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FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the Fiscal Year Ended: December 31, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission File Number: 33-55254-06
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BIO FLORESCENT TECHNOLOGIES, INC.
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(exact name of Registrant as specified in its charter)
Nevada 87-0485320
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7373 North Scottsdale Road, Suite D-222, Scottsdale, Arizona 85253
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 602-596-0269
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Securities registered pursuant to Section 12(b) of the Act: None
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Securities registered pursuant to Section 12(g) of the Act: None
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Check whether the Registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding twelve (12) months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety (90) days.
[ ] Yes [X] No
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained herein, and will not be contained, to the best
of registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ X ]
State Registrant's revenues for its most recent fiscal year. $0.00
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State the aggregate market value of the voting stock held by nonaffiliates
of the Registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within the past sixty (60) days. (See
definition of affiliate in Rule 12b-2 of the Exchange Act).
$11,273,096 as of May 15, 1996
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE (5) YEARS:
Check whether the Registrant has filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by a court.
[ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE REGISTRANTS
Indicate the number of shares outstanding of each of the Registrant's
classes of Common Stock, as of the latest practicable date.
14,921,749 shares of Common Stock, $.001 par value, as of May 15, 1996.
There is only one class of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (i) any annual report to security holders;
(ii) any proxy or information statement; and (iii) any prospectus filed pursuant
to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents
should be clearly described for identification purposes (e.g., annual report to
security holders for fiscal year ended December 24, 1990).
None.
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TABLE OF CONTENTS
<TABLE>
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Page
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ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ITEM 3. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . 6
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . 6
ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED
STOCKHOLDERS MATTERS . . . . . . . . . . . . . . . . . . . . . 7
ITEM 6. PLAN OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . 7
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . 10
ITEM 8. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . 19
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT . . . . . . 20
ITEM 10. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . 21
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . 24
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . . . . 24
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
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PART I
ITEM 1. BUSINESS
COMPANY BACKGROUND
Bio Florescent Technologies, Inc. (the "Company") is a development stage
company engaged primarily in the medical device business. The Company was
incorporated on February 15, 1990 under the laws of Nevada as Partisan
Corporation. On March 10, 1995, the Company's name was changed to Bio Florescent
Technologies, Inc. The Company was inactive through approximately January of
1995 and prior to such time the Company's only activities consisted of the sale
or transfer of shares of common stock in private placements.
The Company's business plan is to generate revenue and profits marketing
and producing technically advanced, state-of-the-art health care testing
equipment and products that respond to critical global demands within special
market segments of the medical and health care industry. The worldwide increase
in viruses such as HIV-1 and HIV-2 (collectively "HIV 1/2") and Hepatitis B have
created a demand for human screening and confirmatory tests, known as immuno
assay products. The Company plans to target this segment of the health care
market to initiate its business plan.
The Company licenses from a third party the technology relating to a
testing system designed to detect the HIV 1/2 virus, which causes the Acquired
Immune Deficiency Syndrome ("AIDS"). The testing system, known as the Mehica
GP120 System, is currently in the early stages of development. In addition to
developing the Mehica GP120 System, the Company plans to license other
compatible products and/or acquire compatible businesses with proven sales and
operating histories.
PRODUCT
MEHICA GP120 SYSTEM
Mehica GP120 System Background. On February 10, 1995, the Company acquired
from Wendover Securities Corp. ("Wendover"), worldwide rights to manufacture,
market and sell the Mehica GP120 System (the "Mehica GP120 System" or the
"Mehica GP120 Test"). This system, which is in the early stages of development,
is designed to be an automated HIV testing system that will process large
quantities of HIV samples at a low unit cost, produce results in just minutes,
and that may be operated by low-skilled technicians. The Mehica GP120 System is
a single use application of the Automated Micro-Cellular Analysis System, a
multi-function cell testing unit which has received a 510(k) Classification by
the U.S. Food and Drug Administration (the "FDA"). A 510(k) Classification is a
pre-market approval from the FDA that the system operates as stated in the
application.
Prior to selling the Mehica GP120 System in the United States, the
Company must obtain certain FDA approvals. Pursuant to the license agreement,
the licensor has agreed to produce a prototype of the Mehica GP120 System and
perform the testing protocol prescribed by applicable FDA regulations, the cost
of which is expected to be in excess of $1,400,000. Once the prototype is
completed, the Company plans to pursue FDA approval of the Mehica GP120 System.
The Company believes that portions of the Mehica GP120 System may be eligible
for a streamlined FDA approval process. While awaiting FDA approval,
<PAGE> 5
the Company plans to qualify and sell the Mehica GP120 System in foreign markets
that do not require FDA approval.
Background - HIV and AIDS. Much has been learned about HIV and AIDS since
it first appeared in 1978. Among the items known about HIV are:
1. HIV specifically seeks out the type of white blood cells known as CD4
or T4 helper/inducer subset of lymphocytes. The selection of the CD4
lymphocyte is particularly damaging because these cells act as the
instructors to other lymphocytes. As more and more of the CD4
population is lost to the virus, the immune system loses its
competence.
2. The body's normal immune response to the presence of foreign or
antigenic substances, such as HIV, is the production of antibodies.
3. Most viruses induce an immune response within 1 to 2 weeks, but with
HIV there is an unusually long interval before the immune response
generates measurable quantities of antibodies (from 6-8 weeks to as
long as 3 years).
4. The CD4 lymphocyte infected with HIV, regardless of type or strain,
always develops a three dimensional surface antigen, a protein called
gp120.
5. Whereas HIV infected cells with exposed gp120 reach a measurable level
of approximately 10 cells per cubic millimeter in 1 to 2 days
following infection, no detectable levels of antibodies (required for
existing testing methods) are present for about six to eight weeks for
most patients and as long as three years for some patients.
Traditional HIV Tests. The currently accepted method of HIV testing
consists of screening blood samples by Enzyme-linked Immunoassay ("EIA") tests
with confirmation of positive or equivocal results with confirmatory Western
Blot or Immuno-Fluorescence Assay ("IFA") tests. All three tests are dependent
upon the infected patient's ability to generate a sufficient quantity of
antibodies to produce a reaction with the test reagents.
A factor in the spread of HIV is that current screening tests for HIV
require an immune response by the infected person before the presence of HIV can
be detected. This immune response is the production of antibodies by the
infected person. Because it takes a minimum of six to eight weeks to as long as
three years for the body to produce a sufficient concentration of antibodies to
be detected by current screening tests, there is an interval when current
screening test methods cannot detect all infected people.
In estimates printed in Scientific American Medicine, one unit out of every
40,000 units of whole blood collected is infected with HIV because of the
current reliance of both screening and confirmatory tests on the presence of
antibodies in the blood. Moreover, one unit of HIV infected blood may infect as
many as five individuals because donated blood is frequently separated into a
variety of blood products, including plasma, platelets and packed Rbc's.
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By contrast, the Mehica GP120 System is designed to detect antigens, known
as gp 120 antigens that appear on an infected cell's surface within 48 hours of
infection as compared with the six-to-eight week interval required for HIV
antibodies to be produced by an individual. The Mehica GP120 Test is designed to
have an accuracy level that significantly exceeds that of existing HIV tests.
The Company estimates the Mehica GP120 Test will take ten minutes to perform. In
comparison, the current test methods take approximately two weeks for a complete
battery of tests and are only about 95% accurate because of the failure of some
infected individuals to make antibodies.
Recently Approved HIV Antigen Tests. A new method of HIV testing which
relies on the presence of antigens in the blood rather than antibodies, known as
p24 testing, has been approved by the FDA. In the reproduction process of HIV,
its genes (viral RNA) give rise to the components that ultimately make new virus
particles. One of the viral genes, called the gag gene, gives rise to four
different polypeptide fragments that are each components of the HIV-1 core
particle. The p24 protein is one of these four proteins that eventually forms a
part of the viral core particle. In an infected individual in which viral
reproduction is accelerating, free floating p24 antigen is increasingly found in
the plasma.
The Company believes that antigen-based tests have the capability to detect
the presence of HIV much sooner than existing test methods. The Mehica GP120
System is designed to detect the gp120 antigen, a cell bound antigen that exists
at the point of contact between every virus and the cell it infects, on the cell
surface. Unlike the p24 antigen, this protein is a surface envelope protein and
not a "buried" core protein. It is not highly immunogenic, and therefore does
not make the body of the person infected produce many antibodies against it.
Studies show that the number of infected cells in the blood stream
substantially accelerates within the first few days and weeks of infection.
Additionally, free floating gp120 that is released as more HIV particles are
made, attack innocent bystander CD4 cells, making the number of gp120 bearing
cells available for detection greater than the number of actually infected
cells. In addition, only a person with HIV infection could have gp120 bearing
lymphocytes. Unlike the tests for p24 which have to capture the free floating
antigen in a time consuming, chemically cumbersome test methodology, the Company
believes the gp120 detection process will be simpler, quicker and less
expensive.
The Company believes that HIV testing will continue to evolve toward
antigen-based tests, rather than tests that rely on the detection of antibodies
to HIV. The Company believes that the antigen-based Mehica GP120 System will
provide a cost-effective, quicker alternative to existing test methods and to
p24 based antigen tests and that the Mehica GP120 System will have the capacity
to detect HIV sooner than such tests.
Recent HIV-Testing Guidelines. On July 7, 1995, The Centers for Disease
Control ("CDC") and the U.S. Public Health Service ("USPHS") published new
recommendations encouraging universal HIV counselling and voluntary testing of
all pregnant women and their newborn infants. The recommendations stated that
pregnant women have many more indeterminate results on Western Blot testing than
any comparable low-risk group, and the CDC recommended that all indeterminate
tests under the ELISA/Western Blot algorithm should be evaluated by the IFA
method because of its greater sensitivity and specificity. Current IFA tests,
although superior to Western Blot in sensitivity and specificity, are still
limited by the availability of antibodies, which may not always be present in
the infected person being tested. The Company believes that the Mehica GP120
Test will present a more
3
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reliable alternative to current testing methods used with pregnant women because
its technology depends on the always-present HIV antigens, not the host
antibodies.
The Company believes that the Mehica GP120 System, which uses a form of
antigen-based, immuno-fluorescent assay test, has the potential to replace the
existing CDC testing algorithm completely because of a number of features that
the Company believes make the Mehica GP120 System superior to existing HIV test
methods, including:
1. The Mehica GP120 System is designed to have a greater sensitivity and
accuracy than current test methods.
2. The automation of the reading of the Mehica GP120 System is designed
to improve accuracy and significantly reduce the cost of HIV testing.
3. The Mehica GP120 System is designed to eliminate the window of
undetectability between exposure to HIV and antibody formation by the
person tested by identifying viral antigens, rather than host
antibodies, which will further enhance the ability to detect infection
sooner than all current methods available, including IFA tests.
4. The Mehica GP120 System is designed to detect the presence of the
virus in infants of infected mothers within a day of birth, unlike all
other current screening and confirmatory tests, which take
substantially longer to perform and will be more costly.
5. The Company anticipates that the Mehica GP120 System will be less
costly than current testing methods by relying on a single test at a
cost of approximately $25.00, as compared to the entire testing
algorithm of ELISA/Western Blot/IFA tests, which can cost as much as
$200.00.
MARKETS
The market for diagnostic products was estimated at $4.32 billion in 1994,
the most recent year for which statistics were available, which was an increase
of 20 percent over the $3.6 billion in 1993. Within the diagnostic market, there
has been a major increase in screening of infectious diseases. This increase has
created a significant demand for technologically advanced rapid assay test
products capable of effectively, efficiently and economically screening large
volumes of the world's population.
Statistics available from the World Health Organization ("WHO") indicate
that the increase of HIV infection in industrialized countries is stabilizing.
However, the rate of HIV infection is dramatically increasing in developing
countries, with the highest incidence of increase in Asia and Latin America.
Once development is completed and applicable regulatory approvals are obtained,
the Company plans to market the Mehica GP120 System both domestically and
internationally. The domestic market includes commercial and public health
testing facilities throughout the United States, and the international market
includes governments and commercial testing facilities.
There are several thousand laboratories and state testing facilities that
perform retrovirus testing in the United States. According to one report, there
were an estimated 97.9 million HIV tests
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<PAGE> 8
performed in 1992 in the United States. This includes testing performed at both
private as well as public testing facilities.
The international market for HIV testing is difficult to quantify. Certain
foreign governments have expressed an interest in the Mehica GP120 System,
either to stop the spread of HIV within their countries or to stop infected
individuals from crossing their borders. The Company believes that the Mehica
GP120 System is the first HIV testing system designed for the kind of mass
screening that is required at border crossings.
PATENTS, COPYRIGHTS, TRADE SECRETS AND TRADEMARKS
To date, the Company has relied on trade secret laws for the protection of
its technology. The Company anticipates that it will seek patent protection of
the Mehica GP120 System once a working prototype is developed. There can be no
assurance that the Mehica GP120 System can be patented or, that if patented, the
Company will be successful in defending such patent, if necessary.
COMPETITION
Competition in the field of medical and laboratory products is intense.
Competition for the Mehica GP120 System will come from existing HIV testing
methods as well as new methods that are developed in the future, including p24
antigen tests. A number of companies, virtually all of which have greater
marketing, financial and other resources than the Company, are developing new
methods of HIV testing. Some methods have the objective of producing products
that are suitable for self testing, similar to home pregnancy tests, and use
urine or saliva instead of blood. The Company believes that all of these methods
are variations on the existing EIA, Western Blot or IFA methods or rely on the
presence in the blood of p24 antigens.
The Company believes that the Mehica GP120 System will offer a more
efficient system than existing HIV screening tests at a competitive price.
However, there are a substantial number of laboratory and medical products which
will compete with the Mehica GP120 System and it is reasonable to expect
additional entrants into the field. Any of these companies may introduce
competing products before the Company is able to introduce its Mehica GP120
System.
GOVERNMENT REGULATION
The Mehica GP120 System is subject to regulation by the FDA and comparable
agencies in foreign countries. Once the development of the Mehica GP120 System
is complete and a prototype is available, the Company will apply for FDA
approval of the Mehica GP120 System. There can be no assurance that such
approval will be obtained.
EMPLOYEES
On May 15, 1996, the Company employed a total of six persons, all of whom
provide management, administrative and secretarial services to the Company. No
employee is subject to a collective bargaining agreement. The Company believes
it has favorable relations with its employees.
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ITEM 2. PROPERTIES
The Company subleases a 1,000 square foot facility in Scottsdale, Arizona
for its principal executive offices. The lease expires in April 1997 and has
monthly rental of $1,000. The Company believes that its current leased space
will be sufficient for the Company's operations in the foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material threatened or pending
litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the shareholders during the fourth
quarter of the year ended December 31, 1995.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDERS' MATTERS
Market Information
Trading activity with respect to the Company's common stock has been
limited. A public trading market having the characteristics of depth, liquidity
and orderliness depends upon the existence of market makers as well as the
presence of willing buyers and sellers, which are circumstances over which the
Company has no control.
Prior to May 1, 1995, there was no public market for the Company's common
stock. Since May 1, 1995, the Company's common stock has been quoted in the
National Daily Quotation Service ("Pink Sheets") published daily by the National
Quotation Bureau, Inc. under the symbol "BFTI". Quotations are also available
through the Electronic Bulletin Board operated by the National Association of
Securities Dealers, Inc. under the symbol "BFTI."
The following table sets forth the high and low bid prices for the
Company's common stock commencing with the second fiscal quarter 1995 as
reported by the National Quotation's Bureau, Inc., which prices reflect
inter-dealer prices without retail mark-up, mark-down or commission, and may not
necessarily represent actual transactions.
<TABLE>
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Quarter Ended High Low
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June 30, 1995 $5.00 $1.00
September 30, 1995 $4.00 $2.62
December 31, 1995 $1.19 $1.06
</TABLE>
HOLDERS
The number of stockholders of record for the common stock of the Company at
the close of business on April 30, 1996 was 514. The Company estimates that
there are approximately 700 beneficial owners of the Company's common stock.
DIVIDENDS
The Company's present policy is to apply available working capital to
expansion; consequently, the Company has not previously declared or paid any
dividends on its common stock and does not expect to pay dividends on its common
stock within the foreseeable future.
ITEM 6. PLAN OF OPERATIONS
The Company is presently concentrating its efforts on opportunities created
by critical global healthcare concerns to more rapidly and reliably detect
viruses such as HIV 1/2 and Hepatitis B.
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The Company secured worldwide rights to manufacture, market and sell the
Mehica GP120 System in February 1995. Consideration for such rights included a
commitment by the Company to finance the production of prototypes, completion of
testing protocol prescribed by regulators and finalization of other development
requirements as well as royalty payments.
The Mehica GP120 System, which is in the early stages of development, is
designed to be an automated HIV testing system that will process large
quantities of HIV samples at a low unit cost, produce results in just minutes
and that may be operated by low-skilled technicians. The Mehica GP120 System is
a single use application of the Automated Micro-Cellular Analysis System, a
multi-function cell testing unit which has received a 510(k) Classification by
the FDA.
Prior to selling the Mehica GP120 System in the United States, the Company
must obtain certain FDA approvals. Pursuant to the license agreement for the
Mehica GP120 System, the licensor has agreed to produce a prototype of the
Mehica GP120 System and perform the testing protocol prescribed by applicable
FDA regulations, the cost of which is expected to be in excess of $1,400,000.
Once the prototype is completed, the Company plans to pursue FDA approval of the
Mehica GP120 System. The Company believes that portions of the Mehica GP120
System may be eligible for a streamlined FDA approval process. While awaiting
FDA approval, the Company plans to qualify and sell the Mehica GP120 System in
foreign markets that do not require FDA approval. The Company has received
inquiries from several foreign countries regarding their needs for the Mehica
GP120 System. The Company plans to develop those markets, among others.
The Company also plans to aggressively pursue the acquisition of other
products through licensing and/or acquiring businesses with proven sales and
operating history which are compatible with corporate strategies to market and
produce the Mehica GP120 System.
To date, the Company's operations have consisted primarily of obtaining the
license to the Mehica GP120 System, assembling a management team and raising
capital. From the Company's inception to December 31, 1995, the Company's
business development costs have totaled approximately $1,400,000. These
expenditures have been funded primarily with the proceeds from the private
sales of its equity securities as well as with the issuance of its common
stock in exchange for services.
During the year ended December 31, 1995, the Company's development
activities resulted in a deficit in cash flow of approximately $591,000. This
deficit was primarily the result of the net operating loss of approximately
$1,400,000 offset by noncash charges totaling approximately $612,000 related to
the write off of artwork purchased with common stock, common stock issued for
services and amortization associated with the Company's license to the Mehica
GP120 System. Additionally, the deficit in cash flow from operating activities
was offset by an increase in accounts payable and accrued liabilities of
approximately $184,000.
The Company's financing activities provided cash flow of approximately
$610,000 during the year ended December 31, 1995. This was the result of the
private placement of 4,559,000 shares of the Company's common stock. The
Company has received an additional $170,000 of cash related to subscription
agreements for the purchase of 1,000,000 shares of the Company's common stock
at $.50 per share entered into in January 1996.
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During 1995, the Company also issued an aggregate of 5,333,333 shares of
its common stock for media products and services to be provided in the future
valued at $500,000, barter credits totaling $50,000 and the license to the
Mehica GP120 System recorded at a value of $1,000,000.
Pursuant to the Mehica GP120 System license agreement, the progression of
the development is directly linked to the availability of funds for paying
development costs. The development process will be conducted in stages, with an
expected start date of May 1, 1996.
The Company is to pay the licensor $1,400,000 in four installments at the
beginning of each development stage in the following amounts:
<TABLE>
<S> <C>
Stage 1 $434,029
Stage 2 $434,029
Stage 3 $287,029
Stage 4 $244,913
</TABLE>
Payment of the Stage 1 amount of $434,029 has not been made as of the date
of this filing. If such payment is not made by approximately July 31, 1996, the
licensor may terminate the license agreement. The Company will need to raise
additional operating capital to satisfy its product development obligations
under the Mehica GP120 System license agreement and to fund other operating
expenses of the business. As of the date of this filing, the Company has not
obtained such financing. Failure by the Company to obtain such additional
financing would have a material adverse effect on the Company and may result in
the termination of the license agreement relating to the Mehica GP120 System by
the licensor. The Company has raised approximately $780,000 of operating capital
since inception and plans to continue its efforts to raise additional operating
capital through various financing methods including private placements of its
common stock. Funding of future operations is dependent on management's ability
to raise additional capital.
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ITEM 7. FINANCIAL STATEMENTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Bio Florescent Technologies, Inc.
We have audited the accompanying balance sheet of BIO FLORESCENT TECHNOLOGIES,
INC. (a Nevada corporation in the development stage) as of December 31, 1995,
and the related statements of operations, stockholders' equity and cash flows
for the year then ended and the related statements of operations and cash flows
for the period from inception (February 15, 1990) to December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. We did not audit the financial statements of Bio Florescent
Technologies, Inc. for the period from inception to December 31, 1994. Such
statements are included in the cumulative inception to December 31, 1995, totals
of the statements of operations and cash flows and reflect total loss from
operations and net loss of .10% of the cumulative totals. Those statements were
audited by other auditors whose reports have been furnished to us and our
opinion, insofar as it relates to amounts for the period from inception to
December 31, 1994, included in the cumulative totals, is based solely upon the
reports of the other auditors.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an 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 financial statements referred to above present fairly, in
all material respects, the financial position of Bio Florescent Technologies,
Inc. as of December 31, 1995, and the results of its operations and its cash
flows for the year then ended and for the period from inception to December 31,
1995, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company is in the development stage and as a result
had negative cash flow from operations for the year ended December 31, 1995.
Furthermore, the Company has not obtained the financing required to fund its
planned operations and as a result, has not made the payments required pursuant
to a license agreement to which it is a party. These factors raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are described in Note 1. The financial
statements do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and classification of
liabilities that might result should the Company be unable to continue as a
going concern.
Arthur Andersen LLP
Phoenix, Arizona,
May 21, 1996.
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BIO FLORESCENT TECHNOLOGIES, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash $ 18,832
Trade exchange receivable - barter (Note 2) 50,000
Media products and services receivable - current portion (Note 3) 250,000
Prepaid expenses 1,875
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Total current assets 320,707
MEDIA PRODUCTS AND SERVICES RECEIVABLE, net of current portion (Note 3) 250,000
LICENSE, net of accumulated amortization of $85,000 (Note 4) 935,000
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$ 1,505,707
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable-
Trade $ 8,437
Related party (Note 6) 157,542
Accrued expenses 17,563
-----------
Total current liabilities 183,542
-----------
COMMITMENTS AND CONTINGENCIES (Notes 4 and 6)
STOCKHOLDERS' EQUITY (Note 5):
Common stock, $.001 par value, 25,000,000 shares authorized;
11,372,249 issued and outstanding 11,372
Common stock to be issued (559,000 shares) 559
Additional paid-in capital 2,695,797
Deficit accumulated during the development stage (1,385,563)
-----------
Total stockholders' equity 1,322,165
-----------
$ 1,505,707
===========
</TABLE>
The accompanying notes are an integral part of this balance sheet.
11
<PAGE> 15
BIO FLORESCENT TECHNOLOGIES, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
AND FOR THE PERIOD FROM INCEPTION OF DEVELOPMENT STAGE
(FEBRUARY 15, 1990) TO DECEMBER 31, 1995
<TABLE>
<CAPTION>
Cumulative
from the
Inception of
Development
Stage
(February 15,
1995 1990)
----------- -------------
<S> <C> <C>
NET SALES $ - $ -
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,381,741 1,382,741
----------- -----------
Loss from operations (1,381,741) (1,382,741)
INTEREST EXPENSE (2,822) (2,822)
----------- -----------
LOSS BEFORE PROVISION FOR INCOME TAXES (1,384,563) (1,385,563)
PROVISION FOR INCOME TAXES (Note 7) - -
----------- -----------
NET LOSS $(1,384,563) $(1,385,563)
=========== ===========
LOSS PER COMMON SHARE (Note 1) $ (.15)
===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 9,423,372
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE> 16
BIO FLORESCENT TECHNOLOGIES, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Deficit
Common Stock Accumulated
--------------------- Common Additional During the
Number Stock to Paid-in Development
of Shares Amount be Issued Capital Stage Total
---------- ------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCEPTION, February 15, 1990 1,000,000 $ 1,000 $ - $ - $ - $ 1,000
Net loss - - - - (1,000) (1,000)
---------- ------- ---- ---------- ----------- -----------
BALANCE, December 31, 1994 1,000,000 1,000 - - (1,000) -
Sale of common stock, net 4,000,000 4,000 - 76,000 - 80,000
Common stock issued 6,372,249 6,372 - 2,090,376 - 2,096,748
Common shares subscribed - - 559 529,421 - 529,980
Net loss - - - - (1,384,563) (1,384,563)
---------- ------- ---- ---------- ----------- -----------
BALANCE, December 31, 1995 11,372,249 $11,372 $559 $2,695,797 $(1,385,563) $ 1,322,165
========== ======= ==== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE> 17
BIO FLORESCENT TECHNOLOGIES, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
AND FOR THE PERIOD FROM INCEPTION OF DEVELOPMENT STAGE
(FEBRUARY 15, 1990) TO DECEMBER 31, 1995
<TABLE>
<CAPTION>
Cumulative
from the
Inception of
Development
Stage
(February 15,
1995 1990)
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,384,563) $(1,385,563)
Adjustments to reconcile net loss to net cash used
in operating activities-
Writedown of artwork 400,000 400,000
Amortization 85,000 85,000
Common stock issued for services 126,748 126,748
Change in assets and liabilities:
Increase in prepaid expenses (1,875) (1,875)
Increase in accounts payable and accrued expenses 183,542 183,542
----------- -----------
Net cash used in operating activities (591,148) (592,148)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net 609,980 610,980
----------- -----------
NET INCREASE IN CASH 18,832 18,832
CASH, beginning of period - -
----------- -----------
CASH, end of period $ 18,832 $ 18,832
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE> 18
BIO FLORESCENT TECHNOLOGIES, INC.
(A COMPANY IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(1) THE COMPANY AND ITS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
HISTORY AND REPORTING ENTITY
Bio Florescent Technologies, Inc. (the Company) is a development stage company
that was incorporated under the laws of the state of Nevada in February 1990 as
Partisan Corporation. On March 10, 1995, the Company's name was changed from
Partisan Corporation to Bio Florescent Technologies, Inc. The Company was
inactive through February 1995 and prior to such time the Company's only
activities consisted of the sale or transfer of shares of its common stock in
private placements.
DEVELOPMENT STAGE ACTIVITY AND MANAGEMENT'S PLANS
The Company is presently concentrating its efforts on opportunities created by
critical global healthcare concerns to more rapidly and reliably detect viruses
such as HIV-1, HIV-2 and Hepatitis B.
The Company secured the worldwide rights to manufacture, market and sell
a human screening immuno assay product line, the Mehica GP120 System in
February 1995. Consideration included a commitment by the Company to finance
the production of prototypes, completion of testing protocol prescribed by
regulators and finalization of other development requirements as well as
royalty payments (Note 4).
The Mehica GP120 System, which is in the early stages of development, is
designed to be an automated HIV testing system that will process large
quantities of HIV samples at a low unit cost. The Mehica GP120 System
technology is designated to include the Mehica GP120 Detector, an
immuno-florescence rapid assay detector and the Packaged Antigen Kit ("PAK"),
a rapid diagnostic test kit. The Mehica GP120 System is a single use
application of the Automated Micro-Cellular Analysis System, a multi-function
cell testing unit which has received a 510 Classification by the U.S. Food and
Drug Administration (the "FDA").
Prior to selling the Mehica GP120 System in the United States, the Company
must obtain certain FDA approvals. Pursuant to the license agreement
relating to the Mehica GP120 System the licensor has agreed to produce a
prototype of the Mehica GP120 System and perform the testing protocol
prescribed by applicable FDA regulations, the cost of which is expected to be
in excess of $1,400,000. Once the prototype is completed, the Company plans to
pursue FDA approval of the Mehica GP120 System. The Company believes that
portions of the Mehica GP120 System may be eligible for a streamlined FDA
approval process. While awaiting FDA approval, the Company plans to qualify and
sell the Mehica GP120 System in foreign markets that do not require FDA
approval. The Company has received inquiries from several foreign countries
regarding their needs for the Mehica GP120 System. The Company plans to develop
those markets, among others.
The Company also plans to aggressively pursue the acquisition of other products
through licensing and/or acquiring businesses with proven sales and operating
history which are compatible with corporate strategies to market and produce the
Mehica GP120 System.
The Company will need to raise additional operating capital to satisfy its
product development obligations under the Mehica GP120 System license
agreement (see Note 4) and to fund other operating expenses of the business. To
date, the Company has not obtained such financing. Failure by the Company to
obtain such additional financing would have a material adverse effect on the
Company and may result in the termination of the license relating to the Mehica
GP120 System by the licensor.
15
<PAGE> 19
The Company reorganized its management team in May 1996 to focus on the
implementation of its business plan which calls for completion of development of
the Mehica GP120 System during the second half of 1997 and the acquisition of
compatible products to establish the Company as an operating company as soon as
possible. The Company will also continue its efforts to raise capital to fund
its operations, including private placements of its common stock. However,
there is no assurance that such efforts will be successful.
USE OF 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.
LOSS PER COMMON SHARE
Loss per common share is computed by dividing the net loss by the weighted
average number of common shares outstanding during the period. Fully diluted
loss per common share is considered equal to primary loss per common share for
all periods presented.
RECENTLY ISSUED ACCOUNTING STANDARDS
SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of, which is required to be adopted by the
company in 1996, is not expected to have a material effect on the Company's
financial position or its results of operations upon adoption. SFAS No. 123,
Accounting for Stock-Based Compensation, is required to be adopted by the
Company in 1996. Pursuant to the provisions of SFAS No. 123, the Company will
continue to account for transactions with its employees pursuant to Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued To Employees.
Therefore, this statement is not expected to have a material effect on the
Company's financial position or its results of operations when adopted.
(2) TRADE EXCHANGE RECEIVABLE - BARTER:
In August 1995, the Company issued 14,814 shares of its common stock in exchange
for $50,000 worth of barter credit on the ITEX Retail Trade Exchange. Management
believes that they will be able to successfully utilize the barter credit for
the cost of hotels and travel over the next year.
(3) MEDIA PRODUCTS AND SERVICES RECEIVABLE:
In October 1995, the Company issued 200,000 shares of its common stock in
exchange for script writing, music scoring, radio commercial production and
radio advertising time to be received in the future valued at approximately
$500,000. Management believes that they will be able to successfully utilize the
entire balance during 1996 and 1997.
(4) LICENSE AGREEMENT:
In February 1995, the Company issued 5,000,000 shares of its common stock with a
fair value of $.20 per share to acquire the exclusive worldwide license to
manufacture, sell and market the Mehica GP120 Detector and the PAK. The license
is for a period of ten years.
Pursuant to the Mehica GP120 System license agreement, the progression of the
development of the prototype is directly linked to the availability of funds
for the development costs. The development process will be conducted in stages,
with an expected start date of May 1, 1996.
The Company is required to pay the licensor $1,400,000 in four (4) installments
at the beginning of each development stage in the following amounts:
Stage 1 $434,029
Stage 2 $434,029
Stage 3 $287,029
Stage 4 $244,913
Payment of the Stage 1 amount of $434,029 has not been made to date. If such
payment is not made by approximately July 31, 1996, the licensor may terminate
the license agreement.
16
<PAGE> 20
In addition to the commitment to fund the development of the prototype, the
Company will pay royalties equal to 10% of the net profits of the Mehica GP120
Detector and $1.50 per PAK sold.
(5) STOCKHOLDERS' EQUITY:
In February 1995, the Company issued 5,000,000 shares of common stock with a
fair value of $.20 per share to acquire an exclusive worldwide license to
manufacture, market and sell the Mehica GP120 Detector and the PAK (Notes 1 and
4).
In February 1995, the Company sold 4,000,000 shares of common stock at $.02 per
share, resulting in net proceeds to the Company of $80,000.
In March 1995, the Company issued 1,000,000 shares of common stock at the then
fair market value of $.01 per share to a related party in exchange for
management services.
In August 1995, the Company issued 38,916 shares of common stock at the then
fair market value of $3.00 per share in exchange for services.
In August 1995, the Company issued 133,333 shares of common stock at the then
fair market value of $3.38 per share in exchange for an ITEX barter credit of
$50,000 and artwork originally valued at $400,000 that was written off as of
December 31, 1995 (Note 2).
In October 1995, the Company issued 200,000 shares of common stock at the then
fair market value of $2.50 per share in exchange for media products and services
(Note 3).
During December 1995, the Company entered into common stock subscription
agreements for the sale of an aggregate of 559,000 shares of the Company's
common stock at $.95 per share, the market value on the date of the transaction.
The shares of common stock were issued in January 1996.
(6) RELATED PARTY TRANSACTIONS:
The Company paid a related party $211,561 for management services and expenses
for the year ended December 31, 1995. At December 31, 1995, the Company owed
$134,297 to this related party which is included in accounts payable-related
party in the accompanying financial statements. See Note 5.
The Company subleases a 1,000 square foot facility in Scottsdale, Arizona from
a related party for its principal executive offices. The lease expires in April
1997 and has a rental rate of $1,000 per month.
(7) INCOME TAXES:
The Company provides for income taxes under Statement of Financial Accounting
Standards No. 109 (SFAS No. 109), Accounting for Income Taxes. SFAS No. 109
requires the use of an asset and liability approach in accounting for income
taxes. Deferred tax assets and liabilities are recorded based on the differences
between the financial statement and tax bases of assets and liabilities and the
tax rates in effect when these differences are expected to reverse.
The components of deferred taxes are as follows at December 31, 1995:
<TABLE>
<S> <C>
Tax effect of net operating loss carryforward $ 554,400
Valuation allowance (554,400)
---------
$ -
=========
</TABLE>
17
<PAGE> 21
SFAS No. 109 requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more likely than
not that some or all of the deferred tax assets will not be realized. In
management's opinion, there can be no assurance that the Company will generate
sufficient taxable income in the future to fully utilize the net deferred tax
asset recorded at December 31, 1995; therefore, a valuation allowance has been
provided for the entire balance.
Net operating loss carryforwards totaled approximately $1,386,000 at December
31, 1995.
(8) SUBSEQUENT EVENTS:
In January 1996, the Company entered into two common stock subscription
agreements. The terms of each agreement call for the purchase of 500,000 shares
of the Company's common stock at the then fair market value of $.50 per share.
The Company received $70,000 in January 1996 and $100,000 in May 1996 pursuant
to these subscription agreements.
The Company and Wyding Holdings Inc. (WHI) entered into a Letter of Intent dated
September 19, 1995, and a Purchase Agreement dated October 23, 1995 (the
"Agreements"), pursuant to which the Company, in exchange for 600,000 shares of
its common stock, purchased from WHI the Latin American marketing rights for the
rapid immunochromatographic assay known as Bioline HIV 1/2 and Bioline Hepatitis
"B" (the "Rapid Assay Test").
The Company and WHI agreed to rescind the Agreements and to mutually release
each other from the obligations set forth therein in April 1996. As a result of
the rescission, the original transaction has not been reflected in the
accompanying financial statements. Concurrent with the rescission, the Company's
president resigned.
18
<PAGE> 22
ITEM 8. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Effective March 15, 1996, the Company engaged Arthur Andersen LLP as its
independent auditors for the fiscal year ended December 31, 1995 to replace the
firm of Smith & Company, who were dismissed at the same time. The decision to
change accountants was approved by the Board of Directors of the Company.
The reports of Smith & Company on the Company's financial statements for
the fiscal years ended December 31, 1993 and 1994 did not contain an adverse
opinion or a disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope, or accounting principles.
In connection with the audits of the Company's financial statements for
each of the two fiscal years ended December 31, 1993 and December 31, 1994, and
in the subsequent interim period, there were no disagreements with Smith &
Company on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope and procedures which, if not resolved to
the satisfaction of Smith & Company, would have caused Smith & Company to make
reference to the matter in their report.
The Company has authorized Smith & Company to respond fully to any
inquiries from Arthur Andersen LLP.
19
<PAGE> 23
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS AND EXECUTIVE OFFICERS.
The following table sets forth the names, ages and positions of the
directors and executive officers of the Company as of May 15, 1996. A summary of
the background and experience of each of these individuals is set forth after
the table.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Jan J. Oliver 55 President; Chief Executive
Officer; Director
A. Richard Bullock 47 Secretary/Treasurer
(Principal Financial and
Accounting Officer);
Director
Ray A. Triphahn 57 Vice President; Assistant
Secretary; Director
</TABLE>
JAN J. OLIVIER has been a Director and the President and Chief Executive
Officer of the Company since April, 1996 and has served as a business consultant
to the Company since March, 1995. Since 1989 and 1993, respectively, Mr. Olivier
has owned Your Choice International, a marketing consulting company, and Cactus
Consultants International, Inc., a financial consulting firm. From April 1983
until July 1987, Mr. Olivier was the President of Olivier Management Corp., a
Nasdaq listed company that conducted international merchant banking activities
and had offices in New York, Zurich, Miami and Seattle. Mr. Olivier has over 30
years of national and international business experience and has served on the
boards of directors of several companies.
A. RICHARD BULLOCK has been a Director and the Secretary/Treasurer of the
Company since February 1995. In addition to his responsibilities as
Secretary/Treasurer of the Company, Mr. Bullock has been an independent
management consultant since 1979 with the Quidquida Management Corporation and
has ten years experience providing corporate and administrative services to a
wide variety of start-up and development stage companies. He has five years
experience as an independent transportation consultant for both national and
international corporations and governments.
RAY A. TRIPHAHN has been a Director, the Vice President and Assistant
Secretary of the Company since February 1995. Mr. Triphahn is a retired
businessman. Prior to his retirement, Mr. Triphahn held various offices with
entities engaged in various aspects of the construction industry.
20
<PAGE> 24
MANAGEMENT CONSULTANTS
Pursuant to the license agreement relating to the Mehica GP120 System, The
Avriel Group ("TAG") has agreed to develop the Mehica GP120 System prototype and
to perform testing protocol required under applicable regulations. Robert
Hallowitz, M.D., a member of TAG is in charge of managing the Mehica GP120
development service contract. Dr. Hallowitz's background includes research with
National Institutes of Health, as well as published research on neurophysiology,
behavioral and preventative medicine.
The Company has retained John G. Charles to oversee all technical aspects
of commercialization of the Mehica GP120 System. Mr. Charles is a medical
technologist who was previously employed by Providence Hospital in Seattle,
Washington where he was responsible for testing hematology, virology and
microbiology. His experience includes seventeen years at the American Optical
Corporation with responsibility for sales of technical products in the Pacific
Northwest. He also served as Western Regional Sales Manager for the Warner
Lambert Division responsible for microscopes, microtomes, and clinical chemistry
systems. His management responsibilities with the Warner Lambert Division
included sales and service for eleven western states, including Washington and
Alaska. For the past eight years, Mr. Charles has participated in the
development of early stage companies specializing in marketing and exporting
medical instrumentation and diagnostic products to the laboratory field,
including clinical chemistry equipment, automated semen analyzers and products
for microbiology.
The Company has also retained Coast Northwest, Inc., a business consulting
firm, to assist it in managing its general business, financial and accounting
matters and to lead the professional search for qualified personnel to direct
the Company's growth. The two principals of Coast Northwest, Inc. each have over
thirty years of business management experience, including having held senior
positions with a "Big Six" international accounting firm.
ITEM 10. EXECUTIVE COMPENSATION
The following table summarizes all compensation paid to the persons who
served in the capacity of president during the three most recently completed
fiscal years. The Company did not have any executive officers whose total annual
salary and bonus exceeded $100,000 for services rendered in all capacities to
the Company during the fiscal years ended December 31, 1995, 1994 and 1993.
21
<PAGE> 25
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Name and Fiscal Other Annual
Principal Position Year Salary Bonus Compensation(1)
------------------ ---- ------ ----- ---------------
<S> <C> <C> <C> <C>
Krista Castleton, 1995 $0.00 $0.00 $0.00
President; Director (1) 1994 $0.00 $0.00 $0.00
1993 $0.00 $0.00 $0.00
Matthew M. Zuckermann,
President; Director (1) 1995 $0.00 $0.00 $0.00
Clayton M. Hardman, 1995 $0.00 $0.00 $0.00
President; Chairman of the
Board(1)
</TABLE>
- - -------------
(1) Krista Castleton served as the President (the Chief Executive Officer of
the Company) from its inception until her resignation in February 1995 in
connection with the Company's acquisition of the licensing rights to the
Mehica GP120 System. In February 1995, Matthew M. Zuckermann became the
President of the Company and he resigned in December of 1995. Clayton M.
Hardman was appointed President and Chairman of the Board in December 1995.
In April 1996, Mr. Hardman resigned as President and Chairman of the Board
and Mr. Olivier was appointed to the office of President.
COMPENSATION OF DIRECTORS
Directors do not receive compensation for service on the Board of
Directors.
22
<PAGE> 26
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth the beneficial ownership of shares of common
stock of the Company on May 15, 1996 by each director and executive officer, by
all directors and executive officers as a group and by all persons known by the
Company to be the beneficial owners of more than 5% of the Company's common
stock.
<TABLE>
<CAPTION>
Shares of Common Stock
Beneficially Owned
-------------------------------
Common Stock
-------------------------------
Number of Shares Percent of
Name and Address Beneficially Held Ownership
- - ---------------- ----------------- ----------
<S> <C> <C>
A. Richard Bullock 100,000 .7%
19930 48 A Avenue
Langley, BC V3A 6Z7
Ray A. Triphahn 115,000 .8%
5200 South Lake Shore Drive #207
Tempe, AZ 85283
Wendover Securities Corporation 3,100,000 20.8%
Charlotte House
Charlotte Street
P. O. Box N-8318
Nassau, Bahamas
Chester King 485,000 3.3%
1641 Shookstown Road
Frederick, MD 21702
Robert A. Hallowitz 485,000 3.3%
20316 Aspenwood
Gaithersburg, MD 20879
All directors and executive 215,000 .15%
officers as a group (3 persons)
</TABLE>
23
<PAGE> 27
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Cactus Consulting provided substantially all of the Company's corporate
management and administrative services during the year ended December 31, 1995,
for which the Company paid to Cactus Consulting $211,561. At December 31, 1995,
the Company owed an additional $134,297 to Cactus Consulting for management
services and expenses. The Company's President, Jan J. Olivier, owns Cactus
Consulting.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
The following exhibits are filed as part of this Report:
<TABLE>
<CAPTION>
Method of
Exhibit No. Description Filing
- - ----------- ----------- ---------
<S> <C> <C>
3.1 Articles of Incorporation of the Registrant *
3.2 Certificate of Amendment to Articles of Incorporation *
3.3 Bylaws of the Registrant *
10 Assignment Agreement dated February 10, 1995 between the *
Company, Wendover Securities Corporation and The Avriel
Group, AMCAS Division, Inc.
11 Statement re Computation of Per Share Earnings *
21 Subsidiaries of the Registrant *
24 Powers of Attorney See Signature
Page
27 Financial Data Schedule *
</TABLE>
- - ----------------------
* Filed herewith.
(b) REPORTS ON FORM 8-K
None.
24
<PAGE> 28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BIO FLORESCENT TECHNOLOGIES, INC.
June 4, 1996 By /s/ Jan J. Olivier
----------------------------------------------------
Jan J. Olivier, President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints JAN J. OLIVIER, A. RICHARD BULLOCK and RAY A.
TRIPHAHN and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments to
this Form 10-KSB Annual Report, and to file the same, with all exhibits thereto,
and other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully and to
all intents and purposes as he might or could do in person hereby ratifying and
confirming all that said attorneys-in-fact and agents, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report on Form 10-KSB has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- - --------- ----- ----
<S> <C> <C>
/s/ Jan J. Olivier President (Chief Executive Officer); June 4, 1996
- - --------------------------- Director
Jan J. Olivier
/s/ A. Richard Bullock Secretary/Treasurer (Principal Financial & June 4, 1996
- - --------------------------- Accounting Officer); Director
A. Richard Bullock
/s/ Ray A. Triphahn Vice President, Assistant June 4, 1996
- - --------------------------- Secretary/Director
Ray A. Triphahn
</TABLE>
25
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
PARTISAN CORPORATION
I THE UNDERSIGNED natural person of the age of 21 years or more, acting
as incorporator of a corporation under the Private Corporations provisions of
78-010, et seq., NEVADA REVISED STATUTES, (hereinafter referred to as the
"N.R.S."), adopt the following Articles of Incorporation for such Corporation:
ARTICLE I
NAME
The name of the Corporation is PARTISAN CORPORATION.
ARTICLE II
PRINCIPAL OFFICE
The initial principal office of the Corporation shall be located at 216
South Fourth Street, Las Vegas, Nevada, 89106, and/or such other place as the
directors shall designate.
ARTICLE III
DURATION
The period of duration of the Corporation is perpetual.
ARTICLE IV
PURPOSES AND POWERS
The purposes for which the corporation is organized are to engage in
any activity or business not in conflict with the laws of Nevada or of the
United States of America, and without limiting the generality of the foregoing,
specifically, to have and to exercise all the powers now or hereafter conferred
by the laws of the State of Nevada upon corporations organized and any and all
acts amendatory thereof and supplemental thereto.
ARTICLE V
AUTHORIZED SHARES
The aggregate number of shares which the Corporation shall have
authority to issue is 25,000,000 shares, having a par value of $0.001 (1 mill)
per share. The stock shall be designated as Class "A" voting common stock and
shall have the same rights and preferences. The common stock shall not be
divided into classes and may not be issued in series. Fully paid stock of this
Corporation shall not be liable for any further call or assessment. The total
capitalization of the Corporation shall be $25,000.
ARTICLE VI
PRE-EMPTIVE RIGHTS
No stockholder of the Corporation shall, because of his ownership of
stock, have a pre-emptive or other right to purchase, subscribe for or take part
of any of the notes, debentures, bonds or other
<PAGE> 2
securities convertible into or carrying options for warrants to purchase stock
of the Corporation issued, optioned or sold by it after its incorporation,
except as may be otherwise stated in these Article of Incorporation or by an
amended certificate of said Articles duly filed, may at any time be issued,
optioned for sale and sold or disposed of by the Corporation pursuant to the
resolution of its Board of Directors to such person, persons or organizations
and upon such terms as may to such Board of Directors seem proper, without first
offering such stock or securities or any part thereof to existing stockholders,
except as required in Article V of these Articles of Incorporation.
ARTICLE VII
VOTING OF SHARES
Each outstanding share of the class "A" common stock of the Corporation
shall be entitled to one vote on each matter submitted to a vote at a meeting of
the stockholders. Each shareholder shall be entitled to vote his or its shares
in person or by proxy, executed in writing by such shareholder or by its duly
authorized attorney in fact. At each election for directors, every shareholder
entitled to vote at such election shall have the right to vote in person or by
proxy, the number of shares owned by him or it for as many persons as there are
directors to be elected and for whose election he or it has the right to vote,
but the shareholder hall have no right, whatsoever, to accumulate his or its
votes with regard to such election.
ARTICLE VIII
DIRECTORS
The governing board of this Corporation shall be called directors, and
the number of directors may from time to time be specified by the By-laws of the
Corporation at not less than one, nor more than fifteen. When the By-laws do not
specify the number of directors, the number of directors shall be three (3), or
equal to the number of shareholders should there be less than three initial
shareholders. The name of the initial director, being also the incorporator and
sole shareholder, is:
NAME ADDRESS
LESLIE H. SHAW 3760 So. Highland Dr. #300, Salt Lake City, UT 84106
which director shall hold office until the first meeting of the shareholders of
the Corporation and until his or her successors have been duly elected and
qualified. Directors need not be residents of the State of Nevada or
shareholders of the Corporation.
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<PAGE> 3
ARTICLE IX
INCORPORATOR
The name and address of the sole incorporator and sole initial
shareholder of this Corporation is:
NAME ADDRESS
LESLIE H. SHAW 3760 So. Highland Dr. #300 Salt Lake City UT 84106
Dated this 29th day of January, 1990.
/s/Leslie H. Shaw
---------------------------
Incorporator
State of Utah )
) ss.
County of Salt Lake )
Personally appeared before me this 29th day of January, 1990, Leslie H.
Shaw, signer of the foregoing instrument who being by me first duly sworn,
declared that she is the person who signed the foregoing as incorporator and
that the statements contained therein are true.
/s/Krista Castleton
---------------------------
Notary Public
Residing in: Salt Lake
3
<PAGE> 1
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
TO
THE ARTICLES OF INCORPORATION
OF
PARTISAN CORPORATION
The undersigned President and Secretary of Partisan Corporation, a
Nevada corporation, pursuant to the provisions of Section 78.385 and 78.390 of
the Nevada Revised Statutes, for the purpose of amending Articles of
Incorporation of the said Corporation, do hereby certify as follows:
The Board of Directors of the said corporation, at a meeting duly
convened and held on the 13th day of February 1995, adopted a Resolution to
amend the Articles of Incorporation of the Corporation as follows:
Article I shall be amended as follows:
Article I
The name of the Corporation shall be:
BIO FLORESCENT TECHNOLOGIES, INC.
The foregoing amendment to the Articles of Incorporation was duly
adopted by the written consent of the shareholders of the Corporation, pursuant
to Section 78.320 of the Nevada Revised Statutes, on February 11, 1995.
The number of shares of Common Stock of the Corporation outstanding and
entitled to vote on the foregoing amendment to the Articles of Incorporation on
February 11, 1995 were 5,200,000 shares and the said amendment was approved and
consented to by 4,176,000 shares, being voted in person or by proxy, which
represented more than a 50% majority of the issued and outstanding shares of the
Common Stock of the Corporation.
The undersigned President and Secretary of the Corporation hereby
declare that the foregoing Certificate of Amendment to the Articles of
Incorporation is true and correct to the best of their knowledge and belief.
<PAGE> 2
In witness whereof, this certificate has been executed by the
undersigned on February 11, 1995.
/s/Ray A. Triphahn /s/Matthew M. Zuckerman
- - -------------------------- --------------------------
Secretary President
Notary:
/s/Joan Elizabeth Brady
State of California
County of Santa Clara
On February 28, 1995 before me, D. Brenda Kavert, Notary Public,
NAME, TITLE OF OFFICER - E.G., J DOE, NOTARY PUBLIC
personally appeared Matthew M. Zuckerman
NAME(S) OF SIGNER(S)
OR proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s)
is subscribed to the within instrument and
acknowledged to me that he/she/they executed
the same in his/her/their authorized
capacity(ies), and that by his/her/their
signature(s) on the instrument the
person(s), or the entity upon behalf of
which the person(s) acted, executed the
instrument.
WITNESS my hand and sofficial seal.
/s/D. Brenda Kavert
---------------------------------------
SIGNATURE OF NOTARY
<PAGE> 1
EXHIBIT 3.3
BYLAWS
OF
PARTISAN CORPORATION
ARTICLE I
OFFICE
The Board of Directors shall designate and the Corporation
shall maintain a principal office. The location of the principal office may be
changed by the Board of Directors. The Corporation may also have offices in such
other places as the Board may from time to time designate.
The location of the principal office of the Corporation shall
be: 216 South Fourth Street, Las Vegas, Nevada, 89101.
ARTICLE II
SHAREHOLDERS MEETING
Section 1. Annual Meetings. The annual meeting of the
shareholders of the Corporation shall be held at such place within or without
the State of Nevada as shall be set forth in compliance with these Bylaws. The
meeting shall be held on the 6th day of February of each year beginning at
10:00. If such day is a legal holiday, the meeting shall be on the next business
day. This meeting shall be for the election of Directors and for the transaction
of such other business as may properly come before it.
Section 2. Special Meetings. Special meetings of shareholders,
other than those regulated by statute, may be called at any time by the
President, or a majority of the Directors, and must be called by the President
upon written request of the holders of 50% of the outstanding shares entitled to
vote at such special meeting. Written notice of such meeting stating the place,
the date and hour of the meeting, the purpose or purposes for which it is
called, and the name of the person by whom or at whose direction the meeting is
called shall be given. The notice shall be given to each shareholder of record
in the same manner as notice of the annual meeting. No business other than that
specified in the notice of the meeting shall be transacted at any such special
meeting.
Section 3. Notice of Shareholder Meetings. The Secretary shall
give written notice stating the place, day, and hour of the meeting, and in the
case of a special meeting, the purpose or purposes for which the meeting is
called, which shall be delivered not less than ten nor more than fifty days
before the date of the meeting, either personally or by mail to each shareholder
of record entitled to vote at such meeting. If mailed,
<PAGE> 2
such notice shall be deemed to be delivered when deposited in the United States
mail, addressed to the shareholder at his address as it appears on the books of
the Corporation, with postage thereon prepaid.
Section 4. Place of Meeting. The Board of Directors may
designate any place, either within or without the State of Nevada, as the place
of meeting for any annual meeting or for any special meeting called by the Board
of Directors. A waiver of notice signed by all shareholders entitled to vote at
a meeting may designate any place, either within or without the State of Nevada,
as the place for the holding of such meeting. If no designation is made, or if a
special meeting be otherwise called, the place of meeting shall be the principal
office of the Corporation.
Section 5. Record Date. The Board of Directors may fix a date
not less than ten nor more than fifty days prior to any meeting as the record
date for the purpose of determining shareholders entitled to notice of and to
vote at such meetings of the shareholders. The transfer books may be closed by
the Board of Directors for a stated period not to exceed fifty days for the
purpose of determining shareholders entitled to receive payment of any dividend,
or in order to make a determination of shareholders for any other purpose.
Section 6. Quorum. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice. At
a meeting resumed after any such adjournment at which a quorum shall be present
or represented, any business may be transacted which might have been transacted
at the meeting as originally noticed. The shareholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of shareholders in such number that less than a
quorum remain.
Section 7. Voting. A holder of an outstanding share, entitled
to vote at a meeting, may vote at such meeting in person or by proxy. Except as
otherwise be provided in the Articles of Incorporation, every shareholder shall
be entitled to one vote for each share standing in his name on the record of
shareholders. Except as herein or in the Articles of Incorporation otherwise
provided, all corporate action shall be determined by 50% of the votes cast at a
meeting of shareholders by the holders of share entitled to vote thereon.
<PAGE> 3
Section 8. Proxies. At all meetings of shareholders, a
shareholder may vote in person or by proxy executed in writing by the
shareholder or by his duly authorized attorney in fact. Such proxy shall be
filed with the Secretary of the Corporation before or at the time of the
meeting. No proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy.
Section 9. Informal Action by Shareholders. Any action
required to be taken at a meeting of the shareholders, or any action which may
be taken at a meeting of the shareholders, may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all of
the shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the
Corporation shall be managed by its Board of Directors. The Board of Directors
may adopt such rules and regulations for the conduct of their meetings and the
management of the Corporation as they deem proper.
Section 2. Number Tenure and Qualifications. The number of
Directors of the Corporation shall be three. Each Director shall hold office
until the next annual meeting of shareholders and until his successor shall have
been elected and qualified. Directors need not be residents of the State Nevada
or shareholders of the Corporation.
Section 3. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than by this Bylaw, immediately
following after and at the same place as the annual meeting of shareholders. The
Board of Directors may provide, by resolution, the time and place for the
holding of additional regular meetings without other notice than this
resolution.
Section 4. Special Meetings. Special meetings of the Board of
Directors may be called by order of the Chairman of the Board, the President, or
by one-third of the Directors. The Secretary shall give notice of the time,
place and purpose or purposes of each special meeting by mailing the same at
least two days before the meeting or by telephoning or telegraphing the same at
least one day before the meeting to each Director.
Section 5. Quorum. A majority of the members of the Board of
Directors shall constitute a quorum for the transaction of business, but less
than a quorum may adjourn any meeting from time to time until
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<PAGE> 4
a quorum shall be present, whereupon the meeting may be held, as adjourned,
without further notice. At any meeting at which every Director shall be present,
even though without any notice, any business may be transacted.
Section 6. Manner of Acting. At all meetings of the Board of
Directors, each Director shall have one vote. The act of a majority present at a
meeting shall be the act of the Board of Directors, provided a quorum is
present.
Section 7. Vacancies. A vacancy in the Board of Directors
shall be deemed to exist in case of death, resignation, or removal of any
Director, or if the authorized number of Directors be increased, or if the
shareholders fail at any meeting of shareholders at which any Director is to be
elected, to elect the full authorized number to be elected at that meeting.
Section 8. Removals. Directors may be removed at any time by a
vote of the shareholders holding 50% of the shares outstanding and entitled to
vote. Such vacancy shall be filled by the Directors then in office, though less
than a quorum, to hold office until the next annual meeting or until his
successor is duly elected and qualified, except that any directorship to be
filled by reason of removal by the shareholders may be filled by election by the
shareholders at the meeting at which the Director is removed. No reduction of
the authorized number of Directors shall have the effect of removing any
Director prior to the expiration of his term of office.
Section 9. Resignation. A Director may resign at any time by
delivering written notification thereof to the President or Secretary of the
Corporation. Resignation shall become effective upon its acceptance by the Board
Directors; provided, however, that if the Board of Directors has not acted
thereon within ten days from the date of its delivery, the resignation shall
upon the tenth day be deemed accepted.
Section 10. Presumption of Assent. A Director of the
Corporation who is present at a meeting of the Board of Directors at which
action on any corporate matter is taken shall be presumed to have assented to
the action taken unless his dissent shall be entered in the minutes of the
meeting or unless he shall file his written dissent to such action with the
person acting as the secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the Secretary of the
Corporation immediately after
4
<PAGE> 5
the adjournment of the meeting. Such right to dissent shall not apply to a
Director who voted in favor of such action.
Section 11. Compensation. By resolution of the Board of
Directors, the Directors may be paid their expenses, if any, of attendance at
each meeting of the Board of Directors, and may be paid a fixed sum for
attendance at each meeting of the Board of Directors or a stated salary as
Director. No such payment shall preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefore.
Section 12. Emergency Power. When, due to a national disaster
or death, a majority of the Directors are incapacitated or otherwise unable to
attend the meetings and function as Directors, the remaining members of the
Board of Directors shall have all the powers necessary to function as a complete
Board, and for the purpose of doing business and filling vacancies shall
constitute a quorum, until such time as all Directors can attend or vacancies
can be filled pursuant to these Bylaws.
Section 13. Chairman. The Board of Directors may elect from
its own number a Chairman of the Board, who shall preside at all meetings of the
Board of Directors, and shall perform such other duties as may be prescribed
from time to time by the Board of Directors.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be a
President, one or more Vice- Presidents, a Secretary, a Treasurer, a General
Manager, and a General Counsel, each of whom shall be elected by a majority of
the Board of Directors. Such other officers and assistant officers as may be
deemed necessary may be elected or appointed by the Board of Directors. In its
discretion, the Board of Directors may leave unfilled for any such period as it
may determine any office except those of President and Secretary. Any two or
more offices may be held by the same person, except the offices of President and
Secretary. Officers may or may not be directors or shareholders of the
Corporation.
Section 2. Election and Term of Office. The officers of the
Corporation to be elected by the Board of Directors shall be elected annually by
the Board of Directors at the first meeting of the Board of Directors held after
each annual meeting of the shareholders. If the election of officers shall not
be held as soon thereafter as convenient. Each officer shall hold office until
his successor shall have been duly elected
5
<PAGE> 6
and shall have qualified or until his death or until he shall resign or shall
have been removed in the manner hereinafter provided.
Section 3. Resignation. Any officer may resign at any time by
delivering a written resignation either to the President or to the Secretary.
Unless otherwise specified therein, such resignation shall take effect upon
delivery.
Section 4. Removal. Any officer or agent may be removed by the
Board of Directors whenever in its judgment the best interests of the
Corporation will be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed. Election or
appointment of an officer or agent shall require 50% vote of the Board of
Directors, exclusive of the officer in question if he is also a Director.
Section 5. Vacancies. A vacancy in any office because of
death, resignation, removal, disqualification or otherwise, or if a new office
shall be created, such vacancy may be filled by the Board of Directors for the
unexpired portion of the term.
Section 6. President. The President shall be the chief
executive and administrative officer of the company. He shall preside at all
meetings of the stockholders and, in the absence of the Chairman of the Board,
at meetings of the Board of Directors. He shall exercise such duties as
customarily pertain to the office of President and shall have general and active
supervision over the property, business, and affairs of the company and over its
several officers. He may appoint officers, agents, or employees other than those
appointed by the Board of Directors. He may sign, execute and deliver in the
name of the company powers of attorney, contracts, bonds and other obligations,
and shall perform such other duties as may be prescribed from time to time by
the Board of Directors or by the Bylaws.
Section 7. Vice-President. The Vice-President shall have such
powers and perform such duties as may be assigned to him by the Board of
Directors or the President. In the absence or disability of the President, the
Vice-President designated by the Board or the President shall perform the duties
and exercise the powers of the President. A Vice-President may sign and execute
contracts and other obligations pertaining to the regular course of his duties.
6
<PAGE> 7
Section 8. Secretary. The Secretary shall, subject to the
direction of a designated Vice-President, keep the minutes of all meetings of
the stockholders and of the Board of Directors and, to the extent ordered by the
Board of Directors or the President, the minutes of meetings of all committees.
He shall cause notice to be given of meetings of stockholders, of the Board of
Directors, and of any committee appointed by the Board. He shall have custody of
the corporate seal and general charge of the records, documents and papers of
the company not pertaining to the performance of the duties vested in other
officers, which shall at all reasonable times be open to the examination of any
Director. He may sign or execute contracts with the President or Vice-President
thereunto authorized in the name of the company and affix the seal of the
company thereto. He shall perform such other duties as may be prescribed from
time to time by the Board of Directors or by the Bylaws. He shall be sworn to
the faithful discharge of his duties. Assistant Secretaries shall assist the
Secretary and shall keep and record such minutes of meetings as shall be
directed by the Board of Directors.
Section 9. Treasurer. The Treasurer shall, subject to the
direction of a designated Vice-President, have general custody of the collection
and disbursement of funds of the company. He shall endorse on behalf of the
company for collection checks, notes and other obligations, and shall deposit
the same to the credit of the company in such bank or banks or depositories as
the Board of Directors may designate. He may sign, with the President or such
other persons as may be designated for the purpose by the Board of Directors,
all bills of exchange or promissory notes of the company. He shall enter or
cause to be entered regularly in the books of the company all and accurate
account of all monies received and paid by him on account of the company; shall
at all reasonable times exhibit his books and accounts of any Director of the
company upon application at the office of the company during business hours;
and, whenever required by the Board of Directors or the President, shall render
a statement of his accounts. He shall perform such other duties as may be
prescribed from time to time by the Board of Directors or by the Bylaws. He
shall give bond for the faithful performance of his duties in such sum and with
or without such surety as shall be approved by the Board of Directors.
7
<PAGE> 8
Section 10. General Counsel. The General Counsel shall advise
and represent the company generally in all legal matters and proceedings, and
shall act as counsel to the Board of Directors and the Executive Committee. The
General Counsel may sign and execute pleadings, powers of attorney pertaining to
legal matters, and any other contracts and documents in the regular course of
his duties.
Section 11. General Manager. The Board of Directors may employ
and appoint a General Manager who may, or may not, be one of the officers or
Directors of the corporation. He shall be the chief operating officer of the
Corporation and, subject to the directions of the Board of Directors, shall have
general charge of the business operations of the corporation and general
supervision over its employees and agents. He shall have the exclusive
management of the business of the corporation and of all of its dealings, but at
all times subject to the control of the Board of Directors. Subject to the
approval of the Board of Directors or the Executive Committee, he shall employ
all employees of the corporation, or delegate such employment to subordinate
officers, or such division chiefs, and shall have authority to discharge any
person so employed. He shall make a report to the President and Directors
quarterly, or more often if required to do so, setting forth the result of the
operations under his charge, together with suggestions looking to the
improvement and betterment of the condition of the corporation, and to perform
such other duties as the Board of Directors shall require.
Section 12. Other Officers. Other officers shall perform such
duties and have, such powers as may be assigned to them by the Board of
Directors.
Section 13. Salaries. The salaries or other compensation of
the officers of the corporation shall be fixed from time to time by the Board of
Directors, except that the Board of Directors may delegate to any person or
group of persons the power to fix the salaries or other compensation of any
subordinate officers or agents. No officer shall be prevented from receiving any
such salary or compensation by reason of the fact that he is also a Director of
the corporation.
Section 14. Surety Bonds. In case the Board of Directors shall
so require, any officer or agent of the corporation shall execute to the
corporation a bond in such sums and with such surety or sureties as the Board of
Directors may direct, conditioned upon the faithful performance of his duties to
the corporation,
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including responsibility for negligence and for the accounting for all property,
monies or securities of the corporation which may come into his hands.
ARTICLE V
COMMITTEES
Section 1. Executive Committee. The Board of Directors may
appoint from among its members an Executive Committee of not less than two nor
more than seven members, one of whom shall be the President, and shall designate
one of such members as Chairman. The Board may also designate one or more of its
members as alternates to serve as members of the Executive Committee in the
absence of a regular member or members. The Board of Directors reserves to
itself alone the power to declare dividends, issue stock, recommend to
stockholders any action requiring their approval, change the membership of any
committee at any time, fill vacancies therein, and discharge any committee
either with or without cause at any time. Subject to the foregoing limitations,
the Executive Committee shall possess and exercise all other powers of the Board
of Directors during the intervals between meetings.
Section 2. Other Committees. The Board of Directors may also
appoint from among its own members such other committees as the Board of
Directors may determine, which shall in each case consist of not less than two
Directors, and which shall have such powers and duties as shall from time to
time be prescribed by the Board. The President shall be a member ex officio of
each committee appointed by the Board of Directors. A majority of the members of
any committee may fix its rules of procedure.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 2. Loans. No loan or advances shall be contracted on
behalf of the corporation, no negotiable paper or other evidence of its
obligation under any loan or advance shall be issued in its name, and no
property of the corporation shall be mortgaged, pledged, hypothecated or
transferred as security for the
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payment of any loan, advance, indebtedness of liability of the corporation
unless and except as authorized by the Board of Directors. Any such
authorization may be general or confined to specific instances.
Section 3. Deposits. All funds of the corporation not
otherwise employed shall be deposited from time to time to the credit of the
corporation in such banks, trust companies or other depositories as the Board of
Directors may select, or as may be selected by any officer or agent authorized
to do so by the Board of Directors.
Section 4. Checks and Drafts. All notes, drafts, acceptances,
checks, endorsements and evidences of indebtedness of the corporation shall be
signed by such officer or officers or such agent or agents of the corporation
and in such manner as the Board of Directors from time to time may determine.
Endorsements for deposit to the credit of the corporation in any of its duly
authorized depositories shall be made in such manner as the Board of Directors
from time to time may determine.
Section 5. Bonds and Debentures. Every bond or debenture
issued by the corporation shall be evidenced by an appropriate instrument which
shall be signed by the president or a Vice-President and by the Treasurer or by
the Secretary, and sealed with the seal of the corporation. The seal may be
facsimile, engraved or printed. Where such bond or debenture is authenticated
with the manual signature of an authorized officer of the corporation or other
trustee designated by the indenture of trust or other agreement under which such
security is issued, the signature of any of the corporation's officers named
thereon may be facsimile. In case any officer who signed, or whose facsimile
signature has been used on any such bond or debenture, shall cease to be an
officer of the corporation for any reason before the same has been delivered by
the corporation, such bond or debenture may nevertheless be adopted by the
corporation and issued and delivered as though the person who signed it or whose
facsimile signature has been used thereon had not ceased to be such officer.
ARTICLE VII
CAPITAL STOCK
Section 1. Certificate of Share. The shares of the corporation
shall be represented by certificates prepared by the Board of Directors and
signed by the President or the Vice-President and by the Secretary, and sealed
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with the seal of the corporation or a facsimile. The signatures of such officers
upon a certificate may be facsimiles if the certificate is countersigned by a
transfer agent or registered by a registrar other than the corporation itself or
one of its employees. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the person to whom the
shares represented thereby are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the corporation. All
certificates surrendered to the corporation for transfer shall be cancelled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and cancelled, except that in case
of a lost, destroyed or mutilated certificate, a new one may be issued therefor
upon such terms and indemnity to the corporation as the Board of Directors may
prescribe.
Section 2. Transfer of Shares. Transfer of shares of the
corporation shall be made only on the stock transfer books of the corporation by
the holder of record thereof or by his legal representative, who shall furnish
proper evidence of authority to transfer, or by his attorney thereunto
authorized by power of attorney duly executed and filed with the secretary of
the corporation, and on surrender for cancellation of the certificate for such
shares. The person in whose name shares stand on the books of the corporation
shall be deemed by the corporation to be the owner thereof for all purposes.
Section 3. Transfer Agent and Registrar. The Board of
Directors shall have power to appoint one or more transfer agents and registrars
for the transfer and registration of certificates of stock of any class, and may
require that stock certificates shall be countersigned and registered by one or
more of such transfer agents and registrars.
Section 4. Lost or Destroyed Certificates. The corporation may
issue a new certificate to replace any certificate theretofore issued by it
alleged to have been lost or destroyed. The Board of Directors may require the
owner of such a certificate or his legal representative to give the corporation
a bond in such sum and with such sureties as the Board of Directors may direct
to indemnify the corporation as transfer agents and registrars, if any, against
claims that may be made on account of the issuance of such new certificates. A
new certificate may be issued without requiring any bond.
Section 5. Consideration for Shares. The capital stock of the
corporation shall be issued for such consideration, but not less than the par
value thereof, as shall be fixed from time to time by the Board
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of Directors. In the absence of fraud, the determination of the Board of
Directors as to the value of any property or services received in full or
partial payment of shares shall be conclusive.
Section 6. Registered Shareholders. The company shall be
entitled to treat the holder of record of any share or shares of stock as the
holder thereof, in fact, and shall not be bound to recognize any equitable or
other claim to or on behalf of this company any and all of the rights and powers
incident to the ownership of such stock at any meeting, and shall have power and
authority to execute and deliver proxies and consents on behalf of this company
in connection with the exercise by this company of the rights and powers
incident to the ownership of such stock. The Board of Directors, from time to
time, may confer like powers upon any other person or persons.
ARTICLE VIII
INDEMNIFICATION
Section 1. Indemnification. No officer or Director shall be
personally liable for any obligations of the corporation or for any duties or
obligations of the corporation or for any duties or obligations arising out of
any acts or conduct of said officer or Director performed for or on behalf of
the corporation. The corporation shall and does hereby indemnify and hold
harmless each person and his heirs and administrators who shall serve at any
time hereafter as a Director or officer of the corporation from and against any
and all claims, judgment s and liabilities to which such persons shall become
subject by reason of his having heretofore or hereafter been a Director or
officer of the corporation, or by reason of any action alleged to have
heretofore or hereafter taken or omitted to have been taken by him as such
Director or officer, and shall reimburse each such person for all legal and
other expenses reasonably incurred by him in connection with any such claim or
liability, including power to defend such person from all suits or claims as
provided for under the provisions of the Nevada Business Corporation Act;
provided, however, that no such person shall be indemnified against, or be
reimbursed for, any expense incurred in connection with any claim or liability
arising out of his own negligence or willful misconduct. The rights accruing to
any person under the foregoing provisions of this section shall not exclude any
other right to which he may lawfully be entitled, nor shall anything herein
contained restrict the right of the corporation to indemnify or reimburse such
person in any proper case, even though not specifically herein provided for. The
corporation, its directors, officers,
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employees and agents shall be fully protected in taking any action or making any
payment, or in refusing so to do in reliance upon the advice of counsel.
Section 2. Other Indemnification. The indemnification herein
provided shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer or employee, and shall inure to the benefit of the heirs, executors and
administrators of such person.
Section 3. Insurance. The corporation may purchase and
maintain insurance on behalf of any person who is or was a Director, officer or
employee of the corporation, or is or was serving at the request of the
corporation as a Director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the corporation would have the power to
indemnify him against liability under the provisions of this section or of the
general Corporation Law of Nevada.
Section 4. Settlement by Corporation. The right of any person
to be indemnified shall be subject always to the right of the corporation by its
Board of Directors, in lieu of such indemnity, to settle any such claim, action,
suit or proceeding at the expense of the corporation by the payment of the
amount of such settlement and the costs and expenses incurred in connection
therewith.
ARTICLE IX
WAIVER OF NOTICE
Whenever any notice is required to be given to any shareholder
or Director of the corporation under the provisions of these Bylaws, or under
the provisions of the Articles of Incorporation, or under the provisions of the
Nevada Business Corporation Act, a waiver thereof in writing signed by the
person or person entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
Attendance at any meeting shall constitute a waiver of notice of such meetings,
except where attendance is for the express purpose of objecting to the legality
of that meeting.
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ARTICLE X
AMENDMENTS
These bylaws may be altered, amended, repealed, or new bylaws
adopted by 50% of the entire Board of Directors at any regular or special
meeting. Any bylaw adopted by the Board may be repealed or changed by action of
the shareholders .
ARTICLE XI
FISCAL YEAR
The fiscal year of the corporation shall be fixed and may be
varied by resolution of the Board of Directors.
ARTICLE XII
DIVIDENDS
The Board of Directors may at any regular or special meeting,
as they deem advisable, declare dividends payable out of the surplus of
corporation.
ARTICLE XIII
CORPORATE SEAL
The seal of the corporation shall be in the form of a circle
and shall bear the name of the corporation and the year of incorporation per
sample affixed hereto.
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<PAGE> 1
EXHIBIT 10
ASSIGNMENT
ASSIGNMENT made 10th February, 1995, by and between Wendover Securities
Corporation, a corporation duly existing and organized in Commonwealth of the
Bahamas, (hereinafter referred to as "Assignor"), and Bio Fluorescent
Technologies, Inc., a corporation duly existing and organized in the State of
Nevada, (hereinafter referred to as the "Assignee") and this Assignment being
properly consented to by The Avriel Group, AMCAS Division, Inc., a corporation
duly existing and organized in the State of Maryland, (hereinafter referred to
as the "Contractor").
WITNESSETH:
RECITALS
That Assignor and contractor did enter into a certain Agreement
(hereinafter referred to as the "Agreement") on or about by February 1995,
attached as Exhibit "A" hereto, and including but not limited to, a) build, and
deliver 100% title, to certain Medical Equipment known as the "Prototype(s)" or
the "Mehica GP120" and/or the "PAK", b) grant a joint divided interest to
Assignor of any existing and after acquired Patent rights to the Mehica GP120
and PAK, c) grant 100% worldwide manufacturing, marketing, and sales rights for
the Mehica GP120 and PAK, d) granting certain partial Mehica GP120 and PAK sales
royalty rights to Assignor, and e) received in return, and Assignor to make
certain staged payments until aggregating the sum of U.S. $1,400,000, and
Assignor to pay certain other associated costs; and
That Assignor wishes to Assign, convey and otherwise transfer, said
Agreement to Assignee, for valuable consideration, and, other consideration
including retention of certain Patent and Sales Royalty rights by the Assignor;
and
Further, Assignor wishes Assignee to assume any and all payment
obligations called for under the Agreement, any costs or expenses related to the
Agreement, the rights thereunder or its subject matter, and such payments, costs
and expenses to be non-recourse to the Assignor after Assignment to Assignee;
and
Contractor wishes to Consent to such Assignment of the Agreement to the
Assignee and the concurrent rights, liabilities, payment obligations and
interests, relating to the Agreement and the Assignor, or Contractor, whether
Assigned fully or partially, upon execution of such Assignment; and
That Assignee wishes to be Assigned, said Agreement, the rights,
liabilities, payment obligations, and interests, whether assigned partially, or
wholly, and Assignee wishes to assume the payment obligations under the
Agreement, and, any and all costs and expenses associated with the subject
matter of the agreement, and the rights contained therein, all for valuable
consideration;
Further, the Assignee wishes to assume all recourse for any and all
payment obligations under the Agreement, or any costs or expenses associated
with the Agreement or its subject matter; and
<PAGE> 2
NOW, THEREFORE, for and in consideration of Ten Dollars $10.00 and,
other valuable consideration, paid by Assignee, Assignor hereby assigns to
Assignee all of rights, title, interest, and concurrent duties, obligations and
liabilities to that Agreement, or called for under that Agreement, as attached
as Exhibit "A" and made a part of this Assignment, subject to, and, under the
following terms and conditions, and reserving the following retained interests
(hereinafter referred to the "Retained Interests"):
1. RETAINED INTEREST. The parties hereto, consisting of the Assignor,
the Assignee, and the Contractor, hereby agree that Assignor shall retain, and
not by way of this Agreement assign, the following rights and interests:
(a) a 50% divided, Joint Interest, in any and all existing, or after
acquired, Patent rights in the Mehica GP120 and PAK, such Joint Patent Rights as
originally conveyed by the Agreement and more specifically described in
paragraph 1.2 of such Agreement, and other applicable parts of the Agreement;
and
(b) a net profit participation consisting of five percent (5%) of the
net profits deriving from sales of the Mehica GP120, as more specifically
described in Exhibit C of the Agreement; AND
2. ADDITIONAL ROYALTY COMPENSATION. The parties hereto, consisting of
the Assignor, the Assignee, and the Contractor, hereby agree that Assignor, in
addition to other valuable consideration, shall be compensated for the life of
the Assigned agreement the following Royalty interest:
(a) a Gross Sales revenue participation interest, consisting of US $.50
per PAK sold.
3. ASSUMPTION OF PAYMENT OBLIGATIONS, LIABILITIES, DUTIES, UNDER THE
AGREEMENT. The parties hereto, consisting of the Assignor, the Assignee, and the
Contractor, hereby agree that, and the Assignee warrants, covenants and agrees,
that Assignee has had an opportunity to review all the payment obligations,
rights, duties, and liabilities under such Agreement hereby assigned, and
Assignee hereby warrants, covenants, and agrees, that Assignee takes, as its own
liabilities, any and all payment obligations under or pursuant to the Contract,
or any additional costs and expenses related to the subject matter of the
Contract.
4. ASSIGNMENT TERMS AND CONDITIONS. The Contractor, Assignor, and
Assignee hereby stipulate and agree, one to another, and for purposes of
enforceability or relating to any interpretation or body public interpretation,
that should the Agreement and the terms and conditions therein, be unclear as to
interpretation or differ as to impact or interpretation, or be interpreted to be
unclear as to assignability, nothing contained in the Agreement, its provisions
or paragraphs shall, by way of omission or lack of clarification, shall be
interpreted to prevent or omit to permit, the legal Assignment herein from
Assignor to Assignee. Nothing in this Assignment shall alter, amend or modify
the terms of the Agreement or the subject matter thereof.
The Contractor, Assignor, and Assignee hereby stipulates and agree that
the words "license or sublicense" or "licensor or licensee" or "sublicensor or
sublicensee", as used in the Agreement
<PAGE> 3
shall also mean "assignment, assignor, assignee" and encompass the principal of
assignment as used herein, and as permitted by the Agreement.
5. CONSENT TO ASSIGNMENT. The Contractor, pursuant to the Agreement,
its various terms and provisions, and specifically paragraph 11 of the
Agreement, hereby consents, stipulates, and agrees, and is hereby and forever
estopped from waiving or withdrawing such consent, stipulation, or agreement,
that the Agreement and this Assignment constitutes a valid Assignment of the
Agreement from Assignor to Assignee and that Assignee shall stand in stead of
Assignor for any and all obligations, liabilities, duties, performance,
participations and interests (save for the Retained Interests of Assignor herein
described).
6. EXHIBIT ATTACHED NOT TO BE PART OF THIS ASSIGNMENT. The parties
hereto, consisting of the Contractor, Assignor, and Assignee, in good faith
recognition of the complex accounting standards, accounting treatment of the
Agreement and Assignment therein, have attached, in good faith, a non-designated
Exhibit entitled "Restatement of Financial Provisions after effect of the
Assignment" for clarification purposes only, to illustrate the intent of the
parties, as a guide and not a legal document, and not necessarily having force
and effect, nor incorporated by reference in this Assignment, and may be changed
as a clarification by the parties, or any party, at any time.
IN WITNESS WHEREOF, the Assignor has duly signed this Assignment the
date first above written, and Contractor has duly signed and Consented to this
Assignment as noted below.
ASSIGNOR CONTRACTOR: Consenting to Assignment
Wendover Securities Corporation The Avriel Group, AMCAS Division, Inc.
BY: /s/John King BY: /s/Shawn A. Matlock
-------------------------------- ----------------------------------
Attest
BY: /s/Kayla Sturrup BY: /s/Chester F. King
-------------------------------- ----------------------------------
<PAGE> 4
AGREEMENT
DATE: February 7, 1995
PARTIES: Wendover Securities Corporation ("WSC"), a corporation organized under
the laws of the Commonwealth of the Bahamas, having a business address at P.O.
Box N8318 Naussau, Bahamas, and The Avriel Group, AMCAS Division, Inc., ("TAG")
a Maryland corporation, having a business address at 5320 Spectrum Drive, Suite
E, Frederick, Maryland 21703, United States of America.
RECITALS:
A. TAG has obtained (from Chester F. King and Dr. Robert A. Hallowitz)
certain technology relating to a detection system, known as the "Mehica GP120"
(hereafter "Mehica"), that automates the process for the detection of gp-120
bearing infected cells, and a packaged antigen kit (hereafter "PAK") designed to
work with the Mehica GP120, all as specified in Exhibit A attached hereto.
B. WSC is agreeable to funding the fabrication of the prototype Mehica
and PAK ("the Project"), to the extent of $1,400,000.00, and to own 100% of such
working prototype.
C. TAG is willing to build a working prototype Mehica GP120 and
prototype PAK for WSC, as an independent contractor, in accordance with the
terms set forth below.
D. TAG represents that Chester F. King and Robert A. Hallowitz, M.D.,
are the inventors of the Mehica GP120 and PAK, and that said inventors have duly
and legally assigned to TAG the invention and patent rights thereto, a copy of
such assignment attached hereto as Exhibit D.
E. TAG is willing to grant to WSC world-wide patent, marketing,
manufacturing and sales rights, all on terms set forth below.
AGREEMENT:
1. Grant of Rights.
1.1 The inventors of the Mehica GP120, Dr. Robert A. Hallowitz and
Chester F. King, have assigned all patent rights to TAG.
1.1.1 TAG will furnish a letter certifying that TAG is duly organized
and existing as a Maryland corporation, and that Dr. Hallowitz and Mr. King have
assigned patent and invention rights to TAG, attached as Exhibit D. WSC will
furnish a letter certifying that WSC is a duly organized and existing
corporation under the laws of the Bahamas.
<PAGE> 5
1.2 TAG hereby grants exclusive rights to WSC to license, sublicense
(including to any WSC majority-owned subsidiary company) the rights to
manufacture, sell and market, and to have its customers and/or customers of any
licensee or sublicensee use the Mehica GP120 and the PAK developed pursuant to
this agreement. Upon receipt by TAG of the total One Million, Four Hundred
Thousand Dollars ($1,400,000.00) from WSC as set out in Section 3 and Exhibit C
of this Agreement, TAG shall hereby grant to WSC joint "patent rights" (as
defined below) and joint rights to manufacture, sell, and market the Mehica
GP120 Detector and the PAK developed pursuant to this agreement. This grant of
rights shall be for the initial term of ten (10) years, unless sooner terminated
in accordance with this Agreement. The parties will conduct good faith
negotiations to extend this contract before the expiration of the initial term
of 10 years.
1.2.1 All licensee, sublicensees or assignees of WSC shall sign an
agreement with TAG agreeing to honor the terms of this Agreement and the payment
of royalties as stipulated herein.
1.3 Any inventions, processes, procedures, discoveries, designs,
configurations, technology, works of authorship, trade secrets, and improvements
(whether or not patentable) (hereinafter collectively called the "Inventions")
which are conceived of or under development by TAG, which does not directly
relate to the Project and the rights to said inventions (patent or otherwise),
shall be the exclusive property of TAG. TAG reserves the rights to all uses of
the inventions and patents except as set out below in section 1.4 and Exhibit A.
1.4 "Patent Rights" shall mean those patents and any reissues and
extensions thereof which issue in any country of the world for the Mehica GP120
Detector and the PAK designed to work with the Mehica GP120 Detector for the use
of detecting gp-120. Patent rights do not include rights to any proprietary
reagents used in the PAK (ie. Agmed, Cambridge, Cellular Products, etc.).
1.5 TAG hereby grantS to WSC the use of the tradename "Bio-Fluorescent
Technologies, Inc."
1.6 WSC shall pay all reasonable legal fees, costs and expenses
necessary and associated with obtaining a ruling on patent viability for the
Mehica GP120 and the PAK. The entity created will pay for all direct patent
applications and filings including the cost of international patents.
1.7 WSC, its affiliates, licensees and sublicensees shall notify TAG
promptly in writing of any infringement of our Licensed Patents which becomes
known to Licensee. If TAG determines that a substantial infringement exists, TAG
and WSC together will take prompt action
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<PAGE> 6
to attempt to eliminate that substantial infringement. WSC, its affiliates and
sublicensees shall cooperate with TAG in determining if substantial infringement
exists and, if so, in attempting to eliminate that substantial infringement. WSC
or TAG shall be responsible for taking appropriate legal action to enforce the
patents.
2. Services. TAG will exert its best efforts, in accordance with
current professional standards, to perform and to complete the project (the
"Project") as set forth in the project description attached hereto as Exhibit B.
2.1 Staged Payments. TAG's ability to render services is dependent upon
the receipt of the staged payments as specified in paragraph 3.1 and Exhibit C
of this Agreement. WSC's failure to make said payments to TAG shall constitute a
material breach by WSC of this Agreement, as identified in paragraph 6.3 below.
WSC's breach of this Agreement by failing to make the payments scheduled in
Exhibit B cannot be cured if a deficit remains at the end of the 90 days
provided under paragraph 6.3.
3. Payment. In consideration of the performance of services by TAG
under paragraph 2 and Exhibit B, and the granting of rights pursuant to
paragraph 1 of this Agreement, WSC shall pay TAG as follows:
3.1 Total Staged Payments: WSC shall pay One Million Four Hundred
Thousand Dollars ($1,400,000.00) to TAG pursuant to the schedule set out in
Exhibit C.
3.2 In addition to the above payments, a royalty as set forth in
section 4 below.
3.3 TAG will receive a set percentage of the entity created or
purchased by WSC to market, manufacture and sell the Mehica GP120, as stipulated
in the December 7, 1994, letter agreement between the companies, as modified by
the letter dated February 3, 1995.
3.4 All costs and expenses incurred by TAG or its employees or officers
in assisting WSC and/or its affiliates or sublicensees in the promotion of the
Mehica GP120 and PAK, including, but not limited to travel expenses, shipping
and printing, shall be paid separate and apart from the development payments and
royalties by WSC and/or its affiliates or sublicensees to TAG prior to the
incursion of said expenses and costs, or within thirty (30) days after the
incursion of said expenses and costs.
4. Royalty.
4.1 WSC shall pay TAG a royalty on the sales of the Mehica GP120
Detector and the PAK sold by WSC directly or by its affiliate(s) licensee(s) and
sublicensee(s), according to the schedule in Exhibit C. This royalty applies is
only to the Mehica GP120 Detector and the PAK
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<PAGE> 7
developed by TAG pursuant to this Agreement and any modifications or
improvements agreed upon by both TAG and WSC.
4.2 Any licensee, sublicensee or assignees (including any WSC
majority-owned subsidiary company that is a sublicensee of WSC) shall pay
royalties to TAG on the same terms, including the rate specified in Exhibit C,
and with the reporting duties specified in 4.4, as if such sublicensee were a
direct licensee of TAG. WSC agrees that any license or sublicense granted by it
shall have privity of contract between TAG and such licensee or sublicensee, and
the obligations of Paragraph 3 through 9, inclusive, of this Agreement shall be
binding upon the sublicensee as if it were in the place of WSC.
4.3 WSC further agrees that any such license, sublicense or assignment
shall include copies of Paragraphs 1 through 9, inclusive, of this Agreement.
Any license or sublicense agreement negotiated by WSC shall include a commitment
by WSC and by the licensee or sublicensee to exert their best efforts to
introduce the Mehica GP120 and the PAKs into public use as rapidly as
practicable. Sublicense terms and conditions shall reflect that any licensee or
sublicensee shall not further sublicense, and shall provide for the transfer of
all obligations, including the payment of royalties specified in such
sublicensees. to TAG or its designee in the event that this Agreement is
terminated.
4.4 Within sixty (60) days after the end of each calendar quarter year
commencing with the first half-year in which the Mehica GP120 and PAKs are
marketed under this Agreement, WSC shall render a written report to TAG setting
forth for the preceding half calendar year: (I) the identity and quantity of
items sold with respect to which a royalty is payable hereunder, and the gross
amount involved therefor, (ii) the aggregate Net Sales thereof; (iii) the amount
of royalty payable with respect thereto; and (iv) any other information required
so that the royalty payable by WSC to TAG hereunder can be properly ascertained.
The royalty payment shall accompany the report. At the request of TAG, WSC shall
permit a certified, public, chartered accountant, selected and compensated by
TAG, to have access to such books and records as may be necessary to determine,
with respect to any accounting period ending not more than three (3) years prior
to the date of such request, the correctness of any report or payment under this
Agreement. Any such accountant entitled hereunder to examine the books of WSC
shall be entitled to make such examination at any time during reasonable
business hours, but shall not be entitled to disclose to any party including TAG
any information relating to the business of WSC except that which should
properly be contained in any report hereunder.
4
<PAGE> 8
4.5 All royalties shall be paid by WSC, its affiliates, licensees,
sublicensees or assignees into an escrow account at Citibank, in New York City.
WSC is to establish said escrow account within six months of signing this
agreement. TAG and WSC will select an escrow agent to administer and distribute
royalties from said escrow account. WSC and TAG shall be paid their royalties
from said escrow account. All amounts payable hereunder by WSC to TAG shall be
payable in United States funds collectable at par in Baltimore, Maryland, after
wire transfer from the Citibank account. The method of calculation of royalties
on sales in countries other than the United States, or sales paid for in other
than United States funds, is set out in Exhibit C.
4.6 If WSC or its affiliate, licensee, or sublicensee is required to
cut the price of the PAK to be competitive with market prices, then the
royalties of TAG may be reduced on a case-by-case basis to an amount agreed upon
by all parties in writing. The royalty paid to TAG shall always be equal to the
total combination of royalties and fees paid to WSC.
5. Confidentiality. "Proprietary Information" shall mean collectively
all such Inventions and any and all confidential, proprietary or secret
information relating to WSC's or to TAG's products, services, clients, customers
or business operations or activities. Without prior written permission from the
other, each party shall use the other's proprietary information only for the
purpose of performing under the terms of this Agreement, and will copy or
distribute it only among those of its employees or consultants who are under a
written duty of confidence to them, and only to the extent necessary for such
performance, and will not otherwise disclose any of it. Any copy permitted
hereunder of any proprietary information shall contain all proprietary notices
contained on the original.
6. Termination.
6.1 If WSC shall become bankrupt or insolvent, or shall file a petition
in bankruptcy, or if its business shall be placed in the hands of a receiver,
assignee or trustee for the benefit of creditors, whether by the voluntary act
of WSC or otherwise, all rights to the Mehica GP120 and the PAK shall revert
back to TAG, and WSC's rights granted in this Agreement shall automatically
terminate. If TAG shall become bankrupt, all of TAG's rights and royalties due
to TAG shall revert and be paid to the inventors.
6.2 Should WSC fail in its payment to TAG of royalties due in
accordance with the terms of the Agreement, TAG shall have the right to serve
written notice upon WSC of its intention to terminate this Agreement within
sixty (60) days after delivery of said notice of termination unless WSC shall
pay TAG, within the sixty (60) day period, all such royalties due and
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<PAGE> 9
payable. Upon the expiration of the sixty (60) day period, the rights,
privileges and license granted to WSC hereunder shall thereupon immediately
terminate.
6.3 Upon any material breach or default of this Agreement by WSC, other
than those circumstances set out in paragraphs 6.1 and 6.2 hereinabove, which
shall always take precedence in that order over any material breach or default
referred to in this Paragraph 6.3, TAG shall have the right to terminate this
Agreement and the rights and license granted hereunder upon ninety (90) days'
written notice to WSC. Such termination shall become effective unless WSC has
cured any such breach or default prior to the expiration of ninety (90) days
from delivery of TAG's notice of termination.
6.4 In the event that TAG encounters an unforeseeable technical, legal
or administrative problem that prevents it from completing a task of the project
within the interval of time specified therefor in Exhibit B, TAG shall serve
written notice upon WSC of the circumstances. TAG and WSC shall thereupon
negotiate in good faith to establish a mutually agreeable basis for attempting
to solve this technical, legal or administrative problem, either between
themselves alone or with the help of a third party. If within ninety (90) day
after the giving of such notice, the parties have not established such a basis,
then either party shall have the right to terminate this agreement immediately
upon written notice of such effect to the other party. If after the 90 day
period expires, WSC or TAG should realize a proposed solution to the technical,
legal or administrative problem, either party shall advise the other of this
proposed solution, and the parties shall thereupon negotiate in good faith terms
for resumption of the Project. This section is not applicable to engineering or
design problems that TAG may uncover during fabrication that are not caused by a
change in the law. TAG shall not be liable for delays in performance under the
terms of this Agreement resulting from acts of God, strikes, lockouts,
embargoes, riots, acts of war whether or not declared, insurrections, civil
disorder, terrorist acts, epidemics, quarantine restrictions, communications,
lincs failure, power failures, fires, floods, earthquakes, other natural
disaster, or other disasters including nuclear incidents. Neither party shall be
liable for delays or failure to perform if prevented from doing so by
governmental regulations imposed after this Agreement's entry into force. In the
event one of these conditions may have occurred the defaulting Party shall
notify the other Party as soon as reasonably practicable as to the nature and
extent of the force majeure condition.
6.5 Upon termination of this Agreement for any reason, nothing herein
shall be construed to release either party of any obligation which shall have
matured prior to the effective date of such termination, and WSC and/or any
sublicensee thereof may, after the effective date of
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<PAGE> 10
such termination, sell all Mehica GP120 systems and PAKs in their possession and
sell all Mehica GP129 systems and PAKs lawfully in the process of manufacture at
the time of such termination, provided that they pay to TAG the royalties
thereon and submit the reports as required by paragraph 4 hereof. The provisions
of paragraph 5 and 7 through 12 shall survive termination of this Agreement.
7. Independent Contractor. For the purposes of this agreement and all
services to be provided hereunder, each party shall be and shall be deemed to be
an independent contractor and not an agent or employee of the other party.
Neither party shall have authority to make any statements, representations or
commitments of any kind or to take any action which shall be binding on the
other party, except as may be explicitly provided for herein or authorized by
the other party in writing.
8. U.S. Laws and Regulations.
8.1 Nothing in this contract shall require either party to perform any
actions in violation of U.S. laws or regulations.
8.2 To the extent that the approval in the U.S. Government under the
provisions of various U.S. laws regulating the export of technology is required,
WSC shall obtain such approval. WSC shall also obtain the approval of any other
governmental authority required to develop, market and sell the Mehica GP120
system or the PAK. TAG will render reasonable assistance to WSC in obtaining
said approvals. TAG will submit the documents required to obtain a 510(k) on the
Mehica GP120 Detector to the F.D.A.; however, TAG is not responsible for any
delays caused by the F.D.A. evaluation and approval process.
8.3 Any criminal violation by WSC, its affiliates, licensees or
sublicensees, their principals or officers, of federal, state or international
tax, trade, securities, import/export, and/or administrative laws, shall
constitute a material breach of this Agreement. Upon indictment or the
commencement of a criminal investigation, all the rights and privileges granted
under this Agreement and any sublicense shall be suspended. If said breaching
party is found guilty of violating said laws, or the matter is not resolved with
eighteen (18) months of indictment or the commencement of a criminal
investigation, the grants of rights and privileges under this Agreement and any
sublicense shall terminate and revert back to TAG. WSC and/or its sublicensee
shall be responsible for any fines and legal costs incurred by TAG for WSC's or
its sublicensee's violation of the laws as outlined in this section 8.3
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<PAGE> 11
9. Notices. Any notices required or permitted to be given under this
Agreement shall be deemed to have been delivered seven (7) days after being
mailed postage-prepaid by United States or international registered airmail to
the following addresses of either party:
in the case of WSC, to the attention of John King at the address given
above;
in the case of TAG, to the attention of Chester F. King at the address
given above;
or, in either case, to such other addresses or persons as shall
hereafter be provided by written notice to the other party.
10. Miscellaneous. This instrument contains the entire agreement
between parties hereto. No verbal agreement, conversation or representation
between any officers, agents, or employees of the parties hereto either before
or after the execution of this agreement shall affect or modify any of the terms
or obligations herein contained. Any amendments, addendums, assignments or
modifications must be made in writing and signed by both parties, and duplicate
originals must be sent pursuant to section 9 to each party hereto, and a copy
will be attached hereto and made part of this agreement as a modification. No
delay or omission by a party in exercising any right under this agreement will
operate as a waiver of that or any other right. A waiver or consent given by a
party on any one occasion is effective only in that instance and will not be
construed as a bar to or waiver of any right on any other occasion. Paragraph
captions are used only for convenience and are in no other way to be construed
as part of this Agreement or as a limitation of the scope of the particular
paragraphs to which they refer. Any and all legal fees incurred in enforcing
this agreement shall be paid by WSC.
11. Parties Bound. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and the successors to substantially the entire
assets and business of the respective parties hereto. This Agreement shall not
be assignable by either party, without the prior written consent of the other
party, which consent shall not be unreasonably withheld. Any and all assignments
of this Agreement or any interest herein not made in accordance with this
paragraph shall be void.
12. Governing Law. This agreement shall be governed by and construed
under and in accordance with the laws of the United States of America and the
State of Maryland. Actions concerning the interpretation or enforcement of this
agreement shall be commended in the State of Maryland.
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<PAGE> 12
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the above date.
Wendover Securities Corporation
By/s/John King
--------------------------------
Authorized Agent, President
The Avriel Group,
AMCAS Division, Inc.
By /s/Shawn A. Matlock
--------------------------------
Shawn A. Matlock, Secretary
9
<PAGE> 13
EXHIBIT A
(PRODUCT DESCRIPTION)
The Mehica GP120 Detector System and Packaged Antigen Kits (PAK) are the
components of the antigen-based gp-120 test performed on whole blood.
The Mehica GP120 Detector System is a microscope imaging system designed to
process and read the PAK. The test itself is conducted in a specially designed
cartridge; blood mixes with high-affinity, genetically engineered antibodies
that attached magnetic particles and a fluorochrome to gp-120 bearing cells.
The Mehica GP120 Detector System performs incubation, magnetic enrichment and
detection of gp-120 bearing cells when present in the whole blood sample. If a
specimen is positive, the imaging system indicates a positive response. If a
specimen is negative, the system indicates a negative response. Images may be
archived for later review.
The Packaged Antigen Kit (PAK) is a specimen collection device housing the
process for tagging individually infected cells. The device contains Designed
Analytical Reagents (DARs) which seek out and attach to a specific structure
(gp-120). The DARs used in this device can tag gp-120 bearing cells in a drop of
blood. The DARs used in the Pak have been developed by independent companies
from whom they can be purchased for incorporation with the PAK. The collection
device serves as the incubation chamber, the magnetic enrichment chamber and the
viewing chamber in the Mehica GP-120 Process.
/s/Robert A. Hallowitz, M.D.
- - -------------------------------------------------
Dr. Robert A. Hallowitz, M.D.
Vice President of Research and Development
10
<PAGE> 14
EXHIBIT B
(DESCRIPTION OF PROJECT)
Upon receipt of staged payments to purchase or fabricate the necessary parts,
equipment, and supplies, The Avriel Group, AMCAS Division, Inc., will assemble a
working prototype Mehica GP120 Detector and the prototype PAK, as defined below.
The project will be completed in one to Four (4) stages. The prototypes will be
of such a nature that they can be redesigned to production models.
The progression of the development is directly linked to the availability of
funds for paying development cost. The development process will be conducted in
the following stages, with an expected start date of May 1, 1996.
1st Stage. Assembly of prototype detector system capable of displaying
fluorescing and non-fluorescing cells:
Start Collection Process protocol for donor samples
in Latin America; and Meet with F.D.A. on
classification of Detector.*
2nd Stage. Reagent Assay Protocols determined;
Reagent Proof of Principle Trials begun;
Begin FDA process of classification of Detector;*
Adding additional components;
Identification of sources of required materials for
cartridge begins (i.e., identify the manufacturers of
a specific reagent, casing materials, glass type);
and Meet with the F.D.A. on the cartridge
classification.*
3rd Stage. Fabrication of the prototype cartridge (begins);
Reagent Proof of Principle Trials Completed; and
Continue meetings with F.D.A.*
4th Stage. Complete fabrication of final working prototype of GP-120
Detector Hardware System and the prototype cartridge.
*Time frames are dependent upon FDA.
The prototype Mehica GP-120 Detector System will perform incubation, magnetic
enrichment and detection of GP-120 bearing infected cells when present in the
whole blood sample, using the PAK collection device. If a specimen is positive,
the imaging system will indicate a positive response. If a specimen is negative,
the system will indicate a negative response.
/s/Robert A. Hallowitz, M.D.
- - ------------------------------------------------
Dr. Robert A. Hallowitz, M.D.
Vice President of Research and Development
11
<PAGE> 15
EXHIBIT C
(PAYMENT SCHEDULES)
PROJECT COMPLETION PAYMENTS: WSC is to pay TAG $1,400,000.00 (United States
Dollars) in four (4) installments* payable at the beginning of each development
stage identified in Exhibit B of this Agreement in the following amounts:
Stage 1. $434,029.00
Stage 2. $434,029.00
Stage 3. $287,029.00
Stage 4. $244,913.00
ROYALTY PAYMENTS: WSC shall pay TAG royalties on the sales of the Mehica GP120
PAK.
1. WSC shall pay TAG royalties* of One dollar ($1.00) per each PAK sold by WSC,
its affiliates, licensees and/or sublicensees, whether sold inside or outside
the United States of America. All royalties are to be calculated in United
States Dollars and paid in United States currency.
2. WSC and TAG shall receive a royalty of 10% of the net profit on all sales of
the Mehica GP120 Systems sold by WSC, its affiliates, licensees and/or
sublicensees. All royalties are to be calculated in United States Dollars and
paid in United States currency.
3. If TAG takes a reduction in royalty on any sale of the PAK or Mehica GP120
Detector, the calculation of royalties due on sales in countries other than the
United States, or sales paid for other than by United States funds, the Net
Sales of such products so sold shall first be determined in the funds of the
countries for which the products were sold, and then converted into its
equivalent in United States funds at:
3.1 The rate applicable to the transfer of funds arising from royalty
payments as established by the exchange control authorities of the country of
which such funds are the national currency, at its average exchange rate during
the accounting period for which payment is thus made; or
3.2 If there is no applicable rate so established, then the average
selling rate for United States funds as published by leading commercial banks in
the major city of the country of which such foreign funds are the national
currency, at its highest exchange rate during such accounting period; or
3.3 If there is no rate so published, then the average of the three
highest buying rates for such foreign funds as published by the First National
Bank of boston for such accounting period.
*All project completion installment payments and royalty payments are to be made
in United States currency.
12
<PAGE> 1
EXHIBIT 11
Statement re: Computation of Earnings per share
<TABLE>
<S> <C>
Common shares outstanding beginning of period 1,000,000
Effect of weighting shares:
Shares issued 8,423,372
---------
Weighted average common shares outstanding 9,423,372
=========
Net loss ($1,384,563)
===========
Loss per common share ($0.15)
======
</TABLE>
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
NONE
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 18,832
<SECURITIES> 0
<RECEIVABLES> 550,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 320,707
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,505,707
<CURRENT-LIABILITIES> 183,542
<BONDS> 0
0
0
<COMMON> 11,931
<OTHER-SE> 1,310,234
<TOTAL-LIABILITY-AND-EQUITY> 1,505,707
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,381,741
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,822
<INCOME-PRETAX> (1,384,563)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,384,563)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,384,563)
<EPS-PRIMARY> (.15)
<EPS-DILUTED> (.15)
</TABLE>
