WATERMARK GROUP, INC. (OTCMKTS:WMHH) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
The disclosure in Item 2.01 below is incorporated by reference
herein.
herein.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On October 13, 2016, we entered into an exclusive license
agreement (the “License Agreement”) with Co-Diagnostics, Inc.,
a Utah corporation (“Co-Diagnostics” or the “Parent”), which
we closed on October 14, 2016, and by the acquisition of rights
under the License Agreement ceased to be a “shell company” as
such term is defined in Rule 12b-2 under the Securities Exchange
Act of 1934. Item 2.01(f) of Form 8-K states that if a registrant
was a shell company immediately before the transaction, as we
were immediately before the acquisition of the rights to the
License Agreement, then the registrant must disclose the
information that would be required if the registrant were filing,
upon consummation of the transaction, a general form for
registration of securities on Form 10 under the Securities
Exchange Act of 1934 reflecting all classes of the registrant’s
securities subject to the reporting requirements of Section 13 or
Section 15(d) of the Securities Exchange Act of 1934.
agreement (the “License Agreement”) with Co-Diagnostics, Inc.,
a Utah corporation (“Co-Diagnostics” or the “Parent”), which
we closed on October 14, 2016, and by the acquisition of rights
under the License Agreement ceased to be a “shell company” as
such term is defined in Rule 12b-2 under the Securities Exchange
Act of 1934. Item 2.01(f) of Form 8-K states that if a registrant
was a shell company immediately before the transaction, as we
were immediately before the acquisition of the rights to the
License Agreement, then the registrant must disclose the
information that would be required if the registrant were filing,
upon consummation of the transaction, a general form for
registration of securities on Form 10 under the Securities
Exchange Act of 1934 reflecting all classes of the registrant’s
securities subject to the reporting requirements of Section 13 or
Section 15(d) of the Securities Exchange Act of 1934.
Accordingly, we are providing below the information that would be
included in a general form for registration of securities on Form
10 under the Securities Exchange Act of 1934.
included in a general form for registration of securities on Form
10 under the Securities Exchange Act of 1934.
Item 1. BUSINESS
The Company
The Company, Watermark Group, Inc., a Nevada corporation
headquartered in Salt Lake City, Utah, prior to consummation of
the License Agreement, was a development stage company that was a
“shell company” as that term is defined in Rule 12b-2 under the
Securities Exchange Act of 1934. On October 13, 2016, the Company
entered into the License Agreement with the Parent, which closed
on October 14, 2016. On October 12, 2016, the Parent entered into
a stock purchase agreement to purchase a controlling interest in
the Company in anticipation of entering into the License
Agreement, which closed on October 19, 2016.
headquartered in Salt Lake City, Utah, prior to consummation of
the License Agreement, was a development stage company that was a
“shell company” as that term is defined in Rule 12b-2 under the
Securities Exchange Act of 1934. On October 13, 2016, the Company
entered into the License Agreement with the Parent, which closed
on October 14, 2016. On October 12, 2016, the Parent entered into
a stock purchase agreement to purchase a controlling interest in
the Company in anticipation of entering into the License
Agreement, which closed on October 19, 2016.
The Company intends to respond to the 2016 outbreak of the Zika
virus by providing state of the art diagnostics tools to the
medical community primarily in developing nations where the
outbreak is most severe. to the License Agreement, the Company
has licensed molecular diagnostics technology from the Parent and
plans to market a panel of diagnostics tests developed using the
licensed technology. The Company plans to respond to the
international crises surrounding the spread of the Zika virus
that has become acute in the last six months. to the License
Agreement, we have licensed the exclusive rights to make, use,
manufacture, sell and license polymerase chain reaction (“PCR”)
tests using the Parent’s patented technology for detecting the
Zika virus as well as other mosquito-borne flaviviruses, which
include dengue, yellow fever, West Nile virus and Japanese
encephalitis, as well as the alphavirus chikungunya. to the
License Agreement, we have also licensed the non-exclusive right
to sell the Parent’s malaria test. The tests to be distributed
by the Company include a multiplex test for all of these
flaviviruses plus chikungunya, differentiating among the viruses
to rapidly diagnose the specific infection, as all these viruses
exhibit similar symptoms, but require different treatments.
virus by providing state of the art diagnostics tools to the
medical community primarily in developing nations where the
outbreak is most severe. to the License Agreement, the Company
has licensed molecular diagnostics technology from the Parent and
plans to market a panel of diagnostics tests developed using the
licensed technology. The Company plans to respond to the
international crises surrounding the spread of the Zika virus
that has become acute in the last six months. to the License
Agreement, we have licensed the exclusive rights to make, use,
manufacture, sell and license polymerase chain reaction (“PCR”)
tests using the Parent’s patented technology for detecting the
Zika virus as well as other mosquito-borne flaviviruses, which
include dengue, yellow fever, West Nile virus and Japanese
encephalitis, as well as the alphavirus chikungunya. to the
License Agreement, we have also licensed the non-exclusive right
to sell the Parent’s malaria test. The tests to be distributed
by the Company include a multiplex test for all of these
flaviviruses plus chikungunya, differentiating among the viruses
to rapidly diagnose the specific infection, as all these viruses
exhibit similar symptoms, but require different treatments.
The Licensed Technology
The Parent developed and patented a molecular diagnostics
platform system that enables rapid, low-cost, sophisticated
molecular testing for organisms and genetic diseases by greatly
automating historically complex procedures in both the
development and administration of tests. One of the Parent’s
newest technical advances involves a novel approach to PCR
primer design (cooperative primers) that eliminates one of the
key vexing issues of PCR amplification, the exponential growth
of primer-dimer pairs (false positives or false negatives)
which adversely interfere with identification of the target
DNA. In addition, the Parent’s scientists have enhanced the
understanding of the mathematics of DNA test design, so as to
“engineer” a DNA test and automate algorithms to screen
millions of possible designs to find the optimum DNA test
design. The Parent’s proprietary platform of Co-Dx
technologies integrates and streamlines these steps as it
analyzes biological samples. The Company entered into an
exclusive license to make, use, sell and licensed PCR tests
using Co-Dx technology, but only for the Zika virus and certain
other flaviviruses and alphaviruses, including dengue,
chikungunya, yellow fever, West Nile virus and Japanese
encephalitis and on a non-exclusive basis, malaria. Together
these tests are referred to as the “Licensed Tests,” and the
technology to design, make, use, sell and license the tests is
referred to as the “Licensed Technology.”
platform system that enables rapid, low-cost, sophisticated
molecular testing for organisms and genetic diseases by greatly
automating historically complex procedures in both the
development and administration of tests. One of the Parent’s
newest technical advances involves a novel approach to PCR
primer design (cooperative primers) that eliminates one of the
key vexing issues of PCR amplification, the exponential growth
of primer-dimer pairs (false positives or false negatives)
which adversely interfere with identification of the target
DNA. In addition, the Parent’s scientists have enhanced the
understanding of the mathematics of DNA test design, so as to
“engineer” a DNA test and automate algorithms to screen
millions of possible designs to find the optimum DNA test
design. The Parent’s proprietary platform of Co-Dx
technologies integrates and streamlines these steps as it
analyzes biological samples. The Company entered into an
exclusive license to make, use, sell and licensed PCR tests
using Co-Dx technology, but only for the Zika virus and certain
other flaviviruses and alphaviruses, including dengue,
chikungunya, yellow fever, West Nile virus and Japanese
encephalitis and on a non-exclusive basis, malaria. Together
these tests are referred to as the “Licensed Tests,” and the
technology to design, make, use, sell and license the tests is
referred to as the “Licensed Technology.”
PCR Market Opportunity
The molecular diagnostics market is the fastest growing portion
of the $33 billion US in vitro (test tube based, controlled
environment) diagnostics market. In vitro diagnostics is
expected to grow to a $75 billion industry in 2020. Given the
advantages of molecular tests over other forms of diagnostic
testing, which include higher sensitivities, the ability to
perform multiplex tests and the ability to test for drug
resistance or individual genes, this segment of the market
remains the fastest growing. The molecular diagnostics market
specifically is expected to aggregate $9.3 billion by 2020 from
$5.9 billion in 2015, at a growth rate of 9.3% from 2015 to
2020.
of the $33 billion US in vitro (test tube based, controlled
environment) diagnostics market. In vitro diagnostics is
expected to grow to a $75 billion industry in 2020. Given the
advantages of molecular tests over other forms of diagnostic
testing, which include higher sensitivities, the ability to
perform multiplex tests and the ability to test for drug
resistance or individual genes, this segment of the market
remains the fastest growing. The molecular diagnostics market
specifically is expected to aggregate $9.3 billion by 2020 from
$5.9 billion in 2015, at a growth rate of 9.3% from 2015 to
2020.
Competitive Business Conditions
The molecular diagnostics industry is extremely competitive.
There are many firms that provide some or all of the products
we provide and provide many diagnostic tests that we have yet
to develop. Many of these competitors are larger than we are
and have significantly greater financial resources. Because we
are not established, many of our competitors have a competitive
advantage in the diagnostic testing industry because they also
have other lines of business in the diagnostics and
pharmaceutical industries from which they derive revenues and
for which they are well known and respected in the medical
profession. We will need to overcome the disadvantage of being
a start up with no history of success and not being well known
in the testing industry. In the diagnostics testing industry,
we compete with such companies as BioMerieux, Siemans, Qiagen
and Cepheid and with such pharmaceutical companies as Abbott
Laboratories, Becton Dickinson and Johnson and Johnson.
There are many firms that provide some or all of the products
we provide and provide many diagnostic tests that we have yet
to develop. Many of these competitors are larger than we are
and have significantly greater financial resources. Because we
are not established, many of our competitors have a competitive
advantage in the diagnostic testing industry because they also
have other lines of business in the diagnostics and
pharmaceutical industries from which they derive revenues and
for which they are well known and respected in the medical
profession. We will need to overcome the disadvantage of being
a start up with no history of success and not being well known
in the testing industry. In the diagnostics testing industry,
we compete with such companies as BioMerieux, Siemans, Qiagen
and Cepheid and with such pharmaceutical companies as Abbott
Laboratories, Becton Dickinson and Johnson and Johnson.
Many of these competitors already have an established customer
base with industry standard technology, which we must penetrate
to be successful.
base with industry standard technology, which we must penetrate
to be successful.
Market Strategy
The Company anticipates generating revenue from co-ventures
with in-country test manufacturing partners, from sublicensing
agreements and from shared-revenue contracts with biotech
companies (speed-to-market test development, companion
diagnostics) and diagnostics product distributors. Our market
strategy is focused on the following goals:
with in-country test manufacturing partners, from sublicensing
agreements and from shared-revenue contracts with biotech
companies (speed-to-market test development, companion
diagnostics) and diagnostics product distributors. Our market
strategy is focused on the following goals:
1) Provide affordable and accurate Zika and other
flavivirus/alphavirus PCR tests worldwide
flavivirus/alphavirus PCR tests worldwide
2) Sell to multiple prospective markets in the US Gulf States,
in the Caribbean, in Latin America and elsewhere
in the Caribbean, in Latin America and elsewhere
a) Through molecular diagnostics manufacturers and
distributors: labs, private organizations and government
agencies addressing healthcare needs in developed and
developing nations,
distributors: labs, private organizations and government
agencies addressing healthcare needs in developed and
developing nations,
b) To clinical reference labs as an affordable test development
alternative in creating their own DNA-based tests internally or
outsourcing development to the Company
alternative in creating their own DNA-based tests internally or
outsourcing development to the Company
c) To pharmaceutical companies looking for accurate companion
diagnostics as they introduce new vaccines or therapeutics to
the market
diagnostics as they introduce new vaccines or therapeutics to
the market
3) Seek strategic partnerships with medium-to-large-cap biotech
companies that can provide broader distribution and a potential
merger or acquisition opportunity
companies that can provide broader distribution and a potential
merger or acquisition opportunity
Product Offering
|
Current: The Company has an exclusive license to a
panel of tests developed on the Parent’s proprietary analytical systems, currently addressing the Licensed Tests, which are Zika, dengue, chikungunya, yellow fever, West Nile virus and Japanese encephalitis and on a non-exclusive basis and not included in the testing panel, malaria. |
|
Near Future: The Company will continue to enhance its
existing tests and as its distribution channels develop, it will seek to license other tests to sell through its distributors. Likewise, the Parent has a vested interest in continuing to iterate and improve the designs of the Licensed Tests and will continue to do so, all subsequent versions of which are licensed under the License Agreement. |
Competitive Advantages of Licensed Tests
|
Affordability – Much lower-cost test kits – a
fraction of competitors’ pricing (50%-90% reductions). |
|
Flexibility – The Licensed Tests can run on many
vendors’ DNA diagnostic testing machines. They are particularly well suited to the new generation of “lab-on-a-chip” and “point-of-care” (“LOC and POC”), highly portable analysis machinery for field, clinic and office applications. |
|
Speed – Rapid assay development and time to results.
|
|
Sophistication – Tests are built on PCR technology,
taking advantage of one of the most advanced diagnostic testing platforms. |
|
Accuracy – Tests are more accurate than competitors’
and can detect more strains of viruses. |
|
Exclusivity – The Parent licensor (Co-Diagnostics,
Inc.) owns all patents and intellectual property, and we have acquired some exclusive and non-exclusive rights as described above. |
|
Broad Footprint – With a dynamic technology that
encompasses markets worldwide, the Company can identify the best target markets, not only in highly burdened developing countries but also in developed nations. |
|
Growth Industry Category – DNA testing is the
fastest-growing segment of in-vitro diagnostic testing. |
|
Combination Product Offering The Licensed Tests are
ultra-sensitive and are the perfect match for a new generation of more affordable molecular diagnostic devices now entering the market. Used together, these affordable tests devices will revolutionize the molecular diagnostics industry in cost, mobility, speed of test results and simplification. |
Market for Goods and Services
Severity of the Problem
“On January 22, 2016, the Center for Disease Control
(‘CDC’) activated its Incident Management System and,
working through the Emergency Operations Center (EOC),
centralized its response to the outbreaks of Zika occurring
in the Americas and increased reports of birth defects and
Guillain-Barr syndrome in areas affected by Zika. On February
1, 2016, the World Health Organization declared a Public
Health Emergency of International Concern (PHEIC) because of
clusters of microcephaly and other neurological disorders in
some areas affected by Zika. On February 8, 2016, CDC
elevated its response efforts to a Level 1 activation, the
highest response level at the agency.”
(‘CDC’) activated its Incident Management System and,
working through the Emergency Operations Center (EOC),
centralized its response to the outbreaks of Zika occurring
in the Americas and increased reports of birth defects and
Guillain-Barr syndrome in areas affected by Zika. On February
1, 2016, the World Health Organization declared a Public
Health Emergency of International Concern (PHEIC) because of
clusters of microcephaly and other neurological disorders in
some areas affected by Zika. On February 8, 2016, CDC
elevated its response efforts to a Level 1 activation, the
highest response level at the agency.”
Source: http://www.cdc.gov/zika/geo/
“The Zika virus ‘is now spreading explosively’ in the
Americas, the head of the World Health Organization said
Thursday, with another official estimating between 3 million
to 4 million infections in the region over a 12-month period.
The lack of any immunity to Zika and the fact that mosquitoes
spreading the virus can be found most ‘everywhere in the
Americas’ — from Argentina to the southern United States —
explains the speed of its transmission, said Dr. Sylvain
Aldighieri, an official with the WHO and Pan American Health
Organization.
Americas, the head of the World Health Organization said
Thursday, with another official estimating between 3 million
to 4 million infections in the region over a 12-month period.
The lack of any immunity to Zika and the fact that mosquitoes
spreading the virus can be found most ‘everywhere in the
Americas’ — from Argentina to the southern United States —
explains the speed of its transmission, said Dr. Sylvain
Aldighieri, an official with the WHO and Pan American Health
Organization.
Aldighieri gave the estimate for Zika infections (including
people who do not report clinical symptoms) based on data
regarding the spread of a different mosquito-borne virus —
dengue. He acknowledged the virus is circulating with ‘very
high intensity.’
people who do not report clinical symptoms) based on data
regarding the spread of a different mosquito-borne virus —
dengue. He acknowledged the virus is circulating with ‘very
high intensity.’
Some 80% of those infected with the Zika virus don’t even
feel sick, and most who do have relatively mild symptoms such
as a fever, rash, joint pain or pink eye. But there are major
worries about the dangers pregnant women and their babies
face.
feel sick, and most who do have relatively mild symptoms such
as a fever, rash, joint pain or pink eye. But there are major
worries about the dangers pregnant women and their babies
face.
Chan said that, where the virus has arrived, there’s been a
corresponding ‘steep increase in the birth of babies with
abnormally small heads and in cases of Guillain-Barre
syndrome.’ Having small heads can cause severe developmental
issues and sometimes death. Guillain-Barre is a rare
autoimmune disorder that can lead to life-threatening
paralysis.
corresponding ‘steep increase in the birth of babies with
abnormally small heads and in cases of Guillain-Barre
syndrome.’ Having small heads can cause severe developmental
issues and sometimes death. Guillain-Barre is a rare
autoimmune disorder that can lead to life-threatening
paralysis.
Health authorities began to suspect a connection between Zika
and neurological ailments, especially in fetuses and
newborns. Brazil alone has reported more than 4,000 cases of
microcephaly — a neurological disorder resulting in the
births of babies with small heads — in infants born to women
infected with Zika while pregnant.”
and neurological ailments, especially in fetuses and
newborns. Brazil alone has reported more than 4,000 cases of
microcephaly — a neurological disorder resulting in the
births of babies with small heads — in infants born to women
infected with Zika while pregnant.”
Source:
http://www.cnn.com/2016/01/28/health/zika-virus-global-response/
http://www.cnn.com/2016/01/28/health/zika-virus-global-response/
“The more researchers learn about the Zika virus, the
scarier it appears, federal health officials said Monday as
they urged more money for mosquito control and to develop
vaccines and treatments. Scientists increasingly believe the
Zika virus sweeping through Latin America and the Caribbean
causes devastating defects in fetal brains if women become
infected during pregnancy. ‘Everything we look at with this
virus seems to be a bit scarier than we initially thought,’
Dr. Anne Schuchat of the Centers for Disease Control and
Prevention said at a White House briefing.”
scarier it appears, federal health officials said Monday as
they urged more money for mosquito control and to develop
vaccines and treatments. Scientists increasingly believe the
Zika virus sweeping through Latin America and the Caribbean
causes devastating defects in fetal brains if women become
infected during pregnancy. ‘Everything we look at with this
virus seems to be a bit scarier than we initially thought,’
Dr. Anne Schuchat of the Centers for Disease Control and
Prevention said at a White House briefing.”
Source:
http://.cbsnews.com/news/officials-zika-virus-scarier-than-we-thought/
http://.cbsnews.com/news/officials-zika-virus-scarier-than-we-thought/
Zika virus has been identified in 31 countries as of March
2016, including the US southern states. For the most recent
recorded year, there were over 8.3 million births in
Central and South America, in Cabo Verde in Africa and in
affected regions of Polynesia. There were an additional
900,000 births in the US Gulf States and Hawaii.
2016, including the US southern states. For the most recent
recorded year, there were over 8.3 million births in
Central and South America, in Cabo Verde in Africa and in
affected regions of Polynesia. There were an additional
900,000 births in the US Gulf States and Hawaii.
Based on current research, it appears that the Zika virus
passes through the placenta of some mothers who have an
active strain of the virus during the first trimester of
their pregnancies. It is estimated that the infection
remains active rather than latent for up to 10 days. A
pregnant woman ideally should be tested every 10 days
during the first trimester, or 9 times. To date, over 4,000
cases of birth defects from Zika have been identified in
the Brazilian states Rio de Janeiro and Bahia. Thus the
potential market for a highly accurate, affordable PCR
diagnostic test could be approximately 9.2 million X 9
tests, or over 80 million tests.
passes through the placenta of some mothers who have an
active strain of the virus during the first trimester of
their pregnancies. It is estimated that the infection
remains active rather than latent for up to 10 days. A
pregnant woman ideally should be tested every 10 days
during the first trimester, or 9 times. To date, over 4,000
cases of birth defects from Zika have been identified in
the Brazilian states Rio de Janeiro and Bahia. Thus the
potential market for a highly accurate, affordable PCR
diagnostic test could be approximately 9.2 million X 9
tests, or over 80 million tests.
Note: Zika does not always manifest acute symptoms,
therefore a broad test initiative will have to be
implemented.
therefore a broad test initiative will have to be
implemented.
The WHO recently announced that the incidence of sexual
transmission of the Zika virus is higher than earlier
analyses indicated. Thus the market for a Zika screening
test may be double the numbers listed above. Zika is a
flavivirus, all of which are transmitted by the Aedes
aegypti mosquito. They include Zika virus, dengue, yellow
fever, West Nile virus and Japanese encephalitis.
Chikungunya, an alphavirus, is likewise transmitted by the
Aedes aegypti mosquito. Many have similar symptoms. The
Company’s next product after a Zika screening will be a
PCR multiplex test to differentiate among these viruses in
the patient. There are over a million cases of dengue in
Brazil alone, and its symptoms are very similar to those of
Zika.
transmission of the Zika virus is higher than earlier
analyses indicated. Thus the market for a Zika screening
test may be double the numbers listed above. Zika is a
flavivirus, all of which are transmitted by the Aedes
aegypti mosquito. They include Zika virus, dengue, yellow
fever, West Nile virus and Japanese encephalitis.
Chikungunya, an alphavirus, is likewise transmitted by the
Aedes aegypti mosquito. Many have similar symptoms. The
Company’s next product after a Zika screening will be a
PCR multiplex test to differentiate among these viruses in
the patient. There are over a million cases of dengue in
Brazil alone, and its symptoms are very similar to those of
Zika.
Compliance with Government Regulation
We will be regulated by the U.S. Federal Drug
Administration, and our products must be approved by the
FDA before we will be allowed to sell our tests in the
United States unless we sell to clinical research labs who
are allowed to use our tests under their general umbrella
of testing for diseases without applying for FDA approval
to service the general public. Because our Parent’s lab is
ISO 9001 and ISO 13485 certified, it is well prepared to
obtain a self-certified CE-IVD marking for its products,
which will allow us to sell our tests in most developed
countries in Europe and Asia as well as in most developing
nations, which are our initial target markets. Each country
will have its individual registration and regulatory
requirements, which will need to be met as well.
Administration, and our products must be approved by the
FDA before we will be allowed to sell our tests in the
United States unless we sell to clinical research labs who
are allowed to use our tests under their general umbrella
of testing for diseases without applying for FDA approval
to service the general public. Because our Parent’s lab is
ISO 9001 and ISO 13485 certified, it is well prepared to
obtain a self-certified CE-IVD marking for its products,
which will allow us to sell our tests in most developed
countries in Europe and Asia as well as in most developing
nations, which are our initial target markets. Each country
will have its individual registration and regulatory
requirements, which will need to be met as well.
Research and Development
We will have no responsibility to perform additional
research and development, as our License Agreement with our
Parent puts the responsibility to complete the development
of all of the Licensed Tests on the Parent. Further the
License Agreement gives us the right to new innovations
discovered and developed by our Parent in the course of its
development activities, including further development of
the Tests using the Parent’s unique technology.
research and development, as our License Agreement with our
Parent puts the responsibility to complete the development
of all of the Licensed Tests on the Parent. Further the
License Agreement gives us the right to new innovations
discovered and developed by our Parent in the course of its
development activities, including further development of
the Tests using the Parent’s unique technology.
Corporate Office
We maintain offices currently at 8160 S. Highland Drive,
Salt Lake City, Utah 84093, which includes two offices
comprising approximately 1,000 square feet leased on a
month to month basis for $750.00 per month. We are seeking
a different location, which may include relocating with or
moving adjacent to our Parent’s corporate offices in Salt
Lake City.
Salt Lake City, Utah 84093, which includes two offices
comprising approximately 1,000 square feet leased on a
month to month basis for $750.00 per month. We are seeking
a different location, which may include relocating with or
moving adjacent to our Parent’s corporate offices in Salt
Lake City.
Employees
We currently have five employees, two of which are
part-time. All are located at our corporate offices.
part-time. All are located at our corporate offices.
Legal Proceedings
We are not aware of any material pending legal proceedings
to which we are a party or of which our property is the
subject. We also know of no proceedings to which any of our
directors, officers or affiliates, or any registered or
beneficial holders of more than 5% of any class of our
securities, or any associate of any such director, officer,
affiliate or security holder, are an adverse party or have
a material interest adverse to us.
to which we are a party or of which our property is the
subject. We also know of no proceedings to which any of our
directors, officers or affiliates, or any registered or
beneficial holders of more than 5% of any class of our
securities, or any associate of any such director, officer,
affiliate or security holder, are an adverse party or have
a material interest adverse to us.
Item 1A. RISK FACTORS
An investment in our securities involves a high degree of
risk. You should consider carefully the following risks,
along with all of the other information included in this
report, before deciding to buy our common stock. Additional
risks and uncertainties not currently known to us or that
we currently deem to be immaterial may also impair our
business operations. If we are unable to prevent events
that have a negative effect from occurring, then our
business may suffer.
risk. You should consider carefully the following risks,
along with all of the other information included in this
report, before deciding to buy our common stock. Additional
risks and uncertainties not currently known to us or that
we currently deem to be immaterial may also impair our
business operations. If we are unable to prevent events
that have a negative effect from occurring, then our
business may suffer.
Risks Related to Our Company
We have a limited commercial history upon which to base our
prospects, have not generated revenues or profits and do
not expect to generate profits for the foreseeable future.
We may never achieve or sustain profitability.
prospects, have not generated revenues or profits and do
not expect to generate profits for the foreseeable future.
We may never achieve or sustain profitability.
We have not earned any revenue to date and do not
expect to earn significant revenue in the near future.
We had a net loss of $ 23,636, $50,735, and $37,906, in
the three-month period ending July 31, 2016, the
twelve-month period ending April 30, 2016 and the
twelve-month period ending April 30, 2015,
respectively. Our accumulated deficit was $239,831 and
$215,745 as of July 31, 2016 and April 30, 2016,
respectively. Potential investors should be aware of
the difficulties normally encountered by a new
enterprise, many of which are beyond our control,
including substantial risks and expenses in the course
of developing new diagnostic tests, establishing or
entering new markets, organizing operations and
marketing procedures. The likelihood of our success
must be considered in light of these risks, expenses,
complications and delays, and the competitive
environment in which we operate. There is, therefore,
nothing at this time upon which to base an assumption
that our business plan will prove successful, and we
may not be able to generate significant revenue, raise
additional capital or operate profitably. We will
continue to encounter risks and difficulties frequently
experienced by early commercial stage companies,
including scaling up our infrastructure and headcount,
and may encounter unforeseen expenses, difficulties or
delays in connection with our growth. In addition, as a
result of the start-up nature of our business, we can
be expected to continue to sustain substantial
operating expenses without generating sufficient
revenues to cover expenditures. As discussed in Note 2
to our audited financial statements, our recurring
operating losses and our need for additional sources of
capital to fund our ongoing operations raise
substantial doubt about our ability to continue as a
going concern. Any investment in our company is
therefore highly speculative and could result in the
loss of your entire investment.
expect to earn significant revenue in the near future.
We had a net loss of $ 23,636, $50,735, and $37,906, in
the three-month period ending July 31, 2016, the
twelve-month period ending April 30, 2016 and the
twelve-month period ending April 30, 2015,
respectively. Our accumulated deficit was $239,831 and
$215,745 as of July 31, 2016 and April 30, 2016,
respectively. Potential investors should be aware of
the difficulties normally encountered by a new
enterprise, many of which are beyond our control,
including substantial risks and expenses in the course
of developing new diagnostic tests, establishing or
entering new markets, organizing operations and
marketing procedures. The likelihood of our success
must be considered in light of these risks, expenses,
complications and delays, and the competitive
environment in which we operate. There is, therefore,
nothing at this time upon which to base an assumption
that our business plan will prove successful, and we
may not be able to generate significant revenue, raise
additional capital or operate profitably. We will
continue to encounter risks and difficulties frequently
experienced by early commercial stage companies,
including scaling up our infrastructure and headcount,
and may encounter unforeseen expenses, difficulties or
delays in connection with our growth. In addition, as a
result of the start-up nature of our business, we can
be expected to continue to sustain substantial
operating expenses without generating sufficient
revenues to cover expenditures. As discussed in Note 2
to our audited financial statements, our recurring
operating losses and our need for additional sources of
capital to fund our ongoing operations raise
substantial doubt about our ability to continue as a
going concern. Any investment in our company is
therefore highly speculative and could result in the
loss of your entire investment.
We will need to raise additional capital, which may not
be available on favorable terms, if at all, and which
may cause dilution to stockholders, restrict our
operations or adversely affect our ability to operate
our business.
be available on favorable terms, if at all, and which
may cause dilution to stockholders, restrict our
operations or adversely affect our ability to operate
our business.
As of April 30, 2016, our cash balance was $1,191 and
our working capital deficit was $13,712. At our current
rate of expenditures, we estimate that our existing
capital resources will fund our operations for twelve
months. Accordingly, we will need to raise additional
funds through public or private debt or equity
financing or through other means in order to sustain
our operations and current business strategy. We may be
unable to obtain adequate financing on favorable terms,
or at all, and any additional financings could result
in additional dilution to our then-existing
stockholders or restrict our operations or adversely
affect our ability to operate our business. If we are
unable to obtain needed financing on acceptable terms,
we may not be able to implement our business plan,
which could have a material adverse effect on our
business, financial condition and results of
operations. We may not be able to meet our business
objectives, our equity value may decrease and investors
may lose some or all of their investment. If we raise
funds by issuing equity securities, the percentage
ownership of our then stockholders will be reduced. If
we raise funds by issuing debt, the ability of our
stockholders to receive earnings or distributions may
be adversely affected and we may be subject to
additional covenants and restrictions.
our working capital deficit was $13,712. At our current
rate of expenditures, we estimate that our existing
capital resources will fund our operations for twelve
months. Accordingly, we will need to raise additional
funds through public or private debt or equity
financing or through other means in order to sustain
our operations and current business strategy. We may be
unable to obtain adequate financing on favorable terms,
or at all, and any additional financings could result
in additional dilution to our then-existing
stockholders or restrict our operations or adversely
affect our ability to operate our business. If we are
unable to obtain needed financing on acceptable terms,
we may not be able to implement our business plan,
which could have a material adverse effect on our
business, financial condition and results of
operations. We may not be able to meet our business
objectives, our equity value may decrease and investors
may lose some or all of their investment. If we raise
funds by issuing equity securities, the percentage
ownership of our then stockholders will be reduced. If
we raise funds by issuing debt, the ability of our
stockholders to receive earnings or distributions may
be adversely affected and we may be subject to
additional covenants and restrictions.
The best efforts structure of this offering may yield
insufficient gross proceeds to execute on our business
plan.
insufficient gross proceeds to execute on our business
plan.
The underwriters are offering the Shares on a
best-efforts basis. The underwriters are not required
to sell any specific number or dollar amount of Shares,
but will use their best efforts to sell the Shares
offered. As a “best-efforts” offering, there can be
no assurance that the offering contemplated hereby will
ultimately be consummated or will result in any
proceeds being made to us. The success of this offering
will impact our ability to cover expenses and finance
operations over the next 12 months. If no Shares are
sold in this offering, or if we sell only a minimum
number of Shares yielding insufficient gross proceeds,
we may be unable to cover our expenses, successfully
fund operations, or execute on our business plan. This
would result in a material adverse effect on our
business, prospects, financial condition, and results
of operations.
best-efforts basis. The underwriters are not required
to sell any specific number or dollar amount of Shares,
but will use their best efforts to sell the Shares
offered. As a “best-efforts” offering, there can be
no assurance that the offering contemplated hereby will
ultimately be consummated or will result in any
proceeds being made to us. The success of this offering
will impact our ability to cover expenses and finance
operations over the next 12 months. If no Shares are
sold in this offering, or if we sell only a minimum
number of Shares yielding insufficient gross proceeds,
we may be unable to cover our expenses, successfully
fund operations, or execute on our business plan. This
would result in a material adverse effect on our
business, prospects, financial condition, and results
of operations.
Our near-term success is dependent upon our ability to
commence sales of our tests.
commence sales of our tests.
Our success will depend, in part, upon our ability to
commence sales of our tests. Attracting new customers
requires substantial time and expense. Any failure to
initiate sales of our tests to validate our platform
would adversely affect our operating results. Many
factors could affect the market acceptance and
commercial success of our diagnostic tests, including:
commence sales of our tests. Attracting new customers
requires substantial time and expense. Any failure to
initiate sales of our tests to validate our platform
would adversely affect our operating results. Many
factors could affect the market acceptance and
commercial success of our diagnostic tests, including:
|
our ability to convince our potential customers of
the advantages and economic value of our tests over competing technologies and diagnostic tests; |
|
the breadth of our test menu relative to
competitors; |
|
changes to policies, procedures or currently
accepted best practices in clinical diagnostic testing; |
|
the extent and success of our marketing and sales
efforts; |
|
our ability to manufacture our commercial
diagnostic tests and meet demand in a timely fashion. |
If we cannot successfully develop, obtain regulatory
approvals for and commercialize new diagnostic tests,
our financial results will be harmed and our ability to
compete will be harmed.
approvals for and commercialize new diagnostic tests,
our financial results will be harmed and our ability to
compete will be harmed.
Our financial performance depends in part upon our
ability to successfully develop and market new tests in
a rapidly changing technological and economic
environment. If we fail to successfully introduce new
diagnostic tests, we could lose customers and market
share. We could also lose market share if our
competitors introduce new diagnostic tests or
technologies that render our diagnostic tests less
competitive or obsolete. In addition, delays in the
introduction of new diagnostic tests due to regulatory,
developmental or other obstacles could negatively
impact our revenue and market share, as well as our
earnings. Factors that can influence our ability to
introduce new diagnostic tests, the timing associated
with new product approvals and commercial success of
these diagnostic tests include:
ability to successfully develop and market new tests in
a rapidly changing technological and economic
environment. If we fail to successfully introduce new
diagnostic tests, we could lose customers and market
share. We could also lose market share if our
competitors introduce new diagnostic tests or
technologies that render our diagnostic tests less
competitive or obsolete. In addition, delays in the
introduction of new diagnostic tests due to regulatory,
developmental or other obstacles could negatively
impact our revenue and market share, as well as our
earnings. Factors that can influence our ability to
introduce new diagnostic tests, the timing associated
with new product approvals and commercial success of
these diagnostic tests include:
|
the scope of and progress made in our research
and development activities; |
|
our ability to successfully initiate and complete
clinical trial studies; |
|
timely expansion of our menu of tests;
|
|
the results of clinical trials needed to support
any regulatory approvals of our tests; |
|
our ability to obtain requisite FDA or other
regulatory clearances or approvals for our tests under development on a timely basis; |
|
demand for the new diagnostic tests we introduce;
|
|
product offerings from our competitors; and
|
|
the functionality of new diagnostic tests that
address market requirements and customer demands. |
We are subject to many laws and governmental
regulations and any adverse regulatory action may
materially adversely affect our financial condition
and business operations.
regulations and any adverse regulatory action may
materially adversely affect our financial condition
and business operations.
Our diagnostic tests are subject to regulation by
numerous government agencies, including the FDA and
comparable foreign agencies. To varying degrees each
of these agencies requires us to comply with laws and
regulations governing the development, testing,
manufacturing, labeling, marketing and distribution
of our diagnostic tests. In the clinical market, our
diagnostic tests are regulated by the FDA and
comparable agencies of other countries. In
particular, FDA regulations govern activities such as
product development, product testing, product
labeling, product storage, premarket clearance or
approval, manufacturing, advertising, promotion,
product sales, reporting of certain product failures
and distribution. Our diagnostic tests will require
510(k) clearance from the FDA prior to marketing in
the United States. Clinical trials are required to
support a 510(k) submission.
numerous government agencies, including the FDA and
comparable foreign agencies. To varying degrees each
of these agencies requires us to comply with laws and
regulations governing the development, testing,
manufacturing, labeling, marketing and distribution
of our diagnostic tests. In the clinical market, our
diagnostic tests are regulated by the FDA and
comparable agencies of other countries. In
particular, FDA regulations govern activities such as
product development, product testing, product
labeling, product storage, premarket clearance or
approval, manufacturing, advertising, promotion,
product sales, reporting of certain product failures
and distribution. Our diagnostic tests will require
510(k) clearance from the FDA prior to marketing in
the United States. Clinical trials are required to
support a 510(k) submission.
Since 2009 the FDA has significantly increased its
oversight of companies subject to its regulations,
including medical device companies, by hiring new
investigators and stepping up inspections of
manufacturing facilities. The FDA has recently also
significantly increased the number of warning letters
issued to companies. If the FDA were to conclude that
we are not in compliance with applicable laws or
regulations, the FDA could refuse to grant pre-market
approval applications or require certificates of
foreign governments for exports, and/or require us to
notify health professionals and others. Any adverse
regulatory action, depending on its magnitude, may
restrict us from effectively marketing and selling
our diagnostic tests.
oversight of companies subject to its regulations,
including medical device companies, by hiring new
investigators and stepping up inspections of
manufacturing facilities. The FDA has recently also
significantly increased the number of warning letters
issued to companies. If the FDA were to conclude that
we are not in compliance with applicable laws or
regulations, the FDA could refuse to grant pre-market
approval applications or require certificates of
foreign governments for exports, and/or require us to
notify health professionals and others. Any adverse
regulatory action, depending on its magnitude, may
restrict us from effectively marketing and selling
our diagnostic tests.
Foreign governmental regulations have become
increasingly stringent and more common, and we may
become subject to more rigorous regulation by foreign
governmental authorities in the future. Penalties for
a company’s non-compliance with foreign governmental
regulation could be severe, including revocation or
suspension of a company’s business license and
criminal sanctions. Any domestic or foreign
governmental law or regulation imposed in the future
may have a material adverse effect on us.
increasingly stringent and more common, and we may
become subject to more rigorous regulation by foreign
governmental authorities in the future. Penalties for
a company’s non-compliance with foreign governmental
regulation could be severe, including revocation or
suspension of a company’s business license and
criminal sanctions. Any domestic or foreign
governmental law or regulation imposed in the future
may have a material adverse effect on us.
Our current and potential customers in the United
States and elsewhere may also be subject, directly or
indirectly, to applicable anti-kickback, fraud and
abuse, false claims, transparency, health information
privacy and security and other healthcare laws and
regulations, which could expose us to criminal
sanctions, civil penalties, contractual damages,
reputational harm, administrative burdens and
diminished profits and future earnings.
States and elsewhere may also be subject, directly or
indirectly, to applicable anti-kickback, fraud and
abuse, false claims, transparency, health information
privacy and security and other healthcare laws and
regulations, which could expose us to criminal
sanctions, civil penalties, contractual damages,
reputational harm, administrative burdens and
diminished profits and future earnings.
The life sciences industry is highly competitive and
subject to rapid technological change. If our
competitors and potential competitors develop
superior diagnostic tests and technologies, our
competitive position and results of operations would
suffer.
subject to rapid technological change. If our
competitors and potential competitors develop
superior diagnostic tests and technologies, our
competitive position and results of operations would
suffer.
We face intense competition from a number of
companies that offer diagnostic tests in our target
markets, many of which have substantially greater
financial resources and larger, more established
marketing, sales and service organizations than we
do. The life sciences industry is characterized by
rapid and continuous technological innovation. We may
need to develop new technologies for our diagnostic
tests to remain competitive. One or more of our
current or future competitors could render our
present or future diagnostic tests obsolete or
uneconomical by technological advances. We may also
encounter other problems in the process of delivering
new diagnostic tests to the marketplace, such as
problems related to design, development or
manufacturing of such diagnostic tests, and as a
result we may be unsuccessful in selling such
diagnostic tests. Our future success depends on our
ability to compete effectively against current
technologies, as well as to respond effectively to
technological advances by developing and marketing
diagnostic tests that are competitive in the
continually changing technological landscape.
companies that offer diagnostic tests in our target
markets, many of which have substantially greater
financial resources and larger, more established
marketing, sales and service organizations than we
do. The life sciences industry is characterized by
rapid and continuous technological innovation. We may
need to develop new technologies for our diagnostic
tests to remain competitive. One or more of our
current or future competitors could render our
present or future diagnostic tests obsolete or
uneconomical by technological advances. We may also
encounter other problems in the process of delivering
new diagnostic tests to the marketplace, such as
problems related to design, development or
manufacturing of such diagnostic tests, and as a
result we may be unsuccessful in selling such
diagnostic tests. Our future success depends on our
ability to compete effectively against current
technologies, as well as to respond effectively to
technological advances by developing and marketing
diagnostic tests that are competitive in the
continually changing technological landscape.
If our diagnostic tests do not perform as expected or
the reliability of the technology on which our
diagnostic tests are based is questioned, we could
experience delayed or reduced market acceptance of
our diagnostic tests, increased costs and damage to
our reputation.
the reliability of the technology on which our
diagnostic tests are based is questioned, we could
experience delayed or reduced market acceptance of
our diagnostic tests, increased costs and damage to
our reputation.
Our success depends on the market’s confidence
that we can provide reliable, high-quality
diagnostic tests. We believe that customers in our
target markets are likely to be particularly
sensitive to product defects and errors. Our
reputation and the public image of our diagnostic
tests or technologies may be impaired if our
diagnostic tests fail to perform as expected or our
diagnostic tests are perceived as difficult to use.
Despite quality control testing, defects or errors
could occur in our diagnostic tests or
technologies.
that we can provide reliable, high-quality
diagnostic tests. We believe that customers in our
target markets are likely to be particularly
sensitive to product defects and errors. Our
reputation and the public image of our diagnostic
tests or technologies may be impaired if our
diagnostic tests fail to perform as expected or our
diagnostic tests are perceived as difficult to use.
Despite quality control testing, defects or errors
could occur in our diagnostic tests or
technologies.
In the future if our diagnostic tests experience a
material defect or error, this could result in loss
or delay of revenues, delayed market acceptance,
damaged reputation, diversion of development
resources, legal claims, increased insurance costs
or increased service and warranty costs, any of
which could harm our business. Such defects or
errors could also prompt us to amend certain
warning labels or narrow the scope of the use of
our diagnostic tests, either of which could hinder
our success in the market. Even after any
underlying concerns or problems are resolved, any
widespread concerns regarding our technology or any
manufacturing defects or performance errors in our
diagnostic tests could result in lost revenue,
delayed market acceptance, damaged reputation,
increased service and warranty costs and claims
against us.
material defect or error, this could result in loss
or delay of revenues, delayed market acceptance,
damaged reputation, diversion of development
resources, legal claims, increased insurance costs
or increased service and warranty costs, any of
which could harm our business. Such defects or
errors could also prompt us to amend certain
warning labels or narrow the scope of the use of
our diagnostic tests, either of which could hinder
our success in the market. Even after any
underlying concerns or problems are resolved, any
widespread concerns regarding our technology or any
manufacturing defects or performance errors in our
diagnostic tests could result in lost revenue,
delayed market acceptance, damaged reputation,
increased service and warranty costs and claims
against us.
If our international distributor relationships are
not successful, our ability to market and sell our
diagnostic tests will be harmed and our financial
performance will be adversely affected.
not successful, our ability to market and sell our
diagnostic tests will be harmed and our financial
performance will be adversely affected.
Outside of the United States, we depend on
relationships with distributors for the marketing
and sales of our diagnostic tests in various
geographic regions, and we have a limited ability
to influence their efforts. Relying on distributors
for our sales and marketing could harm our business
for various reasons, including:
relationships with distributors for the marketing
and sales of our diagnostic tests in various
geographic regions, and we have a limited ability
to influence their efforts. Relying on distributors
for our sales and marketing could harm our business
for various reasons, including:
|
agreements with distributors may terminate
prematurely due to disagreements or may result in litigation between the partners; |
|
our distributors may not devote sufficient
resources to the sale of diagnostic tests; |
|
our distributors may be unsuccessful in
marketing our diagnostic tests; and |
|
we may not be able to negotiate future
distributor agreements on acceptable terms. |
If we become subject to claims relating to improper
handling, storage or disposal of hazardous
materials, we could incur significant cost and time
to comply.
handling, storage or disposal of hazardous
materials, we could incur significant cost and time
to comply.
Our research and development processes involve the
controlled storage, use and disposal of hazardous
materials, including biological hazardous
materials. We are subject to foreign, federal,
state and local regulations governing the use,
manufacture, storage, handling and disposal of
materials and waste products. We may incur
significant costs complying with both existing and
future environmental laws and regulations. In
particular, we are subject to regulation by the
Occupational Safety and Health Administration, or
OSHA, and the Environmental Protection Agency, or
EPA, and to regulation under the Toxic Substances
Control Act and the Resource Conservation and
Recovery Act in the United States. OSHA or the EPA
may adopt additional regulations in the future that
may affect our research and development programs.
The risk of accidental contamination or injury from
hazardous materials cannot be eliminated
completely. In the event of an accident, we could
be held liable for any damages that result, and any
liability could exceed the limits or fall outside
the coverage of our workers’ compensation
insurance. We may not be able to maintain insurance
on acceptable terms, if at all.
controlled storage, use and disposal of hazardous
materials, including biological hazardous
materials. We are subject to foreign, federal,
state and local regulations governing the use,
manufacture, storage, handling and disposal of
materials and waste products. We may incur
significant costs complying with both existing and
future environmental laws and regulations. In
particular, we are subject to regulation by the
Occupational Safety and Health Administration, or
OSHA, and the Environmental Protection Agency, or
EPA, and to regulation under the Toxic Substances
Control Act and the Resource Conservation and
Recovery Act in the United States. OSHA or the EPA
may adopt additional regulations in the future that
may affect our research and development programs.
The risk of accidental contamination or injury from
hazardous materials cannot be eliminated
completely. In the event of an accident, we could
be held liable for any damages that result, and any
liability could exceed the limits or fall outside
the coverage of our workers’ compensation
insurance. We may not be able to maintain insurance
on acceptable terms, if at all.
Our diagnostic tests have not been manufactured on
a high volume scale and are subject to unforeseen
scale-up risks.
a high volume scale and are subject to unforeseen
scale-up risks.
While we have developed a process to manufacture
diagnostic tests, there can be no assurance that we
can manufacture our diagnostic tests at a scale
that is adequate for our future commercial needs.
We may face significant or unforeseen difficulties
in manufacturing our diagnostic tests, including
but not limited to:
diagnostic tests, there can be no assurance that we
can manufacture our diagnostic tests at a scale
that is adequate for our future commercial needs.
We may face significant or unforeseen difficulties
in manufacturing our diagnostic tests, including
but not limited to:
|
technical issues relating to manufacturing
components of our diagnostic test cartridges on a high volume commercial scale at reasonable cost, and in a reasonable time frame; |
|
difficulty meeting demand or timing
requirements for orders due to excessive costs or lack of capacity for part or all of an operation or process; |
|||
|
changes in government regulations or in quality
or other requirements that lead to additional manufacturing costs or an inability to supply product in a timely manner, if at all; and |
|
increases in raw material or component supply
cost or an inability to obtain supplies of certain critical supplies needed to complete our manufacturing processes. |
These and other difficulties may only become
apparent when scaling up to the manufacturing
process of our diagnostic tests to a more
substantive commercial scale. In the event our
diagnostic tests cannot be manufactured in
sufficient commercial quantities or manufacturing
is delayed, our future prospects could be
significantly impacted and our financial prospects
would be materially harmed.
apparent when scaling up to the manufacturing
process of our diagnostic tests to a more
substantive commercial scale. In the event our
diagnostic tests cannot be manufactured in
sufficient commercial quantities or manufacturing
is delayed, our future prospects could be
significantly impacted and our financial prospects
would be materially harmed.
We or our suppliers may experience development or
manufacturing problems or delays that could limit
the growth of our revenue or increase our
losses.
manufacturing problems or delays that could limit
the growth of our revenue or increase our
losses.
We may encounter unforeseen situations in the
manufacturing of our diagnostic tests that could
result in delays or shortfalls in our production.
Our suppliers may also face similar delays or
shortfalls. In addition, our or our suppliers’
production processes may have to change to
accommodate any significant future expansion of
our manufacturing capacity, which may increase
our or our suppliers’ manufacturing costs, delay
production of our diagnostic tests, reduce our
product gross margin and adversely impact our
business. If we are unable to keep up with demand
for our diagnostic tests by successfully
manufacturing and shipping our diagnostic tests
in a timely manner, our revenue could be
impaired, market acceptance for our diagnostic
tests could be adversely affected and our
customers might instead purchase our
competitors’ diagnostic tests. In addition,
developing manufacturing procedures for new
diagnostic tests may require developing specific
production processes for those diagnostic tests.
Developing such processes could be time consuming
and any unexpected difficulty in doing so can
delay the introduction of a product.
manufacturing of our diagnostic tests that could
result in delays or shortfalls in our production.
Our suppliers may also face similar delays or
shortfalls. In addition, our or our suppliers’
production processes may have to change to
accommodate any significant future expansion of
our manufacturing capacity, which may increase
our or our suppliers’ manufacturing costs, delay
production of our diagnostic tests, reduce our
product gross margin and adversely impact our
business. If we are unable to keep up with demand
for our diagnostic tests by successfully
manufacturing and shipping our diagnostic tests
in a timely manner, our revenue could be
impaired, market acceptance for our diagnostic
tests could be adversely affected and our
customers might instead purchase our
competitors’ diagnostic tests. In addition,
developing manufacturing procedures for new
diagnostic tests may require developing specific
production processes for those diagnostic tests.
Developing such processes could be time consuming
and any unexpected difficulty in doing so can
delay the introduction of a product.
We expect to rely on third parties to conduct
studies of our diagnostic tests that will be
required by the FDA or other regulatory
authorities and those third parties may not
perform satisfactorily.
studies of our diagnostic tests that will be
required by the FDA or other regulatory
authorities and those third parties may not
perform satisfactorily.
We do not have the ability to independently
conduct the field trial studies or other studies
that may be required to obtain FDA and other
regulatory clearances or approvals for our
diagnostic tests. Accordingly, we expect to rely
on third parties, such as independent testing
laboratories and hospitals, to conduct such
studies. Our reliance on these third parties will
reduce our control over these activities. These
third-party contractors may not complete
activities on schedule or conduct studies in
accordance with regulatory requirements or our
study design. We cannot control whether they
devote sufficient time, skill and resources to
our studies. Our reliance on third parties that
we do not control will not relieve us of any
applicable requirement to prepare, and ensure
compliance with, various procedures required
under good clinical practices. If these third
parties do not successfully carry out their
contractual duties or regulatory obligations or
meet expected deadlines, if the third parties
need to be replaced or if the quality or accuracy
of the data they obtain is compromised due to
their failure to adhere to our clinical protocols
or regulatory requirements or for other reasons,
our studies may be extended, delayed, suspended
or terminated, and we may not be able to obtain
regulatory approval for additional diagnostic
tests.
conduct the field trial studies or other studies
that may be required to obtain FDA and other
regulatory clearances or approvals for our
diagnostic tests. Accordingly, we expect to rely
on third parties, such as independent testing
laboratories and hospitals, to conduct such
studies. Our reliance on these third parties will
reduce our control over these activities. These
third-party contractors may not complete
activities on schedule or conduct studies in
accordance with regulatory requirements or our
study design. We cannot control whether they
devote sufficient time, skill and resources to
our studies. Our reliance on third parties that
we do not control will not relieve us of any
applicable requirement to prepare, and ensure
compliance with, various procedures required
under good clinical practices. If these third
parties do not successfully carry out their
contractual duties or regulatory obligations or
meet expected deadlines, if the third parties
need to be replaced or if the quality or accuracy
of the data they obtain is compromised due to
their failure to adhere to our clinical protocols
or regulatory requirements or for other reasons,
our studies may be extended, delayed, suspended
or terminated, and we may not be able to obtain
regulatory approval for additional diagnostic
tests.
Product liability claims could adversely impact
our financial condition and our earnings and
impair our reputation.
our financial condition and our earnings and
impair our reputation.
Inadequate disclosure of product-related risks or
product-related information with respect to our
diagnostic tests could result in an unsafe
condition, injury to, or death of, a patient. The
occurrence of such a problem could result in
product liability claims, or safety alert
relating to, one or more of our diagnostic tests.
Product liability claims, regardless of their
ultimate outcome, could have a material adverse
effect on our business and reputation and on our
ability to attract and retain customers for our
diagnostic tests.
product-related information with respect to our
diagnostic tests could result in an unsafe
condition, injury to, or death of, a patient. The
occurrence of such a problem could result in
product liability claims, or safety alert
relating to, one or more of our diagnostic tests.
Product liability claims, regardless of their
ultimate outcome, could have a material adverse
effect on our business and reputation and on our
ability to attract and retain customers for our
diagnostic tests.
Health care policy changes, including U.S. health
care reform legislation signed in 2010, may have
a material adverse effect on us.
care reform legislation signed in 2010, may have
a material adverse effect on us.
In March 2010 the Patient Protection and
Affordable Care Act and the Health Care and
Education Affordability Reconciliation Act of
2010 were signed into law. Elements of this
legislation, such as comparative effectiveness
research, an independent payment advisory board,
payment system reforms, including shared savings
pilots, and other provisions, could meaningfully
change the way health care is developed and
delivered, and may materially impact numerous
aspects of our business.
Affordable Care Act and the Health Care and
Education Affordability Reconciliation Act of
2010 were signed into law. Elements of this
legislation, such as comparative effectiveness
research, an independent payment advisory board,
payment system reforms, including shared savings
pilots, and other provisions, could meaningfully
change the way health care is developed and
delivered, and may materially impact numerous
aspects of our business.
Consolidation in the health care industry could
have an adverse effect on our revenues and
results of operations.
have an adverse effect on our revenues and
results of operations.
Many health care industry companies, including
health care systems, are consolidating to create
new companies with greater market power. As the
health care industry consolidates, competition to
provide goods and services to industry
participants will become more intense. These
industry participants may try to use their market
power to negotiate price concessions or
reductions for diagnostic tests. If we are forced
to reduce our prices because of consolidation in
the health care industry, our projected revenues
would decrease and our earnings, financial
condition, and/or cash flows would suffer.
health care systems, are consolidating to create
new companies with greater market power. As the
health care industry consolidates, competition to
provide goods and services to industry
participants will become more intense. These
industry participants may try to use their market
power to negotiate price concessions or
reductions for diagnostic tests. If we are forced
to reduce our prices because of consolidation in
the health care industry, our projected revenues
would decrease and our earnings, financial
condition, and/or cash flows would suffer.
Our ability to compete depends on our ability to
attract and retain talented employees.
attract and retain talented employees.
Our future success depends on our ability to
identify, attract, train, integrate and retain
highly qualified technical, development, sales
and marketing, managerial and administrative
personnel. Competition for highly skilled
individuals is extremely intense and we face
difficulty identifying and hiring qualified
personnel in many areas of our business. We may
not be able to hire and retain such personnel at
compensation levels consistent with our existing
compensation and salary structure. Many of the
companies with which we compete for hiring
experienced employees have greater resources than
we have. If we fail to identify, attract, train,
integrate and retain highly qualified and
motivated personnel, our reputation could suffer
and our business, financial condition and results
of operations could be adversely affected.
identify, attract, train, integrate and retain
highly qualified technical, development, sales
and marketing, managerial and administrative
personnel. Competition for highly skilled
individuals is extremely intense and we face
difficulty identifying and hiring qualified
personnel in many areas of our business. We may
not be able to hire and retain such personnel at
compensation levels consistent with our existing
compensation and salary structure. Many of the
companies with which we compete for hiring
experienced employees have greater resources than
we have. If we fail to identify, attract, train,
integrate and retain highly qualified and
motivated personnel, our reputation could suffer
and our business, financial condition and results
of operations could be adversely affected.
Our future success also depends on the continued
service and performance of our senior management
team. The replacement of members of our senior
management team likely would involve significant
time and costs, and the loss of any these
individuals may delay or prevent the achievement
of our business objectives.
service and performance of our senior management
team. The replacement of members of our senior
management team likely would involve significant
time and costs, and the loss of any these
individuals may delay or prevent the achievement
of our business objectives.
Changes in tax laws or exposure to additional
income tax liabilities could have a material
impact on our financial condition and results of
operations.
income tax liabilities could have a material
impact on our financial condition and results of
operations.
We are subject to income taxes as well as
non-income based taxes, in both the United
States and various foreign jurisdictions.
Changes in existing tax laws, treaties,
regulations or policies or the interpretation
or enforcement thereof, or the enactment or
adoption of new tax laws, treaties, regulations
or policies could materially impact our
effective tax rate.
non-income based taxes, in both the United
States and various foreign jurisdictions.
Changes in existing tax laws, treaties,
regulations or policies or the interpretation
or enforcement thereof, or the enactment or
adoption of new tax laws, treaties, regulations
or policies could materially impact our
effective tax rate.
If we do not achieve, sustain or successfully
manage our anticipated growth, our business and
prospects will be harmed.
manage our anticipated growth, our business and
prospects will be harmed.
If we are unable to obtain or sustain adequate
revenue growth, our financial results could
suffer. Furthermore, significant growth will
place strains on our management and our
operational and financial systems and processes
and our operating costs may escalate even
faster than planned. If we cannot effectively
manage our expanding operations and our costs,
we may not be able to grow effectively or we
may grow at a slower pace. Additionally, if we
do not successfully forecast the timing of
regulatory authorization for our additional
tests, marketing and subsequent demand for our
diagnostic tests or manage our anticipated
expenses accordingly, our operating results
will be harmed.
revenue growth, our financial results could
suffer. Furthermore, significant growth will
place strains on our management and our
operational and financial systems and processes
and our operating costs may escalate even
faster than planned. If we cannot effectively
manage our expanding operations and our costs,
we may not be able to grow effectively or we
may grow at a slower pace. Additionally, if we
do not successfully forecast the timing of
regulatory authorization for our additional
tests, marketing and subsequent demand for our
diagnostic tests or manage our anticipated
expenses accordingly, our operating results
will be harmed.
Other companies or institutions have
commercial diagnostic tests or may develop
and market novel or improved methods for
infectious disease diagnostic testing, which
may make our diagnostic platform less
competitive or obsolete.
commercial diagnostic tests or may develop
and market novel or improved methods for
infectious disease diagnostic testing, which
may make our diagnostic platform less
competitive or obsolete.
The market for diagnostic testing is large
and established, and our competitors may
possess significantly greater financial
resources and have larger development and
commercialization capabilities than we do. We
may be unable to compete effectively against
these competitors either because their
diagnostic platforms are superior or because
they may have more expertise, experience,
financial resources or stronger business
relationships.
and established, and our competitors may
possess significantly greater financial
resources and have larger development and
commercialization capabilities than we do. We
may be unable to compete effectively against
these competitors either because their
diagnostic platforms are superior or because
they may have more expertise, experience,
financial resources or stronger business
relationships.
New technologies, techniques or diagnostic
tests could emerge that might offer better
combinations of price and performance than
our current or future diagnostic tests.
tests could emerge that might offer better
combinations of price and performance than
our current or future diagnostic tests.
It is critical to our success that we
anticipate changes in technology and customer
requirements and to successfully introduce,
on a timely and cost-effective basis, new,
enhanced and competitive technologies that
meet the needs of current and prospective
customers. If we do not successfully innovate
and introduce new technology into our product
lines or manage the transitions to new
product offerings, our revenues, results of
operations and business will be adversely
impacted. Competitors may be able to respond
more quickly and effectively than we can to
new or changing opportunities, technologies,
standards or customer requirements. We
anticipate that we will face increased
competition in the future as existing
companies and competitors develop new or
improved diagnostic tests and as new
companies enter the market with new
technologies.
anticipate changes in technology and customer
requirements and to successfully introduce,
on a timely and cost-effective basis, new,
enhanced and competitive technologies that
meet the needs of current and prospective
customers. If we do not successfully innovate
and introduce new technology into our product
lines or manage the transitions to new
product offerings, our revenues, results of
operations and business will be adversely
impacted. Competitors may be able to respond
more quickly and effectively than we can to
new or changing opportunities, technologies,
standards or customer requirements. We
anticipate that we will face increased
competition in the future as existing
companies and competitors develop new or
improved diagnostic tests and as new
companies enter the market with new
technologies.
We are dependent on single source suppliers
for some of the components and materials used
in our diagnostic tests, and supply chain
interruptions could negatively impact our
operations and financial performance.
for some of the components and materials used
in our diagnostic tests, and supply chain
interruptions could negatively impact our
operations and financial performance.
Our diagnostic tests are manufactured by us
and we obtain supplies from a limited number
of suppliers. In some cases, critical
components required to manufacture our
diagnostic tests may only be available from a
sole supplier or limited number of suppliers,
any of whom would be difficult to replace.
The supply of any of our manufacturing
materials may be interrupted because of poor
vendor performance or other events outside
our control, which may require us, among
other things, to identify alternate vendors
and result in lost sales and increased
expenses. Even if the manufacturing materials
that we source are available from other
parties, the time and effort involved in
validating the new supplies and obtaining any
necessary regulatory approvals for
substitutes could impede our operations.
and we obtain supplies from a limited number
of suppliers. In some cases, critical
components required to manufacture our
diagnostic tests may only be available from a
sole supplier or limited number of suppliers,
any of whom would be difficult to replace.
The supply of any of our manufacturing
materials may be interrupted because of poor
vendor performance or other events outside
our control, which may require us, among
other things, to identify alternate vendors
and result in lost sales and increased
expenses. Even if the manufacturing materials
that we source are available from other
parties, the time and effort involved in
validating the new supplies and obtaining any
necessary regulatory approvals for
substitutes could impede our operations.
Risks Related to Our Securities
The price of our common stock may fluctuate
substantially.
substantially.
The market price of our common stock has been and
may continue to be subject to wide fluctuation in
response to various factors, some of which are
beyond our control. Some factors that may cause
the market price of our common stock to
fluctuate, in addition to the other risks
mentioned in this “Risk Factors” section and
elsewhere in this prospectus, are:
may continue to be subject to wide fluctuation in
response to various factors, some of which are
beyond our control. Some factors that may cause
the market price of our common stock to
fluctuate, in addition to the other risks
mentioned in this “Risk Factors” section and
elsewhere in this prospectus, are:
|
|
|
|
sales of our common stock by our
stockholders, executives, and directors; |
|
|
|
|
volatility and limitations in trading
volumes of our shares of common stock; |
|
|
|
|
fluctuations in our results of operations;
|
|
|
|
|
our ability to enter new markets;
|
|
|
|
|
actual or un-anticipated fluctuations in
our annual and quarterly financial results; |
|
|
|
|
our ability to obtain financings to
continue and expand our commercial activities, expand our manufacturing operations, conduct and complete research and development activities including, but not limited to, our human clinical trials, and other business activities; |
|
our ability to secure resources and the
necessary personnel to continue and expand our commercial activities, develop additional diagnostic tests, conduct clinical trials and gain approval for our additional diagnostic tests on our desired schedule; |
|
commencement, enrollment or results of
our clinical trials of our diagnostic tests or any future clinical trials we may conduct; |
|
changes in the development status of our
diagnostic tests; |
|
any delays or adverse developments or
perceived adverse developments with respect to the FDA’s review of our planned clinical trials; |
|
any delay in our submission for studies
or test approvals or adverse regulatory decisions, including failure to receive regulatory approval for our diagnostic tests; |
|
our announcements or our competitors’
announcements regarding new tests, enhancements, significant contracts, acquisitions or strategic investments; |
|
unanticipated safety concerns related to
our diagnostic tests; |
|
failures to meet external expectations or
management guidance; |
|
changes in our capital structure or
dividend policy, including as a result of future issuances of securities and sales of large blocks of common stock by our stockholders; |
|
our cash position;
|
|
announcements and events surrounding
financing efforts, including debt and equity securities; |
|
our inability to enter into new markets
or develop new diagnostic tests; |
|
reputational issues;
|
|
competition from existing technologies
and diagnostic tests or new technologies and diagnostic tests that may emerge; |
|
announcements of acquisitions,
partnerships, collaborations, joint ventures, new diagnostic tests, capital commitments, or other events by us or our competitors; |
|
changes in general economic, political
and market conditions in any of the regions in which we conduct our business; |
|
changes in industry conditions or
perceptions; |
|
changes in valuations of similar
companies or groups of companies; |
|
analyst research reports, recommendations
and changes in recommendations, price targets and withdrawals of coverage; |
|
departures and additions of key
personnel; |
|
disputes and litigations related to
intellectual properties, proprietary rights and contractual obligations; |
|
changes in applicable laws, rules,
regulations, or accounting practices and other dynamics; |
|
release or expiry of lockup or other
transfer restrictions on our outstanding common shares; |
|
announcements or actions taken by our
principal stockholders; and |
|
other events or factors, many of which
may be out of our control. |
In addition, if the market for stocks in our
industry or industries related to our
industry, or the stock market in general,
experiences a loss of investor confidence,
the trading price of our common stock could
decline for reasons unrelated to our
business, financial condition and results of
operations. If any of the foregoing occurs,
it could cause our stock price to fall and
may expose us to lawsuits that, even if
unsuccessful, could be costly to defend and a
distraction to management.
industry or industries related to our
industry, or the stock market in general,
experiences a loss of investor confidence,
the trading price of our common stock could
decline for reasons unrelated to our
business, financial condition and results of
operations. If any of the foregoing occurs,
it could cause our stock price to fall and
may expose us to lawsuits that, even if
unsuccessful, could be costly to defend and a
distraction to management.
Future sales and issuances of our common
stock or rights to purchase common stock
could result in additional dilution of the
percentage ownership of our stockholders
and could cause our share price to fall.
stock or rights to purchase common stock
could result in additional dilution of the
percentage ownership of our stockholders
and could cause our share price to fall.
We expect that significant additional
capital will be needed in the future to
continue our planned operations, including
expanding research and development, funding
clinical trials, purchasing of capital
equipment, hiring new personnel,
commercializing our diagnostic tests, and
continuing activities as an operating
public company. To the extent we raise
additional capital by issuing equity
securities, our stockholders may experience
substantial dilution. We may sell common
stock, convertible securities or other
equity securities in one or more
transactions at prices and in a manner we
determine from time to time. If we sell
common stock, convertible securities or
other equity securities in more than one
transaction, investors may be materially
diluted by subsequent sales. Such sales may
also result in material dilution to our
existing stockholders, and new investors
could gain rights superior to our existing
stockholders.
capital will be needed in the future to
continue our planned operations, including
expanding research and development, funding
clinical trials, purchasing of capital
equipment, hiring new personnel,
commercializing our diagnostic tests, and
continuing activities as an operating
public company. To the extent we raise
additional capital by issuing equity
securities, our stockholders may experience
substantial dilution. We may sell common
stock, convertible securities or other
equity securities in one or more
transactions at prices and in a manner we
determine from time to time. If we sell
common stock, convertible securities or
other equity securities in more than one
transaction, investors may be materially
diluted by subsequent sales. Such sales may
also result in material dilution to our
existing stockholders, and new investors
could gain rights superior to our existing
stockholders.
Future sales of our common stock in the
public market may cause our stock price to
decline and impair our ability to raise
future capital through the sale of our
equity securities.
public market may cause our stock price to
decline and impair our ability to raise
future capital through the sale of our
equity securities.
There are a substantial number of shares of
our common stock held by stockholders who
owned shares of our capital stock prior to
our initial public offering that may be
able to sell in the public market. Sales by
such stockholders of a substantial number
of shares could significantly reduce the
market price of our common stock.
our common stock held by stockholders who
owned shares of our capital stock prior to
our initial public offering that may be
able to sell in the public market. Sales by
such stockholders of a substantial number
of shares could significantly reduce the
market price of our common stock.
We plan to register all shares of our
common stock that we may issue to a long
term incentive plan for employees. Shares
issued by us upon exercise of options
granted under such an equity plan will be
eligible for sale in the public market. If
any of these holders cause a large number
of securities to be sold in the public
market, the sales could reduce the trading
price of our common stock. These sales also
could impede our ability to raise capital
in the future.
common stock that we may issue to a long
term incentive plan for employees. Shares
issued by us upon exercise of options
granted under such an equity plan will be
eligible for sale in the public market. If
any of these holders cause a large number
of securities to be sold in the public
market, the sales could reduce the trading
price of our common stock. These sales also
could impede our ability to raise capital
in the future.
“Penny stock” rules may make buying or
selling our securities difficult, which may
make our stock less liquid and make it
harder for investors to buy and sell our
securities.
selling our securities difficult, which may
make our stock less liquid and make it
harder for investors to buy and sell our
securities.
If at any time in the future our shares of
common stock are not listed for trading by
NASDAQ and begin to trade on an
over-the-counter market such as the
Over-the-Counter Bulletin Board or any
quotation system maintained by OTC Markets,
Inc., trading in our securities will be
subject to the SEC’s “penny stock” rules
and it is anticipated that trading in our
securities will continue to be subject to
the penny stock rules for the foreseeable
future. The Securities and Exchange
Commission has adopted regulations that
generally define a penny stock to be any
equity security that has a market price of
less than $5.00 per share, subject to
certain exceptions. These rules require
that any broker-dealer who recommends our
securities to persons other than prior
customers and accredited investors must,
prior to the sale, make a special written
suitability determination for the purchaser
and receive the purchaser’s written
agreement to execute the transaction.
Unless an exception is available, the
regulations require the delivery, prior to
any transaction involving a penny stock, of
a disclosure schedule explaining the penny
stock market and the risks associated with
trading in the penny stock market. In
addition, broker-dealers must disclose
commissions payable to both the
broker-dealer and the registered
representative and current quotations for
the securities they offer. The additional
burdens imposed upon broker-dealers by
these requirements may discourage
broker-dealers from recommending
transactions in our securities, which could
severely limit the liquidity of our
securities and consequently adversely
affect the market price for our securities.
common stock are not listed for trading by
NASDAQ and begin to trade on an
over-the-counter market such as the
Over-the-Counter Bulletin Board or any
quotation system maintained by OTC Markets,
Inc., trading in our securities will be
subject to the SEC’s “penny stock” rules
and it is anticipated that trading in our
securities will continue to be subject to
the penny stock rules for the foreseeable
future. The Securities and Exchange
Commission has adopted regulations that
generally define a penny stock to be any
equity security that has a market price of
less than $5.00 per share, subject to
certain exceptions. These rules require
that any broker-dealer who recommends our
securities to persons other than prior
customers and accredited investors must,
prior to the sale, make a special written
suitability determination for the purchaser
and receive the purchaser’s written
agreement to execute the transaction.
Unless an exception is available, the
regulations require the delivery, prior to
any transaction involving a penny stock, of
a disclosure schedule explaining the penny
stock market and the risks associated with
trading in the penny stock market. In
addition, broker-dealers must disclose
commissions payable to both the
broker-dealer and the registered
representative and current quotations for
the securities they offer. The additional
burdens imposed upon broker-dealers by
these requirements may discourage
broker-dealers from recommending
transactions in our securities, which could
severely limit the liquidity of our
securities and consequently adversely
affect the market price for our securities.
If we do not qualify for an exchange, we
could face significant material adverse
consequences, including:
could face significant material adverse
consequences, including:
|
a limited availability of market
quotations for our securities; |
|
reduced liquidity with respect to our
securities; |
|
a determination that our shares of
common stock are “penny stock” which will require brokers trading in our shares of common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our shares of common stock; |
|
a limited amount of news and analyst
coverage for our company; and |
|
decreased ability to issue additional
securities or obtain additional financing in the future. |
Therefore, it may be difficult for our
stockholders to sell any shares if they
desire or need to sell them.
stockholders to sell any shares if they
desire or need to sell them.
Financial reporting obligations of being a
public company in the United States are
expensive and time consuming, and may place
significant demands on our management and
other personnel.
public company in the United States are
expensive and time consuming, and may place
significant demands on our management and
other personnel.
The additional obligations of being a
public company in the United States require
significant expenditures and may place
significant demands on our management and
other personnel, including costs resulting
from public company reporting obligations
under the Securities Exchange Act of 1934,
as amended, or the Exchange Act, and the
rules and regulations regarding corporate
governance practices, including those under
the Sarbanes-Oxley Act, the Dodd-Frank Wall
Street Reform and Consumer Protection Act,
and the listing requirements of The NASDAQ
Capital Market. Our management and other
personnel devote a substantial amount of
time to ensure that we comply with all of
these requirements. Moreover, despite
recent reforms made possible by the JOBS
Act (certain provisions of which we are
taking advantage of), the reporting
requirements, rules, and regulations will
make some activities more time-consuming
and costly, particularly after we are no
longer an “emerging growth company.” Any
changes that we make to comply with these
obligations may not be sufficient to allow
us to satisfy our obligations as a public
company on a timely basis, or at all.
public company in the United States require
significant expenditures and may place
significant demands on our management and
other personnel, including costs resulting
from public company reporting obligations
under the Securities Exchange Act of 1934,
as amended, or the Exchange Act, and the
rules and regulations regarding corporate
governance practices, including those under
the Sarbanes-Oxley Act, the Dodd-Frank Wall
Street Reform and Consumer Protection Act,
and the listing requirements of The NASDAQ
Capital Market. Our management and other
personnel devote a substantial amount of
time to ensure that we comply with all of
these requirements. Moreover, despite
recent reforms made possible by the JOBS
Act (certain provisions of which we are
taking advantage of), the reporting
requirements, rules, and regulations will
make some activities more time-consuming
and costly, particularly after we are no
longer an “emerging growth company.” Any
changes that we make to comply with these
obligations may not be sufficient to allow
us to satisfy our obligations as a public
company on a timely basis, or at all.
We do not intend to pay cash dividends on
our shares of common stock so any returns
will be limited to the value of our
shares.
our shares of common stock so any returns
will be limited to the value of our
shares.
We currently anticipate that we will
retain future earnings for the
development, operation and expansion of
our business and do not anticipate
declaring or paying any cash dividends
for the foreseeable future. Any return to
stockholders will therefore be limited to
the increase, if any, of our share price.
retain future earnings for the
development, operation and expansion of
our business and do not anticipate
declaring or paying any cash dividends
for the foreseeable future. Any return to
stockholders will therefore be limited to
the increase, if any, of our share price.
We are an “emerging growth company” and
will be able to avail ourselves of
reduced disclosure requirements
applicable to emerging growth companies,
which could make our common stock less
attractive to investors.
will be able to avail ourselves of
reduced disclosure requirements
applicable to emerging growth companies,
which could make our common stock less
attractive to investors.
We are an “emerging growth company,” as
defined in the Jumpstart Our Business
Startups Act of 2012, or the JOBS Act,
and we intend to take advantage of
certain exemptions from various reporting
requirements that are applicable to other
public companies that are not “emerging
growth companies” including not being
required to comply with the auditor
attestation requirements of Section
404(b) of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding
executive compensation in our periodic
reports and proxy statements, and
exemptions from the requirements of
holding a nonbinding advisory vote on
executive compensation and stockholder
approval of any golden parachute payments
not previously approved. Investors may
find our common stock less attractive
because we may rely on these exemptions.
If some investors find our common stock
less attractive as a result, there may be
a less active trading market for our
common stock and our stock price may be
more volatile. We may take advantage of
these reporting exemptions until we are
no longer an “emerging growth company.”
We will remain an “emerging growth
company” until the earliest of (i) the
last day of the fiscal year in which we
have total annual gross revenues of $1
billion or more; (ii) the date on which
we have issued more than $1 billion in
nonconvertible debt during the previous
three years; or (iii) the date on which
we are deemed to be a large accelerated
filer under the rules of the Securities
and Exchange Commission.
defined in the Jumpstart Our Business
Startups Act of 2012, or the JOBS Act,
and we intend to take advantage of
certain exemptions from various reporting
requirements that are applicable to other
public companies that are not “emerging
growth companies” including not being
required to comply with the auditor
attestation requirements of Section
404(b) of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding
executive compensation in our periodic
reports and proxy statements, and
exemptions from the requirements of
holding a nonbinding advisory vote on
executive compensation and stockholder
approval of any golden parachute payments
not previously approved. Investors may
find our common stock less attractive
because we may rely on these exemptions.
If some investors find our common stock
less attractive as a result, there may be
a less active trading market for our
common stock and our stock price may be
more volatile. We may take advantage of
these reporting exemptions until we are
no longer an “emerging growth company.”
We will remain an “emerging growth
company” until the earliest of (i) the
last day of the fiscal year in which we
have total annual gross revenues of $1
billion or more; (ii) the date on which
we have issued more than $1 billion in
nonconvertible debt during the previous
three years; or (iii) the date on which
we are deemed to be a large accelerated
filer under the rules of the Securities
and Exchange Commission.
We have elected to use the extended
transition periods for complying with new
or revised accounting standards.
transition periods for complying with new
or revised accounting standards.
We have elected to use the extended
transition period provided in Section
7(a)(2)(B) of the Securities Act for
complying with new or revised accounting
standards that have different effective
dates for public and private companies
until the earlier of the date we (i) are
no longer an emerging growth company or
(ii) affirmatively and irrevocably opt
out of the extended transaction period
provided in Section 7(a)(2)(B). As a
result, our financial statements may not
be comparable to those of companies that
comply with public company effective
dates.
transition period provided in Section
7(a)(2)(B) of the Securities Act for
complying with new or revised accounting
standards that have different effective
dates for public and private companies
until the earlier of the date we (i) are
no longer an emerging growth company or
(ii) affirmatively and irrevocably opt
out of the extended transaction period
provided in Section 7(a)(2)(B). As a
result, our financial statements may not
be comparable to those of companies that
comply with public company effective
dates.
We may be at risk of securities class
action litigation.
action litigation.
We may be at risk of securities class
action litigation. In the past, life
science companies have experienced
significant stock price volatility,
particularly when associated with binary
events such as clinical trials and
product approvals. If we face such
litigation, it could result in
substantial costs and a diversion of
management’s attention and resources,
which could harm our business and results
in a decline in the market price of our
common stock.
action litigation. In the past, life
science companies have experienced
significant stock price volatility,
particularly when associated with binary
events such as clinical trials and
product approvals. If we face such
litigation, it could result in
substantial costs and a diversion of
management’s attention and resources,
which could harm our business and results
in a decline in the market price of our
common stock.
Our management is required to devote
substantial time to compliance initiatives.
substantial time to compliance initiatives.
As a public company, we incur significant
legal, accounting and other expenses that
we did not incur as a newly formed entity.
The Sarbanes-Oxley Act, as well as rules
subsequently implemented by the Securities
and Exchange Commission, and NASDAQ, have
imposed various new requirements on public
companies, including requiring
establishment and maintenance of effective
disclosure and financial controls and
changes in corporate governance practices.
Our management and other personnel devote a
substantial amount of time to these new
compliance initiatives. Moreover, these
rules and regulations increase our legal
and financial compliance costs and make
some activities more time consuming and
costly. We expect these rules and
regulations to make it more difficult and
more expensive for us to obtain director
and officer liability insurance and we may
be required to incur substantial costs to
maintain the same or similar coverage.
legal, accounting and other expenses that
we did not incur as a newly formed entity.
The Sarbanes-Oxley Act, as well as rules
subsequently implemented by the Securities
and Exchange Commission, and NASDAQ, have
imposed various new requirements on public
companies, including requiring
establishment and maintenance of effective
disclosure and financial controls and
changes in corporate governance practices.
Our management and other personnel devote a
substantial amount of time to these new
compliance initiatives. Moreover, these
rules and regulations increase our legal
and financial compliance costs and make
some activities more time consuming and
costly. We expect these rules and
regulations to make it more difficult and
more expensive for us to obtain director
and officer liability insurance and we may
be required to incur substantial costs to
maintain the same or similar coverage.
Item 2. FINANCIAL INFORMATION
Management’s Discussion and Analysis of
Financial Condition and Results of
Operations
Financial Condition and Results of
Operations
The following discussion of our financial
condition and results of operations
should be read together with our
financial statements and related notes
that are included elsewhere in this
current report. This discussion may
contain forward-looking statements based
upon current expectations that involve
risks and uncertainties. Our actual
results may differ materially from those
anticipated in these forward-looking
statements as a result of various
factors, including those set forth under
the caption “Risk Factors” or in other
parts of this current report. See
“Cautionary Note Regarding
Forward-Looking Statements.”
condition and results of operations
should be read together with our
financial statements and related notes
that are included elsewhere in this
current report. This discussion may
contain forward-looking statements based
upon current expectations that involve
risks and uncertainties. Our actual
results may differ materially from those
anticipated in these forward-looking
statements as a result of various
factors, including those set forth under
the caption “Risk Factors” or in other
parts of this current report. See
“Cautionary Note Regarding
Forward-Looking Statements.”
Critical Accounting Policies
Management Estimates
The preparation of financial statements
in conformity with accounting principles
generally accepted in the United States
of America requires management to make
estimates and assumptions that affect the
reported amounts of assets and
liabilities and disclosures of contingent
assets and liabilities at the date of the
financial statements and the reported
amounts of revenue and expenses during
the reporting period. Actual results
could differ from those estimates.
in conformity with accounting principles
generally accepted in the United States
of America requires management to make
estimates and assumptions that affect the
reported amounts of assets and
liabilities and disclosures of contingent
assets and liabilities at the date of the
financial statements and the reported
amounts of revenue and expenses during
the reporting period. Actual results
could differ from those estimates.
Cash and Cash Equivalents
We consider all cash on hand and in
banks, and highly liquid investments with
maturities of three months or less, to be
cash equivalents. At April 30, 2016 and
2015, we had minimal bank balances. We
have not experienced any losses in such
accounts, and believe we are not exposed
to any significant credit risk on cash
and cash equivalents.
banks, and highly liquid investments with
maturities of three months or less, to be
cash equivalents. At April 30, 2016 and
2015, we had minimal bank balances. We
have not experienced any losses in such
accounts, and believe we are not exposed
to any significant credit risk on cash
and cash equivalents.
Current financial market conditions have
had the effect of restricting liquidity
of cash management investments and have
increased the risk of even the most
liquid investments and the viability of
some financial institutions. We do not
believe, however, that these conditions
will materially affect our business or
our ability to meet our obligations or
pursue our business plans.
had the effect of restricting liquidity
of cash management investments and have
increased the risk of even the most
liquid investments and the viability of
some financial institutions. We do not
believe, however, that these conditions
will materially affect our business or
our ability to meet our obligations or
pursue our business plans.
Accounts Receivable
Trade accounts receivable are carried at
original invoice amount less an estimate
made for doubtful receivables based on a
review of all outstanding amounts on a
monthly basis. Management determines the
allowance for doubtful accounts by
identifying troubled accounts and by
using historical experience applied to an
aging of accounts. Trade receivables are
written off when deemed uncollectible.
Recoveries of trade receivables
previously written off are recorded when
received.
original invoice amount less an estimate
made for doubtful receivables based on a
review of all outstanding amounts on a
monthly basis. Management determines the
allowance for doubtful accounts by
identifying troubled accounts and by
using historical experience applied to an
aging of accounts. Trade receivables are
written off when deemed uncollectible.
Recoveries of trade receivables
previously written off are recorded when
received.
A trade receivable is considered to be
past due if any portion of the receivable
balance is outstanding for more than 90
days. After the receivable becomes past
due, it is on non-accrual status and
accrual of interest is suspended.
past due if any portion of the receivable
balance is outstanding for more than 90
days. After the receivable becomes past
due, it is on non-accrual status and
accrual of interest is suspended.
Property and Equipment
Property and equipment are stated at
cost. Depreciation is provided using the
straight-line method over the estimated
useful lives of the property, generally
from three to five years. Repairs and
maintenance costs are expensed as
incurred except when such repairs
significantly add to the useful life or
productive capacity of the asset, in
which case the repairs are capitalized.
cost. Depreciation is provided using the
straight-line method over the estimated
useful lives of the property, generally
from three to five years. Repairs and
maintenance costs are expensed as
incurred except when such repairs
significantly add to the useful life or
productive capacity of the asset, in
which case the repairs are capitalized.
Patents and Intangibles
We have no patents and trademarks,
although we have licensed rights to our
Parent’s intellectual property as
described herein.
although we have licensed rights to our
Parent’s intellectual property as
described herein.
Long-Lived Assets
We review our long-lived assets,
including patents, whenever events or
changes in circumstances indicate that
the carrying amount of an asset may not
be recoverable. Recoverability of assets
held and used is measured by a comparison
of the carrying amount of an asset to
future un-discounted net cash flows
expected to be generated by the asset. If
such assets are considered to be
impaired, then the impairment to be
recognized is measured by the amount by
which the carrying amount of the assets
exceeds the estimated fair value of the
assets. Fair value is determined by using
cash flow analyses and other market
valuations.
including patents, whenever events or
changes in circumstances indicate that
the carrying amount of an asset may not
be recoverable. Recoverability of assets
held and used is measured by a comparison
of the carrying amount of an asset to
future un-discounted net cash flows
expected to be generated by the asset. If
such assets are considered to be
impaired, then the impairment to be
recognized is measured by the amount by
which the carrying amount of the assets
exceeds the estimated fair value of the
assets. Fair value is determined by using
cash flow analyses and other market
valuations.
Stock-based Compensation
Stock-based compensation cost is
estimated at the grant date, based on the
estimated fair value of the awards, and
recognized as expense ratably over the
requisite service period of the award for
awards expected to vest.
estimated at the grant date, based on the
estimated fair value of the awards, and
recognized as expense ratably over the
requisite service period of the award for
awards expected to vest.
Income Taxes
We account for income taxes in accordance
with the asset and liability method of
accounting for income taxes. Under the
asset and liability method, deferred tax
assets and liabilities are recognized for
the future tax consequences attributable
to differences between the financial
statement carrying amounts of existing
assets and liabilities and their
respective tax bases. Deferred tax assets
and liabilities are measured using
enacted tax rates expected to apply to
the taxable income in the years in which
those temporary differences are expected
to be recovered or settled.
with the asset and liability method of
accounting for income taxes. Under the
asset and liability method, deferred tax
assets and liabilities are recognized for
the future tax consequences attributable
to differences between the financial
statement carrying amounts of existing
assets and liabilities and their
respective tax bases. Deferred tax assets
and liabilities are measured using
enacted tax rates expected to apply to
the taxable income in the years in which
those temporary differences are expected
to be recovered or settled.
Revenue Recognition
We recognize revenue when evidence
exists that there is an arrangement
between us and our customers, delivery
of products sold or service has
occurred, the selling price to our
customers is fixed and determinable
with required documentation, and
collectability is reasonably assured.
We recognize as deferred revenue,
payments made in advance by customers
for products not yet provided.
exists that there is an arrangement
between us and our customers, delivery
of products sold or service has
occurred, the selling price to our
customers is fixed and determinable
with required documentation, and
collectability is reasonably assured.
We recognize as deferred revenue,
payments made in advance by customers
for products not yet provided.
In instances where we have entered into
license agreements with a third parties
to use our technology within their
product offering, we recognize any base
or prepaid revenues over the term of
the agreement and any per occurrence or
periodic usage revenues in the period
they are earned.
license agreements with a third parties
to use our technology within their
product offering, we recognize any base
or prepaid revenues over the term of
the agreement and any per occurrence or
periodic usage revenues in the period
they are earned.
Research and Development
Research and development costs are
expensed when incurred. We have
incurred no research and development
costs.
expensed when incurred. We have
incurred no research and development
costs.
Concentration of Credit Risk
Financial instruments, which
potentially subject us to concentration
of credit risk, consist primarily of
trade accounts receivable. In the
normal course of business, we provide
credit terms to our customers.
Accordingly we will, when we have
receivables, perform ongoing credit
evaluations of our customers and
maintain allowances for possible
losses.
potentially subject us to concentration
of credit risk, consist primarily of
trade accounts receivable. In the
normal course of business, we provide
credit terms to our customers.
Accordingly we will, when we have
receivables, perform ongoing credit
evaluations of our customers and
maintain allowances for possible
losses.
Weighted Average Shares
Basic earnings per common share is
computed by dividing net income or loss
applicable to common shareholders by
the weighted average number of shares
outstanding during each period. The
computation of diluted earnings per
common share is based on the weighted
average number of shares outstanding
during the year, plus the dilutive
common stock equivalents that would
rise from the exercise of stock
options, warrants and restricted stock
units outstanding during the period,
using the treasury stock method and the
average market price per share during
the period, plus the effect of assuming
conversion of the convertible debt. The
computation of diluted earnings per
share does not assume conversion or
exercise of securities that would have
an anti-dilutive effect on earnings.
computed by dividing net income or loss
applicable to common shareholders by
the weighted average number of shares
outstanding during each period. The
computation of diluted earnings per
common share is based on the weighted
average number of shares outstanding
during the year, plus the dilutive
common stock equivalents that would
rise from the exercise of stock
options, warrants and restricted stock
units outstanding during the period,
using the treasury stock method and the
average market price per share during
the period, plus the effect of assuming
conversion of the convertible debt. The
computation of diluted earnings per
share does not assume conversion or
exercise of securities that would have
an anti-dilutive effect on earnings.
Advertising Expenses
We follow the policy of charging the
costs of advertising to expense as
incurred. No advertising expenses were
incurred for the years ended April 30,
2016 and 2015.
costs of advertising to expense as
incurred. No advertising expenses were
incurred for the years ended April 30,
2016 and 2015.
Off-Balance Sheet Arrangements
We have no off-balance sheet
arrangements.
arrangements.
Executive Overview
On October 13, 2016, we entered into
the License Agreement with our Parent,
Co-Diagnostics, and commenced
operations designed to commercialize
the Licensed Tests beginning with the
PCR test for the Zika virus. The
Licensed Technology is encompassed in
three issued patents and two pending
patent applications described in the
License Agreement. Those patents and
applications are entitled “Rapid Oligo
Probes”, “Detection Primers for
Nucleic Acid Extension or Amplification
Reactions”, “Nucleic Acid Hotstart
Technology”, “Primers for Nucleic
Acid Extension or Amplification
Reactions” and “Cooperative Primers,
Probes and Applications thereof.” The
Licensed Tests are “open
architecture” tests that can be
performed on most of the thermocycler
molecular diagnostic testing machines
available in the marketplace. The costs
of goods and delivery to the public
will be much less than tests currently
available since the Licensed Technology
is not based on any other patented
technology requiring licensing
royalties to be able to design and
employ tests.
the License Agreement with our Parent,
Co-Diagnostics, and commenced
operations designed to commercialize
the Licensed Tests beginning with the
PCR test for the Zika virus. The
Licensed Technology is encompassed in
three issued patents and two pending
patent applications described in the
License Agreement. Those patents and
applications are entitled “Rapid Oligo
Probes”, “Detection Primers for
Nucleic Acid Extension or Amplification
Reactions”, “Nucleic Acid Hotstart
Technology”, “Primers for Nucleic
Acid Extension or Amplification
Reactions” and “Cooperative Primers,
Probes and Applications thereof.” The
Licensed Tests are “open
architecture” tests that can be
performed on most of the thermocycler
molecular diagnostic testing machines
available in the marketplace. The costs
of goods and delivery to the public
will be much less than tests currently
available since the Licensed Technology
is not based on any other patented
technology requiring licensing
royalties to be able to design and
employ tests.
In February 2016, in response to the
publicity surrounding the Zika virus
both in the United States and South and
Central America, our Parent commenced
development of a PCR based Zika test.
The development of the Zika test was
completed within a one-month period and
was tested in our Parent’s lab on
synthetic Zika virus where it showed
the desired accuracy and specificity
required to proceed with further
validation studies preliminary to
offering the Zika test for commercial
sale and distribution. In April 2016
our Parent completed a study at Utah
State University wherein our Zika test
was used in experimentation with live
Zika virus. The blind study of twelve
different samples resulted in 100%
detection of the live Zika virus
samples and almost as importantly
amplification did not occur with
samples containing dengue and yellow
fever indicating that our test could
differentiate between other
flaviviruses, which will be an
important selling point in diagnosis of
diseases with similar symptoms and
application of correct treatments.
publicity surrounding the Zika virus
both in the United States and South and
Central America, our Parent commenced
development of a PCR based Zika test.
The development of the Zika test was
completed within a one-month period and
was tested in our Parent’s lab on
synthetic Zika virus where it showed
the desired accuracy and specificity
required to proceed with further
validation studies preliminary to
offering the Zika test for commercial
sale and distribution. In April 2016
our Parent completed a study at Utah
State University wherein our Zika test
was used in experimentation with live
Zika virus. The blind study of twelve
different samples resulted in 100%
detection of the live Zika virus
samples and almost as importantly
amplification did not occur with
samples containing dengue and yellow
fever indicating that our test could
differentiate between other
flaviviruses, which will be an
important selling point in diagnosis of
diseases with similar symptoms and
application of correct treatments.
The License Agreement grants to us the
exclusive rights to make, use, sell,
license and otherwise commercialize the
PCR tests for Zika virus, dengue,
yellow fever, West Nile virus, Japanese
encephalitis, and chikungunya. It also
grants to us a non-exclusive right to
sell our Parent’s test for malaria.
The License Agreement requires that we
pay an initial license fee of $500,000
upon execution of the license, which
has been paid, and that we pay a
royalty of 10% of the gross margin of
the sales of the Licensed Tests. The
License Agreement obligates our Parent
to use up to $200,000 of the initial
license fee for its lab and personnel
to continue development of the Licensed
Tests and covenants that we will have
developed and lab verified tests for
each of the pathogens covered by the
License Agreement ready for in-field
verification preliminary to sales and
distribution of the Licensed Tests
within 180 days of the payment of the
initial license fee.
exclusive rights to make, use, sell,
license and otherwise commercialize the
PCR tests for Zika virus, dengue,
yellow fever, West Nile virus, Japanese
encephalitis, and chikungunya. It also
grants to us a non-exclusive right to
sell our Parent’s test for malaria.
The License Agreement requires that we
pay an initial license fee of $500,000
upon execution of the license, which
has been paid, and that we pay a
royalty of 10% of the gross margin of
the sales of the Licensed Tests. The
License Agreement obligates our Parent
to use up to $200,000 of the initial
license fee for its lab and personnel
to continue development of the Licensed
Tests and covenants that we will have
developed and lab verified tests for
each of the pathogens covered by the
License Agreement ready for in-field
verification preliminary to sales and
distribution of the Licensed Tests
within 180 days of the payment of the
initial license fee.
Our Parent’s lab is ISO certified
(ISO 13485 and 9001), which will
facilitate the Parent in obtaining
CE-IVD marking as an initial
qualification for sales and
distribution of the Licensed Tests
throughout most of the world, with
the exception of the United States.
Our Parent is in the process of
assembling the files and
documentation necessary for obtaining
the CE marking for Zika, dengue and
malaria according to the
self-certifying process available by
the European Commission. Upon receipt
of the CE marking, we will be able to
commence sales of our Licensed Tests
in countries accepting the CE marking
(not in the United States) without
further cumbersome governmental
approvals. We have engaged the
services of a sales representative
who has commenced activities directed
to presentation to government
officials in Latin American
countries.
(ISO 13485 and 9001), which will
facilitate the Parent in obtaining
CE-IVD marking as an initial
qualification for sales and
distribution of the Licensed Tests
throughout most of the world, with
the exception of the United States.
Our Parent is in the process of
assembling the files and
documentation necessary for obtaining
the CE marking for Zika, dengue and
malaria according to the
self-certifying process available by
the European Commission. Upon receipt
of the CE marking, we will be able to
commence sales of our Licensed Tests
in countries accepting the CE marking
(not in the United States) without
further cumbersome governmental
approvals. We have engaged the
services of a sales representative
who has commenced activities directed
to presentation to government
officials in Latin American
countries.
Finally, the License Agreement
provides that we will purchase the
Licensed Tests from our Parent and
that the purchase price of the
Licensed Tests can be no more than
20% greater than the manufacturing
costs of the Licensed Tests.
provides that we will purchase the
Licensed Tests from our Parent and
that the purchase price of the
Licensed Tests can be no more than
20% greater than the manufacturing
costs of the Licensed Tests.
Effective October 11, 2016, we
entered into a subscription agreement
with an accredited investor for the
sale of 5,888,888 shares of our
common stock at a purchase price of
$.18 per share or $1,060,000. The
proceeds from the sale of our stock
have allowed us to commence our
business plan by paying the initial
license fee and providing funds to
commence marketing efforts.
entered into a subscription agreement
with an accredited investor for the
sale of 5,888,888 shares of our
common stock at a purchase price of
$.18 per share or $1,060,000. The
proceeds from the sale of our stock
have allowed us to commence our
business plan by paying the initial
license fee and providing funds to
commence marketing efforts.
Results of Operations for the Years
Ended April 30, 2016 and April 30,
2015
Ended April 30, 2016 and April 30,
2015
Net Sales
We had no sales of products in 2015
or 2016.
or 2016.
Cost of Sales
We had no sales of products in 2015
or 2016.
or 2016.
Operating Expenses
For the fiscal year ended April 30,
2016, total operating expenses were
$43,906, which included professional
fees in the amount of $20,857,
general and administrative expenses
of $20,049 and rent in the amount of
$3,000. For the fiscal year ended
April 30, 2015, total operating
expenses were $33,269, which included
rent in the amount of $3,000,
professional fees in the amount of
$23,886 and general and
administrative expenses of $6,383.
2016, total operating expenses were
$43,906, which included professional
fees in the amount of $20,857,
general and administrative expenses
of $20,049 and rent in the amount of
$3,000. For the fiscal year ended
April 30, 2015, total operating
expenses were $33,269, which included
rent in the amount of $3,000,
professional fees in the amount of
$23,886 and general and
administrative expenses of $6,383.
Interest Expense
We recorded no interest expense.
Net Loss
We had net loss of $50,735 for the
year ended April 30, 2016 compared to
a net loss of $37,906 for the year
ended April 30, 2015.
year ended April 30, 2016 compared to
a net loss of $37,906 for the year
ended April 30, 2015.
Liquidity and Capital Resources
As of April 30, 2016, we had a cash
balance of $1,191. Following the
funding of $1,066,000 received in
October 2016 to the subscription
agreement referenced above, we were
able to pay the required license fee
and to commence operations for the
sale and marketing of our Licensed
Tests. Based on our currently stated
budgets the cash available for
operations should be able to sustain
us for six months to a year depending
our level of activity. It is our
intention to seek additional
investment capital during the next
twelve months and to commence sales
of our Licensed Tests to defray our
costs and expenses of sales and
marketing and continuing operations,
but there can be no assurance that
additional capital will be available
to us or available on terms favorable
to us. There can be no assurance that
we will be able to commence sales and
distribution of our Licensed Tests or
that the Licensed Tests will be
accepted in the medical and testing
community. If adequate funds are not
available on acceptable terms, we may
be unable to fund and develop our
business as currently
planned.
balance of $1,191. Following the
funding of $1,066,000 received in
October 2016 to the subscription
agreement referenced above, we were
able to pay the required license fee
and to commence operations for the
sale and marketing of our Licensed
Tests. Based on our currently stated
budgets the cash available for
operations should be able to sustain
us for six months to a year depending
our level of activity. It is our
intention to seek additional
investment capital during the next
twelve months and to commence sales
of our Licensed Tests to defray our
costs and expenses of sales and
marketing and continuing operations,
but there can be no assurance that
additional capital will be available
to us or available on terms favorable
to us. There can be no assurance that
we will be able to commence sales and
distribution of our Licensed Tests or
that the Licensed Tests will be
accepted in the medical and testing
community. If adequate funds are not
available on acceptable terms, we may
be unable to fund and develop our
business as currently
planned.
Item 3. PROPERTIES
Principal Executive Office
We maintain offices currently at 8160
S. Highland Drive, Salt Lake City,
Utah 84093, which includes two
offices comprising approximately
1,000 square feet leased on a
month-to-month basis for $750 per
month. We are seeking a different
location, which may include
relocating with or adjacent to our
Parent’s corporate offices which are
located in Salt Lake City, Utah.
S. Highland Drive, Salt Lake City,
Utah 84093, which includes two
offices comprising approximately
1,000 square feet leased on a
month-to-month basis for $750 per
month. We are seeking a different
location, which may include
relocating with or adjacent to our
Parent’s corporate offices which are
located in Salt Lake City, Utah.
Item 4. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth
certain information, as of October
19, 2016, with respect to the
beneficial ownership of our
outstanding common stock by (i) any
holder of more than five (5%)
percent; (ii) each of the
Company’s executive officers and
directors; and (iii) the Company’s
directors and executive officers as
a group. Except as otherwise
indicated, each of the stockholders
listed below has sole voting and
investment power over the shares
beneficially owned.
certain information, as of October
19, 2016, with respect to the
beneficial ownership of our
outstanding common stock by (i) any
holder of more than five (5%)
percent; (ii) each of the
Company’s executive officers and
directors; and (iii) the Company’s
directors and executive officers as
a group. Except as otherwise
indicated, each of the stockholders
listed below has sole voting and
investment power over the shares
beneficially owned.
|
Name of Beneficial Owner
|
Common Stock Beneficially
Owned |
Percentage of Common Stock
(1) |
|
Co-Diagnostics, Inc.
|
19,800,000
|
65%
|
|
Robert Salna
|
5,888,888
|
19%
|
|
All officers and directors as
a group |
5,888,888
|
19%
|
(1) Applicable percentage ownership
is based on shares of common stock
outstanding as of October 19, 2016.
Beneficial ownership is determined
in accordance with the rules of the
Securities and Exchange Commission
and generally includes voting or
investment power with respect to
securities. Applicable percentage
ownership is based on 30,666,388
shares of common stock issued and
outstanding as of October 19, 2016,
together with securities
exercisable or convertible into
shares of common stock within 60
days of October 19, 2016 for each
stockholder. Beneficial ownership
is determined in accordance with
the rules of the Securities and
Exchange Commission and generally
includes voting or investment power
with respect to securities. Shares
of common stock that are currently
exercisable or exercisable within
60 days of October 19, 2016 are
deemed to be beneficially owned by
the person holding such securities
for the purpose of computing the
percentage of ownership of such
person, but are not treated as
outstanding for the purpose of
computing the percentage ownership
of any other person.
is based on shares of common stock
outstanding as of October 19, 2016.
Beneficial ownership is determined
in accordance with the rules of the
Securities and Exchange Commission
and generally includes voting or
investment power with respect to
securities. Applicable percentage
ownership is based on 30,666,388
shares of common stock issued and
outstanding as of October 19, 2016,
together with securities
exercisable or convertible into
shares of common stock within 60
days of October 19, 2016 for each
stockholder. Beneficial ownership
is determined in accordance with
the rules of the Securities and
Exchange Commission and generally
includes voting or investment power
with respect to securities. Shares
of common stock that are currently
exercisable or exercisable within
60 days of October 19, 2016 are
deemed to be beneficially owned by
the person holding such securities
for the purpose of computing the
percentage of ownership of such
person, but are not treated as
outstanding for the purpose of
computing the percentage ownership
of any other person.
Item 5. DIRECTORS AND EXECUTIVE
OFFICERS
OFFICERS
Identification of Executive
Officers and Directors
Officers and Directors
Our Articles of Incorporation state
that our Board of Directors shall
consist of a number of directors
designated by our By-Laws, but
never be less than one director.
Our By-Laws allow us to have from 1
to nine directors, and at the
current time we have four
directors.
that our Board of Directors shall
consist of a number of directors
designated by our By-Laws, but
never be less than one director.
Our By-Laws allow us to have from 1
to nine directors, and at the
current time we have four
directors.
The name of the officers and
directors of the Company as of
October 18, 2016, as well as
certain information about them, are
set forth below:
directors of the Company as of
October 18, 2016, as well as
certain information about them, are
set forth below:
|
Name
|
Age
|
Position
|
||
|
Dwight H. Egan
|
|
Director, CEO President
|
||
|
Reed L. Benson
|
|
Director CFO
|
||
|
Robert Salna
|
|
Director
|
||
| Ted Murphy | 52 | Director |
Background of Executive Officers
and Directors
and Directors
On October 14, 2016, Dwight H. Egan
was appointed as a member of the
Company’s Board of Directors and
as President and CEO. Mr. Egan does
not have any understandings or
relationships with third parties to
which he was appointed to the
Board. Mr. Egan became acquainted
with us through his position with
Co-Diagnostics, Inc. and in that
capacity had a prior relationship
with us incident to the license of
certain technology by us.
was appointed as a member of the
Company’s Board of Directors and
as President and CEO. Mr. Egan does
not have any understandings or
relationships with third parties to
which he was appointed to the
Board. Mr. Egan became acquainted
with us through his position with
Co-Diagnostics, Inc. and in that
capacity had a prior relationship
with us incident to the license of
certain technology by us.
Dwight H. Egan has been President
and CEO and director of
Co-Diagnostics, Inc. since April
2013. Co-Diagnostics, Inc. is a
privately-held molecular
diagnostics company headquartered
in Salt Lake City, Utah. Mr. Egan
has been engaged in private
investment business from February
1999 to the present. He was a
senior executive at Data
Broadcasting Corporation, a leading
provider of wireless, real-time
financial market data, news and
sophisticated fixed-income
portfolio analytics to 27,000
individual and professional
investors from 1995 to 1999. He
co-founded and served as CEO and
Chairman of the Board of Broadcast
International, Inc. from 1984 to
1995, when Data Broadcasting
Corporation acquired Broadcast
International and created CBS
MarketWatch, a leading financial
news site and participated in its
initial public offering. Mr.
Egan’s prior experience in
directing a public company and
working with capital markets gives
him valuable experience in advising
the board on matters of finance and
operations.
and CEO and director of
Co-Diagnostics, Inc. since April
2013. Co-Diagnostics, Inc. is a
privately-held molecular
diagnostics company headquartered
in Salt Lake City, Utah. Mr. Egan
has been engaged in private
investment business from February
1999 to the present. He was a
senior executive at Data
Broadcasting Corporation, a leading
provider of wireless, real-time
financial market data, news and
sophisticated fixed-income
portfolio analytics to 27,000
individual and professional
investors from 1995 to 1999. He
co-founded and served as CEO and
Chairman of the Board of Broadcast
International, Inc. from 1984 to
1995, when Data Broadcasting
Corporation acquired Broadcast
International and created CBS
MarketWatch, a leading financial
news site and participated in its
initial public offering. Mr.
Egan’s prior experience in
directing a public company and
working with capital markets gives
him valuable experience in advising
the board on matters of finance and
operations.
On October 14, 2016, Reed L Benson
was appointed as a member of the
Company’s Board of Directors. Mr.
Benson does not have any
understandings or relationships
with third parties to which he was
appointed to the Board. Mr. Benson
became acquainted with us through
his position with Co-Diagnostics,
Inc. and in that capacity had a
prior relationship with us incident
to the license of certain
technology by us.
was appointed as a member of the
Company’s Board of Directors. Mr.
Benson does not have any
understandings or relationships
with third parties to which he was
appointed to the Board. Mr. Benson
became acquainted with us through
his position with Co-Diagnostics,
Inc. and in that capacity had a
prior relationship with us incident
to the license of certain
technology by us.
Reed L Benson has been Chief
Financial Officer, Secretary and
director of Co-Diagnostics, Inc.
from November 2014 to the
present. Since September, 2008 to
the present, in addition to the
private practice of law, he is a
founder and partner of Legends
Capital Group, LLC, a
privately-held venture capital
group that identifies investment
opportunities in natural
resources, bio tech and
technology fields. From October
3, 2015 to August 31, 2106 he
served on the Board of Directors
of Inception Mining, Inc., a
publically traded mining Company.
From October 2004 to September
2008, he was employed as Chief
Financial Officer, Secretary, and
General Counsel and member of
Board of Directors of Broadcast
International, Inc., a
publicly-traded communications
services company. From 2001 to
October 2004, he was in the
private practice of law, focused
on tax and business related
matters. From July 1995 to
January 2001, he was secretary
and general counsel for Data
Broadcasting Corporation, a
provider of market information to
individual investors. Mr. Benson
received J.D. degree from the
University of Utah School of Law
in 1976 and a Bachelor of Science
Degree in Accounting from the
University of Utah in 1971. Mr.
Benson became a Certified Public
Accountant in 1974. Mr. Benson’s
experience in finance, accounting
and business consulting and prior
public company directorship,
provide Mr. Benson with expertise
enabling critical input to our
Board decision-making process.
Financial Officer, Secretary and
director of Co-Diagnostics, Inc.
from November 2014 to the
present. Since September, 2008 to
the present, in addition to the
private practice of law, he is a
founder and partner of Legends
Capital Group, LLC, a
privately-held venture capital
group that identifies investment
opportunities in natural
resources, bio tech and
technology fields. From October
3, 2015 to August 31, 2106 he
served on the Board of Directors
of Inception Mining, Inc., a
publically traded mining Company.
From October 2004 to September
2008, he was employed as Chief
Financial Officer, Secretary, and
General Counsel and member of
Board of Directors of Broadcast
International, Inc., a
publicly-traded communications
services company. From 2001 to
October 2004, he was in the
private practice of law, focused
on tax and business related
matters. From July 1995 to
January 2001, he was secretary
and general counsel for Data
Broadcasting Corporation, a
provider of market information to
individual investors. Mr. Benson
received J.D. degree from the
University of Utah School of Law
in 1976 and a Bachelor of Science
Degree in Accounting from the
University of Utah in 1971. Mr.
Benson became a Certified Public
Accountant in 1974. Mr. Benson’s
experience in finance, accounting
and business consulting and prior
public company directorship,
provide Mr. Benson with expertise
enabling critical input to our
Board decision-making process.
On October 14, 2016, Mr. Robert
Salna was appointed as a member
of the Company’s Board of
Directors. Mr. Salna does not
have any understandings or
relationships with third
parties to which he was
appointed to the Board. Mr.
Salna became acquainted with us
as we sought additional capital
investment to fund our business
plan and he is now one of our
major shareholders.
Salna was appointed as a member
of the Company’s Board of
Directors. Mr. Salna does not
have any understandings or
relationships with third
parties to which he was
appointed to the Board. Mr.
Salna became acquainted with us
as we sought additional capital
investment to fund our business
plan and he is now one of our
major shareholders.
Robert P. Salna has been
President CEO of a privately
held oil production company
since 1999 and has been an
officer and director of four
publicly traded companies since
1988. Mr. Salna received a
B.Sc. from the University of
Toronto in 1979 and became a
licensed Land Surveyor in 1981.
He has also been the owner of a
land survey business since
1988. Mr. Salna previously
served as a director of Mahdia
Gold Corp. until February 3,
2012, when he resigned.
President CEO of a privately
held oil production company
since 1999 and has been an
officer and director of four
publicly traded companies since
1988. Mr. Salna received a
B.Sc. from the University of
Toronto in 1979 and became a
licensed Land Surveyor in 1981.
He has also been the owner of a
land survey business since
1988. Mr. Salna previously
served as a director of Mahdia
Gold Corp. until February 3,
2012, when he resigned.
Ted Murphy has been an officer
and director of various private
and public corporations since
1986, primarily those involved in
real estate and natural resources
development. Mr. Murphy as CEO
was appointed to our Board of
Directors on August , 2016. Prior
to that Mr. Murphy was a key
member of a small goal-oriented
team that brought several small
public companies from bare shell
stage to advanced exploration
stage in such fast developing
areas as Voisey’s Bay, Labrador
and Kalimantan, Indonesia, and a
petroleum exploration company
from exploration drilling to
building an 18 mile pipeline to
put a natural gas field on
production in Colorado and
Wyoming. In 2011 Mr. Murphy was
actively involved in the
negotiation and purchase of
11,000 acres of patented mining
claims in the area around Nome,
Alaska.
and director of various private
and public corporations since
1986, primarily those involved in
real estate and natural resources
development. Mr. Murphy as CEO
was appointed to our Board of
Directors on August , 2016. Prior
to that Mr. Murphy was a key
member of a small goal-oriented
team that brought several small
public companies from bare shell
stage to advanced exploration
stage in such fast developing
areas as Voisey’s Bay, Labrador
and Kalimantan, Indonesia, and a
petroleum exploration company
from exploration drilling to
building an 18 mile pipeline to
put a natural gas field on
production in Colorado and
Wyoming. In 2011 Mr. Murphy was
actively involved in the
negotiation and purchase of
11,000 acres of patented mining
claims in the area around Nome,
Alaska.
Employment Agreements
We have no employment agreements
with any of our employees.
with any of our employees.
Family Relationships
There are no family relationships
among our officers, directors or
affiliates of the Company.
among our officers, directors or
affiliates of the Company.
Involvement in Certain Legal
Proceedings
Proceedings
There are no pending legal
proceedings to which the Company
is a party or in which any
director, officer or affiliate of
the Company, any owner of record
or beneficially of more than 5%
of any class of voting securities
of the Company, or security
holder is a party adverse to the
Company or has a material
interest adverse to the Company.
The Company’s property is not
the subject of any pending legal
proceedings.
proceedings to which the Company
is a party or in which any
director, officer or affiliate of
the Company, any owner of record
or beneficially of more than 5%
of any class of voting securities
of the Company, or security
holder is a party adverse to the
Company or has a material
interest adverse to the Company.
The Company’s property is not
the subject of any pending legal
proceedings.
To the best of our knowledge,
none of our directors or
executive officers has, during
the past ten years:
none of our directors or
executive officers has, during
the past ten years:
been convicted in a criminal
proceeding or been subject to a
pending criminal proceeding
(excluding traffic violations and
other minor offences);
proceeding or been subject to a
pending criminal proceeding
(excluding traffic violations and
other minor offences);
had any bankruptcy petition filed
by or against the business or
property of the person, or of any
partnership, corporation or
business association of which he
was a general partner or
executive officer, either at the
time of the bankruptcy filing or
within two years prior to that
time;
by or against the business or
property of the person, or of any
partnership, corporation or
business association of which he
was a general partner or
executive officer, either at the
time of the bankruptcy filing or
within two years prior to that
time;
been subject to any order,
judgment, or decree, not
subsequently reversed, suspended
or vacated, of any court of
competent jurisdiction or federal
or state authority, permanently
or temporarily enjoining,
barring, suspending or otherwise
limiting, his involvement in any
type of business, securities,
futures, commodities, investment,
banking, savings and loan, or
insurance activities, or to be
associated with persons engaged
in any such activity;
judgment, or decree, not
subsequently reversed, suspended
or vacated, of any court of
competent jurisdiction or federal
or state authority, permanently
or temporarily enjoining,
barring, suspending or otherwise
limiting, his involvement in any
type of business, securities,
futures, commodities, investment,
banking, savings and loan, or
insurance activities, or to be
associated with persons engaged
in any such activity;
been found by a court of
competent jurisdiction in a civil
action or by the SEC or the
Commodity Futures Trading
Commission to have violated a
federal or state securities or
commodities law, and the judgment
has not been reversed, suspended,
or vacated;
competent jurisdiction in a civil
action or by the SEC or the
Commodity Futures Trading
Commission to have violated a
federal or state securities or
commodities law, and the judgment
has not been reversed, suspended,
or vacated;
been 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 (not including any
settlement of a civil proceeding
among private litigants),
relating to an alleged violation
of any federal or state
securities or commodities law or
regulation, 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 any law or regulation
prohibiting mail or wire fraud or
fraud in connection with any
business entity;
to, any federal or state judicial
or administrative order,
judgment, decree, or finding, not
subsequently reversed, suspended
or vacated (not including any
settlement of a civil proceeding
among private litigants),
relating to an alleged violation
of any federal or state
securities or commodities law or
regulation, 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 any law or regulation
prohibiting mail or wire fraud or
fraud in connection with any
business entity;
or been 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 (15 U.S.C.
78c(a)(26))), any registered
entity (as defined in Section
1(a)(29) of the Commodity
Exchange Act (7 U.S.C.
1(a)(29))), or any equivalent
exchange, association, entity
or organization that has
disciplinary authority over its
members or persons associated
with a member.
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 (15 U.S.C.
78c(a)(26))), any registered
entity (as defined in Section
1(a)(29) of the Commodity
Exchange Act (7 U.S.C.
1(a)(29))), or any equivalent
exchange, association, entity
or organization that has
disciplinary authority over its
members or persons associated
with a member.
Compliance with Section 16(a)
of the Securities Exchange Act
of 1934
of the Securities Exchange Act
of 1934
Section 16(a) of the Exchange
Act requires our directors and
executive officers, and persons
who own more than 10% of our
common stock, to file with the
SEC initial reports of
ownership and reports of
changes in ownership of our
common stock and other equity
securities. Executive officers,
directors and greater than 10%
shareholders are required by
SEC regulations to furnish us
with copies of all Section
16(a) forms they file.
Act requires our directors and
executive officers, and persons
who own more than 10% of our
common stock, to file with the
SEC initial reports of
ownership and reports of
changes in ownership of our
common stock and other equity
securities. Executive officers,
directors and greater than 10%
shareholders are required by
SEC regulations to furnish us
with copies of all Section
16(a) forms they file.
To our knowledge, during the
year ended April 30, 2016, our
directors, executive officers
and greater than 10%
shareholders complied with all
Section 16(a) filing
requirements.
year ended April 30, 2016, our
directors, executive officers
and greater than 10%
shareholders complied with all
Section 16(a) filing
requirements.
Item 6. EXECUTIVE COMPENSATION
Summary Compensation Table
SUMMARY COMPENSATION TABLE
|
Name and Principal
|
Salary
|
Bonus
|
Stock Awards
|
Option Awards
|
Non-Equity Incentive Plan
Compensation |
Non-Qualified Deferred
Compensation Earnings |
All Other Compensation
|
Totals
|
||||||||||||||||||||||||||||
|
Position
|
Year
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|||||||||||||||||||||||||||
|
Dwight H. Egan
|
||||||||||||||||||||||||||||||||||||
| CEO | ||||||||||||||||||||||||||||||||||||
|
Reed L Benson
|
||||||||||||||||||||||||||||||||||||
| CFO | ||||||||||||||||||||||||||||||||||||
None of our named executive
officers received any
compensation from us during
the fiscal years ended April
30, 2015 and 2016.
officers received any
compensation from us during
the fiscal years ended April
30, 2015 and 2016.
Agreements
We have no employment
agreements with any of our
named executive officers.
agreements with any of our
named executive officers.
Option Grants
We have granted no options
since our formation.
since our formation.
Compensation of Directors
Our Directors have received no
compensation since formation of
the Company.
compensation since formation of
the Company.
Pension, Retirement or Similar
Benefit Plans
Benefit Plans
We have no pension, health,
annuity, bonus, insurance,
stock options, profit sharing
or similar plans or benefits.
annuity, bonus, insurance,
stock options, profit sharing
or similar plans or benefits.
Item 7. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE
AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE
Related Party Transactions
On October 13, 2016, we entered
into an Exclusive License
Agreement with Co-Diagnostics,
Inc., our parent and
controlling shareholder. The
Exclusive License requires that
we pay an initial license fee
to Co-Diagnostics of $500,000
and 10% of the gross margin on
sales derived from the Licensed
Tests or other sources of
revenue related to the Licensed
Technology.
into an Exclusive License
Agreement with Co-Diagnostics,
Inc., our parent and
controlling shareholder. The
Exclusive License requires that
we pay an initial license fee
to Co-Diagnostics of $500,000
and 10% of the gross margin on
sales derived from the Licensed
Tests or other sources of
revenue related to the Licensed
Technology.
Robert Salna, one of our
current directors, entered into
a subscription agreement with
us to purchase 5,888,888 shares
of our common stock for a
purchase price of $1,060,000 on
October 13, 2016, before he
became a director.
current directors, entered into
a subscription agreement with
us to purchase 5,888,888 shares
of our common stock for a
purchase price of $1,060,000 on
October 13, 2016, before he
became a director.
Family Relationships
There are no family
relationships among our
officers, directors or
affiliates of the Company.
relationships among our
officers, directors or
affiliates of the Company.
Director Independence
Three of our directors are
employees or affiliate
shareholders of the Company.
In addition, Messers Egan and
Benson are also employees and
directors of Co-Diagnostics,
Inc., our Parent corporation.
employees or affiliate
shareholders of the Company.
In addition, Messers Egan and
Benson are also employees and
directors of Co-Diagnostics,
Inc., our Parent corporation.
Board Committees
To date no board committees
have been formed.
have been formed.
Item 8. LEGAL PROCEEDINGS
We are not aware of any
material pending legal
proceedings to which we are a
party or of which our
property is the subject. We
also know of no proceedings
to which any of our
directors, officers or
affiliates, or any registered
or beneficial holders of more
than 5% of any class of our
securities, or any associate
of any such director,
officer, affiliate or
security holder are an
adverse party or have a
material interest adverse to
us.
material pending legal
proceedings to which we are a
party or of which our
property is the subject. We
also know of no proceedings
to which any of our
directors, officers or
affiliates, or any registered
or beneficial holders of more
than 5% of any class of our
securities, or any associate
of any such director,
officer, affiliate or
security holder are an
adverse party or have a
material interest adverse to
us.
Item 9. MARKET PRICE OF AND
DIVIDENDS ON THE
REGISTRANT’S COMMON EQUITY
AND RELATED STOCKHOLDER
MATTERS
DIVIDENDS ON THE
REGISTRANT’S COMMON EQUITY
AND RELATED STOCKHOLDER
MATTERS
Market Information
Our common stock is quoted
for trading by OTC Markets
Group under the symbol
“WNSS.” However, there is
no and has been no active
trading market of our
securities.
for trading by OTC Markets
Group under the symbol
“WNSS.” However, there is
no and has been no active
trading market of our
securities.
Holders of our Common Stock
As of October 19, 2016, there
were 30,666,388 shares of
common stock issued and
outstanding, which were held
by 54 stockholders of record.
were 30,666,388 shares of
common stock issued and
outstanding, which were held
by 54 stockholders of record.
Dividends
We have not declared or paid
dividends on our common stock
since our formation and we do
not anticipate paying
dividends in the foreseeable
future. Declaration or
payment of dividends, if any,
in the future, will be at the
discretion of our Board of
Directors and will depend on
our then current financial
condition, results of
operations, capital
requirements and other
factors deemed relevant by
the Board of Directors. There
are no contractual
restrictions on our ability
to declare or pay dividends.
dividends on our common stock
since our formation and we do
not anticipate paying
dividends in the foreseeable
future. Declaration or
payment of dividends, if any,
in the future, will be at the
discretion of our Board of
Directors and will depend on
our then current financial
condition, results of
operations, capital
requirements and other
factors deemed relevant by
the Board of Directors. There
are no contractual
restrictions on our ability
to declare or pay dividends.
On October 6, 2016, we
declared a 5.5:1 stock
dividend to shareholders of
record as of October 6, 2016.
declared a 5.5:1 stock
dividend to shareholders of
record as of October 6, 2016.
Equity Compensation Plans
We do not have any equity
compensation plans.
compensation plans.
Item 10. RECENT SALES OF
UNREGISTERED
SECURITIES
UNREGISTERED
SECURITIES
Effective October 11, 2016,
we entered into a
subscription agreement with a
director, Robert Salna, an
accredited investor, for the
sale of 5,888,888 shares of
our common stock at a
purchase price of $0.18 per
share, or $1,060,000. These
securities were issued to
exemptions from registration
requirements relying on
Section 4(a)(2) of the
Securities Act of 1933 and
upon Rule 506 of Regulation D
of the Securities Act of 1933
as the investor was
accredited, there was no
general solicitation, and the
transaction did not involve a
public offering.
we entered into a
subscription agreement with a
director, Robert Salna, an
accredited investor, for the
sale of 5,888,888 shares of
our common stock at a
purchase price of $0.18 per
share, or $1,060,000. These
securities were issued to
exemptions from registration
requirements relying on
Section 4(a)(2) of the
Securities Act of 1933 and
upon Rule 506 of Regulation D
of the Securities Act of 1933
as the investor was
accredited, there was no
general solicitation, and the
transaction did not involve a
public offering.
Item 11. DESCRIPTION OF
SECURITIES
SECURITIES
DESCRIPTION OF OUR CAPITAL
STOCK
STOCK
Our authorized capital stock
presently consists of
100,000,000 shares of common
stock, par value $0.0001 per
share, and 10,000,000 shares
of preferred stock, par value
$.0001 per share. As of
September 20, 2016, we had
4,505,000 shares of common
stock outstanding, and no
shares of preferred stock
outstanding or designated.
The following is a summary of
the terms of our capital
stock.
presently consists of
100,000,000 shares of common
stock, par value $0.0001 per
share, and 10,000,000 shares
of preferred stock, par value
$.0001 per share. As of
September 20, 2016, we had
4,505,000 shares of common
stock outstanding, and no
shares of preferred stock
outstanding or designated.
The following is a summary of
the terms of our capital
stock.
Common Stock
Holders of common stock are
entitled to one vote for each
share held on all matters
submitted to a vote of the
shareholders and do not have
cumulative voting rights.
Accordingly, holders of a
majority of the shares of
common stock entitled to vote
in any election of directors
may elect all of the
directors standing for
election. Holders of common
stock are entitled to receive
ratably any dividends, as may
be declared by the board of
directors out of funds
legally available therefor,
subject to the rights of the
holders of preferred stock.
Upon the liquidation,
dissolution or winding up of
our company, the holders of
common stock, subject to the
rights of the holders of
preferred stock, are entitled
to receive ratably our net
assets available after the
payment of our debts and
other liabilities. Holders of
common stock have no
preemptive, subscription,
redemption or conversion
rights. The outstanding
shares of common stock are
fully paid and nonassessable.
entitled to one vote for each
share held on all matters
submitted to a vote of the
shareholders and do not have
cumulative voting rights.
Accordingly, holders of a
majority of the shares of
common stock entitled to vote
in any election of directors
may elect all of the
directors standing for
election. Holders of common
stock are entitled to receive
ratably any dividends, as may
be declared by the board of
directors out of funds
legally available therefor,
subject to the rights of the
holders of preferred stock.
Upon the liquidation,
dissolution or winding up of
our company, the holders of
common stock, subject to the
rights of the holders of
preferred stock, are entitled
to receive ratably our net
assets available after the
payment of our debts and
other liabilities. Holders of
common stock have no
preemptive, subscription,
redemption or conversion
rights. The outstanding
shares of common stock are
fully paid and nonassessable.
Preferred Stock
Our board of directors has
the authority, without
further action by the
shareholders, to issue up
to 10,000,000 shares of
preferred stock in one or
more series and to fix the
designations, powers,
preferences, privileges and
relative participating,
option, or special rights
and the qualifications,
limitations, or
restrictions of those
series, including dividend
rights, conversion rights,
voting rights, terms of
redemption and liquidation
preferences, any or all of
which may be greater than
the rights of the common
stock. The board of
directors, without
shareholder approval, can
issue preferred stock with
voting, conversion or other
rights that could adversely
affect the voting power and
other rights of the holders
of common stock. Preferred
stock could thus be issued
quickly with terms
calculated to delay or
prevent a change in control
or make removal of
management more difficult.
The issuance of preferred
stock may have the effect
of decreasing the market
price of our common stock
and may adversely affect
the voting and other rights
of the holders of our
common stock.
the authority, without
further action by the
shareholders, to issue up
to 10,000,000 shares of
preferred stock in one or
more series and to fix the
designations, powers,
preferences, privileges and
relative participating,
option, or special rights
and the qualifications,
limitations, or
restrictions of those
series, including dividend
rights, conversion rights,
voting rights, terms of
redemption and liquidation
preferences, any or all of
which may be greater than
the rights of the common
stock. The board of
directors, without
shareholder approval, can
issue preferred stock with
voting, conversion or other
rights that could adversely
affect the voting power and
other rights of the holders
of common stock. Preferred
stock could thus be issued
quickly with terms
calculated to delay or
prevent a change in control
or make removal of
management more difficult.
The issuance of preferred
stock may have the effect
of decreasing the market
price of our common stock
and may adversely affect
the voting and other rights
of the holders of our
common stock.
Item 12. INDEMNIFICATION OF
DIRECTORS AND OFFICERS
DIRECTORS AND OFFICERS
The only statute, charter
provision, bylaw, contract,
or other arrangement under
which any controlling
person, director or officer
of us is insured or
indemnified in any manner
against any liability which
he may incur in his
capacity as such, is as
follows:
provision, bylaw, contract,
or other arrangement under
which any controlling
person, director or officer
of us is insured or
indemnified in any manner
against any liability which
he may incur in his
capacity as such, is as
follows:
Chapter 78 of the Nevada
Revised Statutes (the
“NRS”). Section 78.138 of
the NRS provides for
immunity of directors from
monetary liability, except
in certain enumerated
circumstances, as follows:
Revised Statutes (the
“NRS”). Section 78.138 of
the NRS provides for
immunity of directors from
monetary liability, except
in certain enumerated
circumstances, as follows:
“Except as otherwise
provided in NRS 35.230,
91.250, 452.200, 452.270,
668.045 and 694A.030, or
unless the Articles of
Incorporation or an
amendment thereto, in each
case filed on or after
October 1, 2003, provide
for greater individual
liability, a director or
officer is not individually
liable to the corporation
or its stockholders or
creditors for any damages
as a result of any act or
failure to act in his
capacity as a director or
officer unless it is proven
that:
provided in NRS 35.230,
91.250, 452.200, 452.270,
668.045 and 694A.030, or
unless the Articles of
Incorporation or an
amendment thereto, in each
case filed on or after
October 1, 2003, provide
for greater individual
liability, a director or
officer is not individually
liable to the corporation
or its stockholders or
creditors for any damages
as a result of any act or
failure to act in his
capacity as a director or
officer unless it is proven
that:
|
(a)
|
His act or failure
to act constituted a breach of his fiduciary duties as a director or officer; and |
|
(b)
|
His breach of those
duties involved intentional misconduct, fraud or a knowing violation of law.” |
Section 78.5702 of the NRS
provides as follows:
provides as follows:
|
1.
|
A corporation may
indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except in an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he: |
|
(a)
|
Is not liable to
NRS 78.138; or |
|
(b)
|
Acted in good faith
and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. |
|
2.
|
A corporation may
indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he: |
|
(a)
|
Is not liable to
NRS 78.138; or |
|
(b)
|
Acted in good faith
and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation. |
To the extent that a
director, officer, employee
or agent of a corporation
has been successful on the
merits or otherwise in
defense of any action, suit
or proceeding referred to
in subsections 1 and 2, or
in defense of any claim,
issue or matter therein,
the corporation shall
indemnify him against
expenses, including
attorneys’ fees, actually
and reasonably incurred by
him in connection with the
defense.
director, officer, employee
or agent of a corporation
has been successful on the
merits or otherwise in
defense of any action, suit
or proceeding referred to
in subsections 1 and 2, or
in defense of any claim,
issue or matter therein,
the corporation shall
indemnify him against
expenses, including
attorneys’ fees, actually
and reasonably incurred by
him in connection with the
defense.
We intend to maintain a
directors’ and officers’
liability insurance policy
which, subject to the
limitations and exclusions
stated therein, covers the
officers and directors of
Watermark Group for certain
actions or inactions that
they may take or omit to
take in their capacities as
officers and directors of
Watermark Group.
directors’ and officers’
liability insurance policy
which, subject to the
limitations and exclusions
stated therein, covers the
officers and directors of
Watermark Group for certain
actions or inactions that
they may take or omit to
take in their capacities as
officers and directors of
Watermark Group.
Insofar as indemnification
for liabilities arising
under the Securities Act
may be permitted to our
directors, officers and
controlling persons to the
foregoing provisions, or
otherwise, but we have been
advised that in the opinion
of the SEC such
indemnification is against
public policy as expressed
in the Securities Act and
is, therefore,
unenforceable.
for liabilities arising
under the Securities Act
may be permitted to our
directors, officers and
controlling persons to the
foregoing provisions, or
otherwise, but we have been
advised that in the opinion
of the SEC such
indemnification is against
public policy as expressed
in the Securities Act and
is, therefore,
unenforceable.
Item 13. FINANCIAL
STATEMENTS AND
SUPPLEMENTARY DATA
STATEMENTS AND
SUPPLEMENTARY DATA
The Company’s financial
statements in its Annual
Report on Form 10-K filed
on July 21, 2016, and its
Quarterly Report on Form
10-Q filed on September
21, 2016, are
incorporated by reference
herein.
statements in its Annual
Report on Form 10-K filed
on July 21, 2016, and its
Quarterly Report on Form
10-Q filed on September
21, 2016, are
incorporated by reference
herein.
Item 3.02 Unregistered
Sales of Equity
Securities.
Sales of Equity
Securities.
Effective October 11,
2016, we entered into a
subscription agreement
with Robert Salna, an
accredited investor who
is now a director, for
the sale of 5,888,888
shares of our common
stock at a purchase price
of $0.18 per share, or
$1,060,000. These
securities were issued to
exemptions from
registration requirements
relying on Section
4(a)(2) of the Securities
Act of 1933 and upon Rule
506 of Regulation D of
the Securities Act of
1933 as the investor was
accredited, there was no
general solicitation, and
the transaction did not
involve a public
offering.
2016, we entered into a
subscription agreement
with Robert Salna, an
accredited investor who
is now a director, for
the sale of 5,888,888
shares of our common
stock at a purchase price
of $0.18 per share, or
$1,060,000. These
securities were issued to
exemptions from
registration requirements
relying on Section
4(a)(2) of the Securities
Act of 1933 and upon Rule
506 of Regulation D of
the Securities Act of
1933 as the investor was
accredited, there was no
general solicitation, and
the transaction did not
involve a public
offering.
Item 5.01 Changes in
Control of Registrant.
Control of Registrant.
On October 12, 2016,
Co-Diagnostics, in
anticipation of the
execution of the license
agreement described in
Item 2.01 herein, entered
into a Stock Purchase
Agreement to purchase
19,800,000 shares of the
Company’s common stock
(the “Shares”) from Ted
Murphy, the Company’s
Chief Executive Officer
and sole director, for
$55,000. On October 19,
2016, Co- Diagnostics
closed the purchase by
paying the purchase price
from its own funds to Mr.
Murphy. As there were
30,666,388 shares of
Company common stock
outstanding on October
19, 2016, the transfer of
the Shares to
Co-Diagnostics
constitutes a change of
control as Co-Diagnostics
now beneficially owns
approximately 64.6% of
the voting securities of
the Company.
Co-Diagnostics, in
anticipation of the
execution of the license
agreement described in
Item 2.01 herein, entered
into a Stock Purchase
Agreement to purchase
19,800,000 shares of the
Company’s common stock
(the “Shares”) from Ted
Murphy, the Company’s
Chief Executive Officer
and sole director, for
$55,000. On October 19,
2016, Co- Diagnostics
closed the purchase by
paying the purchase price
from its own funds to Mr.
Murphy. As there were
30,666,388 shares of
Company common stock
outstanding on October
19, 2016, the transfer of
the Shares to
Co-Diagnostics
constitutes a change of
control as Co-Diagnostics
now beneficially owns
approximately 64.6% of
the voting securities of
the Company.
Item 5.02 Departure of
Directors or Certain
Ofcers; Election of
Directors; Appointment of
Certain Ofcers;
Compensatory Arrangements
of Certain Ofcers.
Directors or Certain
Ofcers; Election of
Directors; Appointment of
Certain Ofcers;
Compensatory Arrangements
of Certain Ofcers.
The disclosure in Item
2.01 above is
incorporated by reference
herein.
2.01 above is
incorporated by reference
herein.
Item 5.06 Change in Shell
Company Status.
Company Status.
As a result of the
consummation of the
license agreement
described in Item 2.01
herein (which disclosure
in Item 2.01 is
incorporated by reference
herein), we are no longer
a “shell company” as
that term is defined in
Rule 12b-2 under the
Securities Exchange Act
of 1934. We have a
specific business plan
that we are pursuing as
aggressively as possible
within the limits of our
resources. The Company is
now in the business of
developing, selling and
distributing the Licensed
Tests throughout the
world.
consummation of the
license agreement
described in Item 2.01
herein (which disclosure
in Item 2.01 is
incorporated by reference
herein), we are no longer
a “shell company” as
that term is defined in
Rule 12b-2 under the
Securities Exchange Act
of 1934. We have a
specific business plan
that we are pursuing as
aggressively as possible
within the limits of our
resources. The Company is
now in the business of
developing, selling and
distributing the Licensed
Tests throughout the
world.
Item 9.01 Financial
Statements and Exhibits.
Statements and Exhibits.
|
Number
|
Description
|
|
|
3.1
|
Articles of
Incorporation (incorporated by reference to our Registration Statement on Form S-1 filed on February 3, 2011) |
|
|
3.2
|
Bylaws
(incorporated by reference to our Registration Statement on Form S-1 filed on February 3, 2011) |
|
|
3.3
|
Articles of Merger
(incorporated by reference to our Current Report on Form 8-K filed on August 28, 2015) |
|
|
10.1
|
Exclusive License
Agreement, dated October 13, 2016, between the Company and Co-Diagnostics, Inc. |
|
About WATERMARK GROUP, INC. (OTCMKTS:WMHH)
Watermark Group, Inc. is a shell company. The Company intends to promote, sell and distribute films for studios. The Company intends to acquire suitable scripts or the rights to scripts to promote, syndicate and produce for commercial distribution. The Company seeks to attempt raising funds for such productions from private investors through debt or equity financings. The Company plans to purchase such script or the rights to use such script from the author in accordance with terms negotiated with such author, which may or may not include royalties. The Company plans to distribute the finished product to distribution houses, studios and to showcase at film festivals and by cold calling. Its operations have been limited to organizational, start-up and capital formation activities. As of April 30, 2016, the Company had not commenced its principal operations. As of April 30, 2016, the Company had not generated any revenues. WATERMARK GROUP, INC. (OTCMKTS:WMHH) Recent Trading Information
WATERMARK GROUP, INC. (OTCMKTS:WMHH) closed its last trading session at 0.0000 with shares trading hands.
