U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from ___________ to __________
Commission File Number: 33-93132
La Jolla Diagnostics, Inc.
--------------------------
(Exact name of small business issuer as specified in its charter)
California 94-2901715
---------- ----------
(State or other jurisdiction (IRS Employer
of incorporation or organization) identification No.)
7855 Ivanhoe Avenue, Suite 322, La Jolla, California 92037
-----------------------------------------------------------
(Address of principal executive offices and zip code)
(800) 454-6790
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (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 90 days.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: as of May 10, 2000 La Jolla
Diagnostics, Inc. had 20,777,514 shares outstanding of the registrant's common
stock, no par value.
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<Page 1>
LA JOLLA DIAGNOSTICS, INC. AND SUBSIDIARIES
FORM 10-QSB
QUARTER ENDED MARCH 31, 2000
INDEX
Page
PART I FINANCIAL INFORMATION
Item 1 Financial Statements (unaudited):
Condensed Consolidated Balance Sheets as of March 31, 2000
(unaudited) and June 30, 1999 3
Condensed Consolidated Statements of Operations for the Nine
Months Ended March 31, 2000 and 1999 (unaudited) 4
Condensed Consolidated Statements of Operations for the Three
Months Ended March 31, 2000 and 1999 (unaudited) 5
Condensed Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 2000 and 1999 (unaudited) 6
Notes to Condensed Consolidated Financial Statements (unaudited) 7 - 8
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 9 - 11
SIGNATURES 12
PART II OTHER INFORMATION
Item 1 Legal Proceedings - None
Item 2 Changes in Securities - None
Item 3 Defaults Upon Senior Securities - None
Item 4 Submission of Matters to a Vote of Security Holders -
None
Item 5 Other Information - None
Item 6 (a) Exhibits
Ex. 10 Purchase agreement dated as of
March 20, 2000 between DiagnosTech, Inc.,
a subsidiary of La Jolla Diagnostics, Inc.,
and Meridian Diagnostics, Inc. 13 - 31
(b) Reports on Form 8-K - None
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<Page 2>
LA JOLLA DIAGNOSTICS, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2000 AND JUNE 30, 1999
(A Development Stage Company)
<TABLE>
March 31, June 30,
2000 1999
(unaudited)
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 163,218 $ 208,555
Accounts receivable 3,060 207
Advances to officer 6,658 6,670
Inventory - current portion 783,196 786,353
Prepaid expenses 13,322 25,960
---------- ----------
TOTAL CURRENT ASSETS 969,454 1,027,745
Property and equipment, net 87,388 87,829
Inventory 1,240,000 1,240,000
Scientific technology 485,485 512,830
Other assets 3,771 4,590
---------- ----------
$2,786,098 $2,872,994
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 185,814 $ 237,214
Accrued expenses 35,920 27,892
Customer deposits 663 663
Lease obligations,
current portion (Note I) 1,224 1,418
Loans payable (Note H) 73,007 91,841
---------- ----------
TOTAL CURRENT LIABILITIES 296,628 359,028
---------- ----------
LONG TERM LIABILITIES:
Lease obligation,
non-current portion (Note I) - 616
Minority interest 1,434,284 1,227,937
---------- ----------
TOTAL LONG TERM LIABILITIES 1,434,284 1,228,553
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock, no par value (50,000,000
shares authorized, 20,440,082 and
20,378,219 shares issued & outstanding,
respectively) 13,576,136 13,302,264
Additional paid-in capital 831,247 831,247
Preferred stock, no par value (5,000,000
shares authorized, no shares issued) - -
Retained deficit ($6,949,254 and
$6,437,579 deficit accumulated during
development stage begun December 3, 1993,
respectively)(Note B) (13,352,197) (12,848,098)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 1,055,186 1,285,413
---------- ----------
$2,786,098 2,872,994
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<Page 3>
LA JOLLA DIAGNOSTICS, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31, 2000 AND 1999
(A Development Stage Company)
<TABLE>
For The Nine Months Ended
March 31,
2000 1999
(unaudited) (unaudited)
------------ ------------
<S> <C> <C>
NET SALES $ 59,548 $ 56,182
OPERATING EXPENSES
Cost of products sold 72,439 23,125
Selling and administrative expenses 445,623 365,652
Research and development 9,822 29,600
Consulting services 154,791 39,425
Depreciation and amortization 50,633 16,428
------------ ------------
TOTAL OPERATING EXPENSES 733,308 474,230
LOSS FROM OPERATIONS (673,760) (418,048)
OTHER INCOME (EXPENSES)
Interest expense (9,960) (19,751)
Minority interest 179,621 80,242
Loss on settlement of debt - (25,000)
------------ ------------
TOTAL OTHER INCOME (EXPENSES) 169,661 35,491
LOSS BEFORE INCOME TAXES (504,099) (382,557)
PROVISION FOR INCOME TAXES - -
NET LOSS $ (504,099) $ (382,557)
NET LOSS PER COMMON SHARE $ (0.02) $ (0.03)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 20,440,082 14,231,304
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<Page 4>
LA JOLLA DIAGNOSTICS, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(A Development Stage Company)
<TABLE>
For The Three Months Ended
March 31,
2000 1999
(unaudited) (unaudited)
------------ ------------
<S> <C> <C>
NET SALES $ 29,126 $ 6,220
OPERATING EXPENSES
Cost of products sold 6,596 1,956
Selling and administrative expenses 161,874 134,724
Research and development 4,750 9,472
Consulting services 50,700 -
Depreciation and amortization 17,124 9,810
------------ ------------
TOTAL OPERATING EXPENSES 241,044 155,962
LOSS FROM OPERATIONS (211,918) (149,742)
OTHER INCOME (EXPENSES)
Interest expense (979) (3,675)
Minority interest 36,924 38,743
Loss on settlement of debt - (25,000)
------------ ------------
TOTAL OTHER INCOME (EXPENSES) 35,945 10,068
LOSS BEFORE INCOME TAXES (175,973) (139,674)
PROVISION FOR INCOME TAXES - -
NET LOSS $ (175,973) $ (139,674)
NET LOSS PER COMMON SHARE $ (0.01) $ (0.01)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 20,440,082 19,858,206
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<Page 5>
LA JOLLA DIAGNOSTICS, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(A Development Stage Company)
<TABLE>
For The Nine Months Ended
March 31,
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (504,099) $ (382,557)
Adjustments to reconcile loss to net
cash used in operating activities
Depreciation and amortization 48,959 16,428
Minority interest (176,151) 119,059
Issuance of stock for services 39,360 75,300
Changes in assets and liabilities
(Increase) decrease in inventories 3,157 140
(Increase) decrease in accounts receivable (2,852) (1,140)
(Increase) decrease in other assets 13,516 24,305
Increase (decrease) in liabilities (62,204) (51,209)
NET CASH USED IN OPERATING ACTIVITIES (640,316) 19,079
CASH FLOWS USED IN INVESTING ACTIVITIES
Advances (to)/from shareholder, net - 38
Capital expenditures for property and
equipment (21,218) (6,182)
------------ ------------
NET CASH USED FOR INVESTING ACTIVITIES (21,218) (6,144)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 617,008 3,000
Proceeds from notes payable, net - 47,932
Payments on capital lease obligations (811) (829)
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES: 616,197 50,103
NET INCREASE (DECREASE) IN CASH (45,337) 63,038
CASH AT BEGINNING OF PERIOD 208,555 1,307
CASH AT END OF PERIOD $ 163,218 $ 64,345
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<Page 6>
LA JOLLA DIAGNOSTICS, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(A Development Stage Company)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements and
related notes have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission for Form 10-QSB. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments, consisting of a normal recurring nature considered
necessary for a fair presentation, have been included. It is suggested that
these financial statements are read in conjunction with the financial
statements and notes thereto included in the Company's annual report on Form
10-KSB for the year ended June 30, 1999. The results of operations for the
nine month period ended March 31, 2000 are not necessarily indicative of the
operating results for the year ended June 30, 2000. For further information,
refer to the consolidated financial statements and notes thereto included in
the Company's Annual Report on Form 10-KSB for the fiscal year June 30, 1999.
B. INVENTORIES:
Inventories as of March 31, 2000 and June 30, 1999 are comprised of
the following:
March 31, 2000 June 30, 1999
unaudited
------------ ------------
Antisera at original value $ - $4,150,579
Less Valuation reserve - (2,600,579)
------------ ------------
Antisera products, net 1,541,586 1,550,000
Diagnostic test products 464,829 472,665
Healthcare products 16,781 3,688
------------ ------------
$ 2,023,196 $ 2,026,353
============ ============
C. NET LOSS PER COMMON SHARE:
Net loss per common share is computed by dividing the net loss by the weighted
average number of common shares outstanding during the period. For the nine
month period ended March 31, 2000 and 1999, the Company's common stock
equivalents were antidilutive and, therefore, were not included in the
computation of net loss per common share.
In February 1997, the FASB issued Statement of Financial Accounting Standards
No. 128, "Earnings per Share," (SFAS 128) which was required to be adopted on
March 31, 2000. The Company is currently using this method to compute earnings
per share in compliance with SFAS No. 128. Under the new requirements for
calculating primary earnings per share, the dilutive effect of stock options
will be excluded. The impact of SFAS No. 128 has not resulted in any change to
primary earnings per share for the nine month period ended March 31, 2000 and
1999. The impact of SFAS No. 128 on the calculation of fully diluted earnings
per share for these periods is immaterial.
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<Page 7>
D. RELATED PARTY TRANSACTIONS:
During the nine months ended March 31, 2000 and 1999, various shareholders
and directors of the Company provided consulting and research and development
activities related to the business activities and products of the company.
In connection with these services, during the nine months ended
March 31, 2000 and 1999, the Company recognized research and development of
$9,822 and $29,600 and consulting expenses of $154,791 and $39,425,
respectively.
E. SUPPLEMENTAL CASH FLOW INFORMATION:
Interest and Income Taxes Paid
Cash paid for interest and income taxes for the nine months ended
March 31, 2000 and 1999 (unaudited) were as follows:
March 31, 2000 March 31, 1999
------------------ ------------------
Interest $ 9,960 $ 19,751
Income taxes $ - $ -
F. USE OF ESTIMATES:
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimated and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
THIS QUARTERLY REPORT ON FORM 10-QSB CONTAINS FORWARD-LOOKING STATEMENT THAT
INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER
SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS.
FORWARD-LOOKING INFORMATION - GENERAL
This report contains a number of forward-looking statements, which reflect the
Company's current views with respect to future events and financial
performance. These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical results or those anticipated. In this report, the words
"anticipates", "believes", "expects", "intends", "plans", "may", "future", and
similar expressions identify forward-looking statements. Readers are cautioned
to consider the risk factors described above and in the Company's Annual Report
on Form 10-KSB for the year ended June 30, 1999, and not to place undue
reliance on the forward-looking statements contained herein, which speak only
as of the date hereof. The Company undertakes no obligation to publicly revise
these forward-looking statements, to reflect events or circumstances that may
arise after the date hereof.
Additionally, these statements are based on certain assumptions that may prove
to be erroneous and are subject to certain risks including, but not limited to,
the Company's ability to introduce new products, the concentration of the
Company's current products, technological change and increased competition in
the industry, the Company's ability to manage its growth, its limited
protection of technology and trademarks, the Company's dependence on limited
suppliers, representatives, distributors, and its dependence on certain key
personnel within the Company. Accordingly, actual results may differ, possibly
materially, from the predictions contained herein.
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<Page 8>
LIQUIDITY AND CAPITAL RESOURCES
The Company, in the past, has financed operations primarily through the private
placement of common stock, issuance of convertible debt, warrant conversions,
issuing warrants to acquire stock in exchange for services rendered and to a
lesser degree from product sales. Based on its current operating plans, cash
generated from projected sales may not generate the necessary capital to fully
support development of the Company's products through June of 2000 and the
Company will continue to employ use of equity financing to allow the Company to
continue its operations. The Company anticipates that the proceeds from
conventional private placements of stock, issuance of convertible debt and
exercise of warrants and options will continue to enhance working capital.
During the quarter ending March 31, 2000, La Jolla Diagnostics, Inc. received
capital for the exercise of options amounting to $211,083.
Subsequent to the March 31, 2000 quarter end the company has received
additional capital for the exercise of options. The amount of $194,800 has
been received prior to May 15, 2000.
RESULTS OF OPERATIONS.
GENERALLY. The Company and Meridian Diagnostics, Inc. Cincinnati, Ohio,
(Nasdaq:KITS) signed an agreement for a cash payment and future royalties for a
unique rapid blood test for active tuberculosis disease from the DiagnosTech
subsidiary of La Jolla Diagnostics. The test utilizes a combination of three
highly specialized Mycobacterium tuberculosis antigens that react with serum
from persons having active TB, in just three minutes. This ability of the test
to distinguish TB infection from "active" disease makes it ideal for helping
medical professionals select the appropriate therapy. Meridian and La Jolla
have further agreed to cooperate in defining future product improvements and
opportunities.
La Jolla, through its subsidiary DiagnosTech, Inc. intends to aggressively
pursue the development and marketing of its other diagnostic tests and assets.
The parent company, La Jolla is now concentrating on the development and
marketing of its dietary supplements, over-the-counter (OTC) healthcare
products and related technologies.
To achieve these objectives, the Company is using an improved technology in
formulation, and is beginning to aggressively market its products to a new and
larger audience including the use of a greatly expanded internet presence.
The company has launched a major internet health portal, www.NatureWell.com,
which will not accept any advertising in its editorial section. It will rely
on its virtual store for revenue.
The "store" will serve not only users of our health portal, but will also
receive orders from and send information to distributors, representatives and
retailers in the "bricks and mortar" world. The Company believes that,
especially with a number of new products scheduled for introduction over the
next 30 days, the entire product line will become increasingly attractive to
retailers and other re-sellers. Because we retain exclusive control over
internet sales of our products, retailers will be assured that there is no
discounted source available on the internet.
The company's board of directors has approved changing the company's name from
La Jolla Diagnostics, Inc. to NatureWell.com, Inc.
The proposed name change is subject to shareholder approval, which will be
sought at the company's 2000 Annual Meeting. Upon such approval, the company
will immediately file with the NASD for a new ticker symbol.
This action constitutes a proposed name change of the company only. Each share
of La Jolla Diagnostics, Inc. (OTCC:LAJD) will equal one share of
NatureWell.com, Inc.
The Company believes that because of the quality of its existing products and
other products being developed, with its business objectives in place, and
through recent and future funding and projected revenues, and it will begin to
achieve it's goals before the end of its fiscal year (June 30, 2000).
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<PAGE 9>
FOR THE NINE MONTHS ENDED MARCH 31, 2000 AND 1999
For The Nine Months Ended
MARCH 31, 2000 MARCH 31, 1999
------------------ ------------------
Revenues $ 59,548 $ 56,182
Cost of products sold (72,439) (23,125)
Other operating expenses (660,869) (451,105)
---------- ----------
Loss from operations (673,760) (418,048)
Net loss $ (504,099) $ (382,557)
========== ==========
The Company experienced a net loss of $504,099 for the nine month period
ending March 31, 2000, compared with a net loss of $382,557 for the same
period ending March 31, 1999. On a consolidated basis, the Company had
sales totaling $59,548 for the nine months ended March 31, 2000, compared
with $56,182 in sales for the Company for the same period ending
March 31, 1999. Cost of product sales and operating expenses for the nine
months ended March 31, 2000 were $72,439 compared to $23,125 for the nine
months ended March 31, 1999.
FINANCIAL RESOURCES
At March 31, 2000, the Company had current assets of $969,454 which includes
inventory of $16,781 healthcare products, $464,829 diagnostic products,
$301,586 in current antisera inventory and $13,322 in prepaid expenses.
RESEARCH AND DEVELOPMENT
The research and development activities being performed by the Company are
designed to discover and screen potential consumer health care and diagnostic
products.
Healthcare & Nutraceutical Products
The Company has begun to use a new proprietary technology, which it believes is
superior to the former technology in the formulation of its health care
products. The thrust of this technology is to maximize product biological
effectiveness and stability. The stability is of particular importance, as it
impacts on the shelf life, and the method of shipping the products. These
technological changes are being used with all the Company's healthcare products
including the re-introduction of Living Water Eye Lotion and MigraSpray with
feverfew, both of which have been extremely well received by those who are
using them.
The company is also in the process of introducing several other products to its
expanded product line
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<PAGE 10>
NatureWell.com Health Portal
The NatureWell.com health portal is expected to be the most interactive health
portal on the Internet. Users are able to contribute their insights, experience
and knowledge in any one of approximately 400 categories.
Additional features, unique to the NatureWell.com health portal and provided as
a means of bolstering community and encouraging collaboration among users
include: Internet-based bookmark storage, "neighbor-to-neighbor" wherein users
can present their opinions and experiences with various health-related goods
and services, the ability to build a personal homepage on the site, and other
tools.
The commerce section of the web site includes a store, wherein the unique and
proprietary NatureWell products are, of course, prominently featured. The store
will also carry an expanding line of third-party products, on which the Company
expects to receive approximately 50% or better gross margin. The commerce
section also includes a classified/auction section where individuals and
merchants can offer products for sale.
PRODUCTS NOW BEING MARKETED
MIGRASPRAY(TM)
MigraSpray(TM) is a dietary supplement, containing the herb feverfew, designed
to be strayed under the tongue before being swallowed. This sublingual method
of administration promotes excellent absorption. Feverfew is the common name
for Tanacetum Parthenium, a flowering plant related to the chrysanthemum, whose
leaves have been used for centuries in herbal remedies for the treatment of
various conditions including migraine and other headaches. The product has
been processed by a proprietary technology to enhance the bio-effectiveness of
the solution. The shelf life of MigraSpray is 2 years. A bottle will last the
average user 3 months.
ALLERSPRAY(TM)
AllerSpray(TM) is a dietary supplement containing various herbs and amino
acids. The exact formulation, created by NatureWell.com, is unique and
proprietary. In addition, NatureWell.com uses a proprietary process that
enhances both the
bio-effectiveness and the bio-availability of the solution in ALLERSPRAY(TM).
Several of the herbs and amino acids used in ALLERSPRAY(TM), such as Dandelion
and Histidine, have a long history of use for relieving symptoms associated
with allergies.
ALLERSPRAY(TM) is designed to be sprayed under the tongue before being
swallowed. The sublingual method of administration promotes excellent and
rapid absorption. Most individuals find that twice daily use is sufficient.
LIVING WATER EYE LOTION(TM)
Living Water Eye Lotion(TM) is an eye wash or irrigating solution, used in
cleansing the eye to help relieve irritation, burning, stinging, and itching
due to loose foreign material, air pollutants (smog or pollen), or chlorinated
water.
The solution is a borate buffered, sterile isotonic aqueous solution containing
sodium chloride. It is preserved with a mild preservative, 0.1% sorbic acid
and disodium EDTA (ingredients commonly used in solutions for sensitive eyes).
In contrast with:
"Eye lubricants," "Artificial Tears," and "Lens Lubricants," that contain
ingredients which increase fluid viscosity in an attempt to relieve eye dryness
or re-wet contact lenses.
"Eye redness relievers," which contain vasoconstrictors which can cause
eye problems when used too frequently.
Eye drops, which contain antihistamines to treat allergy symptoms.
Living Water Eye Lotion(TM) is specially formulated to enhance eye comfort by
irrigating, flushing and cleansing without interfering with natural functions.
The product has generally exceeded the expectations of those who have tried it.
OPTOPET EYE WASH(TM)
OptoPet Eye Wash(TM) is for cleansing the eyes of dogs and cats, removing
mucous which causes fur stains beneath the eyes (a major problem in certain
breeds).
OTHER PRODUCTS
The Company plans to be introducing several additional products with a wide
range of diet supplement uses in the near future.
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<PAGE 11>
Diagnostic Products
La Jolla Diagnostics' subsidiary, DiagnosTech, Inc. was organized to develop
and market clinical diagnostic products using immunologic and molecular
biologic technologies.
RAPID DIAGNOSTIC TEST FOR TB
The Company and Meridian Diagnostics, Inc. Cincinnati, Ohio, (Nasdaq:KITS)
signed an agreement for a cash payment and future royalties for a unique rapid
blood test for active tuberculosis disease from the DiagnosTech subsidiary of
La Jolla Diagnostics. The test utilizes a combination of three highly
specialized Mycobacterium tuberculosis antigens that react with serum from
persons having active TB, in just three minutes. This ability of the test to
distinguish TB infection from "active" disease makes it ideal for helping
medical professionals select the appropriate therapy. Meridian and La Jolla
have further agreed to cooperate in defining future product improvements and
opportunities.
Tuberculosis is the most common infectious disease in the world, affecting more
than 2 billion people. TB is responsible for 3 million deaths per year and is
the number one cause of death from infectious disease. Exposure to TB usually
comes through the inhalation of droplets from an infected person. The global
migration of infected persons, and the prevalence of people whose immune
systems have been weakened, have contributed to a sharp rise in infected
populations and a more rapid and serious progression to the active disease
state. Once diagnosed, persons with active TB can be contained and treated
using pharmaceutical compounds.
OTHER RAPID DIAGNOSTIC TESTS
DiagnosTech has developed other rapid diagnostic tests, which it intends to
market or license, though they do not have the unique potential of the TB test.
These tests include:
HIV I and II (AIDS) infection using serum/plasma
HIV I and II (AIDS) infection using whole blood
H. pylori infection (the causative agent in over 90% of ulcers)
Hepatitis B (HBsAg)
Pregnancy
Trypanasoa cruzi infection (Chagas disease: a common parasitic infection)
Toxoplasma gondii infection (a common infection among AIDS patients)
ANTISERA
DiagnosTech also has a large inventory of anti-sera. This inventory consists
of high quality, purified antibodies, which are needed for basic research and
clinical immunological assays. The primary users of these antisera products
include universities and other research facilities, clinical diagnostic
laboratories, hospitals and clinics, where certain antibody reagents are used
in large volumes.
MYOCARDIAL INFARCTION PREDICTOR
La Jolla Diagnostics has done some work on a novel method of identifying risk
factors for myocardial infarction among a certain subset of mature people.
This product has been transferred to DiagnosTech who, time and capital
permitting, hopes to develop a practical test. Those with this risk factor
are several times more likely to experience morbidity or mortality from a
condition, which may be ameliorated by, changes in living conditions and life
style.
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<Page 12>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Date: May 15, 2000 LA JOLLA DIAGNOSTICS, INC.
By: /s/ Don Brucker
Don Brucker
Chief Executive Officer
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<Page 13>
Exhibit 10 Purchase agreement dated as of March 20, 2000 between
DiagnosTech, Inc., a subsidiary of La Jolla Diagnostics, Inc., and
Meridian Diagnostics, Inc.
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<Page 14>
---------------------------------------
PURCHASE AGREEMENT
---------------------------------------
DATED AS OF MARCH 20, 2000
BETWEEN
MERIDIAN DIAGNOSTICS, INC.,
AS PURCHASER
AND
DIAGNOSTECH, INC.
(a Subsidiary of La Jolla Diagnostics, Inc.)
AS SELLER
AND
LA JOLLA DIAGNOSTICS, INC.
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<Page 15>
TABLE OF CONTENTS
Page
ARTICLE 1 PURCHASE AND SALE...................................... 1
1.1 Agreement to Sell...................................... 1
1.2 Agreement to Purchase.................................. 2
1.3 The Purchase Price..................................... 2
1.4 Payment of Purchase Price.............................. 2
1.5 Royalty Payment........................................ 2
1.6 Additional Payments.................................... 2
1.7 Books and Records...................................... 3
1.8 Seller's Right to Repurchase........................... 3
ARTICLE 2 CLOSING, ITEMS TO BE DELIVERED, THIRD PARTY
CONSENTS, AND FURTHER ASSURANCES....................... 4
2.1 Closing................................................ 4
2.2 Items to be Delivered at Closing By Seller............. 4
2.3 Items to be Delivered at Closing by Purchaser.......... 4
2.4 Further Assurances..................................... 4
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER AND LA JOLLA.. 4
3.1 Corporate Existence.................................... 4
3.2 Corporate Power; Authorization; Enforceable Obligations 5
3.3 No Third Party Options................................. 5
3.4 Title to Assets; Condition of Assets................... 5
3.5 Government Compliance.................................. 5
3.6 Continuing Contracts................................... 5
3.7 Trademarks............................................. 5
3.8 Technology............................................. 5
3.9 Tax Matters............................................ 6
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER............ 6
4.1 Corporate Existence.................................... 6
4.2 Corporate Power and Authorization...................... 6
ARTICLE 5 RETURN OF ASSETS....................................... 6
5.1 Return of Assets....................................... 6
ARTICLE 6 MISCELLANEOUS.......................................... 7
6.1 Transfer of Technology. Seller shall make available to 7
6.2 Inquiries.............................................. 7
6.3 Use of La Jolla Name................................... 7
6.4 Noncompete............................................. 7
6.5 Brokers' and Finders' Fees............................. 8
6.6 Indemnification........................................ 8
6.7 Expenses............................................... 8
6.8 Knowledge of the Seller................................ 8
6.9 Assignment and Binding Effect.......................... 8
6.10 Waiver................................................. 9
6.11 Notices................................................ 9
6.12 Governing Law.......................................... 10
6.13 Headings, Gender and "Person."......................... 10
6.14 Schedules and Exhibits................................. 10
6.15 Severability........................................... 10
6.16 Counterparts........................................... 10
6.17 Entire Agreement....................................... 10
6.18 Amendments............................................. 10
6.19 Exclusive Benefits..................................... 10
6.20 Delays or Omissions.................................... 11
6.21 Construction........................................... 11
ARTICLE 7 ADDITIONAL DEFINITIONS................................. 11
7.1 Technology............................................. 11
Exhibits, Schedules and Attachments
Schedule 3.6 - Continuing Contracts................................... 13
Schedule 3.7 - Marks.................................................. 14
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<Page 16>
PURCHASE AGREEMENT
------------------
PURCHASE AGREEMENT, dated as of March 20, 2000, by and between
DIAGNOSTECH, INC., a subsidiary of La Jolla Diagnostics, Inc., a California
corporation ("Seller"), LA JOLLA DIAGNOSTICS, INC., a California corporation
("La Jolla") and MERIDIAN DIAGNOSTICS, INC., an Ohio corporation ("Meridian" or
the "Purchaser"), with reference to the following RECITALS:
A. Seller is engaged in, among other things, the manufacturing,
marketing, distribution and sale of certain medical diagnostic products
including the Myco Bacterium Tuberculosis Test (the "Product").
B. Seller is the sole owner of the right, title and interest in and to
the Product.
C. Purchaser is engaged in the business of manufacturing and selling
medical diagnostic products, and desires to purchase the Product of Seller.
D. Subject to the limitations and exclusions contained in this
Agreement and on the terms and conditions hereinafter set forth, Seller and
La Jolla desire to sell and Purchaser desires to purchase the Product.
NOW, THEREFORE, in consideration of the recitals and of the respective
covenants, representations, warranties and agreements herein contained, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE 1
---------
PURCHASE AND SALE
-----------------
1.1 AGREEMENT TO SELL.
(a) At the Closing hereunder, Seller and La Jolla shall grant,
sell, convey, assign, transfer and deliver to Purchaser, upon and subject to
the terms and conditions of this Agreement, all right, title and interest of
Seller and La Jolla in and to (i) the Product and all rights incident thereto
including the product name, licenses, and other sale or distribution rights
related thereto, and all goodwill associated therewith; (ii) Marks (as defined
in Section 3.7 hereof) and rights under any trademark, service mark, trade name
or copyright relating to the Product; (iii) all Technology, improvements
thereto, trade secrets, inventions, patents or patents pending and other
intellectual property related to the Product or under development, including,
without limitation, technical know-how, quality control procedures and 510K
authorizations relating to the Product, to the extent transferable; (iv) all
inventory of Product in finished form or unfinished form on the Closing Date;
and (v) all information, files, records, data, plans, contracts and recorded
knowledge, including customer, prospective customer and supplier lists, related
to (i) through (iv) above (all of which are herein sometimes collectively
referred to as the "Assets"), free and clear of all mortgages, liens, pledges,
security interests, charges, claims, restrictions, encumbrances and interests
of any nature.
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<Page 17>
1.2 AGREEMENT TO PURCHASE. At the Closing hereunder, Purchaser shall
purchase the Assets from Seller, upon and subject to the terms and conditions
of this Agreement and in reliance on the representations, warranties and
covenants of Seller contained herein, in exchange for the Purchase Price.
1.3 THE PURCHASE PRICE. The Purchase Price shall be Twenty Five
Thousand and 00/100 Dollars ($25,000.00) payable at the Closing.
1.4 PAYMENT OF PURCHASE PRICE. Purchaser shall pay to Seller the
Purchase Price set forth in Section 1.3 by wire transfer of immediately
available funds to such account as Seller shall designate.
1.5 ROYALTY PAYMENT. Purchaser shall pay to Seller a royalty fee equal
to eight percent (8%) of Purchaser's net sales of the Product for the period
that Purchaser sells the Product. For purposes of this Agreement, Purchaser's
net sales shall mean the aggregate amount invoiced for sales or rental of the
Product by Purchaser to a person or entity (other than an affiliate of
Purchaser) less (a) sales, service, value-added or similar taxes or excises
incurred in connection with such sale, and (b) governmental charges incurred in
connection with the importation or exportation of such Product in final form;
and (c) credit allowances, rebates to, and charge backs from the account of,
such person or entity for spoiled, damaged, rejected or returned Product, and
(d) transportation, shipping and any other delivery charges of the Product.
Purchaser agrees to pay to Seller the royalty fee required by this Section 1.5
within thirty (30) days after the close of each fiscal quarter of Purchaser for
each December, March, June and September. Net Sales include all sales by
Purchaser and any assignee, licensee, or other successor in interest of
Purchaser.
1.6 Additional Payments. Purchaser shall pay Seller the following
additional amounts, but in no event shall Purchaser be obligated to make any
payments to Seller in excess of Three Hundred Thousand and 00/100 Dollars
($300,000.00) pursuant to this Section 1.6. Net Sales include all sales by
Purchaser and any assignee, licensee, or other successor in interest of
Purchaser:
(a) If and when Purchaser reaches annual aggregate net sales
of Two Million and 00/100 Dollars ($2,000,000.00) but less than Five Million
and 00/100 Dollars ($5,000,000.00) of the Product, calculated in any one year
of Purchaser based on Purchaser's fiscal year beginning October 1 and ending on
September 30, Purchaser shall pay Seller One Hundred Thousand and 00/100
Dollars ($100,000.00) within forty five (45) days of the date such sales of the
Product are made; and
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<Page 18>
(b) If and when Purchaser reaches annual aggregate net sales
of Five Million and 00/100 Dollars ($5,000,000.00) or greater of the Product,
calculated in any one year of Purchaser based on Purchaser's fiscal year
beginning October 1 and ending on September 30, Purchaser shall pay Seller Two
Hundred Thousand and 00/100 Dollars ($200,000.00) within forty five (45) days
of the date such sales of the Product are made.
1.7 BOOKS AND RECORDS. Purchaser and its affiliates shall keep
accurate books and records as reasonably needed for determination of Sales
Royalty payments due under Section 1.5 above. Such books and records shall be
maintained for a period of at least three (3) years from the expiration of the
relevant Sales Royalty payment period.
Not more than once in each fiscal year, Seller may have the books
and records of the Purchaser or any of its successors, audited by an
independent certified public accounting firm ("CPA Firm") reasonably acceptable
to Purchaser to the extent necessary to verify the correctness of any Sales
Royalty payment report furnished under this Agreement. If such independent CPA
Firm should determine that an underpayment of Sales Royalty may have occurred,
Seller may have Purchaser's independent accountants review the Purchaser's
records and the report and calculations of the CPA Firm to determine
Purchaser's agreement. If the CPA Firm and Purchaser's independent accountants
do not agree, and the parties cannot agree to a mutually satisfactory
resolution, then a third accounting firm shall be hired by the parties to
finally resolve the correct amount due. The determination by the third
independent certified public accounting firm shall be final. The CPA Firm or
any third firm shall keep all information received in connection with any audit
confidential, and they shall report to Seller and Purchaser only the accuracy
of and/or any deficiencies in any such Sales Royalty payment report. The fee
for such CPA Firm and any third firm shall be paid by Seller unless the audit
finally results in an upward adjustment of Sales Royalty payments due Seller by
more than Five Percent (5%) of the amount due under this Agreement; in such
case, Purchaser shall pay the full cost of such audits. In any event,
Purchaser shall pay any finally determined underpayment with interest in
accordance with Section 1.3 above.
1.8 SELLER'S RIGHT TO REPURCHASE. If Purchaser notifies Seller in
writing that it has ceased production and distribution of the Product, Seller
shall have the right of first refusal, to be exercised within thirty (30) days
of receipt of Purchaser's written notice, to repurchase the Assets, excluding
all improvements to the Product made by Purchaser, for the sum of Twenty-Five
Thousand Dollars ($25,000.00). If Seller fails to respond during such thirty
(30) day period in writing to Purchaser, it shall be deemed that Seller does
not wish to exercise its right of first refusal. If Seller exercises the right
to purchase granted in this Section 1.8, the Closing shall occur within thirty
(30) days of Seller's written notification of its desire to exercise its right
to repurchase.
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<Page 19>
ARTICLE 2
CLOSING, ITEMS TO BE DELIVERED, THIRD PARTY
CONSENTS, AND FURTHER ASSURANCES
-------------------------------------------
2.1 CLOSING. The closing (the "Closing") of the sale and purchase of
the Assets are taking place contemporaneously with the execution of this
Agreement. The date of the Closing is sometimes herein referred to as the
"Closing Date."
2.2 ITEMS TO BE DELIVERED AT CLOSING BY SELLER. At the Closing and
subject to the terms and conditions herein contained, Seller shall deliver to
Purchaser the following:
(a) The bill of sale as shall be necessary and effective to
transfer and assign to, and vest in, Purchaser good and valid title in all of
Seller's right, title and interest in and to the Assets; and
(b) Any and all tests, manuals, clinical data, production
processes or other written material of whatsoever kind or nature relating to
the Product or the Technology in the possession or the property of Seller,
including without limitation all governmental approvals and filings.
2.3 ITEMS TO BE DELIVERED AT CLOSING BY PURCHASER. At the Closing and
subject to the terms and conditions herein contained, Purchaser shall deliver
to Seller the Purchase Price in accordance with Section 1.3.
2.4 FURTHER ASSURANCES. After the Closing, each of the parties hereto
will cooperate with the other and execute and deliver to the other parties
hereto such other instruments and documents and take such other actions as may
be reasonably requested from time to time by any other party hereto as
necessary to carry out, evidence and confirm the intended purposes of this
Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER AND LA JOLLA
-----------------------------------------------------
Seller and La Jolla, jointly and severally, hereby represent and warrant
to Purchaser that:
3.1 CORPORATE EXISTENCE. Seller and La Jolla are corporations duly
organized, validly existing and in good standing under the laws of the State of
California. Seller is duly qualified to conduct business and is in good
standing as a foreign corporation in each jurisdiction where the conduct of its
business requires it to be so qualified, except to the extent the failure to so
qualify would not have a material adverse effect on Seller.
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<Page 20>
3.2 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Seller
and La Jolla have the power, authority and legal right to execute, deliver and
perform this Agreement. The execution, delivery and performance of this
Agreement by Seller and La Jolla have been duly authorized by all necessary
corporate action. This Agreement has been, and the other agreements, documents
and instruments required to be delivered by Seller and La Jolla in accordance
with the provisions hereof (the "Documents") will be, duly executed and
delivered on behalf of Seller and La Jolla, and this Agreement constitutes, and
the Documents when executed and delivered will constitute, the legal, valid and
binding obligations of Seller, and La Jolla enforceable against Seller and La
Jolla in accordance with their respective terms.
3.3 NO THIRD PARTY OPTIONS. There are no existing agreements,
options, commitments or rights with, of or to any person to acquire any of
Seller's assets, properties or rights included in the Assets or any interest
therein, except for those contracts entered into in the normal course of
business consistent with past practice for the sale of Product inventory of
Seller.
3.4 TITLE TO ASSETS; CONDITION OF ASSETS. Seller has good, valid and
marketable title to the Product; free and clear of all mortgages, liens,
pledges or security interests.
3.5 GOVERNMENT COMPLIANCE. Seller has obtained all necessary
approvals, licenses and permits for the manufacture and sale of the Product and
Technology in each other jurisdiction where the Product is currently sold and
Seller is not in violation of any material governmental statute, rule or
regulation relating to the manufacture and sale of the Product.
3.6 CONTINUING CONTRACTS. Schedule 3.6 attached hereto contains a
correct and complete list of all contracts, agreements, commitments, and
engagements of the Seller relating to the Product and the Technology.
3.7 TRADEMARKS. Schedule 3.7 hereto contains a true, correct and
complete description of all trademarks, service marks, trade names, copyrights,
and all applications therefore used with the Product and the Business,
(collectively the "Marks"). Seller and La Jolla have the sole and exclusive
right to use the Marks. Seller has no knowledge of any infringement of its
Marks by any person and no claims or litigation have been asserted or
threatened by any person contesting the right of Seller to use, or the validity
of the Marks, or challenging or questioning the validity or effectiveness of
any license or agreement pertaining thereto, and the use of any such Marks by
Seller does not infringe on the rights of any person or violate any license or
other agreement applicable thereto.
3.8 TECHNOLOGY. Seller has the sole and exclusive right to the
Technology and the right to transfer the Technology to Purchaser. Seller has
no knowledge of any infringement of its Technology by any person and no claims
or litigation have been asserted or threatened by any person contesting the
right of Seller to use, or challenging or questioning the validity or
effectiveness of any license or agreement pertaining thereto, and the use of
such Technology by Seller does not infringe on the rights of any person or
violate any license or agreement applicable thereto. If any party alleges
infringement by Purchaser's purchase and subsequent use of the Technology,
Seller shall hold harmless and defend Purchaser against any and all such
claims, damages, liabilities and expenses, and shall further allow Purchaser to
resolve any such claim of infringement with any Person or entity, and reduce
the Royalty Payment due pursuant to Section 1.5 by a corresponding amount to
reimburse Purchase in full for any and all such payments or expenses made to
resolve such infringement, whether such payments are cash payments,
royalty/license payments or payments made over time.
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<Page 21>
3.9 TAX MATTERS. To the best of Seller's knowledge, the Product
constitutes a separate unit of a trade or business under Internal Revenue Code
("IRC") Section 41(f)(3)(A). The qualified research and experimental expenses
incurred in the base period from September 1998 through March 2000 were Three
Hundred Ninety-Nine Thousand Four Hundred Seventy-Six and 87/100 Dollars
($399,476.87). No gross receipts were recorded during the base period. This
information is being furnished under IRC Section 41(f)(3)(B).
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser represents and warrants to Seller and La Jolla as follows:
4.1 CORPORATE EXISTENCE. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Ohio.
4.2 CORPORATE POWER AND AUTHORIZATION. Purchaser has the corporate
power, authority and legal right to execute, deliver and perform this
Agreement. The execution, delivery and performance of this Agreement by
Purchaser has been duly authorized by all necessary corporate action. This
Agreement has been, and the other agreements, documents and instruments
required by Purchaser in accordance with the provisions hereof ("Purchaser's
Documents") will be, duly executed and delivered by Purchaser and this
Agreement constitutes and the Purchaser's Documents when executed and delivered
will constitute, the legal, valid and binding obligations of Purchaser
enforceable against Purchaser in accordance with its respective terms.
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<Page 22>
ARTICLE 5
RETURN OF ASSETS
----------------
5.1 RETURN OF ASSETS. In the event Purchaser fails to make the
payments provided under Article I of this Agreement within thirty (30) days
after the due date, Purchaser shall immediately return the Product and the
Assets to Seller, including all materials furnished to Purchaser and all copies
and reproductions thereof and shall execute any and all documentation that
Seller shall deem necessary or appropriate to cause a complete return of the
Assets to Seller, free, clear and unencumbered. Upon return of the Assets to
Seller, Purchaser shall have no right, title or interest in the Assets.
ARTICLE 6
MISCELLANEOUS
-------------
6.1 TRANSFER OF TECHNOLOGY. Seller shall make available to Purchaser
sufficient qualified personnel capable of transferring Technology to Purchaser;
such personnel of Seller will train Purchaser's personnel to reproduce the
antigen antibodies and reagents necessary for the continued production of the
Product.
6.2 INQUIRIES. Seller shall refer all inquiries regarding the Product
which it receives to Purchaser.
6.3 USE OF LA JOLLA NAME. Purchaser shall be permitted to use the
La Jolla trade name for a period of six (6) months from the date hereof in
connection with the marketing, advertising and promoting of the Product solely
with the following references: "The Product was acquired from La Jolla" or
"The Product formerly manufactured by La Jolla." If Purchaser desires to use
other phrases or terms referencing La Jolla in any manner, prior written
approval shall be obtained before such use. Nothing in this Section 6.3, or in
this Agreement, shall be deemed to give Purchaser any claim or right to the
La Jolla name or trademarks pertaining to the Product during or after
termination of this Agreement. Any and all use of the La Jolla name hereunder
by Purchaser shall be solely in conjunction with the Product as specified
herein and any such use shall inure to the benefit of La Jolla.
6.4 NONCOMPETE. For the period that this Agreement is in effect and
for a period of one (1) year after the date of termination of this Agreement
for any reason, Seller and La Jolla covenant and agree that Seller and La Jolla
shall not, directly or indirectly, sell, distribute or otherwise market any
product which is in direct competition with the Product, provided, however,
that Seller and La Jolla and their affiliates shall have the right to use the
Technology to develop a product which does not compete with the Product. In
the event that Seller or La Jolla breach Section 6.4 of this Agreement, in
addition to any other remedies to which Purchaser may be entitled (by law,
equity or otherwise), during the term of such breach Purchaser shall have no
obligation for making the royalty payments otherwise required by Section 1.5 of
this Agreement.
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<Page 23>
6.5 BROKERS' AND FINDERS' FEES.
(a) Seller and La Jolla represent and warrant to Purchaser
that all negotiations relative to this Agreement have been carried on by it and
its representations without the intervention of any person who may be entitled
to any brokerage or finder's fee or other commission in respect of this
Agreement or the consummation of the transactions contemplated hereby, and
Seller and La Jolla agree to indemnify and hold harmless Purchaser against any
and all claims, losses, liabilities and expenses which may be asserted against
or incurred by it as a result of Seller's dealings, arrangements or agreement
with any such person.
(b) Purchaser represents and warrants that all negotiations
relative to this Agreement have been carried on by it directly without the
intervention of any person who may be entitled to any brokerage or finder's fee
or other commission in respect of this Agreement or the consummation of the
transactions contemplated hereby, and Purchaser agrees to indemnify and hold
harmless Seller against any and all claims, losses, liabilities and expenses
which may be asserted against or incurred by it as a result of Purchaser's
dealings, arrangements or agreements with any such person.
6.6 INDEMNIFICATION.
(a) Purchaser shall indemnify, defend and hold harmless Seller
and La Jolla from and against any claims, liabilities and damages that Seller
or La Jolla may incur arising from sales of the Product from and after the
Closing, and any breach of this Agreement by Purchaser.
(b) Seller and La Jolla, jointly and severally, shall hold
harmless, defend and indemnify Purchaser from and against any claims,
liabilities and damages that Purchaser may incur arising from sales of the
Product prior to and up to the Closing by Seller, and any breach of this
Agreement by Seller or La Jolla.
6.7 EXPENSES. Except as otherwise provided in this Agreement, each
party hereto shall pay its own expenses incidental to the preparation of this
Agreement, the carrying out of the provisions of this Agreement and the
consummation of the transactions contemplated hereby.
6.8 KNOWLEDGE OF THE SELLER. As used in this Agreement, the terms "to
the best knowledge of the Seller," "to the best of Seller's knowledge," or
similar phrases, shall mean the actual knowledge of any officers, directors or
senior employees of the Seller.
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<Page 24>
6.9 ASSIGNMENT AND BINDING EFFECT. All of the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the successors and assigns of Seller and Purchaser.
6.10 WAIVER. Any term or provision of this Agreement may be waived at
any time by the party entitled to the benefit thereof by a written instrument
duly executed by such party.
6.11 NOTICES. Any notice, request, demand, waiver, consent, approval
or other communication which is required or permitted hereunder shall be in
writing and shall be deemed given only if delivered personally or sent by
registered or certified mail, postage prepaid, as follows:
If to Seller, to:
DIAGNOSTECH, INC., a subsidiary of
LA JOLLA DIAGNOSTICS, INC.
7855 Ivanhoe Ave., Suite 322
La Jolla, California 92037
Attention: Chief Financial Officer
If to La Jolla, to:
LA JOLLA DIAGNOSTICS, INC.
1020 Prospect Street, Suite 210
La Jolla, California 92037
If to Purchaser, to:
MERIDIAN DIAGNOSTICS, INC.
3471 River Hills Drive
Cincinnati, Ohio 45244
Attention: President
With a required copy to:
Keating, Muething & Klekamp, P.L.L.
One East Fourth Street
1800 Provident Tower
Cincinnati, Ohio 45202
Attention: James M. Jansing, Esq.
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<Page 25>
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as
of the date so delivered, telegraphed or mailed.
6.12 GOVERNING LAW. This Agreement and the legal relations between the
parties shall be governed by, interpreted and enforced in accordance with the
laws of the State of Ohio.
6.13 HEADINGS, GENDER AND "PERSON." All section headings contained in
this Agreement are for convenience of reference only, do not form a part of
this Agreement and shall not affect in any way the meaning or interpretation of
this Agreement. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine, or neuter, as
the context requires. Any reference to a "person" herein shall include an
individual, firm, corporation, partnership, trust, governmental authority or
body, association, unincorporated organization or any other entity.
6.14 SCHEDULES AND EXHIBITS. All Attachments, Exhibits and Schedules
referred to herein are intended to be and hereby are specifically made a part
of this Agreement.
6.15 SEVERABILITY. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
6.16 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by the parties. It shall
not be necessary in making proof of this Agreement or any counterpart hereof to
produce or account for any of the other counterparts.
6.17 ENTIRE AGREEMENT. This Agreement, including the Attachments,
Schedules and other documents referred to herein which form a part hereof, and
any confidentiality agreement entered into by the parties hereto, contain the
entire understanding of the parties with respect to the subject matter
contained herein and therein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter
other than the confidentiality agreement previously referenced. The
representations and warranties of Seller, La Jolla and Purchaser shall survive
the Closing of this Agreement.
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<Page 26>
6.18 AMENDMENTS. This Agreement may not be changed orally, but only by
an agreement in writing signed by each of the parties hereto. Any provision of
this Agreement can be waived, amended, supplemented or modified by written
agreement of each of the parties hereto.
6.19 EXCLUSIVE BENEFITS. Nothing in this Agreement is intended to
confer any rights or remedies, whether express or implied, under or by reason
of this Agreement, on any persons other than the parties hereto and their
respective successors and assigns, nor is anything in this Agreement intended
to relieve or discharge the obligation or liability of any third persons to any
party to this Agreement.
6.20 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any party hereto, upon any breach or default of any
other party hereto, under this Agreement, shall impair any such right, power or
remedy of such party nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or in any similar breach or
default thereafter occurring, nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring.
6.21 CONSTRUCTION. This Agreement is to be deemed to have been
prepared jointly by the parties hereto after arms-length negotiations, and any
uncertainty or ambiguity existing herein shall not be interpreted against any
party, but according to the application of the rules of interpretation or
contracts.
ARTICLE 7
ADDITIONAL DEFINITIONS
----------------------
For purposes of this Agreement the following terms shall have the meanings
set forth below:
7.1 TECHNOLOGY. "Technology" means the patented and unpatented
proprietary information and know how of Seller relating to the manufacture, use
and application of the Product or improvements thereto, including, but not
limited by enumeration to, all know how methods, data and information relating
to the formulation, composition, synthesis, testing, evaluation, quantities,
ingredients, sources, specifications, equipment, test data, methods, materials,
components, assay, stability, sensitivity, specificity and quality testing.
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<Page 27>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the
date first written.
MERIDIAN DIAGNOSTICS, INC.
(Purchaser)
By: /s/ William J. Motto
-----------------------
Name: William J. Motto
Title: Chairman & CEO
DiagnosTech, Inc., a subsidiary of
La Jolla Diagnostics, Inc. (Seller)
By: /s/ Don Brucker
-----------------------
Name: Don Brucker
Title: Chairman and C.E.O.
LA JOLLA DIAGNOSTICS, INC. (La Jolla)
By: /s/ Don Brucker
-----------------------
Name: Don Brucker
Title: Chairman and C.E.O.
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<Page 28>
Schedule 3.6
Continuing Contracts
None
- Page 13 -
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<Page 29>
Schedule 3.7
Marks
None
- Page 14 -
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<Page 30>
BILL OF SALE
This Bill of Sale dated as of March 20, 2000 is executed and delivered by
DiagnosTech, Inc., a subsidiary of La Jolla Diagnostics, Inc., a California
corporation ("Seller"), La Jolla Diagnostics, Inc., a California corporation
("La Jolla") to Meridian Diagnostics, Inc., an Ohio corporation ("Purchaser").
All capitalized words and terms used in this Bill of Sale and not defined
herein shall have the respective meanings given to them in the Purchase
Agreement dated as of March 20, 2000 by and between the Seller, La Jolla and
the Purchaser (the "Agreement").
WHEREAS, pursuant to the Agreement, the Seller and La Jolla have agreed to
sell, transfer, convey, and assign and deliver to the Purchaser the Assets; and
NOW, THEREFORE, for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Seller and La Jolla hereby
agree as follows:
1. The Seller and La Jolla hereby sell, transfer, convey, assign and
deliver to the Purchaser, its successors and assigns, to have and to
hold forever, all of the Assets.
2. The Seller and La Jolla hereby covenant and agree that each will, at
the request of the Purchaser and without further consideration,
execute and deliver, and will cause their employees to execute and
deliver such other instruments of sale, transfer, conveyance and
assignment, and to take such other action as may be reasonably
necessary to more effectively sell, transfer, convey and assign and
deliver to, invest in the Purchaser, its successors and assigns,
good, clear, record and marketable title to the Assets hereby sold,
transferred, conveyed, assigned and delivered, or intended so to be,
and to put Purchaser in actual possession and operating control
thereof, to assist Purchaser in exercising all rights with respect
thereto and to carry out the purpose and intent of the Agreement.
3. Seller and La Jolla, by their execution of this Bill of Sale, and the
Purchaser, by its acceptance of the Bill of Sale, each hereby
acknowledge and agree that neither the representations and warranties
nor the rights and remedies of any party under the Agreement shall be
deemed to be enlarged, modified or altered in any way by this Bill of
Sale, and shall survive the delivery of this Bill of Sale.
- Page 15 -
- -------------------------------------------------------------------------------
<Page 31>
IN WITNESS WHEREOF, the Seller and Purchaser have caused this Bill of Sale
to be duly executed as of and on the date first above written.
WITNESS: DIAGNOSTECH, INC.,
a subsidiary of La Jolla Diagnostics, Inc.
/s/ M S Huebotter BY: /s/ Don Brucker
- ----------------------------- ------------------------------
LA JOLLA DIAGNOSTICS, INC.
/s/ M S Huebotter BY: /s/ Don Brucker
- ----------------------------- ------------------------------
ACCEPTED:
MERIDIAN DIAGNOSTICS, INC.
BY: /s/ William J. Motto
TITLE: Chairman & CEO
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