believes are appropriate precautions, there can be no assurance that the
Company will avoid significant liability exposure. An inability to obtain
product liability insurance at acceptable cost or to otherwise protect against
potential product liability claims could prevent or inhibit the
commercialization of products developed by the Company. A product liability
claim could have a material adverse effect on the Company's business, financial
condition and results of operations.
The strategy of the Company for growth is substantially dependent upon its
ability to market and distribute products successfully. Other companies,
including those with substantially greater financial, marketing and sales
resources, compete with the Company, and have the advantage of marketing
existing products with existing production and distribution facilities. There
can be no assurance that the Company will be able to market and distribute
products on acceptable terms, or at all. Failure of the Company to market its
products successfully could have a material adverse effect on the Company's
business, financial condition or results of operations.
The medical products industry has been under increasing scrutiny by various
state and federal regulatory agencies. While the Company does not presently
require any government approval to create, develop or manufacture the ELAST
Device; the Company may be subject to various forms of government regulations,
including consumer safety laws and environmental safety laws. Any future
violation of, or the cost of compliance with, these laws and regulations could
have a material adverse effect on the Company's business, financial condition
and results of operations.
The medical products industry is rapidly changing through the continuous
development and introduction of new products. The strategy of the Company for
growth is substantially dependent upon its ability to successfully introduce the
ELAST Devices. Accordingly, the ability of the Company to compete may be
dependent upon the ability of the Company to enhance and improve its products
continually. There can be no assurance that competitors will not develop
technologies or products that render the products of the Company obsolete or
less marketable. The Company may be required to adapt to technological changes
in the industry and develop products to satisfy evolving industry or customer
requirements, any of which could require the expenditure of significant funds.
At this time, the Company does not have a source of commitment for such funds.
Continued refinement and improvement costs are risks inherent in new product
development, including unanticipated technical or other problems which could
result in material delays in product commercialization.
Liquidity and Capital Resources. During the year ended December 31, 1998,
and the three month period ended March 31, 1999, the Company received $397,000
and $208,250, respectively, from the sale of common stock, issuance of common
stock as a result of the exercise of warrants, and the payment of a stock
subscription receivable. After payment of development and operating expenses,
the Company had cash resources of $270,017 at March 31, 1999. On July 7, 1999, a
group of Australian investors deposited $250,000 with the Company in
anticipation of purchasing up to 500,000 shares of the Company's common stock
and up to 500,000 non-detachable warrants granting certain rights to purchase an
additional 500,000 shares of the Company's common stock; however, the purchase
has not yet been consummated and is subject to certain conditions precedent,
including but not limited to the payment of additional monies to the Company.
The cash and equivalents constitute the Company's present internal sources of
liquidity. Because neither the Company nor its subsidiary is generating any
revenues from the sale or licensing of their products, the Company's only
external source of liquidity is the sale of its capital stock.
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Sales of common stock and exercise of warrants pursuant to an offering of
unregistered securities by Elast Delaware resulted in cash receipts of $197,000
and $189,990, respectively, in the year to date ended December 31, 1998.
Collection of an outstanding receivable relating to the sale of common stock
resulted in an additional $10,000 of cash receipts to the Company. During the
three month period ended March 31, 1999, the Company received $208,250 from the
sale of common stock.
The Company believes these cash resources are sufficient to complete
prototype development and limited clinical trials of the ELAST Device. If the
ELAST Device performs as anticipated, the Company believes that it will be able
to raise the funds necessary to begin production of the ELAST Devices - for the
North American and international clinical trials and the FDA approval process
through the sale of equity, debt, or licensing. Should the development of the
prototype or clinical testing of the prototype take more time than anticipated,
or if the results of testing require significant modifications to the ELAST
Device, sufficient funds may not be available to enable the ELAST Device to be
completed and brought to market during the time period currently anticipated by
the Company.
Manufacturing and Marketing the Company's Products. The Company does not
anticipate any supply problems. As this time, the Company does not require
manufacturing facilities. As the principal components of the ELAST Device
consist of electronic parts that are readily available, the Company does not
anticipate that its manufacturer will have any supply problems. The Company's
operations are not effected by any seasonal factors.
Once the initial testing of the ELAST Device is completed, the Company will
manufacture, or cause to be manufactured, about 200 units of the ELAST Device,
which will be provided to a selected group of physicians, including eye, ear,
nose and throat specialists, chemical ecologists, and allergy specialist
doctors, naturopaths, and chiropractors. Thereafter, the ELAST Device will be
marketed to physicians and hospitals to test patients for prescription drug
compatibility, to avoid drug-related illnesses. The Company's operating plan is
to market the ELAST Device as a stand-alone device that can be attached to
"medical environment" computers. Once the ELAST Device gains acceptance in the
medical community, the Company anticipates that a patient home-testing unit may
be developed.
Impact of the Year 2000. The Year 2000 (commonly referred to as "Y2K")
issue results from the fact that many computer programs were written using two,
rather than four, digits to identify the applicable year. As a result, computer
programs with time-sensitive software may recognize a two digit code for any
year in the next century as related to this century. For example, "00", entered
in a date-field for the year 2000, may be interpreted as the year 1900,
resulting in system failures or miscalculations and disruptions of operations,
including, among other things, a temporary inability to process transactions or
engage in other normal business activities.
To improve operating performance, the Company has undertaken a number of
significant systems initiatives, including a comprehensive review of the
hardware, software and communication systems owned by or supplied to the
Company. These have been analyzed by reviewing all relevant product and service
manuals, contacting vendors, and on-line research of relevant vendor websites.
The Company believes that all of its computer systems are Year 2000 compliant.
The Company (i) has completed an assessment of each of its operations and their
Year 2000 readiness, (ii) has determined that appropriate actions have been and
are being taken, and (iii) believes that it has completed its overall Year 2000
remediation prior to any anticipated impact on its operations. The Company has
determined that the Year 2000 issue will not pose significant operational
problems for its computer systems. However, although the Company believes its
own computer systems are compliant, the Company has been unable to determine the
extent to which the Company's computer systems are vulnerable to the failure of
third parties to remediate their own Year 2000 issues. There is no guarantee
that the computer systems of other companies on which the Company's
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computer system relies or interfaces will be converted and would not have an
adverse effect on the Company's computer system.
In a worst case scenario, the Company's business operations could be
adversely affected by the non-compliance of banks, communications providers,
utilities, common carriers, the Company's customers, potential customers,
suppliers, and other sources known and unknown to the Company. Widespread
breakdowns in the telecommunications, banking, and computer industries would
have an adverse effect on business operations globally, including the Company's
operations. The ultimate impact of the Y2K issue cannot be reasonably estimated
as of the date of this Registration Statement. Many Y2K problems might not be
readily apparent when they first occur, but instead could imperceptibly degrade
technology systems and corrupt information stored in computerized databases, in
some cases before January 1, 2000.
Item 3. Description of Property
Property held by the Company. The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiary, Elast Technologies
Corporation, a Delaware corporation (previously defined in this Registration
Statement as "Elast Delaware"). All significant intercompany transactions have
been eliminated. As of the dates specified in the following table, the Company
held the following property:
================================================================================
Property Dec. 31, 1998 Dec. 31,1997
- --------------------------------------------------------------------------------
Cash and equivalents $226,818.00 $108,280.00
- --------------------------------------------------------------------------------
License to use Patent No. 5413113 $800.00 $800.00
- --------------------------------------------------------------------------------
The Company defines cash equivalents as all highly liquid investments with
a maturity of 3 months or less when purchased. The Company does not presently
own any interests in real estate. The Company does not presently own any
inventory or equipment.
Item 4. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners. Other than officers
and directors, no persons are beneficial owners of 5% or more of the Company's
issued and outstanding common stock.
(b) Security Ownership of Management. The directors and principal executive
officers of the Issuer own, in the aggregate, 3,452,140 shares of the Company's
common stock, or approximately 47% of the issued and outstanding common shares,
as set forth on the following table. Associates and family members residing with
directors and principal executive officers also own shares of the Company's
common stock, as specified under the heading entitled Beneficial Ownership
immediately below the table.
<TABLE>
<CAPTION>
Amount and
Name and Address Nature of Percent of
Title of Class of Owner Owner Class
-------------- ---------------- ----------- ----------
<S> <C> <C> <C>
Common Stock Dr. Robert Milne 2,849,476 38.8%
2432 Greens Ave. Secretary and Director
Henderson, NV 89014
Common Stock Thomas Krucker 385,332 5.2%
2505 Rancho Bel Air President and Director
Las Vegas, NV 89107
Additional shares beneficially
owned by officers and
directors as a group (1) 217,332 3.0%
Total shares beneficially
owned by all officers and
directors as a group 3,452,140 47.0%
</TABLE>
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(1) Beneficial Ownership. Dr. Milne's spouse, Julie Milne, and immediate
family members residing with him, Drew Milne, Meredith Milne and Brook Milne,
own, in the aggregate, an additional 110,000 shares of the Company's common
stock, or approximately 1.5% of the issued and outstanding common stock of the
Company. The Milne Medical Center, an affiliate of Dr. Milne, owns 10,000 shares
of the Company's common stock, or approximately 0.14% of the issued and
outstanding common stock of the Company. Mr. Krucker's spouse, Katherine, and an
immediate family member residing with him, Kimberly Krucker, own, in the
aggregate, 97,332 additional shares of the Company's common stock, or
approximately 1.3% of the issued and outstanding common stock of the Company.
Changes in Control. Management of the Company is not aware of any
arrangements which may result in "changes in control" as that term is defined by
the provisions of Item 403(c) of Regulation S-B. Pursuant to a Plan of Merger
filed with the Delaware Secretary of State, in June, 1998, Elast Technologies
Corporation, a Delaware corporation (previously defined in this Registration
Statement as "Elast Delaware"), merged with and into Elast Merger, Inc., a
Nevada corporation, which was a wholly-owned subsidiary of the Company.
Shareholders who formerly held stock in Elast Delaware received 4 shares of the
Company's common stock for each share of their Elast Delaware stock on or about
June 30, 1998, with the result that the former shareholders of Elast Delaware
now hold a controlling interest in the Company, and Elast Delaware is now a
wholly-owed subsidiary of the Company. The Company changed its name from Med
Mark, Inc. to Elast Technologies, Inc. on or about October 27, 1998.
Item 5. Directors, Executive Officers, Promoters and Control Persons
The directors and principal executive officers of the Company are as
specified on the following table:
================================================================================
Name Age Position
- --------------------------------------------------------------------------------
Thomas Krucker 59 President and Director
- --------------------------------------------------------------------------------
Robert D. Milne, M.D. 53 Chairman of the Board of Directors
- --------------------------------------------------------------------------------
Edward L. Hamilton 62 Senior Executive Vice President and Director
- --------------------------------------------------------------------------------
Nicholas Spencer 40 Director
================================================================================
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Thomas Krucker is the President, Chief Executive Officer, and a director of
the Company. His term of office as a director expires in 1999. Mr. Krucker
graduated from the University of Arizona in 1962 and received a Juris Doctorate
degree from Pepperdine University in 1969. Mr. Krucker served with Toyota USA in
a key management position for approximately 20 years. Mr. Krucker was formerly
the chief operating officer of Fun City Popcorn, Inc., a Nevada corporation
which recently changed its name to Tone Products. Mr. Krucker left Tone Products
to accept the office of President of the Company.
Robert D. Milne, M.D. is the Chairman of the Board of Directors of the
Company. His term of office as a director expires in 1999. Dr. Milne is a
board-certified family practice physician with extensive experience in allergy
testing and preventative medicine. He is also the inventor of the ELAST Device.
Before starting his own practice at the Milne Medical Center in Las Vegas,
Nevada, Dr. Milne was Medical Director at the Omni Medical Center and also
practiced medicine at the Nevada Clinic after previous assignments in emergency
medicine and a family practice. Dr. Milne is the author of numerous papers in
the medical field and has authored several books, including The Definitive Guide
to Headaches and The Photon Connection - Energy for the New Millennium.
Edward L. Hamilton is the Senior Executive Vice President of Corporate
Affairs and a director of the Company. During the past 5 years, Mr. Hamilton has
been involved with the United Nations Childrens' Foundation, producing a special
program to educate children worldwide called the "Magic Seven". Mr. Hamilton was
also the Chief Executive Officer of Cobba Productions, Inc., which, in
conjunction with Mr. Film of Venice and Pulse Entertainment California created
3-dimensional computer animation. He has also been a consultant for
international marketing to Klamath Falls Algae. Mr. Hamilton has an extensive
background in international business, with particular emphasis on start-up
companies, finance, management and planning corporate strategy.
Nicholas Spencer is a director of the Company. Mr. Spencer has more than 15
years experience in starting, managing, and improving business performance and
now specializes in business planning and start-up companies with a special
emphasis on marketing and development. Mr. Spencer currently serves on the Board
of Directors of Medsearch Pty. Limited, Sydney, New South Wales, and also serves
as Chairman of the Board for that company.
There is no family relationship between any of the officers or directors of
the Company. There are no orders, judgments, or decrees of any governmental
agency or administrator, or of any court of competent jurisdiction, revoking or
suspending for cause any license, permit or other authority to engage in the
securities business or in the sale of a particular security or temporarily or
permanently restraining any officer or director of the Company from engaging in
or continuing any conduct, practice or employment in connection with the
purchase or sale of securities, or convicting such person of any felony or
misdemeanor involving a security, or any aspect of the securities business or of
theft or of any felony, nor are any of the officers or directors of any
corporation or entity affiliated with the Company so enjoined.
Item 7. Certain Relationships and Related Transactions
Compensation to Officers and Directors of the Company. As of December 31,
1997, no compensation had been paid or accrued to any of the officers or
directors of the Company. As of June 30, 1998, compensation of $152,804 in the
form of shares of the Company's common stock has been paid or accrued to the
officers or directors of the Company.
Shares Issued as Compensation for Services. In 1996, the Company issued
21,332 shares of its common stock for legal services related to corporate
formation and preparation of the Company's private placement memorandum. The
Company valued those legal services at $6,719.00.
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In 1998 the Company issued 270,000 shares of its common stock for
consulting and engineering services, and employee compensation, as follows:
(i) Consultants were issued 115,000 shares of the Company's common stock as
additional compensation for their services to the Company. Those shares were
valued at what the Company believes was the fair market value at the time of
issuance, which was $1.50 per share.
(ii) Third Party Engineers were issued 55,000 shares of the Company's
common stock as additional compensation for their services to the Company. Those
shares were valued at what the Company believes was the fair market value at the
time of issuance, which was $1.54 per share.
(iii) Dr. Milne, an officer, director and major shareholder of the Company,
was issued 100,000 shares of the Company's common stock as additional
compensation for his services to the Company, specifically, his continuing
efforts related to the development of certain technology of the Company. Those
shares were valued at what the Company believes was the fair market value at the
time of issuance, which was $1.50 per share.
Related Party Transactions. Dr. Robert A. Milne, an officer, director and
major shareholder of the Company, provides office space and clerical services to
the Company, at no cost to the Company. At such time as the Company begins
receiving revenue from operations, management of the Company anticipates that
the Company will begin paying rent for 800 square feet of this office space, at
a rate of $1,200 per month, and will also reimburse Dr. Milne for clerical
services, at a rate to be determined by the Company and Dr. Milne.
Licensing Agreements Were Not the Result of Arms-Length Negotiations. On or
about July 18, 1996, Dr. Robert A. Milne entered into an agreement with Elast
Delaware to extend the license of his patent technology (U.S. Patent No.
5,413,113). At that time, Dr. Milne was the Chairman of the Board of Directors
and a major shareholder of Elast Delaware. As specified above, on or about June
30, 1998, the Company acquired all of the issued and outstanding capital stock
of Elast Delaware. On or about April 30, 1999, the Company entered into a
License Agreement which, by its terms, superseded and replaced any previous
license agreement between the parties relating to Dr. Milne's patent technology,
and which transferred the license rights from Elast Delaware to the Company. At
that time Dr. Milne was a director of both Elast Delaware and the Company, and a
major shareholder of the Company.
Transactions with Promoters. Thomas Krucker and Dr. Milne were the
promoters of Elast Delaware. Mr. Krucker received 101,865 shares of Elast
Delaware's common stock for his management and organizational services provided
to Elast Delaware. Dr. Milne received a total of 800,000 shares of common stock
of Elast Delaware pursuant to the licensing agreements for the ELAST Device with
the Company's predecessors-in-interest and as additional consideration for his
continued development of the patent and related technology.
Item 8. Legal Proceedings
There are no legal actions pending against the Company nor are any such
legal actions contemplated, except as specified below:
There is presently a dispute regarding the validity of certain stock
options relating to the purchase of certain shares of Elast Delaware's common
stock. On or about May 14, 1999, Dr. Gary Marrone, the former Secretary of Elast
Delaware and a former Director of Elast Delaware, notified the Company that he
believed that the unexercised Elast Delaware stock options held by each Director
of Elast Delaware had been converted
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<PAGE>
into options to purchase up to 400,000 shares of the Company's common stock at a
significantly reduced exercise price as a result of the Plan of Merger. The
Company believes that Dr. Marrone's claim is without merit. The Company further
believes that Dr. Marrone may take legal action with regard to this matter. The
Company intends to vigorously oppose any such action.
Item 10. Recent Sales of Unregistered Securities
There have been no sales of unregistered securities within the last three
(3) years which would be required to be disclosed pursuant to Item 701 of
Regulation S-B, except for the following:
On or about December 9, 1996, Elast Delaware sold 546,672 units, at $0.38
per unit, in a private placement offering in reliance upon the exemptions from
registration provided in Section 4(2) of the Securities Act of 1933, as amended,
and Rule 506 of Regulation D promulgated by the Securities and Exchange
Commission. Specifically, the offer was made to "accredited investors", as that
term is defined under applicable federal and state securities laws, and no more
than 35 non-accredited investors. Each unit was one share of Elast Delaware's
unregistered and restricted one mil ($.001) par value common stock and one
warrant to purchase an additional unregistered and restricted share of Elast
Delaware's common stock at a price of $0.38 per share. The offering price for
the units was arbitrarily established by Elast Delaware and had no relationship
to assets, book value, revenues or other established criteria of value. The
warrants and the shares of common stock issuable upon its exercise are
non-transferrable and are "restricted securities" as defined by Rule 144
promulgated pursuant to the Securities Act of 1933. The proceeds of the offering
were used to pay for past expenses incurred in designing the ELAST Device and
for costs incurred to refine, engineer and test the ELAST Device and to pay
Elast Delaware's start-up costs, including legal fees, equipment and office
expenses. There were warrants to purchase 546,672 shares of common stock which
expire on September 30, 1999. As of December 31, 1998, warrants for 506,640
shares of common stock have been exercised at $0.38. There were no commissions
paid on the sale of those units.
As specified above, in June, 1998, Elast Delaware merged with and into
Elast Merger, Inc., a Nevada corporation, which was a wholly-owned subsidiary of
the Company. Elast Merger, Inc. was dissolved and Elast Delaware is now a
wholly-owned subsidiary of the Company. Shareholders who formerly held stock in
Elast Delaware received 4 shares of the Company's common stock for each share of
their Elast Delaware common stock on or about June 30, 1998, with the result
that the former shareholders of Elast Delaware now hold the controlling interest
in the Company. Also during 1998, Elast Delaware issued 394,000 shares of its
common stock in a private placement at $0.50 per share, and Elast Delaware
issued 1,007,472 common shares at $0.38 per share for consulting services to 4
consultants in connection with the merger transaction.
Item 11. Description of Securities
The Company is authorized to issue 25,000,000 shares of common stock, $.001
par value, each share of common stock having equal rights and preferences,
including voting privileges. As of July 1, 1999, approximately 7,990,148 shares
of the Company's common stock were issued and outstanding.
The shares of $.001 par value common stock of the Company constitute equity
interests in the Company, entitling each shareholder to a pro rata share of cash
distributions made to shareholders, including dividend payments. The Bylaws of
the Company specify how the cash available for distribution, whether occurring
from operations, sales or refinancing, is to be shared among the shareholders.
The holders of the Company's common stock are entitled to one vote for each
share of record on all matters to be voted on by shareholders. There is no
cumulative voting with respect to the election of directors of the Company or
any other matter, with the result that the holders of more than 50% of the
shares voted for the election of those directors can elect all of the Directors.
The holders of the Company's common stock are entitled to receive
11
<PAGE>
dividends when and if declared by the Company's Board of Directors from funds
legally available; provided that cash dividends are at the sole discretion of
the Company's Board of Directors. In the event of liquidation, dissolution or
winding up of the Company, the holders of common stock are entitled to share
ratably in all assets remaining available for distribution to them after payment
of liabilities of the Company and after provision has been made for each class
of stock, if any, having preference in relation to the Company's common stock.
Holders of the shares of Company's common stock have no conversion, preemptive
or other subscription rights, and there are no redemption provisions applicable
to the Company's common stock. All of the outstanding shares of the Company's
common stock are duly authorized, validly issued, fully paid and non-assessable.
Item 13. Financial Statements.
Copies of the financial statements specified in Regulation 228.310 (Item
310) are filed with this Amendment No. 1 to Registration Statement on Form 10-SB
(see Item 15 below).
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There have been no changes in or disagreements with the Company's
accountants since the formation of the Company required to be disclosed pursuant
to Item 304 of Regulation S-B.
Item 15. Financial Statements and Exhibits
(a) Index to Financial Statements. Page
- ---------------------------------- ----
Elast Technologies, Inc. (A Development Stage Company)
Consolidated Financial Statements:
Report of Independent Auditors F-1
Consolidated Balance Sheets for the Years
Ended December 31, 1998 and 1997 F-2
Consolidated Statements of Operations for the Years
Ended December 31, 1998 and 1997 and for the Period
from June 12, 1996 (inception) to December 31, 1998 F-3
Consolidated Statements of Shareholders' Equity for the Years
Ended December 31, 1998 and 1997 and for the Period
from June 12, 1996 (inception) to December 31, 1998 F-4
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1998 and 1997 and for the Period
from June 12, 1996 (inception) to December 31, 1998 F-6
Notes to the Consolidated Financial Statements F-8
12
<PAGE>
(b) Index to Exhibits.
Copies of the following documents are filed with this Amendment No. 1 to
Registration Statement on Form 10-SB as exhibits:
Index to
Exhibits Page
- -------- ----
2 Plan of Merger Between Elast E-1
Technologies Corporation and
Elast Merger, Inc. (Material Contract)
10.1 License to use Patent No. 5413113 E-4
dated April 30, 1999 (Material Contract)
10.2 Research Agreement Between Elast E-5
Technologies Corporation and The Charles
Stark Draper Laboratory, Inc.
(Material Contract)
10.3 Modification 02 to the E-7
Research Agreement Between Elast
Technologies Corporation and The Charles
Stark Draper Laboratory, Inc.
(Material Contract)
10.4 Modification 03 to the E-9
Research Agreement Between Elast
Technologies Corporation and The Charles
Stark Draper Laboratory, Inc.
(Material Contract)
99 Patent No. 5413113 E-11
13
<PAGE>
SIGNATURES
In accordance with the provisions of Section 12 of the Securities Exchange
Act of 1934, Elast Technologies, Inc. has duly caused this Amendment No. 1 to
the Registration Statement on Form 10-SB to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Las Vegas, State of
Nevada, on July 29, 1999.
Elast Technologies, Inc.,
a Nevada corporation
By: /s/ Thomas Krucker
Thomas Krucker
Its: President
14
<PAGE>
Elast Technologies, Inc.
(A Development Stage Company)
Index to the Consolidated Financial Statements
As of December 31, 1998 and 1997 and for the
Years Ended December 31, 1998 and 1997 and for the
Period from June 12, 1996 (Inception) to December 31, 1998
- --------------------------------------------------------------------------------
Report of Independent Auditors ............................................ 1
Consolidated Financial Statements of Elast Technologies, Inc.:
Consolidated Balance Sheets,
December 31, 1998 and 1997 ....................................... 2
Consolidated Statements of Operations for the years ended
December 31, 1998 and 1997 and for the period from
June 12, 1996 (inception) to December 31, 1998 ................... 3
Consolidated Statements of Shareholders' Equity for the years
ended December 31, 1998 and 1997 and for the period from
June 12, 1996 (inception) to December 31, 1998 ................... 4
Consolidated Statements of Cash Flows for the years ended
December 31, 1998 and 1997 and for the period from
June 12, 1996 (inception) to December 31, 1998 ................... 6
Notes to the Consolidated Financial Statements ............................ 8
<PAGE>
[LETTERHEAD OF KELLY & COMPANY]
REPORT OF INDEPENDENT AUDITORS
We have audited the accompanying consolidated balance sheets of Elast
Technologies, Inc. (a development stage company) as of December 31, 1998 and
1997, and the related consolidated statements of operations, shareholders'
equity, and cash flows for the years ended December 31, 1998 and 1997 and for
the period from June 12, 1996 (inception) to December 31, 1998. These
consolidated financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above, revised
as described in Note 6 present fairly, in all material respects, the
consolidated financial position of Elast Technologies, Inc. (a development stage
company) as of December 31, 1998 and 1997, and the consolidated results of
operations and cash flows for the years ended December 31, 1998 and 1997 and for
the period from June 12, 1996 (inception) to December 31, 1998, in conformity
with generally accepted accounting principles.
/s/ KELLY & COMPANY
Kelly & Company
Newport Beach, California
April 29, 1999, except as to Note 6,
to which the date is
July 24, 1999
<PAGE>
Elast Technologies, Inc.
(A Development Stage Company)
Consolidated Balance Sheets
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
ASSETS
1998 1997
----------- -----------
Current assets:
Cash and equivalents $ 226,818 $ 108,280
License, net 400 800
----------- -----------
Total current assets 227,218 109,080
Property and equipment, net 3,434 --
----------- -----------
Total assets $ 230,652 $ 109,080
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $ 12,992 --
Accounts payable, officer -- $ 1,925
----------- -----------
Total liabilities 12,992 1,925
----------- -----------
Shareholders' equity:
Common stock, $.001 par value; 25,000,000
shares authorized; 7,179,448 and 3,768,004
shares issued and outstanding at December 31,
1998 and 1997, respectively. 7,179 3,768
Additional paid-in capital 1,413,886 214,418
Deficit accumulated during development stage (1,203,405) (101,031)
----------- -----------
217,660 117,155
Less: common stock subscription receivable -- (10,000)
----------- -----------
Total shareholders' equity 217,660 107,155
----------- -----------
Total liabilities and shareholders' equity $ 230,652 $ 109,080
=========== ===========
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE>
Elast Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
For the Years Ended December 31, 1998 and 1997
And for the Period from June 12, 1996 (Inception) to December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from
June 12, 1996
Year Ended Year Ended (Inception) to
December 31, December 31, December 31,
1998 1997 1998
----------- ----------- --------------
<S> <C> <C> <C>
Revenue -- -- --
Cost of sales -- -- --
----------- ----------- -----------
Gross profit -- -- --
Officers compensation $ 203,682 -- $ 203,682
Research and development 108,161 $ 46,520 176,381
Legal and professional 502,231 18,719 526,565
Investor relations 238,759 -- 238,759
Other operating costs and expenses 63,107 3,613 79,071
----------- ----------- -----------
Total operating costs (1,115,940) (68,852) (1,224,458)
Interest income in excess of interest expense 13,566 6,130 21,053
----------- ----------- -----------
Net loss $(1,102,374) $ (62,722) $(1,203,405)
=========== =========== ===========
Loss per common share - basic and diluted $ (0.19) $ (0.02) $ (0.26)
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
Elast Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Shareholders' Equity
For the Years Ended December 31, 1998 and 1997
And for the Period from June 12, 1996 (Inception) to December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Elast Technologies, Inc.
Elast Technologies Corporation (Formerly Med Mark, Inc.)
(An Delaware Corporation) (A Nevada Corporation) Price
------------------------- ----------------------
Common Common Common Common Per
Shares Stock Shares Stock Share
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, June 12, 1996 (inception) -- -- -- -- --
Shares issued for the medical device license 3,200,000 $ 3,200 -- -- --
Shares issued for legal services 21,332 21 -- -- $ 0.31
Contribution of funds expended by the major
shareholder on the Company's behalf -- -- -- --
Shares issued in private placement 546,672 547 -- -- 0.38
Net loss from inception to December 31, 1996 -- -- -- --
----------- ----------- ----------- -----------
Balance, December 31, 1996 3,768,004 3,768 -- --
Contribution of funds expended by the major
shareholder on the Company's behalf -- -- -- --
Net loss for the year ended December 31, 1997 -- -- -- --
----------- ----------- ----------- -----------
Balance, December 31, 1997 3,768,004 3,768 -- --
----------- ----------- ----------- -----------
<CAPTION>
Deficit Less:
Accumulated Common
Additional During the Stock
Paid-in Development Subscription
Capital Stage Subtotal Receivable Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, June 12, 1996 (inception) -- -- -- -- --
Shares issued for the medical device license $ (2,400) -- $ 800 -- $ 800
Shares issued for legal services 6,698 -- 6,719 -- 6,719
Contribution of funds expended by the major
shareholder on the Company's behalf 4,167 -- 4,167 -- 4,167
Shares issued in private placement 204,453 -- 205,000 $ (10,000) 195,000
Net loss from inception to December 31, 1996 -- $ (38,309) (38,309) -- (38,309)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1996 212,918 (38,309) 178,377 (10,000) 168,377
Contribution of funds expended by the major
shareholder on the Company's behalf 1,500 -- 1,500 -- 1,500
Net loss for the year ended December 31, 1997 -- (62,722) (62,722) -- (62,722)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1997 214,418 (101,031) 117,155 (10,000) 107,155
----------- ----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
Elast Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Shareholders' Equity
For the Years Ended December 31, 1998 and 1997
And for the Period from June 12, 1996 (Inception) to December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Elast Technologies, Inc.
Elast Technologies Corporation (Formerly Med Mark, Inc.)
(An Delaware Corporation) (A Nevada Corporation) Price
------------------------- ----------------------
Common Common Common Common Per
Shares Stock Shares Stock Share
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1997 3,768,004 $ 3,768 -- -- --
Shares outstanding prior to the reorganization -- -- 1,220,000 $ 1,220 --
Shares issued in private placement 394,000 394 -- -- $ 0.50
Payment of receivable arising from issuance
of common stock -- -- -- --
Shares issued on the exercise of warrants 506,640 507 -- -- 0.38
Shares issued to consultant in connection
with the reorganization 1,007,472 1,007 -- -- 0.38
Shares issued and surrendered in the
acquisition of Elast Technologies, Inc. (a
Nevada Corporation) (reverse merger) (5,676,116) (5,676) 5,676,116 5,676 --
Shares issued for consulting services,
engineering services, and employee
compensation -- -- 270,000 270 1.51
Shares issued to an existing shareholder to
correct a stock issuance error -- -- 13,332 13 --
Net loss for the year ended December 31, 1998 -- -- -- --
----------- ----------- ----------- -----------
Balance, December 31, 1998 -- $ -- 7,179,448 $ 7,179
=========== =========== =========== ===========
<CAPTION>
Deficit Less:
Accumulated Common
Additional During the Stock
Paid-in Development Subscription
Capital Stage Subtotal Receivable Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 $ 214,418 $ (101,031) $ 117,155 $ (10,000) $ 107,155
Shares outstanding prior to the reorganization 29,506 -- 30,726 -- 30,726
Shares issued in private placement 196,606 -- 197,000 -- 197,000
Payment of receivable arising from issuance
of common stock -- -- -- 10,000 10,000
Shares issued on the exercise of warrants 189,483 -- 189,990 -- 189,990
Shares issued to consultant in connection
with the reorganization 376,791 -- 377,798 -- 377,798
Shares issued and surrendered in the
acquisition of Elast Technologies, Inc. (a
Nevada Corporation) (reverse merger) -- -- -- -- --
Shares issued for consulting services,
engineering services, and employee
compensation 407,095 -- 407,365 -- 407,365
Shares issued to an existing shareholder to
correct a stock issuance error (13) -- -- -- --
Net loss for the year ended December 31, 1998 -- (1,102,374) (1,102,374) -- (1,102,374)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 $ 1,413,886 $(1,203,405) $ 217,660 $ -- $ 217,660
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE>
Elast Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1998 and 1997
And for the Period from June 12, 1996 (Inception) to December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from
June 12, 1996
Year Ended Year Ended (Inception) to
December 31, December 31, December 31,
1998 1997 1998
----------- ----------- --------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(1,102,374) $ (62,722) $(1,203,405)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 770 -- 770
Issuance of stock for services 785,163 -- 791,882
Increase (decrease) in liabilities:
Accounts payable, trade 12,992 -- 12,992
Accounts payable, officer (1,925) 1,925 --
Note payable, officer -- (9,236) --
----------- ----------- -----------
Cash used in operating activities (305,374) (70,033) (397,761)
----------- ----------- -----------
Cash flows used in investing activities:
Purchase of property and equipment (3,804) -- (3,804)
----------- ----------- -----------
Cash used in investing activities (3,804) -- (3,804)
----------- ----------- -----------
Cash flows provided by financing activities:
Acquisition of MedMark, Inc. 30,726 -- 30,726
Exercise of warrants 189,990 -- 189,990
Payment of notes receivable for common stock 10,000 -- 10,000
Issuance of common stock 197,000 -- 392,000
Contribution to additional paid in capital -- 1,500 5,667
----------- ----------- -----------
Cash provided by financing activities 427,716 1,500 628,383
----------- ----------- -----------
Net increase (decrease) in cash 118,538 (68,533) 226,818
Cash at beginning of period 108,280 176,813 --
----------- ----------- -----------
Cash at end of period $ 226,818 $ 108,280 $ 226,818
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE>
Elast Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
For the Years Ended December 31, 1998 and 1997
And for the Period from June 12, 1996 (Inception) to December 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Supplemental Disclosure of Cash Flow Information
Period from
June 12, 1996
Year Ended Year Ended (Inception) to
December 31, December 31, December 31,
1998 1997 1998
----------- ----------- --------------
<S> <C> <C> <C>
Interest paid -- $ 1,375 $ 1,375
Income taxes paid $ 1,403 400 1,803
<CAPTION>
Supplemental Schedule of Non-Cash Investing and Financing Activities
<S> <C> <C> <C>
Assets acquired in non-cash transactions:
Acquisition of medical device license -- -- $ 800
Increase in common stock subscription
receivable -- -- 10,000
Issuance of common stock -- -- (10,800)
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
7
<PAGE>
Elast Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
For the Years Ended December 31, 1998 and 1997
And for the Period from June 12, 1996 (Inception) to December 31, 1998
- --------------------------------------------------------------------------------
1. Development Stage Operations
Elast Technologies, Inc. (a development stage company) (the "Company") was
incorporated in the state of Nevada on November 5, 1996 and has a limited
operating history with no revenues and no products or technology ready for
the market. The Company is engaged in the development of its first product,
a non-invasive medical device to test for allergies with real time,
quantifiable, visually displayed results. Management's efforts to date have
focused primarily on the development and testing of the medical device and
the raising of capital. As such, the Company is subject to the risks and
uncertainties associated with a new business. The success of the Company's
future operations is dependent, in part, upon the Company's ability to
successfully market its yet to be developed products and obtain additional
capital. Management's plans are discussed further in Note 10.
2. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Elast Technologies, Inc. (a Nevada corporation) (the "Company") and its
subsidiary, Elast Technologies Corporation (a Delaware corporation) ("Elast
Delaware"). All significant intercompany transactions have been eliminated.
Prior to June 10, 1998, the Company was named Med Mark, Inc. ("Med Mark").
The name change was in conjunction with the reverse merger acquisition
(Note 9).
Revenue Recognition
Revenue will be recognized when the Company's goods are shipped.
Cash and Equivalents
The Company invests portions of its excess cash in highly liquid
investments. Cash and equivalents include time deposits and commercial
paper with original maturities of three months or less. In addition, the
Company has no compensating balance requirements. The Company maintains its
cash in bank accounts, which exceeded federally insured limits by $ 131,886
and $8,280 at December 31, 1998 and 1997, respectively. The Company has not
experienced any losses in such accounts. The Company believes it is not
exposed to any significant credit risk on cash.
8
<PAGE>
Elast Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements, Continued
For the Years Ended December 31, 1998 and 1997
And for the Period from June 12, 1996 (Inception) to December 31, 1998
- --------------------------------------------------------------------------------
2. Summary of Significant Accounting Policies, Continued
Property and Equipment
The Company records property and equipment at cost. Significant
improvements, which extend the life of the underlying asset, are
capitalized, and expenditures for normal maintenance and repairs are
charged to operations. Depreciation is provided for property and equipment
using the straight-line method over the expected useful lives. The
Company's property and equipment consists of computers with an expected
useful life of 5 years.
Intangible Asset
The intangible asset is the cost of the license agreement to patented
technology and is amortized on a straight-line method over the shorter of
its estimated useful life or the license term. As of December 31, 1998
accumulated amortization was $400.
Research and Development Costs
Research and development expenditures are charged to operations as they are
incurred.
Impairment of Long-Lived Assets
The Company annually evaluates its long-lived assets, including the
intangible asset, described as a license to patented technology, for
potential impairment. When circumstances indicate that the carrying amount
of the asset is not recoverable, as demonstrated by the projected
undiscounted cash flows, an impairment loss will be recognized. The
Company's management has determined that there was no such impairment
present at December 31, 1998 and 1997.
Income Taxes
The Company accounts for deferred income taxes using the liability method.
Deferred income taxes will be computed based on the tax liability or
benefit in future years of the reversal of temporary differences in the
recognition of income or deduction of expenses between financial and tax
reporting purposes. The net difference between tax expense and taxes
currently payable will be reflected in the financial statements as deferred
taxes.
9
<PAGE>
Elast Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements, Continued
For the Years Ended December 31, 1998 and 1997
And for the Period from June 12, 1996 (Inception) to December 31, 1998
- --------------------------------------------------------------------------------
2. Summary of Significant Accounting Policies, Continued
Income Taxes, Continued
Deferred tax assets and/or liabilities will be classified as current and
noncurrent based on the classification of the related asset or liability
for financial reporting purposes, or based on the expected reversal date
for deferred taxes that are not related to an asset or liability.
Disclosures about Fair Value of Financial Instruments
The Company accounts for the value of financial instruments using the fair
value method.
Stock Based Compensation
Statement of Financial Account Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation," established accounting and disclosure
requirements using a fair value based method of accounting for stock-based
employee compensation plans.
As permitted by SFAS No. 123, the Company continues to account for
stock-based compensation using the intrinsic value method as prescribed in
Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock
Issued to Employees". Compensation cost from stock options, if any, is
measured as the excess of the quoted market price of the Company's stock at
the date of grant over the amount an employee must pay to acquire the
stock. Compensation cost is amortized over the requisite vesting periods.
Common Shares and Per Share Amounts
All common shares and per share amounts have been adjusted to give
retroactive effect, where applicable to the one for four reverse stock
split.
Earnings per Common Share
In 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings Per Share". This pronouncement replaced the previously reported
primary and fully diluted earnings per share with basic and diluted
earnings per share ("EPS"), respectively. Losses for the years ended
December 31, 1998 and 1997 have been calculated in accordance with this
pronouncement.
10
<PAGE>
Elast Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements, Continued
For the Years Ended December 31, 1998 and 1997
And for the Period from June 12, 1996 (Inception) to December 31, 1998
- --------------------------------------------------------------------------------
2. Summary of Significant Accounting Policies, Continued
Earnings per Common Share, Continued
Basic EPS is computed by dividing income or loss available to common
shareholders by the weighted average number of common shares outstanding
for the year. Diluted EPS is similar to Basic EPS except that the weighted
average of common shares outstanding is increased to include the number of
additional common shares that would have been outstanding if potentially
dilutive common shares had been issued.
Management Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Reclassification
Certain reclassifications have been made to the 1997 financial statements
in order to conform to the 1998 financial statement presentation.
3. Property and Equipment
Property and equipment consist of the following:
1998 1997
------- -------
Computers $ 3,804 --
Less: accumulated depreciation (370) --
------- -------
Total property and equipment, net $ 3,434 --
======= =======
Depreciation expense for the year ended December 31, 1998 was $370.
11
<PAGE>
Elast Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements, Continued
For the Years Ended December 31, 1998 and 1997
And for the Period from June 12, 1996 (Inception) to December 31, 1998
- --------------------------------------------------------------------------------
4. Deferred Income Taxes
The components of the provision for income taxes are as follows:
1998 1997
------- -------
Current tax expense:
Federal -- --
State -- --
------- -------
-- --
------- -------
Deferred tax expense:
Federal -- --
State -- --
------- -------
-- --
------- -------
Total provision - -
======= =======
Significant components of the Company's deferred income tax assets and
liabilities at December 31, 1998 and 1997 are as follows:
1998 1997
---------- --------
Deferred income tax asset:
Capitalized start-up expenses $ 399,012 $ 32,685
Other 15,716 4,900
---------- --------
Total deferred income tax asset 414,728 37,585
Valuation allowance (414,728) (37,585)
---------- --------
Net deferred income tax liability $ -- $ --
========== ========
Reconciliation of the effective tax rate to the U.S. statutory rate is as
follows:
1998 1997
---------- --------
Tax expense at U.S. statutory rate 34.0% 34.0%
Change in the valuation allowance (34.2) (33.4)
Other (0.2) (0.6)
---------- --------
Effective income tax rate (0.4% --%
========== ========
As of December 31, 1998, the Company has a federal research and
experimentation credit carryover of $15,716. The credits will begin to
expire in 2011.
12
<PAGE>
Elast Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements, Continued
For the Years Ended December 31, 1998 and 1997
And for the Period from June 12, 1996 (Inception) to December 31, 1998
- --------------------------------------------------------------------------------
5. Related Party Transactions
Expenses Incurred on Behalf of the Company
An officer who is a major shareholder of the Company provides office space
and clerical services to the Company, which has an annual cost of $6,000,
based on the current activity level. The expense sharing was calculated
based on the related entities' estimated usage of office space and support
staff.
Licensing Agreement
In 1996 the Company entered into a licensing agreement with an individual
who is an officer and major shareholder whereby the Company received the
exclusive right to develop, manufacture, and market an allergy detection,
non-invasive, medical device (Electronic Allergo-Sensitivity Test Device,
U.S. Patent No. 5413113). The Company issued 3,200,000 shares of Company
common stock for $800 at the time of the transaction to acquire the
licensing agreement rights. Continuing modifications and enhancements to
the technology described by the licensing agreement have been and may
continue to be made during the development and testing of the medical
device. It is not certain that the final technology involved in the medical
device will be protected by the original patent. The licensing agreement
does not require any royalty payments. The licensing agreement is for a
term of five years, with options to extend the agreement for two additional
five-year terms at no additional cost.
6. Stock Based Compensation
The options granted to purchase common stock shown below were originally
indicated as options to purchase common stock of the Company and also
reflected a four-for-one forward stock split effectuated by the Company
after the date these options were granted. However, subsequent to year end,
the Company determined that the minutes granting these options, while
indicated as minutes of the Company, were actually those of Elast
Technologies Corporation, a Delaware corporation ("Elast Delaware") and not
those of Elast Technologies, Inc., a Nevada corporation (the "Company").
Further, it was determined that the four-for-one forward stock split had
not occurred, but rather, when Elast Delaware merged with a wholly owned
subsidiary of the Company on June 30, 1998, each of the issued and
outstanding shares of Elast Delaware were converted to four shares of the
Company's common stock. Accordingly, the information presented below has
been revised to reflect options of Elast Delaware as originally granted by
its Board of Directors.
13
<PAGE>
Elast Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements, Continued
For the Years Ended December 31, 1998 and 1997
And for the Period from June 12, 1996 (Inception) to December 31, 1998
- --------------------------------------------------------------------------------
6. Stock Based Compensation, Continued
On February 13, 1998, the Board of Directors of Elast Delaware granted
100,000 options to purchase common stock to three members of the Board of
Directors of Elast Delaware in recognition of their service to it.
Accordingly, 300,000 options with a three year term were issued to the
Directors at an exercise price of $2.00 per share. Two of the Directors are
employees of Elast Delaware, and their options were accounted for under APB
No. 25. The options were granted at prices which equaled or exceeded the
fair value of Elast Delaware's common stock at the date of grant.
Consequently, no expense was recognized in connection with the issuance of
these 200,000 options. The 100,000 options issued to the nonemployee
director were valued in accordance with the provision of SFAS No. 123 and
determined to have no value, therefore no expense was recognized.
The following summarizes information about stock options of Elast
Delaware granted and outstanding at December 31, 1998 and 1997, and
changes during the years then ended:
1998 1997
----------------- -----------------
Exercise Exercise
Options Price Options Price
------- ------- ------- -------
Outstanding at beginning
of year -- -- -- --
Granted 300,000 $ 2.00 -- --
------- ------- ------- -------
Outstanding at end of year 300,000 $ 2.00 -- --
======= ======= ======= =======
The Company continues to account for stock-based compensation to employees
using the intrinsic value method as prescribed in APB No. 25 under which no
compensation cost for options is recognized for options granted at or above
fair market value of the Company's common stock at the date of grant. Had
consideration been given to compensation expense for options calculated
based upon fair values at the grant dates in accordance with SFAS No. 123,
there would be no effect on the Company's pro forma net loss and net loss
per share.
The fair value of each option granted was estimated at the date of grant
using the Black-Scholes Option Pricing Model (the "BSOPM"). The weighted
average assumptions used to calculate the minimum values of the stock
options granted in 1998 are a dividend yield of 0%, risk-free interest rate
at 5.00%, an expected stock price volatility of zero, and an expected
contractual life of 3 years, which resulted in no value ascribed to the
options granted during 1998.
14
<PAGE>
Elast Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements, Continued
For the Years Ended December 31, 1998 and 1997
And for the Period from June 12, 1996 (Inception) to December 31, 1998
- --------------------------------------------------------------------------------
6. Stock Based Compensation, Continued
The BSOPM was developed for use in estimating the fair value of traded
options. The Company's employee stock options have characteristics
significantly different from those of traded options, such as vesting
restriction and extremely limited transferability. In addition, the
assumptions used in option valuation models are highly subjective,
particularly the expected stock price volatility of the underlying stock.
Because changes in these subjective input assumptions can materially affect
the fair value estimate, in management's opinion, the existing models do
not provide a reliable single measure of the fair value of its employee
stock options.
7. Stock Purchase Warrants
The Company's private placement offering of stock in 1996 was accomplished
with the sale of 136,668 units comprised of four shares of common stock and
four stock purchase warrants. The stock purchase warrants were immediately
exercisable upon issuance and all but 40,032 have been exercised. The stock
purchase warrants provide for an exercise price of $0.38 and they expire on
September 30, 1999.
8. Loss Per Common Share
In the year ended December 31, 1997, the Company adopted SFAS No. 128,
"Earnings per Share". Loss per common share has been calculated in
accordance with this statement.
Basic and diluted loss per common share have been computed by dividing the
loss available to common shareholders by the weighted-average number of
common shares for the period.
The computations of basic and diluted loss per common share for the years
ended December 31, 1998 and 1997 are as follows:
Period from
June 12, 1996
Year Ended Year Ended (Inception) to
December 31, December 31, December 31,
1998 1997 1998
----------- ----------- -------------
Net loss available to common
stockholders $(1,102,374) $ (62,722) (1,203,405)
Weighted-average shares,
basic and diluted 5,798,194 3,768,004 4,579,954
----------- ----------- -----------
Loss per common share,
basic and diluted $ (0.19) $ (0.02) $ (0.26)
=========== =========== ===========
15
<PAGE>
Elast Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements, Continued
For the Years Ended December 31, 1998 and 1997
And for the Period from June 12, 1996 (Inception) to December 31, 1998
- --------------------------------------------------------------------------------
8. Loss Per Common Share, Continued
The effect of the potentially dilutive securities listed below was not
included in the computation of diluted loss per share because to do so
would have been antidilutive for the periods presented.
Period from
June 12, 1996
Year Ended Year Ended (Inception) to
December 31, December 31, December 31,
1998 1997 1998
----------- ----------- -------------
Shares of common stock issuable under:
Stock options of subsidiary 300,000 -- 300,000
Stock purchase warrants 40,032 40,032 40,032
----------- ----------- -------------
340,032 40,032 340,032
=========== =========== =============
9. Stock Transactions
Shares Issued to Acquire a License Agreement
In 1996, the Company issued 3,200,000 shares of its stock for $800 to
obtain a licensing agreement from an individual, who is an officer of the
Company (Note 5).
Shares Issued for Services
In 1996, the Company issued 21,332 shares for legal services related to
corporate formation and preparation of the Company's private placement
memorandum. The shares of Company stock were issued for legal services
valued at $6,719.
In 1998 the Company issued 270,000 shares for consulting and engineering
services and employee compensation as follows:
Consultants were issued 115,000 shares as additional recognition of
their services to the Company. The shares were valued at their fair
value at the time of issuance, $1.50 per share.
Outside engineers were issued 55,000 shares as additional recognition
of their services to the Company. The shares were valued at fair value
at the date of their issuance, $1.54 per share.
An officer and major shareholder was issued 100,000 shares as
additional recognition of his continuing efforts related to the
development of the technology. The shares were valued at their fair
value at the date of issuance, $1.50 per share.
16
<PAGE>
Elast Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements, Continued
For the Years Ended December 31, 1998 and 1997
And for the Period from June 12, 1996 (Inception) to December 31, 1998
- --------------------------------------------------------------------------------
9. Stock Transactions, Continued
Private Placement Offerings
In 1996, the Company, in a private placement offering, sold 546,672 units
consisting of one share of common stock and one stock purchase warrant
("warrants") at an exercise price of $0.38 per share. The warrants were
redeemable at $0.38 per warrant immediately upon issuance, and they will
expire on September 30, 1999.
In 1998, the Company, in a private placement offering, sold 394,000 shares
of common stock at $0.50 per share.
Common Shares Issued for Warrants Exercised
During 1997, 506,640 warrants were exercised resulting in the issuance of
506,640 shares of common stock.
Shares Issued for Raising Capital
In 1998, the Company issued 1,007,472 shares of stock for consulting
services related to the acquisition of Med Mark, Inc. (a reverse merger).
The shares were valued at $0.38 per share.
Acquisition of Med Mark, Inc. (Reverse Merger)
On June 10, 1998, the Company acquired all of the outstanding common stock
of Elast Delaware in a business combination accounted for as a purchase.
For accounting purposes, the acquisition has been treated as the
acquisition of the Company by Elast Delaware with Elast Delaware as the
acquiror (reverse acquisition). The effective purchase price was 1,220,000
shares of the Company's common stock. The Company, formerly known as Med
Mark, had no operations as of the acquisition date. No goodwill has been
recorded as a result of this transaction. As this transaction is treated as
a reverse merger acquisition, the historical financial statements prior to
June 10, 1998 are those of Elast Delaware.
Stock Issued to Correct a Stock Issuance Error
In 1998, the Company issued 13,332 shares to correct an error on a previous
stock issuance.
17
<PAGE>
Elast Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements, Continued
For the Years Ended December 31, 1998 and 1997
And for the Period from June 12, 1996 (Inception) to December 31, 1998
- --------------------------------------------------------------------------------
10. Management's Plan, (Unaudited)
At the balance sheet date:
o The Company is a non-operating development stage company.
o It had sufficient cash to cover its obligations.
Management has been devoting substantially all of its efforts to the
development and testing of the allergy detection, non-invasive, medical
device. Once testing is completed and FDA approval is received, the Company
will manufacture about 200 units. These initial units have been identified
for a select target group of physicians for a Beta test. The group will
include eye, ear, nose, throat specialists, clinical ecologists, and
allergy specialists, naturopaths, chemical ecologists, and chiropractors.
Upon completing of this test, the device will be marketed to all physicians
and hospitals to test for prescription drug compatibility with patients to
avoid Iatrogenic (drug related) illness. It is anticipated this portion of
management's plan will be completed in approximately twenty-four months.
The Company's overall operating plan is to market the initial product as a
stand-alone device that can be attached to personal computers. Once the
product gains acceptance in the medical community, a patient home testing
version of the unit will be developed. To achieve its plan, management is
also aware that it must secure additional investment capital.
11. Year 2000 Disclosure (Unaudited)
The Company has conducted a comprehensive review of its computer operations
to identify the systems that could have been adversely affected by the Year
2000 Issue and has developed and implemented a plan that it believes has
resolved the issue. The Year 2000 Issue is the result of computer programs
being written using two digits rather than four to define the applicable
year. Any of the Company's programs that have time-sensitive software might
have recognized a date using "00" as the year 1900 rather than the year
2000. This could have resulted in a system failure or miscalculations. The
Company presently believes that, with its existing software and conversions
to new software, the Year 2000 problem will not pose significant
operational problems for the Company's computer systems as converted.
18
<PAGE>
Elast Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements, Continued
For the Years Ended December 31, 1998 and 1997
And for the Period from June 12, 1996 (Inception) to December 31, 1998
- --------------------------------------------------------------------------------
12. Subsequent Event
On March 3, 1999, the Company filed Form 10-SB with the Securities and
Exchange Commission. The Company, by meeting the definition of a "small
business issuer", was able to utilize Form 10-SB for registration of its
securities under the Securities Exchange Act of 1934.
19
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 12:10 PM 06/30/1998
981256403 -- 2541600
PLAN OF MERGER
This PLAN OF MERGER (the "Plan of Merger"), is made as of the 10th day of
June, 1998, by and between ELAST TECHNOLOGIES CORPORATION, a Delaware
corporation (the "Company' or the "Surviving Corporation") and ELAST MERGER,
INC., a Nevada corporation ("EMI"). EMI together with the Company are referred
to as the "Constituent Corporations." EMI is a wholly owned subsidiary of Med
Mark, Inc., a Nevada corporation ("Med Mark").
The authorized capital stock of the Company consists of 10,000,000 shares
of Common Stock, par value $0.001 ("Company Common Stock"), and the authorized
capital stock of EMI consists of 100,000 shares of Common Stock, par value
$0.001 (the "EMI Common Stock"). The directors of the Constituent Corporations
deem it advisable and to the advantage of said corporations that EMI merge into
the Company upon the terms and conditions provided herein.
NOW, THEREFORE, the parties hereby adopt the plan of reorganization
encompassed by this Plan of Merger and hereby agree that EMI shall merge into
the Company on the following terms, conditions and other provisions:
1. Terms and Conditions.
1.1 Merger. EMI shall be merged with and into the Company, with the Company
being the surviving corporation. The merger shall be effective on the date a
copy of this Plan of Merger is filed with the Division of Corporations of the
office of the Secretary of State of the state of Delaware (the "Effective
Date").
1.2 Succession. On the Effective Date, the Company shall succeed to all of
the rights, privileges, powers, immunities and franchises and all the property,
real, personal and mixed of the EMI, without the necessity for any separate
transfer. The Company shall thereafter be responsible and liable for all
liabilities and obligations of the Company, and neither the rights of creditors
nor any liens on the property of the EMI shall be impaired by the merger.
1.3 Common Stock of the Company and Med Mark. Upon the Effective Date, by
virtue of the merger and without any further action on the part of the
Constituent Corporations or their stockholders, (1) each share of Company Common
Stock issued and outstanding immediately prior to the Effective Date shall be
changed and converted into and become four shares of Med Mark Common Stock, par
value $0.001 ("Med Mark Common Stock"), or a total of approximately 5,676,116
shares for the 1,419,029 issued and outstanding shares of Company Common Stock.
1.4 Stock Certificates. On and after the Effective Date, all of the
outstanding certificates that prior to that time represented shares of Company
Common Stock shall be deemed for all purposes to evidence ownership of and to
represent the shares of Med Mark Common Stock into which the shares of the
Company represented by such certificates have been converted as provided herein
and shall be so registered on the books and records of Med Mark or its transfer
agent. The registered owner of any such outstanding stock certificate shall,
until such certificate shall have been surrendered for transfer or conversion or
otherwise accounted for to Med Mark or its transfer agent, have and be entitled
to exercise any voting and other rights with respect to and to receive any
dividend and other distributions upon the shares of Med Mark evidenced by such
outstanding certificate as provided above.
E-1
<PAGE>
1.5 Acts, Plans, Policies, Agreements, Etc. All corporate acts, plans,
policies, agreements, arrangements, approvals and authorizations of the Company,
its stockholders, Board of Directors and committees thereof, officers and agents
which were valid and effective immediately prior to the Effective Date, shall be
as effective and binding thereon after the Effective Date.
2. Charter Documents, Directors and Officers
2.1 Certificate of Incorporation and By-Laws. The Certificate of
Incorporation and Bylaws of the Company as in effect immediately prior to the
Effective Date shall remain the Certificate of Incorporation and Bylaws of the
Company after the Effective Date.
2.2 Directors and Officers. On the Effective Date, the Board of Directors
of the Company will consist of the members of the Board of Directors of the
Company immediately prior to the Merger. The directors will continue to hold
office as directors of the Company for the same term for which they would
otherwise serve as directors of the Company. The individuals serving as
executive officers of the Company immediately prior to the Merger will serve as
executive officers of the Company upon the effectiveness of the Merger.
3. Miscellaneous
3.1 Further Assurances. From time to time, and when required by the Company
or by its successors and assigns, there shall be executed and delivered such
documents and instruments as necessary, to carry out the purposes of this Plan
of Merger, and the directors and officers of the Company are fully authorized in
the name and on behalf of the Company or otherwise to take any and all such
action and to execute and deliver any and all such documents and other
instruments.
3.2 Amendment. At any time before or after approval by the stockholders of
the Company and EMI, this Plan of Merger may be amended in any manner (except
that any of the principal terms may not be amended without the approval of the
stockholders of the Company) as may be determined in the judgment of the
respective Boards of Directors of the Company and EMI to be necessary, desirable
or expedient in order to clarify the intention of the parties hereto or to
effect or facilitate the purpose and intent of this Plan of Merger.
3.3 Abandonment. At any time before the Effective Date, this Plan of Merger
may be terminated and the merger may be abandoned by the Board of Directors of
the Company or EMI, notwithstanding the approval of this Plan of Merger by the
stockholders of the Company and EMI, or the consummation of the merger may be
deferred for a reasonable period if, in the opinion of the Board of Directors of
the Company or EMI, such action would be in the best interests of the
Constituent Corporations.
3.4 Approval. This Plan of Merger has been duly adopted and approved by
each of the Boards of Directors of the Constituent Corporations and by the
stockholders of each Constituent Corporation in the manner required by the
Delaware Corporation Law and the Nevada Revised Statutes.
E-2
<PAGE>
3.5 Governing Law. This Plan of Merger shall be governed by and construed
in accordance with the laws of the state of Delaware.
IN WITNESS WHEREOF, this agreement has been signed as of the date
first-above written for and on behalf of the corporate parties hereto by the
undersigned thereunto duly authorized.
ELAST TECHNOLOGIES CORPORATION
By: /s/ Robert D. Milne
-------------------------------------
Robert D. Milne, President
ELAST MERGER, INC.
By: /s/ Tom Krucker
-------------------------------------
Tom Krucker, President
Agreed and accepted this 10th day of June, 1998.
MED MARK, INC.
By: /s/ C. Brenton Woods
-------------------------------------
C. Brenton Woods, President
E-3
LICENSE AGREEMENT
This Agreement supersedes/replaces any licensing Agreement before this
date, and further transfers all rights to develop, test, manufacture, and market
an Electronic Allergo-Sensitivity Test Device U.S. Patent No. 5413 113
("Device").
This License Agreement and transfer from ELAST Delaware Corporation to
ELAST Nevada Corporation becomes effective with the signing of this document.
Robert Drew Milne, M.D. the Licensor of "Device" and ELAST Technologies, Inc. (A
Nevada Corporation) agree to the full rights of ELAST Technologies to develop,
test, manufacture, and market the Device for ELAST shares that have previously
been issued as consideration.
The parties agree to a 5 (five) year license Agreement with a unilateral
right by ELAST Technologies to extend the license Agreement for two additional 5
(five) year options. The parties agree to delete any other previous Agreements
and further Agree that this ELAST Patent No. 5413 113. Agreement only applies to
the "Device" in measurement of allergic responses to substances, i.e. foods,
chemicals, medicines, drugs. Any other use of said patent shall be previously
approved in writing by Robert Drew Milne as owner and licensor of patent No.
5413 113.
Therefore, the parties hereby transfer and/or amend any previous license
Agreements to the aforementioned 3 (three) 5 (five) year periods beginning of
date signed below.
Licensor: /s/ Robert D. Milne, M.D.
----------------------------------------------
Robert D. Milne, M.D.
Licensee: /s/ T.F. Krucker
----------------------------------------------
ELAST Technologies - (Delaware Corporation)
by T.F. Krucker, President
Licensee: /s/ T.F. Krucker
----------------------------------------------
(current) ELAST Technologies, Inc. (Nevada Corporation)
by T.F. Krucker, President
E-4
RESEARCH AGREEMENT
THIS AGREEMENT, made and entered into this 26th day of December 1996
between ELAST TECHNOLOGIES CORPORATION with offices at 2110 Pinto Lane, Las
Vegas, Nevada 89106 (hereinafter referred to as "Sponsor") and THE CHARLES STARK
DRAPER LABORATORY, INC., a nonprofit Massachusetts Corporation, having offices
at 555 Technology Square, Cambridge. Massachusetts 02139 (hereinafter referred
to as the "Laboratory").
WITNESSETH: That, for the purpose of promoting the increase of useful
knowledge and in consideration of the mutual promises and covenants herein
contained, the Parties hereto agree, as follows:
I. During the period of 1 January 1997 through 30 June 1997 the Laboratory shall
provide engineering services to the Sponsor in accordance with the statement of
work identified as Enclosure A, attached hereto and incorporated herein by
reference. The Laboratory shall use its best efforts in performing the work
required under this agreement.
II. The estimated total cost to perform the work on a cost plus fixed fee basis
is:
Total Estimated Cost $ 33,103
Fixed Fee 2,616
------------
Total Price $ 35,719
The Laboratory agrees not to exceed the total price unless so authorized by
Sponsor in writing.
III. Invoices shall be rendered to Sponsor by the Laboratory on or about the
fifteenth of each month and shall cover charges incurred on the project during
the preceding month. The final invoice shall be submitted for the final month or
fraction thereof promptly after completion of the project. Sponsor agrees to pay
the invoices of the Laboratory, so rendered, within thirty (30) days after
receipt. Final order invoices will be issued using Interim Rates/Quick Closeout
Procedures.
IV. Title to any invention made or conceived in the performance of this research
agreement by any employee, agent, or any other person acting for the Laboratory
will remain with the Laboratory which shall have the sole right to determine
disposition of any patent application or other rights resulting therefrom,
provided that upon issue of any patent on any such invention or discovery, the
Laboratory shall grant to Sponsor an irrevocable, royalty-free, non-exclusive
license for the use of any such invention or discovery. With respect to any
invention or discovery which the Laboratory determines not to patent. this
Agreement constitutes a grant to Sponsor of an trrevocable. royalty-free,
non-exclusive license for the use thereof. The Laboratory will require all
employees, agents, or other persons acting for it engaged in the research to
execute written agreements by which they bind themselves to perform as stated
herein.
V. The Laboratory agrees that it will exercise all reasonable precautions to
maitain in confidence Sponsor's proprietary information, and so identified,
which has been disclosed or will be disclosed to the Laboratory in confidence
except such information which is already known to the Laboratory, has become or
later becomes public or part of the public domain or comes to the Laboratory,
ahs become or later becomes public or part of the public domain or comes to the
Laboratory form another source without a similar obligation of confidentiality.
The Laboratory reserves the right to disseminate information developed by
it in the course of this research provided that proprietary information of
sponsor is not disclosed. The Laboratory shall furnish sponsor with a preprint
of the information to be disseminated thirty (30) days prior to publication of
same for Sponsor's review to assure compliance with the preceding paragraph.
Sponsor shall, within fifteen (15) days of receipt advise the Laboratory of any
failure of compliance with the preceding paragraph.
E-5
<PAGE>
It is agreed and understood that the Laboratory is an independent
contractor with respect to Sponsor and not an employee or servant in any
respect, and neither the Laboratory nor any subcontractors nor any of their
officers, employees, or agents shall have any authority or power whatsoever to
incur indebtedness or liability of any kind on behalf of or in the name of
Sponsor to commit Sponsor in any other manner. The officers, employees, and
agents of the Laboratory and of any subcontractors are under no circumstances to
be deemed to be employees of Sponsor and shall not be entitled to any benefits
or other compensation hereunder.
VI. The Laboratory and the Sponsor understand that the electro-physiological
responses to be measured by the electronics assembly are new and not, as yet,
well understood. The Sponsor will, therefore, indemnify and save harmless the
Laboratory from all claims resulting from the Laboratory's participation in this
effort.
VII. It is also mutually agreed that no advertising, promotional. or publicity
matter containing any reference to either of the parties hereto, or to any of
their employees, shall be made use of by either party or anyone in their behalf,
unless and until the same shall have first been submitted by the one party or to
the other party and approved in writing, except for publication in the
Laboratory's house organ and annual report.
VIII. Either party may terminate this Agreement upon ninety (90) days written
notice to the other party. In the event of such termination prior to submission
of the final invoice, Laboratory's fixed fee shall be reduced in accordance with
the following formula:
<TABLE>
<CAPTION>
<S> <C>
Total of Costs Invoiced (per Section III)
Reduced Fixed Fee = Fixed Fee (per Section II) X ---------------------------------------------
Total Estimated Cost (per Section II)
</TABLE>
IX. Any notice, invoice, tender, or delivery to be given hereunder by either
party to the other may be effected in writing personally delivered or sent by
registered or certified mail, postage prepald, return receipt requested, and
shall be deemed communicated on the date of personal delivery or seventy-two
(72) hours after such mailing, as the case may be. Mailed notices shall be
addressed to the parties as their addresses appear above, but each party may
change his address by prior written notice given in accordance with this
section.
X. This Agreement contains the entire Agreement between the parties relating to
the rights herein granted and the obligations herein assumed. No oral
representations or modifications concerning this Agreement shall be of any force
or effect unless contained in a subsequent modification in writing signed by the
party to be charged.
XI. This Agreement is entire as to all of the performance to be rendered under
it. Breach of any of the performance to be rendered by either party shall
constitute a breach of the entire Agreement and shall give the other party the
right to terminate this Agreement.
XII. This Agreement shall not be assigned by the Laboratory without the prior
written consent of Sponsor.
XIII. This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the Undersigned have set forth their hands and seals as
of the date and year first written.
ELAST TECHNOLOGIES CORPORATION THE CHARLES STARK DRAPER LABORATORY, INC.
By /s/ Robert Milne, M.D. By /s/ [ILLEGIBLE]
------------------------------- --------------------------------------
Title President Title D.C. DRISCOLL
---------------------------- VICE PRESIDENT & TREASURER
-----------------------------------
Date 12/18/96 Date DEC 26 1996
---------------------------- -----------------------------------
E-6
RESEARCH AGREEMENT
between
ELAST TECHNOLOGIES CORPORATION (ELAST)
and
THE CHARLES STARK DRAPER LABORATORY, INC. (DRAPER)
dated 26 December 1996
This is Modification 02 to this Research Agreement. The Research Agreement is
modified as follows:
1. ELAST provides $2,769 in additional funds on a no-fee basis for
additional effort under tasks authorized by the basic Research
Agreement.
2. ELAST provides $8,562 ($7,935 cost and $627 fixed fee) for follow-on
technical effort as defined in Draper Technical Statement dated 17
October 1997.
3. The total contract period of performance is extended to 31 December
1997.
4. A summary of cost-plus-fixed-fee for this effort is:
<TABLE>
<CAPTION>
Cost Fee Total
---- --- -----
<S> <C> <C> <C>
Basic Agreement $ 33,103 $ 2,616 $ 35,719
Modification 02
(Basic Tasks Additional Effort) 2,769 0 2,769
Modification 02
(Follow-on Effort) 7,935 627 8,562
-------- ------- --------
Proposed CPFF Total $ 43,807 $ 3,243 $ 47,050
</TABLE>
Agreed to by:
ELAST TECHNOLOGIES CORPORATION THE CHARLES STARK DRAPER
LABORATORY, INC.
By: /s/ Robert Milne, M.D. By: /s/ David C. Drisoll
----------------------------- -------------------------------
Name: Dr. Robert Milne Name: David C. Driscoll
--------------------------- -----------------------------
Title: President Title: Vice President & Treasurer
-------------------------- ----------------------------
Date: 1 November 1997 Date: Jan 13 1998
--------------------------- -----------------------------
E-7
RESEARCH AGREEMENT
between
ELAST TECHNOLOGIES CORPORATION (ELAST)
and
THE CHARLES STARK DRAPER LABORATORY, INC. (DRAPER)
dated 26 December 1996
This is Modification 03 to this Research Agreement. The Research Agreement is
modified as follows:
The total contract period of performance is extended to 28 February 1998 at
no additional cost to the Sponsor.
Agreed to by:
ELAST TECHNOLOGIES CORPORATION THE CHARLES STARK DRAPER
LABORATORY, INC.
By: /s/ Robert Milne, M.D. By: /s/ David C. Driscoll
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Name: Dr. Robert Milne Name: David C. Driscoll
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Title: President Title: Vice President & Treasurer
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Date: 9 January 1998 Date: Jan 13 1998
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US PATENT & TRADEMARK OFFICE
PATENT FULL TEXT AND IMAGE DATABASE
(1 of 1)
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United States Patent 5,413,113
Milne May 9, 1995
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Electronic allegro-sensitivity test device
Abstract
A device and method for testing a patient's sensitivity to a plurality of
potential allergens is disclosed using the galvanometric skin response of the
patient's body to determine the same. A pair of electrodes are attached at
separate locations of the body and are connected to a signal amplification unit
and A/D converter, which is in turn connected to the bus of a personal computer.
An allergen sampling tray is also connected to the computer bus and also a third
electrode adapted to deliver the allergen samples in sequence transcutaneously.
The skin response changes according to severity of the allergen reaction, and
the signal amplification means and AID converter allow these changes to be
viewed graphically in a real time mode on the computer screen and also to be
stored within the computer and to be printed out to allow the physician and the
patient a hard copy of the test data.
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Inventors: Milne; Robert D. (2432 Greens Ave., Henderson, NV 89014)
Appl. No.: 215358
Filed: March 21, 1994
U.S. Class: 128/734; 123/743
Intern'l Class: A61M 037/00
Field of Search: 128/739,736,743 604/19,20
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References Cited Referenced By
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U.S. Patent Documents
2308933 Jan., 1943 Raesler 128/734.
4494544 Jan., 1985 Van Dyke et al. 128/734.
4809707 Mar., 1989 Kraft et al. 128/743.
4819657 Apr., 1939 Kraft et al. 128/743
5246008 Sep., 1993 Mueller 128/734
Primary Examiner: Rimell; Sam
Attorney, Agent or Firm: Kroll; Michael I.
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Claims
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1. A testing apparatus to test a patient's sensitivity to a plurality of
potential allergens comprising:
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electrode means for measuring directly the galvanometric response of the
patient, said electrode means comprising a pair of electrodes attached at
different points to said patient and said electrodes being each connected to a
signal amplification means;
computer interface means included in said signal amplification means for the
display and storage of said amplified signals over time in a graphic format for
indicating directly the galvanometric response of said patient to each allergen
in sequence; and
allergen storage tray means containing different allergens located at different
storage sites therein;
means comprising a third electrode to introduce allergen samples
transcutaneously in sequence from said allergen storage tray means by computer
controlled signals into contact with said patient; whereby
as each allergen is introduced into contact with the patient, the galvanometric
response of the patient is monitored through said electrode means such that the
severity of the reaction of the patient to each allergen can be determined.
2. The apparatus according to claim 1, wherein said interface means includes
means to store said amplified signals digitally in long term storage.
3. A method of testing a patient's sensitivity to a plurality of potential
allergens comprising the steps of:
placing electrode means comprising a pair of electrodes adapted to receive the
galvanometric responses produced by the patient at different sites on the body;
introducing by way of a third electrode allergen samples transcutaneously in
sequence from an allergen storage tray means containing allergens located at
different storage sites thereon into contact said patient;
amplifying the galvanometric responses;
converting the galvanometric responses into a digital form;
displaying the converted signal graphically as a function of time, whereby over
time, during exposure to the allergen, the galvanometric response of the patient
can be observed;
interpreting the galvanic response as a function of time observations as an
allergen sensitivity quantity.
4. The method claimed in claim 3 wherein after said displaying step the
following step is performed:
storing said digital signal data onto magnetic media.
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Description
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CROSS REFERENCE TO RELATED DISCLOSURE DOCUMENT
This invention was disclosed in Information Disclosure Document No. 332,087,
filed with the United States Patent and Trademark Office on Jun. 7, 1993.
BACKGROUND OF THE INVENTION
1. Field of the Invention
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The present invention relates to allergen testing. More specifically, it relates
to a device for allergen testing that includes a pair of sensing electrodes, an
allergen delivery electrode connected to an allergen sample tray, a
microprocessor for amplifying and comparing the signals from the two sensing
electrodes, an AID converter for turning the amplified data to a digital
information stream, and an interface including software to display and store the
gathered information on a conventional personal computer (PC).
2. Description of the Prior Art
Presently, allergy testing commonly takes the form of introducing allergens to a
portion of the patients' dermis and then measuring the size and color of the
induced weal. This often involves breaking the surface of the skin to introduce
the substance and has a number of drawbacks. It is painful, for one, and the
patient can have a severe reaction if they are extremely sensitive to one of the
introduced substances. Additionally, the procedure causes some discomfort.
Another prior art method of testing involves introducing the potential allergen
and then measuring the temperature response, by means of electrodes or the other
sensing means, of the skin proximate the area where the substance was
introduced. This allows for smaller amounts of the allergen to be used, but in
many cases it still involves the breaking of the skin. The present invention
attempts to improve on these prior art methods and devices by using
galvanometric skin response to determine the sensitivity of the patient to
various substances. As will be seen, the simplicity and effectiveness of my
invention is not rivaled in the prior art.
There have been a number of U.S. Patents issued that relate to this art that
were uncovered during a search, and they are hereinafter discussed:
U.S. Pat. No. 4,702,259, issued on Oct. 27, 1987 to Marc Ferreira et al.,
discloses a device for measuring and indicating changes in the electrical
resistance of a living body. The device includes an analog portion, a digital
portion and a stable source of power for both portions. The analog portion
includes a bridge network which includes a potentiometer, which tums together
with the potentiometer provided in the digital portion, and digital processing
circuitry. Digital displays determine and display a count indicative of the
position of the potentiometer and the total amount of rotation of said
potentiometer. In addition, a computer may be interfaced with the device to
record or play back the changes in the resistance of the living body. Unlike the
present invention, there is nowhere in the document a teaching or disclosure
that discusses using the apparatus as a testing device for allergen response,
nor is there any type of delivery system for stimuli disclosed.
U.S. Pat. No. 4,805,621 issued to Roland Heinze et al. on Feb. 21, 1989
discloses an apparatus for measuring the impedance of body tissue with a signal
source connected to the tissue to be measured which supplies an electrical
signal to the tissue, a unit for acquiring an impedance signal from the body
tissue dependent on the electrical signal, and a evaluation stage for the
impedance signal. The evaluation stage filters out low frequency signal
components corresponding to the conductance of the tissue, and has a signal
output to which the signal components which were filtered out are supplied. In
this device, an electrical signal is impressed on the tissue of the patient
through a pair of electrodes and the voltage drop is measured. This is unlike
the present invention, which measures the galvanometric skin response in the
presence of allergenic substances and displays the same.
Next in this discussion is U.S. Pat. No. 4,809,707 issued to Thomas L. Kraft et
al. on Mar. 7, 1989. Kraft et al. show an electrode for performing a plurality
of allergy tests on a patient undergoing tests. The allergy electrode consists
of a plurality of individual testing electrodes and a single common electrode.
Each of the testing electrodes includes allergen delivery apparatus and a
temperature sensor. The allergen is contained in a removable allergen
impregnated pad. If a dry allergen is used, it may be hydrolized with a drop of
distilled water prior to application. A small electric charge charges a charge
plate on one side of the allergen pad and a common ring on the electrodes is
grounded in a circuit with the charging plate, thereby causing electric field to
transfer the allergen through the pores of the skin. The area surrounding the
allergen delivery area is sensed for temperature by a thin film temperature
sensor and a rigid temperature conducted base. A thermistor or other temperature
to voltage transducer converts the sensed temperature to an electric voltage
which is applied through
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appropriate differential amplifiers and multiplexer to an analog to digital
converter. The digital data is then stored by a microprocessor in random access
memory. An output device can be connected to receive the stored data and the
time at which it was stored so as to manifest to the physician the change in
temperature of the tested area with respect to time. This discloses an electrode
for non-invasive allergy testing. Included are plurality of testing electrodes
and a common electrode. Each of the testing electrodes have therein an allergen
impregnated pad, a charge plate, a common ring grounded in the circuit with the
charge plate, and a thin film temperature sensor or the like. A small charge is
placed on the charge plate, which causes the allergen to transfer through the
pores of the skin, while the thin film sensors monitor temperature in the
proximate area. The common electrode monitors the temperature in a distant area.
Processing and storage means are disclosed to allow the physician to review the
results of the test.
Lastly, U.S. Pat. No. 4,819,657 issued on Apr. 11, 1989, also to Thomas L. Kraft
et al. discloses a automatic allergy detection system. The system includes an
electrode capable of testing up to eight different allergies and an associated
electronic unit. The electrode includes apparatus to transcutaneously deliver an
allergen to the patient without puncturing the patient's skin. The electrode
also includes a temperature sensor for sensing the skin temperature in the area
surrounding the deliver of the allergen. Electronic apparatus is provided for
processing the sensed temperature and storing data related thereto for
subsequent print out to an output device. The allergy testing system is
controlled so that periodic temperature readings are made at thirty second
intervals over approximately a fifteen minute testing span. The data can be
printed out in a graphic format to allow the physician to easily and quickly
make more accurate diagnosis. In this device there are disclosed electrodes
similar to those discussed in Kraft et al. (`707). However, more detail is gone
into concerning the processing and data storage portion of the device. Neither
of the two Kraft et al. patents discusses the use of galvanometric skin response
as a method of ascertaining a patients sensitivity to a specific substance.
None of the above inventions and patents, taken either singly or in combination,
is seen to describe the instant invention as claimed.
SUMMARY OF THE INVENTION
The present invention is a device for testing a patient's sensitivity to a
plurality of potential allergens by using the galvanometric skin response of the
patient's body to determine the same. A pair of electrodes are attached at
separate locations of the body and are connected to a signal amplification unit
and AID converter, which is in turn connected to the bus of a personal computer.
An allergen sampling tray is also connected to the computer bus and also a third
electrode adapted to deliver the allergen samples in sequence transcutaneously.
The skin response changes according to severity of the allergen reaction, and
the signal amplification means and AID converter allow these changes to be
viewed graphically in a real time mode on the computer screen and also to be
stored within the computer and to be printed out to allow the physician and the
patient a hard copy of the test data.
Accordingly, it is a principal object of the invention to provide a new and
improved galvanic skin response allergen testing device which overcomes the
disadvantages of the prior art in a simple but effective manner.
It is another principal object of the invention to provide an allergen testing
device using galvanometric skin response that allows the patient to be tested
without the discomfort of prior art devices and in particular, without the use
of painful massive injections.
It is another object of the invention to provide an allergen testing device
using galvanometric skin response that is interfaced with a personal computer to
allow the testing physician to view the real time responses of the patient on
the computer screen during exposures to different substances.
It is a further object of the invention to provide an allergen testing device
using galvanometric skin response wherein a series of allergens is delivered
transcutaneously by an electrode.
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It is still a further object of the invention to provide an allergen testing
device using galvanometric skin response that allows for the storage of the test
data in storage memory of a personal computer and printout of the same data for
reference by the physician and patient.
Finally it is a general goal of the invention to provide improved elements and
arrangements thereof in an apparatus for the purposes described which is
inexpensive, dependable and fully effective in accomplishing its intended
purposes.
These and other objects of the present invention will become readily apparent
upon further review of the following specification and drawings.
BRIEF DESCRIPTION OF THE DRAWINGS
Various other objects, features, and attendant advantages of the present
invention will become more fully appreciated as the same becomes better
understood when considered in conjunction with the accompanying drawings, in
which like reference characters designate the same or similar parts throughout
the several views, and wherein:
FIG. 1 is a diagrammatic view of a patient attached to the inventive device.
FIG. 2 is an example of the display generated by the contemplated software on a
personal computer screen or, alternatively, in a printout for hard copy
reference.
FIG. 3 is a block diagram showing the electronic signal processor used in the
instant invention.
DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT
The present invention is an allergen tester that utilizes the galvanometric
response of the skin to ascertain the severity of a patient's reaction to
various substances. It has been observed through clinical observation that the
human body loses energy when exposed to substances that induce an allergic or
otherwise detrimental reaction. This energy loss is very rapid and can be
measured in microvolts. Thus, the present invention is a system that seeks to
use this phenomenon to allow the physician to see, graphically, and in real
time, the degree of a patients sensitivity to a given substance at the time of
testing.
Referring to FIG. 1 there is seen a patient P, a first electrode 10, a second
electrode 12, signal amplification and interface box 20, allergen sample tray
30, allergen delivery electrode 32, signal interface wire 22, allergen storage
tray interface wire 34, and a personal computer 40. The personal computer 40
would be any of the now ubiquitous devices on the market, but preferably would
be one of the type employing a high speed processor for quick operation.
The two electrodes 10, 12 are placed on the patient P's body in any convenient
location. In the figure shown here, the electrode 10 is placed on the patient
P's head or neck region and the electrode 12 is placed on the hip region.
The unit would first be activated and a galvanometric baseline would be
established. It should be noted that though no power means are shown, both the
allergen sample tray 30 and the signal amplification and interface box 20 could
be powered by standard household or commercial AC current through a variety of
well known means, or, by virtue of the fact that the entire system would not
draw much power, they could be operated off the switchable power supply already
present in the computer. In any case, the means to power the units would be
available and obvious to a skilled person. The allergen delivery electrode 32 is
now affixed to the patient P. A method of delivering allergens transcutaneously
is disclosed in U.S. Pat. No. 4,809,707, discussed above, and is hereby
incorporated by reference.
As the allergen is delivered, the response from the electrodes 10, 12 is
monitored. If the patient P has no reaction to the substance the line on the
monitor will resemble a flat horizontal line such as that at
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indicated at 100 in FIG. 2. It should be mentioned here that the means of
turning the sequential microvolt A changes in the electrodes 10, 12 as measured
over time (indicated by the arrow Al in FIG. 2) into the Cartosian typo display
shown in FIG. 2 are well known, and it is not deemed necessary to discuss the
techniques in the present document. The details of the amplification and
interface box are shown in FIG. 3 and it would be obvious to a skilled artisan
how to construct such a device. Returning to FIG. 2, if the patient reacted to
the substance, the graph would drop as the skin response changed, as is seen at
the portion of the graph marked 110 in FIG. 2. The recovery slope 120 in the
same figure shows the energetic flexibility or "bounce back" of the patient from
the substance. The greater the drop in the graph, the more severe the reaction.
Thus, it is contemplated that, through the allergen storage tray 30 and the
allergen storage tray interface wire 34, a variety of different substances could
be delivered in sequence through the allergen delivery electrode 32 by computer
controlled signals that would switch to different storage sites 36, 36' within
the allergen storage tray 30 for the delivery of the substance to the delivery
electrode 32. This would quickly and easily give the physician the ability to
ascertain the substances that the patient needed to avoid or be given
immunotherapy for exposure thereto. Plots or printouts (not shown) could be
generated for reference by the software contemplated in the invention.
Additionally, records could be kept in the long term memory storage (not shown)
of the computer 40 to provide comparisons over the course of treatment.
The following is a list of the elements discussed in the above specification:
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patient P
first electrode 10
second electrode 12
signal amplification and interface
20
allergen sample tray 30
allergen delivery electrode
32
signal interface wire 22
allergen storage interface wire
34
personal computer 40
flat horizontal graph line
100
reaction drop on graph 110
recovery slope on graph
120
first allergen storage site
36
second (separate) allergen storage site
36'
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From the foregoing description, one skilled in the art can easily ascertain the
essential characteristics of this invention and, without departing from the
spirit and scope thereof, can make various changes and modifications of the
invention to adapt it to various usages and conditions. For example, the artisan
could easily determine various other methods of administering miniscule amounts
of allergy producing agents for the purpose of monitoring galvanic response
recovery rates.
It is to be understood that the present invention is not limited to the sole
embodiment described above, but encompasses any and all embodiments within the
scope of the following claims:
It is to be understood that the present invention is not limited to the sole
embodiment described above, but encompasses any and all embodiments within the
scope of the following claims.
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