Panther Biotechnology Inc. (OTCMKTS:PBYA) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
The information in Item 2.01 below regarding the Exchange
Agreement is incorporated in this Item 1.01 by reference.
Item 2.01. Completion of Acquisition or Disposition of
Assets.
On November 8, 2016 (the Closing Date), Panther Biotechnology,
Inc. (we, us or the Company), consummated the transactions
contemplated by a Share Exchange Agreement (the Exchange
Agreement), by and between the Company, Brown Technical Media
Corporation (Brown) and the shareholders of Brown (the Exchange),
on the same day. In connection with the closing of the Exchange,
we issued 32,000,000 restricted shares of our common stock, to
the shareholders of Brown, which included Evan M. Levine, our
Chief Executive Officer and director (6,600,000 shares of common
stock beneficially owned by Mr. Levine, when including minor
children and affiliates, who received shares in the Exchange),
Noah I. Davis, our President and Chief Operating Officer
(7,175,522 shares of common stock beneficially owned by Mr.
Davis), and Steven M. Plumb, our Chief Financial Officer
(11,469,785 shares of common stock beneficially owned by Mr.
Plumb, when including shares held by his minor children and
affiliates, who received shares in the Exchange) in consideration
for 100% of the outstanding capital stock of Brown, and Brown
became our wholly-owned subsidiary.
In November 2015, the Company authorized the payment of $15,000
per month to Mr. Levine, effective January 15, 2016, and $1,000
per month as healthcare reimbursement, as compensation for his
services as CEO. In March 2016, the Company entered into an
agreement with Mr. Plumb to pay Mr. Plumb $6,000 per month to
serve as the CFO of the Company. In February 2014, Brown entered
into consulting agreements with Mr. Davis and Mr. Plumb. The
agreements were modified on May 1, 2016 such that Mr. Davis, the
President and Chief Operating Officer is paid $11,000 per month
by Brown and Mr. Plumb, the Chief Financial Officer, is paid
$4,500 per month by Brown. The contracts expire on December 19,
2017. The Brown employment agreements were not assumed by the
Company as part of the Business Combination and will remain with
Brown. In addition, the Panther agreements with Mr. Levine and
Mr. Plumb remain in effect.
We also agreed to provide the pre-closing shareholders of the
Company additional shares of common stock, subject to the terms
of the Exchange Agreement, in the event that Transferrin
Doxorubicin (a) meets the primary endpoint for Phase 2 clinical
trials (6 million shares); (b) meets the primary endpoint for
Phase 3 clinical trials (8 million shares); and (c) receives FDA
Approval/clearance to market (10 million shares), prior to the
earlier of January 22, 2020 and the date the assets relating to
Transferrin Doxorubicin are sold or divested by us.
The Exchange Agreement requires that the Company raise $250,000
in capital, in the form of the sale of common stock or
convertible notes, prior to closing. As of the date of this
filing $212,000 has been raised by the Company through the sale
of convertible notes and shares (described in greater detail
below under Item 3.02). Both the Company and Brown have agreed to
waive the capital raise requirement and accept the amount of
capital raised as sufficient to close.
The Exchange Agreement includes customary representations,
warranties, and indemnification obligations of the parties.
In conjunction with the Share Exchange Agreement, on November 8,
2016, Noah I. Davis was appointed President and Chief Operating
Officer of the Company and Steven M. Plumb and Noah I. Davis were
appointed to the Board of Directors of the Company.
The foregoing description of the Exchange Agreement is qualified
in its entirety by reference to the full text thereof which is
filed as Exhibit 2.1 to this Current Report on Form 8-K/A and
incorporated herein by reference.
Item 2.03. Creation of a Direct Financial Obligation or
an Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The Company assumed the debts of Brown in connection with the
Exchange Agreement, which debts and liabilities are described in
greater detail below under Item 5.06.
Item 3.02 Unregistered Sales of Equity
Securities.
As described above under Item 2.01 Completion of Acquisition or
Disposition of Assets, in connection with the Exchange Agreement,
the Company issued 32,000,000 shares of restricted common stock
to the owners of Brown, which included Evan M. Levine, our Chief
Executive Officer and director (6,000,000 shares of common stock)
and Steven M. Plumb, our Chief Financial Officer (11,791,371
shares of common stock).
On August 31, 2016, the Company sold a convertible promissory in
the amount of $50,000 to an investor. The note bears interest at
10% per annum and may be converted into the common stock of the
Company upon the completion of a capital raise of $500,000 by
December 31, 2016 (a Qualified Raise). The note may be converted
into common stock at 75% of the price of the capital raised in
the Qualified Raise. The note is due on December 31, 2016.
On October 14, 2016, the Company sold two convertible promissory
notes totaling $37,000 to two investors in a private transaction.
The notes bear interest at 10% per annum and may be converted
into the common stock of the Company upon the completion of a
Qualified Raise. The notes may be converted into common stock at
75% of the price of the capital raised in the Qualified Raise.
The notes are due on December 31, 2016.
On October 31, 2016, the Company sold a convertible promissory in
the amount of $50,000 to an investor in a private transaction.
The note bears interest at 10% per annum and may be converted
into the common stock of the Company upon the completion of a
Qualified Raise. The note may be converted into common stock at
75% of the price of the capital raised in the Qualified Raise.
The note is due on December 31, 2016.
On October 17, 2016, we sold 333,333 shares of restricted common
stock for gross proceeds of $50,000 and on October 31, 2016, we
sold 166,666 shares of restricted common stock for gross proceeds
of $25,000.
On November 7, 2016, the Company agreed to issue 500,000 shares
of its restricted common stock to the incoming Vice Chairman of
the Board, Richard Corbin. These shares were issued on November
30, 2016.
On November 7, 2016, the Company agreed to issue 75,000 shares of
restricted common stock to James Sapirstein, a former director of
the Company, for his service as a director. These shares were
issued on November 30, 2016.
On November 7, 2016, the Company formed a Scientific Advisory
Board (SAB) comprised of David Barshis, John Norton, and
Heinz-Josef Lenz. The Company agreed to issue 150,000 shares of
its restricted common stock to each member of the SAB as
compensation for their service on the SAB. These shares were
issued on November 30, 2016.
The Company claims an exemption from registration for such
issuances and sales described above to Section 4(2) and/or Rule
506 of Regulation D of the Securities Act since the foregoing
issuances and sales did not involve a public offering, the
recipients took the securities for investment and not resale, we
took appropriate measures to restrict transfer, and the
recipients were either (a) an accredited investor; and/or (b) had
access to similar documentation and information as would be
required in a Registration Statement under the Securities Act.
With respect to the transactions described above, no general
solicitation was made either by us or by any person acting on our
behalf. The transactions were privately negotiated. No
underwriters or agents were involved in the foregoing issuance or
grant and the Company paid no underwriting discounts or
commissions. The securities sold are subject to transfer
restrictions, and the certificate(s) evidencing the securities
contain an appropriate legend stating that such securities have
not been registered under the Securities Act and may not be
offered or sold absent registration or to an exemption therefrom.
Item 5.01 Changes In Control Of Registrant.
As a result of the Business Combination, the owners of Brown
prior to the combination, obtained majority voting control over
the Company, with Evan M. Levine, our Chief Executive Officer and
director (receiving 6,000,000 shares of common stock), Steven M.
Plumb, our Chief Financial Officer (11,469,785 shares of common
stock), and Noah I. Davis, our newly appointed President, Chief
Operating Officer and Director (7,175,522 shares of common
stock). The information in Item 2.01 above regarding the Exchange
Agreement and the information below under Item 5.06 – Security
Ownership of Certain Beneficial Owners and Management are
incorporated in this Item 5.01 by reference.
Item 5.02 Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.
On November 7, 2016, David Barshis, James Sapirstein, Heinz-Josef
Lenz and John Norton resigned from the Board of Directors. Such
resignations were not in connection with a disagreement with the
Company. On the same date, David Barshis, James Sapirstein,
Heinz-Josef Lenz were appointed to the Companys Scientific
Advisory Board.
Effective on November 7, 2016, Richard Corbin, Jr., was appointed
as Vice Chairman of the Board of Directors.
On November 8, 2016, Steven M. Plumb and Noah I. Davis were
appointed to the Board of Directors, Mr. Davis was appointed to
the positions of President and Chief Operating Officer and Mr.
Plumb was appointed to the positions of Secretary and Treasurer
of the Company. In connection with Mr. Davis appointment, Evan
Levine stepped down as President of the Company.
Mr. Plumbs and Mr. Davis bios are provided below under Form 10
Disclosure – Item 5. Directors and Executive Officers Background
of Officer and Directors.
On November 7, 2016, the vesting of the 180,000 shares of common
stock issued to Steven M. Plumb on March 21, 2016, in
consideration for services rendered, which were to vest to him
over a 36 month period, was accelerated such that all remaining
unvested shares vested to him on such date.
On November 7, 2016, the Board of Directors approved the
appointments of the following individuals to the various
committees of the Board of Directors: Audit Committee – Messrs.
Levine and Plumb; Nominating and Governance Committee – Messrs.
Levine, Plumb, and Corbin; and Compensation Committee – Messrs.
Levine, Plumb, and Corbin.
Item 5.03 Amendments to Articles of Incorporation or
Bylaws; change of Fiscal Year.
On November 8, 2016, the Board of Directors approved a change in
the Companys fiscal year end from May 31st to October
31st, the fiscal year end of Brown. By selecting the
year end of the accounting acquiror, Brown, the Company will be
using the year end of Brown and will be filing a Form 10-K for
the year ending October 31, 2016.
Section 5.06 Change in Shell Company Status
We previously incorrectly stated that prior to the Business
Combination, we were a shell company (as such term is defined in
Rule 12b-2 under the Securities Exchange Act of 1934, as amended,
or the Exchange Act); however, we now believe that such
determination was incorrect and that we were not a shell company
prior to the Business Combination. Nevertheless, the information
contained in this Report, together with the information contained
in our Annual Report on Form 10-K for the fiscal year ended May
31, 2015, and our subsequent Quarterly Report on Form 10-Q for
the quarter ended August 31, 2016, as filed with the SEC,
constitute the current Form 10 information necessary to satisfy
the conditions contained in Rule 144(i)(2) under the Securities
Act of 1933, as amended, or the Securities Act.
Item 2.01(f) of Form 8-K states that if the registrant was a
shell company (which as described above, we do not believe that
we were), then the registrant must disclose the information that
would be required if the registrant were filing a general form
for registration of securities on Form 10 under the Securities
Exchange Act of 1934, as amended. Notwithstanding the above, we
have provided the information that would be included in a Form 10
registration statement, other than information previously filed
by us as disclosed above, below.
FORM 10 DISCLOSURE
Item 1. Business
Company Overview
As described above, on November 8, 2016, the Company consummated
the transactions contemplated by the Exchange Agreement, to
which, Brown became a wholly-owned subsidiary of the Company, and
the Companys main operations changed to those of Brown.
Brown is a global provider of technical codes and standards,
training materials, and e-Learning solutions.
Brown was incorporated on January 21, 2014. On January 31, 2014,
Brown acquired a 51% interest in Brown Book Shop, Inc., a Texas
corporation that was formed as Brown Book Shop, a
sole-proprietorship, in 1946, and on June 8, 1976 was
incorporated in Texas as Brown Book Shop, Inc. Brown operates a
bookstore in Houston, Texas, and operates an e-commerce website,
www.browntechnical.org, which includes information we do not
desire to incorporate by reference into this filing.
On August 6, 2014, Brown formed Pink Professionals, LLC (Pink) to
develop and market social networking software aimed at female
managers and professionals in certain targeted professions, such
as Oil and Gas, Finance and Information Technology. At the time
of formation, Brown owned 75% of the membership units of Pink. On
October 31, 2014, Brown sold the rights to the use of the
software in the Oil and Gas industry to the 25% owner of Pink in
exchange for cash consideration and the cancelation of such other
owners membership units. Accordingly, Brown now owns 100% of the
equity in Pink.
On October 31, 2016, Brown acquired an additional 48% of Brown
Book Shop, Inc. for $50,000 in cash and a note payable in the
amount of $184,981. The note is due October 31, 2026, bears
interest at 8% per annum, requires monthly payments of principal
and interest of $2,244, and a balloon payment of $110,687 after
five years. The note is unsecured. As a result of this
transaction, Brown now owns 99% of Brown Book Shop, Inc.
Brown provides technical professionals with the information
required to more effectively design products and construct and
complete engineering projects. Its product offerings include
content on millions of engineering and technical standards,
codes, specifications, handbooks, reference books, journals, and
other scientific and technical documents.
Brown is an independent provider of print and electronic codes
and standards used by engineers and tradesmen to ensure that they
are following the national and local building and industrial
codes as they perform their jobs. Brown sells individual print
and electronic versions of individual codes and subscriptions to
sets of codes. Brown also sells aids and guides that assist
engineers and tradesmen in the performance of their jobs. Brown
publishes its own content and resells the content of independent
third parties. In September 2016, Brown established an eLearning
division that is involved in producing and distributing online
training courses aimed at its target market.
As a result of this transaction, the Company will be pursuing the
business operations of Brown and will seek to find a financial
partner to continue the development of the assets of Panther. The
Company is seeking to raise capital to expand the operations of
Brown and is pursuing acquisitions of complementary companies
that can add content to our eLearning operations. While we plan
to continue our business as a provider of technical codes and
standards, and training materials, we are focusing future
expansion on our eLearning operations. Accordingly, we are adding
online training content to our offerings and licensing and
acquiring training content. We do not plan to allocate any
capital to our biotech assets at this time. Management time will
only be devoted to efforts to identify a financial partner and to
negotiate the terms of an agreement with a financial partner, if
one if found, whereby such financial partner will continue to
develop the biotech assets.
Marketing
Brown serves the small to medium sized business market in the
United States, although its sales are worldwide. Brown has
seventy years of experience in its market. Currently Brown has
25,000 active customers on its website. Since 2014, Brown has
devoted considerable resources to building its online presence
and expanding its web presence and closing efficiency. Brown
offers over 20 customized sites for its customers and utilizes
extensive email marketing campaigns with custom landing pages for
each campaign. Over 95% of Browns sales are derived from its
website and corporate customers.
Competition
Browns product offerings compete with IHSMarkit, SAI Global,
TechStreet, Thomson Reuters, Thomas Publishing, and the standards
developing organizations (SDOs), among others.
Competitive advantage
Brown has invested in its user interface which allows small and
medium sized business customers to quickly and easily locate the
products that meet their needs. Brown bundles its products to
allow its customers to rapidly find complementary products. Its
product bundles are competitively priced and provide an
alternative to expensive online subscription products.
Global delivery. Brown has expanded its customer
service and delivery systems to allow it to process orders and
ship within 24 hours of the receipt of an order. Brown ships
across the United States and around the world.
Outstanding reputation. Brown has built an
outstanding reputation in the codes and standards industry
through its fast, reliable, quality and friendly service. Its
reputation is well known in the industry among its customers and
suppliers.
Complementary product mix. Brown believes that
it is one of the largest independent single-source providers of
the resources needed to train, license, certify, and perform in a
vocational trade. Brown offers codes and standards, training
materials, work place guides, online eLearning, testing and
certifications to the vocational trades. Brown believes that the
breadth of its service and product offerings allows it to better
serve the needs of its customers by providing them with
single-source solutions to learn a trade, expand their
capabilities and more efficiently and effectively perform their
trade. Brown believes that the integration of its services into a
single platform, together with its global presence and delivery
capabilities, allows its customers to leverage its solutions to
address their performance improvement needs in a way that
improves the speed and efficiency at which critical know-how is
disseminated on a firm-wide basis, and enables them to achieve
their desired performance improvement goals.
Employees
The Company has 13 full-time employees. The Company utilizes a
variety of methods to attract and retain personnel.
Employment agreements
In November 2015, the Company authorized the payment of $15,000
per month to Mr. Levine, effective January 15, 2016, and $1,000
per month as healthcare reimbursement, as compensation for his
services as CEO. In March 2016, the Company entered into an
agreement with Mr. Plumb to pay Mr. Plumb $6,000 per month to
serve as the CFO of the Company. In February 2014, Brown entered
into consulting agreements with Mr. Davis and Mr. Plumb. The
agreements were modified on May 1, 2016 such that Mr. Davis, the
President and Chief Operating Officer is paid $11,000 per month
by Brown and Mr. Plumb, the Chief Financial Officer, is paid
$4,500 per month by Brown. The contracts expire on December 19,
2017. The Brown employment agreements were not assumed by the
Company as part of the Business Combination and will remain with
Brown. In addition, the Panther agreements with Mr. Levine and
Mr. Plumb remain in effect.
Content agreements
Brown has entered into numerous agreements to publish books and
materials under its Brown Technical imprint and license content
for its proprietary eLearning courses. These agreements provide
Brown with the exclusive rights to the intellectual property that
Brown has licensed.
Available Information
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K and amendments to reports filed or
furnished to Section 13 of the Securities Exchange Act of 1934,
as amended (the Exchange Act), are available free of charge after
we electronically file or furnish it to the SEC. The public may
read and copy any materials we file with the SEC at the SECs
Public Reference Room at 100 F Street, NE, Washington, DC 20549.
The public may obtain information on the operation of the Public
Reference Room by calling 1-800-SEC-0330. The SEC also maintains
a website atwww.sec.gov that contains reports, proxy and
information statements, and other information regarding issuers
that file electronically. We assume no obligation to update or
revise forward looking statements in this Current Report on Form
8-K/A, whether as a result of new information, future events or
otherwise, unless we are required to do so by law.
Prior Business Combination Operations
The Company continues to own the Transferrin Doxorubicin
(TRF_DOX), which is a combination of transferrin glycoproteins
with Doxorubicin for targeted delivery to tumors with the
reduction of serious side effects, and reevaluating both
Numonafide, which is a derivative of the widely studied
anticancer drug Amonafide optimized to eliminate toxic
metabolites and reduce side effects, and TDZD-8, a kinase
inhibitor targeting cancer stem cells. We are not planning on
allocating additional cash funding for this project. Instead,
management is actively seeking a financial partner to continue
the development of Transferrin Doxorubicin. In the event that
such a financial partner is found and results in a future revenue
stream, the Company has agreed to issue:
(i) 6,000,000 shares of common stock of the Company, in the event
that Transferrin Doxorubicin meets the primary endpoint for Phase
2 clinical trials;
(ii) 8,000,000 shares of common stock of the Company, in the
event that Transferrin Doxorubicin meets the primary endpoint for
Phase 3 clinical trials; and
(iii) 10,000,000 shares of common stock of the Company, in the
event that Transferrin Doxorubicin receives FDA
Approval/clearance to market.
Additional information may be found at our website,
www.pantherbiotechnology.com, which includes information we do
not desire to incorporate by reference herein, and in Part I,
Item 1, Business, of the Companys Annual Report on Form 10-K for
the year ended May 31, 2016, filed on September 13, 2016, which
is incorporated herein by this reference.
* * * * * *
Hereafter, references in this report to Brown, the Company, we
and our include Panther Biotechnology, Inc. and Brown and its
subsidiaries, except in those circumstances where the context and
reference to Brown or the Company or Panther is intended to
relate to just the parent company or subsidiary, whether before
or after the exchange transaction.
Risk Factors
The following are some of the factors that we believe could cause
our actual results to differ materially from historical results
and from the results contemplated by the forward-looking
statements contained in this report and other public statements
made by us. Additional risks and uncertainties not presently
known to us, or that we currently see as immaterial, may also
harm our business. Most of these risks are generally beyond our
control. If any of the risks or uncertainties described below, or
any such additional risks and uncertainties actually occur, our
business, results of operations and financial condition could be
materially and adversely affected and the value of our securities
may decline in value. In addition to the risk factors below, the
Company is still subject to all of the risks described under the
heading Item 1A. Risk Factors, in its Annual Report on Form 10-K
for the year ended May 31, 2016, filed with the Securities and
Exchange Commission on September 13, 2016, and incorporated
herein by reference.
We have future capital needs and without adequate
capital we may be forced to cease or curtail our business
operations.
Our growth and continued operations could be impaired by
limitations on our access to capital markets. The limited capital
we have raised to date may be inadequate for our long-term growth
and to support our operations. If financing is available, it may
involve issuing securities senior to our common stock. In
addition, in the event we do not raise additional capital from
conventional sources, such as our existing investors or
commercial banks, there is every likelihood that our growth will
be restricted and we may be forced to scale back or curtail
implementing our business plan. Even if we are successful in
raising capital in the future, we will likely need to raise
additional capital to continue and/or expand our operations. If
we do not raise the additional capital, the value of any
investment in our Company may become worthless. In the event we
do not raise additional capital from conventional sources, it is
likely that we may need to scale back or curtail implementing our
business plan.
We have received a going concern opinion from our
auditors and we are currently operating at a loss, which raises
substantial doubt about our ability to continue as a going
concern.
The auditors of Panther Biotechnology, Inc. and Brown Technical
Media Corp. have issued a going concern opinion for both Panther
Biotechnology, Inc. and Brown Technical Media Corp. Although we
are currently conducting operations, the Company has not
generated a net profit since inception. This raises substantial
doubt about our ability to continue as a going concern. The
ability of the Company to continue as a going concern is
dependent on the Companys ability to raise additional capital and
implement its business plan.
Changing economic conditions in the United States
could harm our business, results of operations and financial
condition.
Our revenues and profitability are related to general levels of
economic activity and employment primarily in the United States.
As a result, an economic recession in the United States could
harm our business and financial condition. If the economies in
which our customers operate are weakened in any future period,
these companies may reduce their expenditures on external
training, and other products and services supplied by us, which
could materially and adversely affect our business, results of
operations and financial condition. As we expand our business
globally, we may be subject to additional risks associated with
economic conditions in the countries into which we enter or in
which we expand our operations.
If we cannot successfully implement our business
strategy, then our business, financial condition and results of
operations could be materially adversely affected.
Our ability to successfully implement our business strategy is
subject to a number of risks, many of which are beyond our
control, including:
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higher technology costs due to the trend toward delivering more educational content in both digital and traditional print formats, |
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rising advances for popular authors and market pressures to maintain competitive retail pricing, |
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a material increase in product returns or in certain production costs, |
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market acceptance of new technology products, including online or computer-based learning, |
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changing demographics and preferences of vocational students and teachers that may affect product offerings and revenues, and |
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| consolidation in the eLearning vocational training market. |
We may not be able to successfully implement our business
strategy and, even if successfully implemented, our strategy may
not improve our operating results. In addition, we may decide to
alter or discontinue aspects of our business strategy and may
adopt alternative or additional strategies due to business or
competitive factors or factors not currently expected, such as
unforeseen costs and expenses or events beyond our control. If we
are unable to successfully implement our business strategy our
business, financial condition and results of operations could be
adversely affected.
We have made, and may be required to make in the
future, substantial investments in our technology infrastructure.
If we do not make such investments or do not effectively make
such investments, our business, financial condition and results
of operations may be materially adversely affected.
The method of delivering our products is subject to technological
change. Over the past several years, we have made significant
investments in technology, including spending on computer
hardware, software, electronic systems, telecommunications
infrastructure and digitization of our content. We expect our
investment in technology to continue at significant levels.
Additional capital will be necessary in order to make these
investments. If we do not make such investments or do not
effectively make such investments, our business, financial
condition and results of operations may be materially adversely
affected. In addition, we cannot predict whether technological
innovations will, in the future, make some of our products,
particularly those printed in traditional formats, wholly or
partially obsolete. If we are unable to identify, develop and
successfully integrate technological innovations, or our
competitors are able to better integrate technological
innovations, we may not be able to effectively compete, and,
therefore, we may experience a loss in sales or we may be
required to invest additional significant resources to further
adapt to the changing competitive environment.
Our intellectual property and proprietary rights may
not be adequately protected under current laws which could harm
our competitive position and materially adversely affect our
business, financial condition and results of
operations.
Our success depends, in part, on our proprietary content. The
product offerings of Brown are largely comprised of intellectual
property content owned by third parties that is delivered through
a variety of media, including textbooks, digital learning
solutions and the Internet. We also currently distribute a small
number of products comprised of content that we own. We and the
third party content owners rely on copyright and other
intellectual property laws to establish and protect the
proprietary rights in these products. However, these proprietary
rights may be challenged, invalidated or circumvented. We also
own the United States patent rights for TRF-DOX. This is the only
patent that we own. We currently have two licensed patents, one
owned patent and copyright license agreements (Copyright
Agreements) with six authors. These Copyright Agreements utilize
a standard form, included as an Exhibit to this filing. These
agreements grant the Company an exclusive license to the
marketing and sale of the content, specify royalty rates and are
in effect for the term of the underlying copyright. Our
intellectual property rights in the United States, the primary
jurisdiction in which we conduct business, are well-established.
However, we also conduct business in other countries, such as
China and India, where the extent of effective legal protection
for intellectual property rights is uncertain, and this
uncertainty could affect our current performance and future
growth. Moreover, despite copyright and trademark protection,
third parties may be able to copy, infringe, illegally
distribute, import or resell or otherwise profit from our
proprietary rights without our authorization. These unauthorized
activities may be more easily facilitated by the Internet. In
addition, the lack of Internet-specific legislation relating to
intellectual property protection creates an additional challenge
for us in protecting our proprietary rights relating to our
online business processes and other digital technology rights.
The steps taken by us to protect our proprietary information may
not be adequate to prevent misappropriation of our content or
technology. In addition, our proprietary rights may not be
adequately protected because:
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people may not be deterred from misappropriating our technologies despite the existence of laws or contracts prohibiting such actions, |
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policing unauthorized use of our intellectual property can be difficult, expensive and time-consuming (which may divert our managements time from implementing our business strategy), and we may be unable to determine the extent of any unauthorized use, and |
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the laws of other countries in which we may market our products may offer little or no effective protection for our proprietary technologies. |
We may also be required to initiate expensive and time-consuming
litigation to defend our intellectual property or to maintain our
intellectual property. If we are not able to adequately protect
our intellectual property rights and proprietary rights, our
competitive position may be harmed and our business, financial
condition and results of operations could be materially adversely
affected.
As a result of sales outside of the United States, we
face additional risks, which may harm our results of
operations.
A portion of our sales are outside of the United States and, as a
result, we are subject to foreign business, political and
economic risks. Additionally, a portion of our customers are
located outside of the United States, which further exposes us to
foreign risks.
Our non-U.S. sales are directly influenced by the political and
economic conditions of the region in which they are located.
Accordingly, we are subject to risks associated with
international sales, including:
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political, social and economic instability, including wars, terrorism, political unrest, boycotts, curtailment of trade and other business restrictions; |
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compliance with domestic and foreign export and import regulations, and difficulties in obtaining and complying with domestic and foreign export, import and other governmental approvals, permits and licenses; |
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local laws and practices that favor local companies, including business practices that we are prohibited from engaging in by the Foreign Corrupt Practices Act and other anti-corruption laws and regulations; |
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natural disasters, including earthquakes, tsunamis and floods; |
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| trade restrictions or higher tariffs; | ||
| transportation delays; | ||
| difficulties of managing distributors; | ||
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less effective protection of intellectual property than is afforded to us in the United States or other developed countries; |
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| inadequate local infrastructure; and | ||
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exposure to local banking, currency control and other financial-related risks. |
As a result of having global sales, the sudden disruption of the
supply chain and/or the manufacture of our products caused by
events outside of our control could impact our results of
operations by impairing our ability to timely and efficiently
deliver our products. Moreover, the international nature of our
business subjects us to risk associated with the fluctuation of
the U.S. dollar versus foreign currencies. Decreases in the value
of the U.S. dollar versus currencies in jurisdictions where we
have large fixed costs or our third-party manufacturers have
significant cost will increase the cost of such operations, which
could harm our results of operations.
We may face intellectual property infringement claims
that could be time-consuming and costly to defend and could
result in our loss of significant rights.
Litigation regarding copyrights and other intellectual property
rights is extensive in the publishing industry, including claims
involving the terms by which photographs and other content are
licensed to us for inclusion in our textbooks and other products.
We may be subject to such claims in the future. Our third-party
suppliers may also become subject to infringement claims, which
in turn could negatively impact our business.
Litigation is expensive and time-consuming and could divert
managements attention from our business and could have an adverse
effect on our business, financial condition and results of
operations. If there is a successful claim of infringement
against us, our customers or our third-party intellectual
property providers, we may be required to pay substantial damages
to the party claiming infringement, stop selling products or
using technology that contains the allegedly infringing
intellectual property, or enter into royalty or license
agreements that may not be available on acceptable terms, if at
all. All of these requirements could damage our business. We may
have to develop non-infringing technology and our failure in
doing so or obtaining licenses to the proprietary rights on a
reasonable or timely basis could have an adverse effect on our
business, financial condition and results of operations.
We may not be willing or able to maintain the
availability of information obtained through licensing
arrangements or the terms of our licensing arrangements may
change, which may reduce our profit margins or our market
share.
In February 11, 2016, we incorporated a new subsidiary, Brown
Technical Publications, Inc. (BTP) with the intent of publishing
original content obtained through licensing agreements. On March
28, 2016, we executed our first publishing agreement. In April
2016, we began selling the first product developed by BTP and in
July 2016, we began shipping books published under the March 28,
2016, licensing agreement. We generated $0 and $735 of revenue
from the sales of these products during the year ended October
31, 2015 and the nine months ended July 31, 2016, respectively.
We currently have copyright license agreements (Copyright
Agreements) with six authors. These Copyright Agreements utilize
a standard form, attached as an Exhibit to this filing, These
agreements grant the Company an exclusive license to the
marketing and sale of the content, specify royalty rates and are
in effect for the term of the underlying copyright. The remainder
of our revenue is derived from the sale of third party and
alternate content providers. Our largest supplier for this
content is IHS Markit. The terms of our agreement with IHS Markit
are included as Exhibits to this filing. Some content providers
may seek to increase licensing fees for providing their
proprietary content to us. In such case, our profit margins may
be reduced if we are unable to pass along such price increases to
our customers. We may also find it unprofitable to continue
offering these products and may decide to stop offering them for
sale. If we are unable to renegotiate acceptable licensing
arrangements with these content providers or find alternative
sources of equivalent content, the quality of our content may
decline and as a result we may experience a reduction in our
market share, and our business, financial condition and results
of operations may be materially adversely affected.
Our business relies on our hosting facilities and
electronic delivery systems and any failures or disruptions may
adversely affect our ability to serve our
customers.
We depend on the capacity, reliability and security of our
hosting facilities and electronic delivery systems to provide our
online library reference materials and other online products to
our customers. Certain events, such as loss of service from third
parties, operational failures, sabotage, break-ins, and similar
disruptions from unauthorized tampering or hacking, human error,
national disasters, power loss, or computer viruses, could cause
our electronic delivery systems to operate slowly or interrupt
their availability for periods of time. Any back-up systems or
facilities we maintain may also experience interruptions and loss
of service. We do not have a back-up facility for some of our
online products. If disruptions, failures or slowdowns of our
facilities, electronic delivery systems, or back-up systems or
facilities occur, our ability to distribute our products and
services effectively and to serve our customers may be adversely
affected and we may experience harm to our reputation and loss of
revenues.
A security breach involving our products and services
or our customers credit, debit card or private data could subject
us to material claims and additional costs and could harm our
reputation.
Our customers depend on our products and services to collect,
secure, store and transmit confidential information. In
connection with credit card sales, we transmit and store
confidential credit and debit card information. We also have
access to, collect or maintain private or confidential
information regarding our customers and employees, as well as our
business. Third parties may attempt to breach the security of our
systems, products and services. Any security breach for which we
are, or are perceived to be, responsible, in whole or in part,
could subject us to claims that could harm our reputation and
result in significant costs to defend, settle or satisfy. Any
imposition of liability, particularly liability that is not
covered by insurance or is in excess of insurance coverage, could
materially harm our operating results. Computer viruses, physical
or electronic break-ins and similar disruptions could lead to
interruptions and delays in customer processing or a loss of
data. We might be required to expend significant financial and
other resources to protect against further security breaches or
to rectify problems caused by any security breach.
We have and may continue to outsource certain
functions to third parties and these arrangements may not be
successful, thereby resulting in increased costs, or may
materially adversely affect service levels, results of operations
and our financial reporting.
We rely on third party providers of outsourced services to
provide services on a timely and effective basis. These services
include, among others, printing of textbooks, payroll and
benefits administration and specific activities related to
general accounting, fixed asset and accounts payable functions.
We do not ultimately control the performance of our outsourcing
partners and the failure of third-party providers of outsourced
services to perform as required by contract or to our
expectations could result in significant disruptions and costs to
our operations, which could materially adversely affect our
business, financial condition and results of operations and our
ability to report financial information accurately and in a
timely manner.
If we do not adequately manage and develop our
operational and managerial systems and processes, our ability to
manage and grow our business may be harmed.
We need to continue to improve existing, and implement new,
operational and managerial systems to manage our business
effectively. Any delay in the implementation of, or disruption in
the transition to, our new or enhanced systems, could adversely
affect our business, financial condition and results of
operations.
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limitations on the repatriation of funds to the United States, |
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challenges in enforcing agreements and collecting receivables under certain foreign legal systems, |
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lack of local acceptance or knowledge of our products and services, |
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lack of recognition of our brands, unavailability of joint venture partners or local companies for acquisition, |
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| instability of international economies and governments, | ||
| changes in legal, regulatory and tax requirements, | ||
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exposure to varying legal standards, including intellectual property protection laws, in other jurisdictions, |
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general economic and political conditions in the countries in which we operate, and |
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changes in foreign governmental regulations or other governmental actions that would have a direct or indirect adverse impact on our business and market opportunities. |
We are also subject to the United States Foreign Corrupt
Practices Act which generally prohibits companies and their
intermediaries from making payments to foreign officials for the
purpose of obtaining or keeping business. While we have
procedures designed to ensure our compliance with such laws,
these procedures may fail or may not protect us against liability
as a result of actions that may be taken in the future by our
agents and other intermediaries, including those over whom we may
have limited or no control.
Our success will depend, in part, on our ability to anticipate
and effectively manage these and other risks associated with our
operations outside the United States.
If we are unable to identify, complete and
successfully integrate acquisitions, our ability to grow our
business may be limited and our business, financial condition and
results of operations may be adversely impacted.
Our acquisition strategy involves a number of risks, including:
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our ability to find suitable businesses to acquire at affordable valuations or on other acceptable terms, |
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competition for acquisition targets may lead to higher purchase prices or one of our competitors acquiring one of our acquisition targets, |
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prohibition of future acquisitions under United States or foreign antitrust laws, |
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the diversion of managements attention from existing operations to the integration of acquired companies, |
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| our inability to realize expected cost savings and synergies, | ||
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expenses, delays and difficulties of integrating acquired businesses into our existing business structure, and |
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difficulty in retaining key customers and management personnel. |
If we are unable to continue to acquire and efficiently integrate
suitable acquisition candidates, our ability to increase revenues
and fully implement our business strategy may be adversely
impacted, which could adversely affect our business, financial
condition and results of operations.
Changes to laws and regulations may have an adverse
effect on our business.
Our business and customers businesses are subject to United
States federal, state and local and international laws and
regulations, including laws and regulations relating to
intellectual property, libel, privacy, accessibility, product
offerings and financial aid eligibility and laws and regulations
applicable generally to businesses. New laws and regulations and
changes to existing laws and regulations applicable to us and our
customers may restrict or require a change to how we and our
customers conduct business and could have an adverse effect on
our business.
We may not be able to attract or retain key
employees.
Our future success depends on the continued services of key
employees and our ability to attract and retain new employees
with the experience and capabilities necessary to support our
needs. The loss of any of the key employees or the failure to
attract and retain suitably skilled new employees could adversely
affect our business, financial condition and our results of
operations.
There are risks associated with our
indebtedness.
As of July 31, 2016, we had unsecured term loans with an
aggregate principal balance of $726,384 (excluding amortization
of discount). We may incur additional indebtedness in the future
through offerings of debt securities or through traditional debt
agreements. Our outstanding indebtedness and any additional
indebtedness we incur may have significant consequences,
including, without limitation, any of the following:
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we will be required to use cash reserves to pay the principal of and interest on our indebtedness; |
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our indebtedness and leverage may increase our vulnerability to adverse changes in general economic and industry conditions, as well as to competitive pressure; |
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our ability to obtain additional financing for working capital, capital expenditures, acquisitions or for general corporate and other purposes may be limited; and |
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our flexibility in planning for, or reacting to, changes in our business and our industry may be limited. |
Our ability to make payments of principal of and interest on our
indebtedness depends upon our future performance, which will be
subject to general economic conditions, industry cycles and
financial, business and other factors affecting our consolidated
results of operations and financial condition, many of which are
beyond our control. If we are unable to generate sufficient cash
flow from operations in the future to service our debt, we may be
required to, among other things:
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seek additional capital through the sale of equity securities; |
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| seek additional financing in the debt markets; | ||
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refinance or restructure all or a portion of our indebtedness; |
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| sell selected assets; or | ||
| reduce or delay planned capital or operating expenditures. |
Such measures might not be sufficient to enable us to service our
debt. Our failure to satisfy our obligations under the agreements
governing our indebtedness could result in an event of default,
which could permit our secured lenders to foreclose on our assets
and stock securing such indebtedness. In addition, any such
financing, refinancing or sale of assets might not be available
on economically favorable terms or at all.
The price of our common stock is highly volatile and
could decline regardless of our operating
performance.
The market price of our common stock could fluctuate in response
to, among other things:
| changes in economic and general market conditions; | ||
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changes in the outlook and financial condition of certain of our significant customers and industries in which we have a concentration of business; |
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changes in financial estimates, treatment of our tax accounting or liabilities or investment recommendations by securities analysts following our business; |
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changes in accounting standards, policies, guidance, interpretations or principles; |
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sales of common stock by our directors, officers and significant stockholders; |
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our failure to achieve operating results consistent with projections; and |
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| the operating and stock price performance of competitors. |
These factors may adversely affect the trading price of our
common stock and prevent you from selling your common stock at or
above the price at which you purchased it. In addition, in recent
periods, the stock market has experienced significant price and
volume fluctuations. This volatility has had a significant impact
on the market price of securities issued by many companies,
including ours and others in our industry. These changes can
occur without regard to the operating performance of the affected
companies. As a result, the price of our common stock could
fluctuate based upon factors that have little or nothing to do
with our company, and these fluctuations could materially reduce
our share price.
Our financial results are subject to quarterly
fluctuations, which may result in volatility or declines in our
stock price.
We experience, and expect to continue to experience, fluctuations
in quarterly operating results. Consequently, you should not deem
our results for any particular quarter to be necessarily
indicative of future results. Factors that may affect quarterly
operating results in the future include:
| the overall level of services and products sold; | ||
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the volume of publications we ship each quarter, because revenue and cost of publications contracts are recognized in the quarter during which the publications ship; |
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| fluctuations in project profitability; | ||
| the gain or loss of material clients; | ||
| the timing, structure and magnitude of acquisitions; | ||
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participant training volume and general levels of outsourcing demand from clients in the industries that we serve; |
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| the budget and purchasing cycles of our customers. | ||
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the commencement or completion of client engagements or services and products in a particular quarter; and |
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| the general level of economic activity. |
Accordingly, it is difficult for us to forecast our growth and
results of operations on a quarterly basis. If we fail to meet
expectations of investors or analysts, our stock price may fall
rapidly and without notice. Furthermore, the fluctuation of
quarterly operating results may render less meaningful
period-to-period comparisons of our operating results.
We may continue making acquisitions as part of our
growth strategy, which subjects us to numerous risks that could
have a material adverse effect on our business, financial
condition and results of operations.
As part of our growth strategy, we may continue to pursue
selective acquisitions of businesses that broaden our service and
product offerings, deepen our capabilities and allow us to enter
attractive new domestic and international markets. Pursuit of
acquisitions exposes us to many risks, including that:
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acquisitions may require significant capital resources and divert managements attention from our existing business; |
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| acquisitions may not provide the benefits anticipated; | ||
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acquisitions could subject us to contingent or other liabilities, including liabilities arising from events or conduct predating the acquisition of a business that were not known to us at the time of the acquisition; |
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we may incur significantly greater expenditures in integrating an acquired business than had been initially anticipated; |
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acquisitions may create unanticipated tax and accounting problems; and |
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acquisitions may result in a material weakness in our internal controls if we are not able to successfully establish and implement proper controls and procedures for the acquired business. |
Our failure to successfully accomplish future acquisitions or to
manage and integrate completed or future acquisitions could have
a material adverse effect on our business, financial condition or
results of operations. We can provide no assurances that we:
| will identify suitable acquisition candidates; | ||
| can consummate acquisitions on acceptable terms; | ||
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can successfully compete for acquisition candidates against larger companies with significantly greater resources; |
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can successfully integrate any acquired business into our operations or successfully manage the operations of any acquired business; or |
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will be able to retain an acquired companys significant client relationships, goodwill and key personnel or otherwise realize the intended benefits of any acquisition. |
In addition, acquisitions might involve our entry into new
businesses that might not be as profitable as we expect. We can
provide no assurances that our expectations regarding the
profitability of future acquisitions will prove to be accurate.
Acquisitions might also increase our exposure to the risks
inherent in certain markets or industries.
As a result of completed and possible future acquisitions, our
past performance is not indicative of future performance, and
investors should not base their expectations as to our future
performance on our historical results.
Future acquisitions may require that we incur debt or
issue dilutive equity.
Future acquisitions may require us to incur additional debt,
under our existing credit facility or otherwise, or issue equity,
resulting in additional leverage or dilution of ownership.
Difficulties in integrating acquired businesses could
result in reduced revenues and income.
We might not be able to integrate successfully any business we
have acquired or could acquire in the future. The integration of
the businesses could be complex and time consuming and will place
a significant strain on our management, administrative services
personnel and information systems. This strain could disrupt our
business. Furthermore, we could be adversely impacted by
liabilities of acquired businesses. We could encounter
substantial difficulties, costs and delays involved in
integrating common accounting, information and communication
systems, operating procedures, internal controls and human
resources practices, including incompatibility of business
cultures and the loss of key employees and customers. Also,
depending on the type of acquisition, a key element of our
strategy may include retaining management and key personnel of
the acquired business to operate the acquired business for us.
Our inability to retain these individuals could materially impair
the value of an acquired business. In addition, small businesses
acquired by us may have greater difficulty competing for new work
as a result of being part of our larger entity. These
difficulties could reduce our ability to gain customers or retain
existing customers, and could increase operating expenses,
resulting in reduced revenues and income and a failure to realize
the anticipated benefits of acquisitions.
Competition could materially and adversely affect our
performance.
The training industry is highly fragmented and competitive, with
low barriers to entry and no single competitor accounting for a
significant market share. Our competitors include divisions of
several large publicly traded and privately held companies,
vocational and technical training schools, degree-granting
colleges and universities, continuing education programs and
thousands of small privately held training providers and
individuals. Moreover, we expect to face additional competition
from new entrants into the training and performance improvement
market due, in part, to the evolving nature of the market and the
relatively low barriers to entry.
We cannot provide any assurance that we will be able to compete
successfully in the industries or markets in which we compete,
and the failure to do so could materially and adversely affect
our business, results of operations and financial condition.
Failure to keep pace with technology and changing
market needs could harm our business.
Our future success will depend upon our ability to adapt to
changing client needs, to gain expertise in technological
advances rapidly and to respond quickly to evolving industry
trends and market needs. We may not be able to expand our
operations into all geographic areas into which we seek to expand
our services and may not be able to attract and retain qualified
personnel to provide our services in all such geographic areas.
We may not be successful in adapting to advances in technology or
marketing our products in advanced formats. In addition, products
delivered in the newer formats might not provide comparable
training results. Furthermore, subsequent technological advances
might render moot any successful expansion of the methods of
delivering our products. If we are unable to develop new means of
delivering our products due to capital, personnel, technological
or other constraints, our business, results of operations and
financial condition could be materially and adversely affected.
We have only a limited ability to protect the
intellectual property rights that are important to our success,
and we face the risk that our services or products may infringe
upon the intellectual property rights of others.
Our future success depends, in part, upon our ability to protect
our proprietary methodologies and other intellectual property.
Existing laws of some countries in which we provide or license or
intend to provide or license our services or products may offer
only limited protection of our intellectual property rights. We
rely upon a combination of trade secrets, confidentiality
policies, non-disclosure and other contractual arrangements and
copyright and trademark laws to protect our intellectual property
rights. The steps we take in this regard might not be adequate to
prevent or deter infringement or other misappropriation of our
intellectual property, and we may not be able to detect
unauthorized use or take appropriate and timely steps to enforce
our intellectual property rights. Protecting our intellectual
property rights might also consume significant management time
and resources.
Our services and products, or the products of others that we
offer to our clients, may infringe on the intellectual property
rights of third parties, and we might have infringement claims
asserted against us or against our clients. These claims might
harm our reputation, result in financial liabilities and prevent
us from offering some services or products. We have generally
agreed in our contracts to indemnify our clients against expenses
or liabilities resulting from claimed infringements of the
intellectual property rights of third parties. In some instances,
the amount of these indemnities could be greater than the
revenues we receive from the client. Any claims or litigation in
this area, whether we ultimately win or lose, could be
time-consuming and costly, injure our reputation or require us to
enter into royalty or licensing arrangements. We might not be
able to enter into these royalty or licensing arrangements on
acceptable terms. Any limitation on our ability to provide or
license a service or product could cause us to lose
revenue-generating opportunities and require us to incur
additional expenses to develop new or modified solutions for
future projects.
Our information technology systems are subject to
risks that we cannot control.
Our information technology systems are dependent upon global
communications providers, web browsers, telephone systems, and
other aspects of the Internet infrastructure that have
experienced system failures and electrical outages in the past.
Our systems are susceptible to slow access and download times,
outages from fire, floods, power loss, telecommunications
failures, hacking, and similar events. Our servers are vulnerable
to computer viruses, hacking, and similar disruptions from
unauthorized tampering with our computer systems. The occurrence
of any of these events could disrupt or damage our information
technology systems and inhibit our internal operations, our
ability to provide services to our customers, and the ability of
our customers to access our information technology systems. This
could result in our loss of customers, loss of revenue or a
reduction in demand for our services.
A breach of our security measures could harm our
business, results of operations and financial
condition.
Our databases contain confidential data of our clients and our
clients customers, employees and vendors, including sensitive
personal data. As a result, we are subject to numerous laws and
regulations designed to protect this information and various U.S.
federal and state laws governing the protection of health or
other personally identifiable information. These laws and
regulations are increasing in complexity and number, change
frequently and sometimes conflict among the various countries in
which we operate. A party, including our employees, who is able
to circumvent our security measures could misappropriate such
confidential information or interrupt our operations. Many of our
contracts require us to comply with specific data security
requirements. If we are unable to maintain our compliance with
these data security requirements or any person, including any of
our current or former employees, penetrates our network security
or misappropriates sensitive data, we could be subject to
significant liabilities to our clients for breaching these data
security requirements or other contractual confidentiality
provisions. These liabilities might not be subject to a
contractual limit of liability or an exclusion of consequential
or indirect damages and could be significant. Furthermore,
unauthorized disclosure of sensitive or confidential data of our
clients or other parties, whether through breach of our computer
systems, systems failure or otherwise, could also damage our
reputation and cause us to lose existing and potential clients.
We may also be subject to civil actions, regulatory enforcement
actions, and criminal prosecution for breaches related to such
data or need to expend significant capital and other resources to
continue to protect against security breaches or to address any
problem they may cause. In addition, our liability insurance,
which includes cyber insurance, might not be sufficient in type
or amount to cover us against claims related to security
breaches, cyberattacks and other related breaches.
We are expanding into new markets in which we have a
limited operating history in and expect to continue to incur
losses for an indeterminable period of time.
We have a limited operating history with our current business
plan. While Brown has been in business since 1946, we only began
operating as an internet based company in 2014. We are currently
expanding into the online training market. Companies that are
expanding into new markets and changing the primary means of
generating revenue face substantial business risks and may suffer
significant losses. We face challenges and uncertainties in
financial planning as a result of the unavailability of
historical data and uncertainties regarding the nature, scope and
results of our future activities. The Company must develop
successful new business relationships, establish operating
procedures, hire staff, install management information and other
systems, establish facilities and obtain licenses, as well as
take other measures necessary to conduct its new business
activities. We may not be successful in implementing our business
strategies or in completing the development of the infrastructure
necessary to conduct our business as planned. As a result of
industry factors or factors relating specifically to us, we may
have to change our methods of conducting business, which may
cause a material adverse effect on our results of operations and
financial condition. As a result, we may not be able to achieve
or sustain profitability or positive cash flows provided by our
operating activities in the future.
We do not presently intend to pay any cash dividends
on or repurchase any shares of our common stock.
We do not presently intend to pay any cash dividends on our
common stock or to repurchase any shares of our common stock. Any
payment of future dividends will be at the discretion of the
Board of Directors and will depend on, among other things, our
earnings, financial condition, capital requirements, level of
indebtedness, statutory and contractual restrictions applying to
the payment of dividends and other considerations that our Board
of Directors deems relevant. Cash dividend payments in the future
may only be made out of legally available funds and, if we
experience substantial losses, such funds may not be available.
Accordingly, you may have to sell some or all of your common
stock in order to generate cash flow from your investment, and
there is no guarantee that the price of our common stock that
will prevail in the market will ever exceed the price paid by
you.
Shareholders may be diluted significantly through our
efforts to obtain financing and satisfy obligations through the
issuance of additional shares of our common stock.
We may attempt to use non-cash consideration to satisfy
obligations moving forward. In many instances, we believe that
the non-cash consideration will consist of restricted shares of
our common stock or convertible securities, convertible into
shares of our common stock. Our directors have authority, without
action or vote of the shareholders, to issue all or part of the
authorized but unissued shares of common stock. In addition, we
may attempt to raise capital by selling shares of our common
stock (either restricted shares in private placements or
registered shares), possibly at a discount to market in the
future. These actions will result in dilution of the ownership
interests of existing shareholders, may further dilute common
stock book value, and that dilution may be material. Such
issuances may also serve to enhance existing managements ability
to maintain control of the Company because the shares may be
issued to parties or entities committed to supporting existing
management.
Investors may face significant restrictions on the
resale of our common stock due to federal regulations of penny
stocks.
Our common stock will be subject to the requirements of Rule
15g-9, promulgated under the Securities Exchange Act of 1934, as
amended, as long as the price of our common stock is below $5.00
per share. Under such rule, broker-dealers who recommend
low-priced securities to persons other than established customers
and accredited investors must satisfy special sales practice
requirements, including a requirement that they make an
individualized written suitability determination for the
purchaser and receive the purchasers consent prior to the
transaction. The Securities Enforcement Remedies and Penny Stock
Reform Act of 1990 also requires additional disclosure in
connection with any trades involving a stock defined as a penny
stock.
Generally, the Commission defines a penny stock as any equity
security not traded on an exchange or quoted on NASDAQ that has a
market price of less than $5.00 per share. The required penny
stock disclosures include the delivery, prior to any transaction,
of a disclosure schedule explaining the penny stock market and
the risks associated with it. Such requirements could severely
limit the market liquidity of the securities and the ability of
purchasers to sell their securities in the secondary market.
In addition, various state securities laws impose restrictions on
transferring penny stocks and as a result, investors in
the common stock may have their ability to sell their shares of
the common stock impaired.
Financial Information
Managements Discussion and Analysis of Financial
Condition and Results of Operations of Brown
The following discussion should be read in conjunction with the
financial statements of Brown and notes thereto included
elsewhere in this filing.
Results of Operations of Brown
For the three months ended July 31, 2016 compared to the
three months ended July 31, 2015
Revenue
Revenue for the three months ended July 31, 2016 increased
$49,511, from $624,288 during the three months ended July 31,
2015, to $673,799 during the three months ended July 31, 2016.
The increase was due to an increase in website sales during the
period as a result of increased advertising and marketing
efforts.
Cost of sales
Cost of sales for the three months ended July 31, 2016 decreased
$51,659, from $468,355 during the three months ended July 31,
2015, to $416,696 during the three months ended July 31, 2016.
Gross profit
Gross profit for the three months ended July 31, 2016 increased
$101,170, from $155,933 during the three months ended July 31,
2015 to $257,103 during the three months ended July 31, 2016. The
increase was due to higher cost of goods sold in the prior years
period as a result of the write-off of obsolete inventory during
that period. Gross margins for the three months ended July 31,
2016 increased from 25% in the three months ended July 31, 2015
to 38% during the three months ended July 31, 2016. In addition,
we began obtaining better margins on our products by improving
our purchasing operations.
General and administrative expenses
General and administrative expenses for the three months ended
July 31, 2016 increased $35,864, from $162,487 during the three
months ended July 31, 2015, to $198,351 during the three months
ended July 31, 2016. The increase was due to increased
advertising costs of $14,344, increased credit card processing
fees of $4,837 and increased payroll of $19,185, offset by a
decrease in meals and entertainment of $2,809.
Professional fees
Professional fees for the three months ended July 31, 2016
increased $289, from $65,453 during the three months ended July
31, 2015, to $65,742 during the three months ended July 31, 2016.
Professional fees consist of software development and management
consulting fees. The change is inconsequential.
Other income and expense
Interest expense for the three months ended July 31, 2016
increased $55,588, from $39,505 during the three months ended
July 31, 2015, to $95,093 during the three months ended July 31,
2016 due to higher levels of borrowing during the three months
ended July 31, 2016.
Net income or loss
Net loss for the three months ended July 31, 2016 decreased
$9,429, from $114,947 during the three months ended July 31,
2015, to $105,518 during the three months ended July 31, 2016
primarily due to improved gross margins.
For the nine months ended July 31, 2016 compared to the
nine months ended July 31, 2015
Revenue
Revenue for the nine months ended July 31, 2016 increased
$717,569, from $1,515,421 during the nine months ended July 31,
2015, to $2,232,990 during the nine months ended July 31, 2016.
The increase was due to an increase in website sales during the
period as a result of increased advertising and marketing
efforts.
Cost of sales
Cost of sales for the nine months ended July 31, 2016 increased
$711,253, from $927,145 during the nine months ended July 31,
2015, to $1,638,398 during the nine months ended July 31, 2016.
The increase was due to increased sales as a result of an
increase in website sales during the period. Our cost of sales
was 61% of sales during the period ending July 31, 2015 and 73%
of sales during the period ending July 31, 2016. The cost of
sales percentage increased over the prior year due to temporary
promotions run in order to boost sales during the nine months
ended July 31, 2016, thus increasing cost of sales during that
period.
Gross profit
Gross profit for the nine months ended July 31, 2016 increased
$6,316, from $588,276 during the nine months ended July 31, 2015
to $594,592 during the nine months ended July 31, 2016. The
decrease was due to temporary promotions run in order to boost
sales. Gross margins fell from 39% in the nine months ended July
31, 2015 to 27% during the nine months ended July 31, 2016.
General and administrative expenses
General and administrative expenses for the nine months ended
July 31, 2016 increased $69,869, from $475,854 during the nine
months ended July 31, 2015, to $545,723 during the nine months
ended July 31, 2016. The increase was due to increased
advertising costs of $40,352, increased credit card processing
fees of $18,306 and increased bad debt expense of $10,407.
Professional fees
Professional fees for the nine months ended July 31, 2016
decreased $56,448, from $197,177 during the nine months ended
July 31, 2015, to $140,729 during the nine months ended July 31,
2016. Professional fees consist of software development and
consulting fees. The decrease was due to a reduction in the use
of outside software development firms.
Other income and expense
Interest expense for the nine months ended July 31, 2016
increased $83,376, from $57,341 during the nine months ended July
31, 2015, to $140,717 during the nine months ended July 31, 2016,
due to higher levels of borrowing during the nine months ended
July 31, 2016. Gain on the sale of intangible property decreased
$60,100, from $60,100 during the nine months ended July 31, 2015
to zero during the nine months ended July 31, 2016 due to the
one-time gain realized from the sale of intellectual property
during the nine months ended July 1, 2015 that was not repeated
during the nine months ended July 31, 2016.
Net income or loss
Net loss for the nine months ended July 31, 2016 increased
$149,607, from $92,301 during the nine months ended July 31, 2015
to $241,908 during the nine months ended July 31, 2016 primarily
due to higher interest costs of $83,376 and the reduction in gain
on sale of intangible property of $60,100.
For the year ended October 31, 2015 compared to the
period from January 21, 2014 through October 31, 2014
Revenue
Revenue increased $719,131, from $1,418,727 during the period
from January 21, 2014 through October 31, 2014 to $2,137,858
during the year ended October 31, 2015. The increase was due to
an increase in web site sales during the period, as a result of
increased advertising, marketing and sales efforts.
Cost of sales
Cost of sales increased $624,519, from $792,706 during the period
from January 21, 2014 through October 31, 2014 to $1,417,225
during the year ended October 31, 2015. Cost of sales are
variable with sales. The increase was due to the increased sales
during the period. Our costs as a percentage of sales increased
during this period also as a result of temporary sales promotions
run during 2015.
Gross profit
Gross profit increased $94,612, from $626,021 during the period
from January 21, 2014 through October 31, 2014 to $720,633 during
the year ended October 31, 2015. The decrease in gross margins
was due to a write off of obsolete inventory during the year
ended October 31, 2015. Gross margins fell from 44% during the
period from January 21, 2014 through October 31, 2014 to 34%
during the year ended October 31, 2015.
General and administrative expenses
General and administrative expenses increased $143,794, from
$501,529 during the period from January 21, 2014 through October
31, 2014 to $645,323 during the year ended October 31, 2015. The
increase was due to increased advertising costs of $40,352,
increased credit card processing fees of $18,306 and increased
bad debt expense of $10,407.
Professional fees
Professional fees for the year ended October 31, 2015 decreased
$4,046, from $238,073 during the period from January 21, 2014
through October 31, 2014 to $234,027 during the year ended
October 31, 2015. Professional fees consist of software
development costs and consulting fees. The decrease was due to
decreased spending on software development during the year ended
October 31, 2015 compared to 2014.
Other income and expense
Interest expense increased $50,895, from $18,343 during the
period from January 21, 2014 through October 31, 2014 to $69,238
during the year ended October 31, 2015 due to higher levels of
borrowing during the year ended October 31, 2015. Gain on sale of
intangible property increased $60,100, from zero during the
period from January 21, 2014 through October 31, 2014 to $60,100
during the year ended October 31, 2015 due to the one-time gain
realized during the year ended October 31, 2015.
Net income or loss
Net loss for the year increased $39,366, from $142,228 during the
period from January 21, 2014 through October 31, 2014 to $181,594
during the year ended October 31, 2015 primarily due to higher
interest costs of $50,895 and increased general and
administrative costs of $143,794, offset by the gain on sale of
intangible property of $60,100 and the increase in gross margin
of $94,612.
Liquidity and Capital Resources
Brown had total assets of $663,483 as of July 31, 2016, including
$553,174 of current assets. Brown had total liabilities of
$959,946 as of July 31, 2016, which included $802,660 of current
liabilities. Included in current liabilities was $130,612 owed to
related parties and $467,257 owed in notes payable, net. The
amount owed to related parties consists of costs for the
reimbursements for the purchase of inventory that were paid for
with the personal credit cards of one of the shareholders. Notes
payable are discussed in greater detail in our financial
statements, as disclosed in the exhibits to this filing.
Brown has negative working capital of $249,486 as of July 31,
2016 and had net cash used in operations of $186,588 during the
nine months ended July 31, 2016.
The Company has funded operations through short term credit card
debt and advances against future credit card receipts. During the
period from August 1, 2016 through October 31, 2016, the Company
raised $212,000 from the private placement of notes and equity
sales. We plan to raise additional capital by the end of calendar
year 2016 to fund ongoing operations and planned acquisitions. We
intend to fund acquisitions primarily through the issuance of our
common stock.
Cash flows
Brown had $186,588 of net cash used in operating activities for
the nine months ended July 31, 2016, which mainly included net
loss of $241,908 and decrease in accounts payable of $144,979,
offset by $85,282 of increase in accrued expenses related
parties.
Brown had $43,466 of net cash used in investing activities for
the nine months ended July 31, 2016, which was solely due to the
purchase of an investment in an urgent care center located in
Houston, Texas. The investment in the urgent care center is a
passive investment. The urgent care center is managed by the CEO
and CFO of the Company, who collectively own 6% of the equity of
the urgent care center. The Company owns 5% of the equity in the
urgent care center, and accordingly, does not consolidate the
results of the urgent care center. The Company recognizes its
share of net profit and losses from this investment, which are
not expected to have a material impact on the Companys results of
operations.
Brown had $195,803 of net cash provided by financing activities
for the nine months ended July 31, 2016, which was mainly due to
$1,245,707 of proceeds from notes payable offset by $1,039,229 of
repayments of notes payable.
Notes Payable
Brown had the following notes payable outstanding as of July 31,
2016:
| Balance as of July 31, 2016 | ||||
|
Note payable dated March 31, 2015, bearing interest at 15.9% due July 20, 2017. |
$ | 51,306 | ||
|
Note payable dated May 14, 2015, bearing interest at 18%, due October 2016, and guaranteed by the officers of Brown. As of the filing date, the note was repaid in full. |
98,480 | |||
|
Notes payable dated May 19, 2015, bearing interest at 33%, due May 19, 2016, and guaranteed by the officers of Brown. Brown refinanced the note payable on November 12, 2015 and again on June 14, 2016 to provide additional funding and extend the maturity date to September 14, 2017. Brown recorded a debt discount of $139,140 at inception and has amortized $59,179 for the nine months ended July 31, 2016. As of July 31, 2016, $79,961 remains unamortized. The effective interest rate is 35.6%. |
218,371 | |||
|
Note payable dated October 23, 2014, bearing interest at 10%, due in August 2017, and guaranteed by the officers of Brown. Brown recorded a debt discount of $17,100 at inception and has amortized $2,983 for the nine months ended July 31, 2016. As of July 31, 2016, $14,117 remains unamortized. The effective interest rate is 12.5%. |
142,178 | |||
|
Note payable dated March 16, 2015, bearing interest at 9%, due December 31, 2016. |
51,000 | |||
| Total notes payable | 561,335 | |||
| Less: Unamortized debt discount | (94,078 | ) | ||
| Notes payable, net | $ | 467,257 | ||
On August 31, 2016, the Company sold a convertible promissory in
the amount of $50,000 to an investor. The note bears interest at
10% per annum and may be converted into the common stock of the
Company upon the completion of a capital raise of $500,000 by
December 31, 2016 (a Qualified Raise). The note may be converted
into common stock at 75% of the price of the capital raised in
the Qualified Raise. The note is due on December 31, 2016.
On October 14, 2016, the Company sold two convertible promissory
notes totaling $37,000 to two investors in a private transaction.
The notes bear interest at 10% per annum and may be converted
into the common stock of the Company upon the completion of a
Qualified Raise. The notes may be converted into common stock at
75% of the price of the capital raised in the Qualified Raise.
The notes are due on December 31, 2016.
On October 31, 2016, the Company sold a convertible promissory in
the amount of $50,000 to an investor in a private transaction.
The note bears interest at 10% per annum and may be converted
into the common stock of the Company upon the completion of a
Qualified Raise. The note may be converted into common stock at
75% of the price of the capital raised in the Qualified Raise.
The note is due on December 31, 2016.
Plan of Operations
The Company is currently comprised of two divisions, (1) an
online aggregator of eLearning, standards, and codes for
professional industries (Brown) and (2) a developer of
Transferrin Doxorubicin, a conjugate of Transferrin Glycoproteins
and Doxorubicin for the treatment of cancer (Panther). The
management team will manage both divisions concurrently with the
intent of maximizing overall shareholder value. The Company is
considering adding additional divisions in different industries
to grow into a global conglomerate as discussed below.
Moving forward the Company intends to grow the Company into one
of the leading eLearning companies through both organic growth
and strategic acquisitions. Organic growth is expected through
efforts of:
| increasing the online footprint, | ||
| increasing eLearning offerings, | ||
|
improving efficiencies in staffing, process, inventory management and margins, |
||
| publishing original content, and | ||
| private labeling additional content. |
Management is currently pursuing acquisitions, strategic
partnerships, new dedicated synergistic web site launches, new
titles and content, new training opportunities and new online
services. Management is also actively seeking a financial partner
to continue the development of Transferrin Doxorubicin.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or
are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures,
or capital resources that is material to investors.
Recent Accounting Pronouncements
The Company does not expect the adoption of any recently issued
accounting pronouncements to have a significant impact on its
financial position, results of operations, or cash flows.
Properties
Our principal administrative office is located at 1517 San
Jacinto Street, Houston, Texas 77002. We lease 13,199 square feet
under a lease that calls for monthly lease payments of $7,506 per
month and expires on September 30, 2019. We sub lease 3,073
square feet to tenants at $4,289 per month.
We also maintain a business address at 888 Prospect Street, Suite
200, La Jolla, California 92037 on a month to month lease at a
cost of $200 per month.
The Company does not currently have any investments or interests
in any real estate, nor do we have investments or an interest in
any real estate mortgages or securities of persons engaged in
real estate activities.
Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth certain information concerning the
number of shares of our common stock owned beneficially as of the
date of this filing by: (i) each person (including any group)
known to us to own more than five percent (5%) of any class of
our voting securities; (ii) each of our directors; (iii) each of
our named executive officers; and (iv) officers and directors as
a group. Unless otherwise indicated, the shareholder listed
possesses sole voting and investment power with respect to the
shares shown.
| Title of Class | Name and Address of Beneficial Owner (6) |
Amount and Nature of Beneficial Ownership |
Percentage of Common Stock (2) |
|||
| DIRECTORS AND EXECUTIVE OFFICERS | ||||||
| Common Stock |
Evan M. Levine Chief Executive Officer and Director (3) |
6,600,000 Shares | 16.30% | |||
|
Noah I. Davis President, Chief Operating Officer and Director (4) |
7,175,522 Shares | 17.70 % | ||||
|
Steven M. Plumb Chief Financial Officer and Director (5) |
11,649,785 Shares | 28.70% | ||||
| Richard Corbin, Director and Vice Chairman of the Board (6) | 1,452,112 Shares | 3.6% | ||||
|
Total, all officers and directors as a group (four persons) |
26,877,419 Shares | 66.3% | ||||
| 5% STOCKHOLDERS | ||||||
| None. | ||||||
Notes:
| (1) |
Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the number of shares outstanding is deemed to include the number of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the persons actual ownership or voting power with respect to the number of shares of common stock actually outstanding on November 8, 2016. |
| (2) |
Based on 40,564,717 shares of our common stock issued and outstanding as of November 8, 2016. |
|
| (3) |
Mr. Levine beneficially owns 5,600,001 shares directly, and the following shares indirectly: 999,999 held in the names of his minor children, which shares he is deemed to beneficially own. |
|
| (4) |
Mr. Davis beneficially owns 3,912,504 shares directly, and the following shares indirectly: 3,263,018 held in the name of his wife, Hillary Davis. The following shares are owned by other family members of Mr. Davis, and are deemed not to be beneficially owned by Mr. Davis; 1,071,954 shares held in a trust for the benefit of his minor children of which Mr. Davis is not the trustee; 503,926 held in the name of Robert and Rachel Davis, his parents, 5,039 held in the name of his brother, Joseph Davis,50,393 held in the name of his brother, Jacob Davis, 5,039 held in the name of Hannah Weissman, his sister; 37,518 in the name of his sister, Courtney Rosenthal, 37,518 shares in the name of Stephanie Deutsch, the sister of his wife, and 2,894,278 held in the name of the 2009 Noah Davis Family Trust, of which Mr. Davis is not the trustee. |
|
| (5) |
Mr. Plumb owns 10,041,854 shares directly, and the following shares indirectly: 1,607,931 shares held in the names of his minor children which shares he is deemed to beneficially own. |
|
| (6) |
Mr. Corbin beneficially owns 444,236 shares directly, and the following shares indirectly: 548,779 shares held in the name of Corbin Capital, LLC of which Mr. Corbin is managing member, 25,764 shares held in the name of Midland IRA Inc FBO Richard Corbin IRA of which Mr. Corbin is the beneficiary, and 433,333 in the name of Corbin Living Trust, of which Mr. Corbin is the trustee, which shares he is deemed to beneficially own. |
| (7) |
The address of each entity or person listed in the table is 1517 San Jacinto Street, Houston, Texas 77002. |
Changes in Control
The Company is not aware of any pending or contemplated
arrangements which may at a subsequent date result in a change of
control of the Company.
Equity Compensation Plans
We have no equity compensation program, including no stock option
plan.
Warrants and Options
We have outstanding warrants to purchase 32,000 shares of our
common stock at an exercise price of $6.00 per share outstanding.
The warrants were issued on August 28, 2015 and expire on August
28, 2020.
Directors and Executive Officers
The current directors and officers of the Company are set forth
below. The directors hold office for their respective term and
until their successors are duly elected and qualified. Vacancies
in the existing Board of Directors are filled by a majority vote
of the remaining directors. The officers serve at the will of our
Board of Directors.
| Name | Position Held with the Company | Age | Date First Elected or Appointed | |
| Richard Corbin, Jr. | Director and Vice Chairman of the Board | January 12, 2015 | ||
| Noah I. Davis | President, Chief Operating Officer and Director | November 8, 2016 | ||
| Steven M. Plumb, CPA | Chief Financial Officer, Secretary, Treasurer and Director | March 16, 2016 | ||
| Evan M. Levine | Chairman of the Board and Chief Executive Officer | February 4, 2015 |
Background of Officer and Directors
The following is a brief account of the education and business
experience during at least the past five years of each director,
executive officer and key employee of our company, indicating the
persons principal occupation during that period, and the name and
principal business of the organization in which such occupation
and employment were carried out.
Richard Corbin Director
Mr. Corbin is a co-founder of Panther Biotechnology, Inc. and has
over 16 years of investment analysis and operational experience
with early stage companies. From September 2014 to the present,
Mr. Corbin has served as the Chief Financial Officer and
co-founder of Level Funded Health Partners, an institutionally
backed national health insurance agency focused on bringing
innovative healthcare cost solutions to small businesses. From
August 2013 to August 2014, Mr. Corbin was the CFO for
ForeverCar, a venture-backed start-up focused on improving and
bringing transparency to the vehicle service contract industry.
From April 2008 to January 2012, Mr. Corbin performed financial
analysis on capital raises with early state private and public
companies while at Daybreak Special Situations Fund. In addition,
Mr. Corbin manages Corbin Capital LLC, a fund focused on early
stage and seed round investments. Mr. Corbin holds a BBA from
Mendoza College of Business at the University of Notre Dame and
an MBA from DePauls Kellstadt Graduate School for Business.
Evan M. Levine Chairman of the Board, and Chief
Executive Officer
Mr. Levine has served as a Director and our President and Chief
Executive Officer since February 2015. Mr. Levine also became the
Chairman of the Board on June 1, 2015. Mr. Levine has over two
decades plus of in-depth expertise in strategic ventures,
executive supervision, asset management and the institutional
investment business. He is also the Founder and Managing Partner
of Mark Capital LLC, a family office focused on microcap
restructuring investment and management. Prior to joining the
Company, from February 2013 until February 2015, Mr. Levine
served as the Chairman of the Board and Chief Executive Officer
of Valley Forge Composite Technologies, an entity in the
aerospace and securities industries, where he architected and
implemented a sophisticated bankruptcy restructuring and
reorganization while managing multifarious complex litigation
actions designed to return value to the decimated stakeholders.
Prior thereto, as Founder and Managing Partner of Mark Capital
LLC, Mr. Levine has executed and orchestrated multiple corporate
restructurings and changes in management. From 2002 until 2008,
Mr. Levine served in multiple roles including Chief Operating
Officer, President, Chief Executive Officer, and Vice Chairman at
Adventrx Pharmaceuticals, a publicly traded biotech company
focused on oncology and antiviral drug development.
Steven M. Plumb Chief Financial Officer
Steven M. Plumb has over 25 years of experience in accounting,
operations, finance and marketing. Mr. Plumb has served as our
Chief Financial Officer since March 2016. From March 2001 to the
present, Mr. Plumb has served as the President of Clear Financial
Solutions, Inc., an accounting and consulting firm based in
Houston, Texas, which he founded. During his tenure as President
of Clear Financial Solutions, Inc., Mr. Plumb served as the CFO
for a number of public and private companies, including Bering
Exploration, Inc., Hyperdynamics Corp., Panther Biotechnology,
Inc., Complexa, Inc. and HoustonPharma, Inc. From June 2002 to
December 2004, Mr. Plumb was the Chief Financial Officer of
ADVENTRX Pharmaceuticals Inc. He also held various roles with the
Big 4 accounting firms and was the Chief Financial Officer for
DePelchin Childrens Center, a Houston-based nonprofit
organization that offers mental health, foster care and adoption
services in Texas. Mr. Plumb earned his Bachelors Degree in
Business Administration in Accounting from the University of
Texas at Austin in 1981. Mr. Plumb is a Certified Public
Accountant.
Noah I. Davis President and Chief Operating
Officer
Noah I. Davis is an experienced internet and real estate
executive. From January 2014 to the present, he has served as the
President and Chief Executive Officer of Brown Technical Media
Corp. From July 2013 to January 2014, Mr. Davis served as the
contract general manager of Brown Book Shop, Inc. In January
2014, Mr. Davis was part of the investor group that purchased
Brown Book Shop. From August 2011 to July 2013, he has been
involved in several restructuring and turnaround projects in the
healthcare and transportation industries. From July 2008 to
September 2012, he successfully created, built and sold,
Remington Moving and Storage, an online web based moving and
storage application. From April 2008 to January 2013, he was a
member of senior management of Caltex Capital which structured
other investments in various businesses and was installed as CFO
and CEO in various industries. Mr. Davis is proficient in
financial analysis, deal syndication, business development,
project management and traditional and internet based marketing.
Mr. Davis graduated from Yeshiva University with a degree in
Accounting and Finance in 2004.
Employment Agreements and Stock Option Plans
In November 2015, the Company authorized the payment of $15,000
per month to Mr. Levine, effective January 15, 2016, and $1,000
per month as healthcare reimbursement, as compensation for his
services as CEO. In March 2016, the Company entered into an
agreement with Mr. Plumb to pay Mr. Plumb $6,000 per month to
serve as the CFO of the Company. In February 2014, Brown entered
into consulting agreements with Mr. Davis and Mr. Plumb. The
agreements were modified on May 1, 2016 such that Mr. Davis, the
President and Chief Operating Officer is paid $11,000 per month
by Brown and Mr. Plumb, the Chief Financial Officer, is paid
$4,500 per month by Brown. The contracts expire on December 19,
2017. The Brown employment agreements were not assumed by the
Company as part of the Business Combination and will remain with
Brown. In addition, the Panther agreements with Mr. Levine and
Mr. Plumb remain in effect.
We currently do not have any stock option plans outstanding in
favor of any employee or director.
Director Qualifications
The Board of Directors believes that each of our directors is
highly qualified to serve as a member of the Board of Directors.
Each of the directors has contributed to the mix of skills, core
competencies and qualifications of the Board of Directors. When
evaluating candidates for election to the Board of Directors, the
Board of Directors seeks candidates with certain qualities that
it believes are important, including integrity, an objective
perspective, good judgment, and leadership skills. Our directors
are highly educated and have diverse backgrounds and talents and
extensive track records of success in what we believe are highly
relevant positions.
Term of Office
Our directors are appointed for a one-year term to hold office
until their respective successors are duly elected and qualified.
Our officers are appointed by our Board of Directors and hold
office until they resign or are removed from office by the Board
of Directors.
CORPORATE GOVERNANCE
The Company promotes accountability for adherence to honest and
ethical conduct; endeavors to provide full, fair, accurate,
timely and understandable disclosure in reports and documents
that the Company files with the SEC and in other public
communications made by the Company; and strives to be compliant
with applicable governmental laws, rules and regulations.
Board Leadership Structure
Our Board of Directors has the responsibility for selecting the
appropriate leadership structure for the Company. In making
leadership structure determinations, the Board of Directors
considers many factors, including the specific needs of the
business and what is in the best interests of the Companys
stockholders. Our current leadership structure is comprised of a
combined Chairman of the Board and Chief Executive Officer (CEO),
Mr. Levine. The Board of Directors believes that this leadership
structure is the most effective and efficient for the Company at
this time. Mr. Levine possesses detailed and in-depth knowledge
of the issues, opportunities, and challenges facing the Company,
and is thus best positioned to develop agendas that ensure that
the Board of Directors time and attention are focused on the most
critical matters. Combining the Chairman of the Board and CEO
roles promotes decisive leadership, fosters clear accountability
and enhances the Companys ability to communicate its message and
strategy clearly and consistently to our stockholders,
particularly during periods of turbulent economic and industry
conditions.
Risk Oversight
Effective risk oversight is an important priority of the Board of
Directors. Because risks are considered in virtually every
business decision, the Board of Directors discusses risk
throughout the year generally or in connection with specific
proposed actions. The Board of Directors approach to risk
oversight includes understanding the critical risks in the
Companys business and strategy, evaluating the Companys risk
management processes, allocating responsibilities for risk
oversight among the full Board of Directors, and fostering an
appropriate culture of integrity and compliance with legal
responsibilities. The Board of Directors exercises direct
oversight of strategic risks to the Company, including reviewing
and assessing the Companys processes to manage business and
financial risk and financial reporting risk; reviewing the
Companys policies for risk assessment and assessing steps
management has taken to control significant risks; overseeing
risks relating to compensation programs and policies;
recommending the slate of director nominees for election at the
annual stockholder meetings; reviewing, evaluating and
recommending changes to the Companys corporate governance
guidelines; and establishing the process for conducting the
review of the Chief Executive Officers performance.
Family Relationships
None of our directors are related by blood, marriage, or adoption
to any other director, executive officer, or other key employees.
Arrangements between Officers and Directors
To our knowledge, there is no arrangement or understanding
between any of our officers and any other person, including
directors, to which the officer was selected to serve as an
officer.
Other Directorships
No directors of the Company are also directors of issuers with a
class of securities registered under Section 12 of the Exchange
Act (or which otherwise are required to file periodic reports
under the Exchange Act).
Involvement in Certain Legal Proceedings
To the best of our knowledge, during the past ten years, none of
our directors or executive officers were involved in any of the
following: (1) any bankruptcy petition filed by or against any
business of which such person was a general partner or executive
officer either at the time of the bankruptcy or within two years
prior to that time; (2) any conviction in a criminal proceeding
or being a named subject to a pending criminal proceeding
(excluding traffic violations and other minor offenses); (3)
being subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; (4) being found by a
court of competent jurisdiction (in a civil action), the SEC or
the Commodities Futures Trading Commission to have violated a
federal or state securities or commodities law, (5) being the
subject of, or a party to, any Federal or State judicial or
administrative order, judgment, decree, or finding, not
subsequently reversed, suspended or vacated, relating to an
alleged violation of (i) any Federal or State securities or
commodities law or regulation; (ii) any law or regulation
respecting financial institutions or insurance companies
including, but not limited to, a temporary or permanent
injunction, order of disgorgement or restitution, civil money
penalty or temporary or permanent cease-and-desist order, or
removal or prohibition order; or (iii) any law or regulation
prohibiting mail or wire fraud or fraud in connection with any
business entity; or (6) being the subject of, or a party to, any
sanction or order, not subsequently reversed, suspended or
vacated, of any self-regulatory organization (as defined in
Section 3(a)(26) of the Exchange Act), any registered entity (as
defined in Section 1(a)(29) of the Commodity Exchange Act), or
any equivalent exchange, association, entity or organization that
has disciplinary authority over its members or persons associated
with a member.
Code of Ethics
We have adopted a Code of Business Conduct and Ethics that
applies to, among other persons, members of our Board of
Directors, our companys officers including our president, chief
executive officer and chief financial officer, employees,
consultants and advisors. As adopted, our Code of Business
Conduct and Ethics sets forth written standards that are designed
to deter wrongdoing and to promote:
| 1. |
honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
|
| 2. |
full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission and in other public communications made by us; |
|
| 3. |
compliance with applicable governmental laws, rules and regulations; |
|
| 4. |
the prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons identified in the Code of Business Conduct and Ethics; and |
|
| 5. |
accountability for adherence to the Code of Business Conduct and Ethics. |
Our Code of Business Conduct and Ethics requires, among other
things, that all of our Companys senior officers commit to
timely, accurate and consistent disclosure of information; that
they maintain confidential information; and that they act with
honesty and integrity.
In addition, our Code of Business Conduct and Ethics emphasizes
that all employees, and particularly senior officers, have a
responsibility for maintaining financial integrity within our
Company, consistent with generally accepted accounting
principles, and federal and state securities laws. Any senior
officer, who becomes aware of any incidents involving financial
or accounting manipulation or other irregularities, whether by
witnessing the incident or being told of it, must report it to
our Company. Any failure to report such inappropriate or
irregular conduct of others is to be treated as a severe
disciplinary matter. It is against our Company policy to
retaliate against any individual who reports in good faith the
violation or potential violation of our Companys Code of Business
Conduct and Ethics by another.
We will provide a copy of the Code of Business Conduct and Ethics
to any person without charge, upon request. Requests can be sent
to: Panther Biotechnology, Inc., 1517 San Jacinto Street,
Houston, Texas 77002.
Stockholder Communications with the Board
Our stockholders and other interested parties may communicate
with members of the Board of Directors by submitting such
communications in writing to our Secretary, Steven M. Plumb, who,
upon receipt of any communication other than one that is clearly
marked Confidential, will note the date the communication was
received, open the communication, make a copy of it for our files
and promptly forward the communication to the director(s) to whom
it is addressed. Upon receipt of any communication that is
clearly marked Confidential, our Secretary will not open the
communication, but will note the date the communication was
received and promptly forward the communication to the
director(s) to whom it is addressed. If the correspondence is not
addressed to any particular board member or members, the
communication will be forwarded to a board member to bring to the
attention of the Board of the Directors.
Nomination Process
Our Board of Directors does not have a policy with regards to the
consideration of any director candidates recommended by our
shareholders. Our Board of Directors has determined that it is in
the best position to evaluate our Companys requirements as well
as the qualifications of each candidate when the board considers
a nominee for a position on our Board of Directors. If
shareholders wish to recommend candidates directly to our board,
they may do so by sending communications to the President of our
Company at the address on the cover of this current report.
Board and Committee Meetings
The Board held 7 formal meetings during the year ended May 31,
2016. As our Company develops a more comprehensive Board of
Directors, all proceedings will be conducted by resolutions
consented to in writing by all the directors and filed with the
minutes of the proceedings of the directors. Such resolutions
consented to in writing by the directors entitled to vote on that
resolution at a meeting of the directors are, according to the
Nevada Revised Statutes and our Bylaws, as valid and effective as
if they had been passed at a meeting of the directors duly called
and held. On February 2, 2015, the Board of Directors created the
Audit Committee, the Nominating and Governance Committee and the
Compensation Committee. The members of each committee are as
follows: Audit Committee consists of Messrs. Levine and Plumb;
the Nominating and Governance Committee consists of Messrs.
Levine, Plumb, and Corbin; and, the Compensation Committee
consists of Messrs. Levine, Plumb, and Corbin. Each committee is
to create their own charter, which have not been completed nor
approved by the date hereof.
Audit Committee and Audit Committee Financial
Expert
Our Board of Directors has determined that it does not have a
member of the audit committee that qualifies as an audit
committee financial expert as defined in Item 407(d)(5)(ii) of
Regulation S-K, and is independent as the term is used in Item
7(d)(3)(iv) of Schedule 14A under the Exchange Act. Our Audit
Committee is capable of analyzing and evaluating our financial
statements and understanding internal controls and procedures for
financial reporting. We believe that retaining an independent
director who would qualify as an audit committee financial expert
would be overly costly and burdensome, at this time, and is not
warranted in our circumstances given the early stages of our
development and the fact that we have not generated any material
revenues to date.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Exchange Act requires our directors and
executive officers, and persons who own more than 10% of our
outstanding common stock, to file with the SEC initial reports of
ownership and reports of changes in ownership of common stock.
Officers, directors and greater than 10% stockholders are
required by SEC regulations to furnish us with copies of all
Section 16(a) forms they file.
Based solely upon a review by us of Forms 3 and 4 relating to
fiscal years 2015 and 2014 as furnished to us under Rule 16a-3(d)
under the Securities Act, and Forms 5 and amendments thereto
furnished to us with respect to fiscal year 2015, we believe that
during the fiscal years ended May 31, 2016 and 2015, we
determined that no director, executive officer, or beneficial
owner of more than 10% of our Class A common stock failed to file
a report on a timely basis during 2015, except for: (i) Steven M.
Plumb failed to report one transaction, (ii) Evan Levine failed
to report one transaction; (iii) Phillip Ruben failed to report
one transaction, (iv) Richard Corbin failed to report three
transactions; (v) Irwin Zalcberg failed to report one
transaction; (vi) John Norton failed to report one transaction;
(vii) David Barshis failed to report one transaction; (viii)
Hienz-Josef Lenz failed to report one transaction; and (ix) James
Sapirstein failed to report one transaction.
Executive Compensation
See the information contained in Part III, Item 11, Executive
Compensation, of the Companys Annual Report on Form 10-K for the
year ended May 31, 2016, filed with the Securities and Exchange
Commission on September 13, 2016, which information is
incorporated herein by this reference.
Certain Relationships and Related Transactions, and
Director Independence
Related Party Transactions
None of the directors or executive officers of the Company, nor
any person who owned of record or was known to own beneficially
more than 5% of the Companys outstanding shares of its common
stock, nor any associate or affiliate of such persons or
companies, has any material interest, direct or indirect, in any
transaction that has occurred during the past two fiscal years,
or in any proposed transaction, which has materially affected or
will affect the Company, except as described in Item 2.01, Evan
M. Levine, our Chief Executive Officer and director (6,000,000
shares of common stock) and Steven M. Plumb, our Chief Financial
Officer (11,791,371 shares of common stock), were issued shares
of common stock in connection with the closing of the
transactions contemplated by the Exchange Agreement and except as
otherwise disclosed in Recent Sales of Unregistered Securities.
Additionally, Brown had $43,466 of net cash used in investing
activities for the nine months ended July 31, 2016, which was
solely due to the purchase of an investment in an urgent care
center located in Houston, Texas. The investment in the urgent
care center is a passive investment. The urgent care center is
managed by the CEO and CFO of the Company, who collectively own
6% of the equity of the urgent care center. The Company owns 5%
of the equity in the urgent care center, and accordingly, does
not consolidate the results of the urgent care center. The
Company recognizes its share of net profit and losses from this
investment, which are not expected to have a material impact on
the Companys results of operations.
With regard to any future related party transaction, we plan to
fully disclose any and all related party transactions in the
following manner:
| Disclosing such transactions in reports where required; | ||
|
Disclosing in any and all filings with the SEC, where required; |
||
|
Obtaining disinterested directors consent when deemed necessary; and |
||
| Obtaining shareholder consent where required. |
Director Independence
The OTCPink market on which shares of the Companys common stock
is quoted does not have any director independence requirements.
Legal Proceedings
From time to time, the Company is party to various legal
proceedings that arise in the ordinary course of its business,
which include commercial, intellectual property, employment, tort
and other litigation matters. We are not involved currently in
legal proceedings that could reasonably be expected to have a
material adverse effect on our business, prospects, financial
condition or results of operations. We may become involved in
material legal proceedings in the future.
Market Price of and Dividends on the Registrants Common
Equity and Related Stockholder Matters
Market Information
Our common stock is quoted on the pink sheets market operated by
OTC Markets Group (OTCPink) under the symbol PBYA.
The following table sets forth the approximate high and low bid
prices for our common stock as reported by the OTCPink for the
periods indicated. The quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not
represent actual transactions.
| Period | High | Low | ||||||
| June 1, 2015 through August 31, 2015 | $ | 6.39 | $ | 4.64 | ||||
| September 1, 2015 through November 30, 2015 | 5.85 | 1.40 | ||||||
| December 1, 2015 through February 28, 2016 | 1.70 | 0.99 | ||||||
| March 1, 2016 through May 31, 2016 | 1.57 | 0.48 | ||||||
| June 1, 2016 through August 31, 2016 | 0.24 | 0.99 | ||||||
| September 1, 2016 through November 30, 2016 | 0.35 | 0.80 | ||||||
| June 1, 2014 through August 31, 2014 | $ | 24.00 | $ | 7.00 | ||||
| September 1, 2014 through November 30, 2014 | 31.00 | 3.25 | ||||||
| December 1, 2014 through February 28, 2015 | 4.35 | 2.01 | ||||||
| March 1, 2015 through May 31, 2015 | 8.15 | 3.46 | ||||||
Dividends
There are no restrictions in our articles of incorporation or
bylaws that restrict us from declaring dividends. The Nevada
Revised Statutes, however, do prohibit us from declaring
dividends where, after giving effect to the distribution of the
dividend:
| 1. |
we would not be able to pay our debts as they become due in the usual course of business; or |
|
| 2. |
our total assets would be less than the sum of our total liabilities, plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution. |
We have not declared any dividends. We do not plan to declare any
dividends in the foreseeable future.
Equity Compensation Plans
We have no equity compensation program, including no stock option
plan, and none are planned for the foreseeable future.
Recent Sales of Unregistered Securities
During July and August 2013, we sold 1,025,000 shares at $0.02
per share for total proceeds of $20,500 under an S-1 Registration
Statement filed on May 21, 2013. On August 15, 2013, the Company
closed its offering and has not sold any additional shares under
the prospectus included in the registration statement.
On July 6, 2015, the Company issued 50,000 shares of its common
stock to Faulk Pharmaceuticals, Inc. in accordance with a license
agreement. The fair market value of the stock on the date of
grant was $274,000.
On July 6, 2015, the Company issued 25,437 shares of its common
stock to the University of Rochester in accordance with a license
agreement. The fair market value of the stock, $200,000, on the
date of grant, was accrued in stock payable on May 31, 2015.
On September 3, 2015, the Company closed a Stock Purchase
Agreement with a private non-affiliated investor to sell 33,000
shares of the Companys common stock, at a price of $5.00 per
share. The investor paid $125,000 of the purchase price at
closing, giving rise to a stock subscription receivable of
$40,000. During the year ended May 31, 2016, the subscription
receivable was collected. The investor also received a common
stock purchase warrant for the right to purchase 33,000 shares at
a purchase price of $6.00 per share. The fair market value of the
warrant was $171,600 on the date of grant. The warrant expires on
August 27, 2020.
On September 12, 2015, Irwin Zalcberg, a shareholder of the
Company transferred 674,622 shares of his own on the Companys
behalf for the settlement of $3,231,217 of stock payable recorded
as of May 31, 2015. Of these shares, 488,340 were related to
services and 186,282 were for the Companys license purchase from
Northwestern University.
In May 2016, the Company sold 833,333 shares of its common stock
to Richard Corbin, a member of the board of directors, at $0.15
per share for gross proceeds of $125,000.
In May 2016, a convertible note holder submitted a notice of
conversion of $29,250 in principal. The Company issued 250,000
shares of its common stock to the note holder in conjunction with
the conversion notice.
During the year ended May 31, 2016, the Company issued:
|
320,511 common shares for the settlement of $1,186,881 of stock payable recorded as of May 31, 2015 for share-based compensation and purchase of intangibles. |
||
|
34,873 common shares to related parties for services. The fair value of the stock on grant date was $184,734, and was recorded as share-based compensation. |
||
|
1,644,873 common shares for services. The fair value of the stock on grant date was $6,537,913 and was recorded as share-based compensation. This includes share based compensation of $986,880 which was accrued as a stock payable as of May 31, 2015. |
In June 2016, the Company entered into stock purchase agreements
with four private investors to sell 350,000 shares of its common
stock for gross proceeds of $52,500 at a price of $0.15 per
share.
In July 2016, the Company entered into a stock purchase agreement
with a Richard Corbin, a member of the board of directors to sell
100,000 shares of its common stock for gross proceeds of $15,000
at a price of $0.15 per share.
On August 31, 2016, the Company sold a convertible promissory in
the amount of $50,000 to an investor. The note bears interest at
10% per annum and may be converted into the common stock of the
Company upon the completion of a capital raise of $500,000 by
December 31, 2016 (a Qualified Raise). The note may be converted
into common stock at 75% of the price of the capital raised in
the Qualified Raise. The note is due on December 31, 2016.
On October 14, 2016, the Company sold two convertible promissory
notes totaling $37,000 to two investors in a private transaction.
The notes bear interest at 10% per annum and may be converted
into the common stock of the Company upon the completion of a
Qualified Raise. The notes may be converted into common stock at
75% of the price of the capital raised in the Qualified Raise.
The notes are due on December 31, 2016.
On October 31, 2016, the Company sold a convertible promissory in
the amount of $50,000 to an investor in a private transaction.
The note bears interest at 10% per annum and may be converted
into the common stock of the Company upon the completion of a
Qualified Raise. The note may be converted into common stock at
75% of the price of the capital raised in the Qualified Raise.
The note is due on December 31, 2016.
On October 19, 2016, the Company issued 85,574 shares of its
common stock to a consultant in exchange for services rendered.
On October 17, 2016, we sold 333,333 shares of restricted common
stock for gross proceeds of $50,000 and on October 31, 2016, we
sold 166,666 shares of restricted common stock for gross proceeds
of $25,000.
On November 7, 2016, the Company agreed to issue 500,000 shares
of its restricted common stock to the incoming Vice Chairman of
the Board, Richard Corbin. These shares were issued on November
30, 2016.
On November 7, 2016, the Company formed a Scientific Advisory
Board (SAB) comprised of David Barshis, John Norton, and
Heinz-Josef Lenz. The Company agreed to issue 150,000 shares of
its restricted common stock to each member of the SAB as
compensation for their service on the SAB. These shares were
issued on November 30, 2016.
On November 7, 2016, the Company agreed to issue 75,000 shares of
restricted common stock to James Sapirstein, a former director of
the Company, for his service as a director. These shares were
issued on November 30, 2016.
As described above under Item 2.01 Completion of Acquisition or
Disposition of Assets, in connection with the Exchange Agreement,
the Company issued 32,000,000 shares of restricted common stock
to the owners of Brown.
The Company claims an exemption from registration for such
issuances described above to Section 4(2) and/or Rule 506 of
Regulation D of the Securities Act since the foregoing issuances
and grants did not involve a public offering, the recipients took
the securities for investment and not resale, we took appropriate
measures to restrict transfer, and the recipients were either (a)
an accredited investor; and/or (b) had access to similar
documentation and information as would be required in a
Registration Statement under the Securities Act. With respect to
the transactions described above, no general solicitation was
made either by us or by any person acting on our behalf. The
transactions were privately negotiated. No underwriters or agents
were involved in the foregoing issuance or grant and the Company
paid no underwriting discounts or commissions. The securities
sold are subject to transfer restrictions, and the certificate(s)
evidencing the securities contain an appropriate legend stating
that such securities have not been registered under the
Securities Act and may not be offered or sold absent registration
or to an exemption therefrom.
Description of Registrants Securities
We have authorized capital stock consisting of 100,000,000 shares
of common stock, $0.001 par value per share and 10,000,000 shares
of preferred stock, $0.001 par value per share (Preferred
Stock). As of November 8, 2016, we had 40,564,717 shares of
common stock issued and outstanding, held by 186 stockholders of
record, and no shares of Preferred Stock issued and outstanding.
Common Stock
Voting Rights. Holders of common stock are
entitled to one vote for each share held on all matters submitted
to a vote of stockholders. Directors are appointed by a plurality
of the votes present at any special or annual meeting of
stockholders (by proxy or in person), and a majority of the votes
present at any special or annual meeting of stockholders (by
proxy or in person) shall determine all other matters. There is
no cumulative voting of the election of directors then standing
for election. The common stock is not entitled to pre-emptive
rights and is not subject to conversion or redemption.
Dividend Rights. The holders of outstanding
shares of common stock are entitled to receive dividends out of
assets or funds legally available for the payment of dividends at
such times and in such amounts as the board from time to time may
determine.
Liquidation. Upon liquidation, dissolution or
winding up of the Company, the assets legally available for
distribution to stockholders are distributable ratably among the
holders of the common stock after payment of liquidation
preferences, if any, on any outstanding payment of other claims
of creditors.
Other Rights. All of our outstanding shares of
common stock are fully paid and non-assessable. The holders of
our common stock have no preemptive rights and no rights to
convert their common stock into any other securities, and our
common stock is not subject to any redemption or sinking fund
provisions.
Preferred Stock
Shares of Preferred Stock may be issued from time to time in one
or more series, each of which shall have such distinctive
designation or title as shall be determined by our Board prior to
the issuance of any shares thereof. Preferred Stock shall have
such voting powers, full or limited, or no voting powers, and
such preferences and relative, participating, optional or other
special rights and such qualifications, limitations or
restrictions thereof, as shall be stated in such resolution or
resolutions providing for the issue of such class or series of
Preferred Stock as may be adopted from time to time by the Board
prior to the issuance of any shares thereof. The number of
authorized shares of Preferred Stock may be increased or
decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority
of the voting power of all the then outstanding shares of our
capital stock entitled to vote generally in the election of the
directors, voting together as a single class, without a separate
vote of the holders of the Preferred Stock, or any series
thereof, unless a vote of any such holders is required to any
Preferred Stock Designation.
Additionally, while it is not possible to state the actual effect
of the issuance of any additional shares of Preferred Stock on
the rights of holders of the common stock until the Board
determines the specific rights of the holders of any additional
shares of Preferred Stock, such rights may be superior to those
associated with our common stock, and may include:
| Restricting dividends on the common stock; | ||
|
Rights and preferences including dividend and dissolution rights, which are superior to our common stock; |
||
| Diluting the voting power of the common stock; | ||
| Impairing the liquidation rights of the common stock; or | ||
|
Delaying or preventing a change in control of the Company without further action by the stockholders. |
Anti-Takeover Provisions Under The Nevada Revised
Statutes
Business Combinations
Sections 78.411 to 78.444 of the Nevada revised statues (the
NRS ) prohibit a Nevada corporation from engaging in a
combination with an interested stockholder for
three years following the date that such person becomes an
interested shareholder and place certain restrictions on such
combinations even after the expiration of the three-year period.
With certain exceptions, an interested stockholder is a person or
group that owns 10% or more of the corporations outstanding
voting power (including stock with respect to which the person
has voting rights and any rights to acquire stock to an option,
warrant, agreement, arrangement, or understanding or upon the
exercise of conversion or exchange rights) or is an affiliate or
associate of the corporation and was the owner of 10% or more of
such voting stock at any time within the previous three years.
A Nevada corporation may elect not to be governed by Sections
78.411 to 78.444 by a provision in its articles of incorporation
or bylaws. We have such a provision in our Articles of
Incorporation, as amended and Bylaws, as amended, to which we
have elected to opt out of Sections 78.411 to 78.444; therefore,
these sections do not apply to us.
Control Shares
Nevada law also seeks to impede unfriendly corporate
takeovers by providing in Sections 78.378 to 78.3793 of the NRS
that an acquiring person shall only obtain voting rights
in the control shares purchased by such person to the
extent approved by the other shareholders at a meeting. With
certain exceptions, an acquiring person is one who acquires or
offers to acquire a controlling interest in the
corporation, defined as one-fifth or more of the voting power.
Control shares include not only shares acquired or offered to be
acquired in connection with the acquisition of a controlling
interest, but also all shares acquired by the acquiring person
within the preceding 90 days. The statute covers not only the
acquiring person but also any persons acting in association with
the acquiring person.
A Nevada corporation may elect to opt out of the provisions of
Sections 78.378 to 78.3793 of the NRS. We have a provision in our
Articles of Incorporation, as amended, to which we have elected
to opt out of Sections 78.378 to 78.3793; therefore, these
sections do not apply to us.
Removal of Directors
Section 78.335 of the NRS provides that 2/3rds of the voting
power of the issued and outstanding shares of the Company are
required to remove a Director from office. As such, it may be
more difficult for shareholders to remove directors due to the
fact the NRS requires greater than majority approval of the
shareholders for such removal.
Dividend Policy
We have never paid any cash dividends on our capital stock and do
not anticipate paying any cash dividends on our Common Stock in
the foreseeable future. We intend to retain future earnings to
fund ongoing operations and future capital requirements. Any
future determination to pay cash dividends will be at the
discretion of our Board of Directors and will be dependent upon
our financial condition, results of operations, capital
requirements and such other factors as the Board of Directors
deems relevant.
Indemnification of Directors and Officers
We may indemnify an officer or director who is made a party to
any proceeding, including a lawsuit, because of his position, if
he acted in good faith and in a manner he reasonably believed to
be in our best interest. We may advance expenses incurred in
defending a proceeding. To the extent that the officer or
director is successful on the merits in a proceeding as to which
he is to be indemnified, we must indemnify him against all
expenses incurred, including attorneys fees. With respect to a
derivative action, indemnity may be made only for expenses
actually and reasonably incurred in defending the proceeding, and
if the officer or director is judged liable, only by a court
order. The indemnification is intended to be to the fullest
extent permitted by the laws of the State of Nevada.
Regarding indemnification for liabilities arising under the
Securities Act, which may be permitted to directors or officers
under Nevada law, we are informed that, in the opinion of the
SEC, indemnification is against public policy, as expressed in
the Securities Act and is, therefore, unenforceable.
Financial Statements and Supplementary Data
The Audited Financial Statements of Brown Technical Media
Corporation for year ended October 31, 2015 compared to the
period from January 21, 2014 through October 31, 2014; Unaudited
and Reviewed Financial Statements of Brown Technical Media
Corporation for the three and nine months ended July 31, 2016 and
2015; and Pro Forma Financial Statements, are incorporated by
reference herein as exhibits 99.1, 99.2 and 99.3, respectively.
Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
Financial Statements and Exhibits
The Audited Financial Statements of Brown Technical Media
Corporation for year ended October 31, 2015 compared to the
period from January 21, 2014 through October 31, 2014; Unaudited
and Reviewed Financial Statements of Brown Technical Media
Corporation for the three and nine months ended July 31, 2016 and
2015; and Pro Forma Financial Statements, are incorporated by
reference herein as exhibits 99.1, 99.2 and 99.3, respectively.
The information provided below in Item 9.01 of this Current
Report on Form 8-K/A is incorporated by reference into this
section.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Business
Acquired
Incorporated by reference herein as Exhibit 99.1 are the audited
financial statements of Brown for the years ended October 31,
2015 and 2014. Also attached are the unaudited and reviewed
financial statements of Brown for the three and nine months ended
July 31, 2016 and 2015 filed as Exhibit 99.2.
(b) Pro Forma Financial Information
Incorporated by reference herein as Exhibit 99.3 are the
unaudited pro forma financial statements of the Company and Brown
for the period ended July 31, 2016, which give effect to the
Business Combination.
(d) Exhibits. The following exhibits
are either filed as a part hereof or are incorporated by
reference. Exhibit numbers correspond to the numbering system in
Item 601 of Regulation S-K.
| Exhibit | |||
| Number | Description of Exhibit | Filing | |
| 2.1 |
Share Exchange Agreement by and among the Company, Brown Technical Media Corporation and the shareholders of Brown Technical Media Corporation dated November 8, 2016 |
Filed with the SEC on November 15, 2016, as Exhibit 2.1 to our Current Report on Form 8-K filed on the same date, and incorporated herein by reference |
|
| 3.1 | Articles of Incorporation and Amendments |
Filed with the SEC on February 6, 2013, as part of our Registration Statement on Form S-1, and incorporated herein by reference |
|
| 3.2 | Amendment to Articles of Incorporation |
Filed with the SEC on June 12, 2014, as part of our Current Report on Form 8- K filed on the same date, and incorporated herein by reference |
|
| 3.3 | Bylaws |
Filed with the SEC on February 6, 2013, as part of our Registration Statement on Form S-1, and incorporated herein by reference |
| 10.1 |
Form of Stock Subscription Agreement (September, October and November 2016 sales of common stock) |
Filed with the SEC on November 15, 2016, as Exhibit 10.1 to our Current Report on Form 8-K filed on the same date, and incorporated herein by reference |
|
| 10.2 |
Form of Convertible Note Payable (relating to notes sold in August and October 2016) |
Filed with the SEC on November 15, 2016, as Exhibit 10.2 to our Current Report on Form 8-K filed on the same date, and incorporated herein by reference |
|
| 10.3 | Employment agreement of Plumb dated April 8, 2013 |
Filed with the SEC on November 15, 2016, as Exhibit 10.3 to our Current Report on Form 8-K filed on the same date, and incorporated herein by reference |
|
| 10.4 | Employment agreement of Davis dated February 1, 2014 |
Filed with the SEC on November 15, 2016, as Exhibit 10.4 to our Current Report on Form 8-K filed on the same date, and incorporated herein by reference |
|
| 10.5 |
Amendment No. 1 to employment agreement of Plumb dated July 9, 2013 |
Filed with the SEC on November 15, 2016, as Exhibit 10.5 to our Current Report on Form 8-K filed on the same date, and incorporated herein by reference |
|
| 10.6 |
Amendment No. 2 to employment agreement of Plumb dated February 1, 2014 |
Filed with the SEC on November 15, 2016, as Exhibit 10.6 to our Current Report on Form 8-K filed on the same date, and incorporated herein by reference |
|
| 10.7 |
Amendment No. 3 to employment agreement of Plumb dated May 1, 2016 |
Filed with the SEC on November 15, 2016, as Exhibit 10.7 to our Current Report on Form 8-K filed on the same date, and incorporated herein by reference |
|
| 10.8 |
Amendment No. 1 to employment agreement of Davis dated May 1, 2016 |
Filed with the SEC on November 15, 2016, as Exhibit 10.8 to our Current Report on Form 8-K filed on the same date, and incorporated herein by reference |
|
| 10.9 | Consulting agreement with Levine dated September 30, 2016 |
Filed with the SEC on November 15, 2016, as Exhibit 10.9 to our Current Report on Form 8-K filed on the same date, and incorporated herein by reference |
|
| 10.10 |
Form of Note Payable issued in conjunction with the purchase of Brown Book Shop, Inc. |
Filed with the SEC on November 15, 2016, as Exhibit 10.10 to our Current Report on Form 8-K filed on the same date, and incorporated herein by reference |
|
| 10.11 |
Form of subscription agreement for May, June and July 2016 sales of common stock. |
Filed herewith. | |
| 10.12 |
Asset Purchase Agreement between Faulk Pharmaceuticals, Inc. and the Company dated April 6, 2015 |
incorporated by reference and previously filed as an exhibit with Form 10-K for the year ended May 31, 2014 dated June 15, 2015 |
|
| 10.13 |
Loan agreement with Delta S Ventures, LLP dated March 16, 2015 |
Filed herewith. | |
| 10.14 |
Loan agreement with Business Financial Services, Inc., DBA BFS Capital, dated November 12, 2015 |
Filed herewith. | |
| 10.15 |
Loan agreement with Business Financial Services, Inc., DBA BFS Capital, dated June 14, 2016 |
Filed herewith. | |
| 10.16 |
Loan agreement with American Express Bank, FSB, dated July 14, 2014 |
Filed herewith. | |
| 10.17 | Loan agreement with Celtic Bank, dated May 14, 2015 | Filed herewith. | |
| 10.18 |
Loan agreement with Amazon Capital Services, Inc., dated September 17, 2015 |
Filed herewith. | |
| 10.19 | Form of Copyright License Agreement | Filed herewith. | |
| 10.20 | Reseller agreement with IHS Markit dated July 2, 2014 | Filed herewith. | |
| 10.21 |
Amendment No. 1 to IHS Reseller Agreement, dated March 1, 2015 |
Filed herewith. |
| 14.1 | Code of Ethics |
Incorporated by reference and previously filed as an exhibit with the Companys Form 10-K for the year ended May 31, 2013, filed on August 29, 2013 |
|
| 21.1 | Subsidiaries |
Filed with the SEC on November 15, 2016, as Exhibit 21.1 to our Current Report on Form 8-K filed on the same date, and incorporated herein by reference |
|
| 99.1 |
Audited Financial Statements of Brown Technical Media Corporation |
Filed with the SEC on November 15, 2016, as Exhibit 99.1 to our Current Report on Form 8-K filed on the same date, and incorporated herein by reference |
|
| 99.2 |
Unaudited and Reviewed Financial Statements of Brown Technical Media Corporation for the three and nine months ended July 31, 2016 and 2015 |
Filed with the SEC on November 15, 2016, as Exhibit 99.2 to our Current Report on Form 8-K filed on the same date, and incorporated herein by reference |
|
| 99.3 | Pro Forma Financial Statements | Filed herewith. |
About Panther Biotechnology Inc. (OTCMKTS:PBYA)
Panther Biotechnology, Inc. (Panther) is an early-stage bio-medical technology company that pursues and is continuing to pursue in-licensing of certain technologies. The Company is focused on the acquisition and development of therapeutics for the treatment of neoplastic, autoimmune and antiviral disorders. The Company is developing approximately three clinical candidates, TRF-DOX, which is a combination of transferrin glycoproteins with Doxorubicin for targeted delivery to tumors with the reduction of serious side effects; Numonafide, which is a derivative of the studied anticancer drug Amonafide optimized to eliminate toxic metabolites and reduce side effects, and TDZD-8, which is a kinase inhibitor targeting cancer stem cells. Panther owns and is planning to search for additional in-licensing opportunities and new technology assets from universities or other companies and begin to develop the assets for the treatment of cancer and other life threatening diseases. Panther Biotechnology Inc. (OTCMKTS:PBYA) Recent Trading Information
Panther Biotechnology Inc. (OTCMKTS:PBYA) closed its last trading session 00.000 at 0.940 with 300 shares trading hands.
