Item 1. Business
Business Development
Panther Biotechnology, Inc. (“Panther”) was established to better serve the unmet medical needs of patients with the most difficult to treat types of cancer. Panther’s mission is to identify, license, and acquire undervalued molecules that are designed to heal without causing harm and are either optimized derivatives of existing products, repurposed approved products, products that did not meet clinical endpoints and also new classes of drugs. The favorable therapeutic index of Panther's allows use in combination with other drugs including immunotherapeutics for better and more durable responses. Panther has partnered with the Center for Developmental Therapeutics and the new Northwestern Medical Developmental Therapeutics Institute of Northwestern University and the University of Rochester.
Panther Biotechnology, Inc. was incorporated in the State of Nevada on July 11, 2011, as New Era Filing Services, Inc. The Company changed its name to NEF Enterprises, Inc. on October 4, 2011, and on May 29, 2014 the Company changed its name again to Panther Biotechnology, Inc. Panther incorporated a wholly owned subsidiary in the State of Florida on September 28, 2011, called New Era Filing Services, Inc. which changed its name to PubCo Reporting Services, Inc. (“PubCo Reporting”) on November 26, 2013. PubCo Reporting was sold on June 1, 2015. Our fiscal year end is May 31. The Company's administrative address is 2801 Lakeside Drive, Suite 207B, Bannockburn, Illinois, 60015. The telephone number is 312-371-6829. Our mailing address is 2801 Lakeside Drive, Suite 207B, Bannockburn, Illinois, 60015. The Company has also established a second location at 888 Prospect Street, La Jolla, CA 92037. The telephone number at this location is 858-263-2744. Panther plans to transition all corporate activity to the Greater San Diego area in 2016.
On March 23, 2015, the Board of Directors of Panther announced the hiring of Evan M. Levine as Chief Executive Officer as a first step in progressing the mission of the Company and its future growth. Mr. Levine brought over two decades of in-depth experience in executive management and the institutional investment business with expertise that includes initiating, restructuring, and managing corporate infrastructure with knowledge and skills to increase investor and shareholder net worth. Mr. Levine has executed and orchestrated corporate restructurings and change management dealings that resulted in the successful turnaround of several publicly traded companies. Mr. Levine acquired and reorganized the struggling biotech company, Adventrx Pharmaceuticals, with investment partners and architected the restructuring of the management, board of directors and the strategic development programs. This resulted in turning a pre-money valuation of less than $700,000 to a market capitalization high of over $550 million. Mr. Levine initiated the Brown Simpson Strategic Growth Fund with three investment partners and initial capital of $400,000 which increased to more than $650 million within three years. Mr. Levine has set a vision to build a world class biotechnology enterprise with the intention of moving molecules through the clinic and concurrently seeking development and commercialization partners.
On April 1, 2015, Panther announced the execution of an exclusive license agreement with Northwestern University in which Panther had previously purchased an option in 2014. Under the terms of the agreement, Panther has licensed from Northwestern University the rights to develop and commercialize new technologies to enhance efficacy and decrease toxic side effects of a novel category of anti-cancer drugs. The licensed compounds, called Numonafides, are optimized derivatives of Amonafide, and are engineered to avoid acetylation and eliminate a toxic metabolite. Numonafides have demonstrated broad in vitro activity in blood, cervical, colon, gastric, liver, lung and skin cancers. Laboratory results suggest that the lead compound has a broad spectrum of anti-tumor activities with minimal toxicity and minimal chances of developing drug resistance. In addition, mouse models have demonstrated increased tumor response by Numonafide, as well as a great reduction in toxicities compared to Amonafide. The license is based on the issued US patents 8,420,665 and 8,829,025 filed under "Anti-Cancer Compounds." Panther is able to leverage its close relationships with Northwestern to conduct these activities. The Inventor of the technology, Dr. John Norton, and a prominent figure in the community, Dr. Jayesh Mehta, Director Hematopoietic Stem Cell Transplantation Program, Division of Hematology / Oncology, Northwestern University Feinberg School of Medicine, are on the Board of Directors of Panther. Also Andrew Mazar, Director of the Center of Developmental Therapeutics at Northwestern University is on the Scientific Advisory Board of Panther. The initial target indication is treatment refractory acute myelogenous leukemia (AML) and may include other cancers such as triple negative breast cancer, which have historically relied upon cancer therapies that produce severe side effects, as well as hepatocellular carcinoma, for which, there are no effective and minimally toxic systemic chemotherapeutics. The Company is in the process of planning additional pre-clinical studies and CMC activities to support an Investigational New Drug submission for 2016 with the intention of initiating a Phase 1 / 2 study in AML by the end of that year.
On April 7, 2015, Panther announced an agreement to acquire technology assets of Faulk Pharmaceuticals located in Raleigh, North Carolina. Panther closed on this acquisition on July 14, 2015. The transaction provided Panther with a proprietary, multi-nationally patent protected, ligand-drug conjugate technology platform as well as a pipeline of drug product candidates that address unmet medical needs in oncology and autoimmune disease indications. The lead development program is a ligand-drug conjugate, TRF-DOX, a combination of transferrin glycoproteins with Doxorubicin for targeted delivery to tumors with the reduction of serious side effects. Clinical results demonstrate significant improvement over Doxorubicin. In a randomized, double blind, controlled study of patients with advanced FIGO stage IV ovarian cancer, the addition of either TRF-DOX or Doxorubicin to conventional chemotherapy was compared. Treatment with TRF-DOX resulted in a statistically significant increase in survival over Doxorubicin in patients with drug resistant ovarian cancer. In a non-blinded study in patients with acute leukemia, TRF-DOX was dosed at 10% of the usual dose and demonstrated an 87% decline in cancer cells circulating in the blood and no extension of the disease to bone marrow in 100% of the patients. TRF-DOX also exhibited a complete response of both the primary tumor and metastatic lesions in a patient with angiosarcoma after having failed three months of standard chemotherapy. TRF-DOX leverages the targeting ability of the plasma protein transferrin to deliver a powerful chemotherapeutic payload to cancerous cells. In vitro assays demonstrate growth inhibition of cancer cells that are resistant to other chemotherapies including Doxorubicin itself. Cytotoxicity studies demonstrate that a dose reduction of ten to one hundred-fold kills all cancer cells in multiple indications. In vivo studies demonstrate that TRF-DOX selectively binds tumors, inhibits tumor growth better than unmodified Doxorubicin, and increases survival. This improved therapeutic index suggests that further improvements in efficacy without added toxicity can be achieved. The Company is in the process of planning additional pre-clinical studies and CMC activities to support an Investigational New Drug submission for 2016 with the intention of initiating a phase 2 study in ovarian cancer by the end of that year and is also considering a phase 1a / 1b study in lung cancer.
On April 17, 2015, Panther announced the execution of an exclusive license agreement with the University of Rochester for a new drug candidate that selectively kills leukemic stem cells. Under the terms of the agreement, Panther has licensed from the University of Rochester, the rights to develop and commercialize a first in class new chemical entity with demonstrated powerful anti-leukemia activity. The licensed compound, called TDZD-8, is a small molecule engineered to kill leukemic stem cells. TDZD-8 has demonstrated broad and selective in vitro activity against many different types of leukemia. In addition, TDZD-8 has no significant toxicity in normal hematopoietic stem cells. The license is based on the pending US patent 12/374,002, pending EU patent 07810619.2, issued Australia patent 2007275686, and issued New Zealand patent 574619, all filed under "Thiadiazolidinone Derivatives." Studies of TDZD-8 were performed to determine the effects on different types of leukemia cells taken from patients (AML, bcCML, CLL and ALL), and on normal blood cells as well. All forms of leukemia cells were strongly inhibited and induced to die by TDZD-8, however, there was minimal effect on normal blood cells. Further, TDZD-8 was submitted for screening against the NCI60 panel and found to be selectively cytotoxic to leukemia cells and cells from related diseases. The compound does not greatly impact tumors derived from non-blood tissues. TDZD-8 is a kinase inhibitor and induces oxidative stress, causing its striking ability to induce the leukemia cells to die after less than 2 hours of exposure to the drug. The Company is in the process of planning additional pre-clinical studies and CMC activities to support an Investigational New Drug submission for 2016 with the intention of initiating a phase 1 study in AML and / or CML by the end of that year.
On July 1, 2015, Panther announced that it had entered into a letter of intent to acquire Alchemia Oncology Pty LTD, a subsidiary of Alchemia LTD listed on the Australian Stock Exchange. The transaction was brought to Panther Biotechnology by Tim Boyd of Blueprint Partners in Santa Monica and Venice, California, whom Panther engaged to seek potential acquisitions of Australian biotechnology candidates on a success fee basis. Mr. Boyd identified and negotiated directly with Alchemia and agreed on the transaction terms. Mr. Boyd subsequently presented those terms to Panther Biotechnology. Mr. Boyd guaranteed the due diligence and guaranteed a financing of $10,000,000 should Panther engage in the transaction with a short term guarantee of $500,000 simply to execute the term sheet. The agreement that Mr. Boyd negotiated required a final mutually agreed upon asset purchase agreement containing certain milestone achievements in the short term, including but not limited to a filing of an S-1 registration statement and applying for a listing on the NASDAQ. The acquisition consideration was $15,000,000 worth of Panther Biotechnology common shares which were generally trading around $5 per share during the relevant time. The guaranteed price of the first tranche of the Blueprint Partners financing was $5 per share. Panther believed the transaction to be of minimal risk. However, initial failure of Blueprint to deliver the financing resulted in the failure to achieve certain milestones per the term sheet which then possibly subjected Panther to a break fee of $500,000 (which Panther takes the position that it is not liable if such fee were ever pursued). Panther was unable to agree upon the terms of the asset purchase agreement as well as unable to achieve the milestones on a timely basis due to both Alchemia withholding critical data and Mr. Boyd improperly misrepresenting his ability to deliver the requisite financing concurrent with the execution of the term sheet. In addition, Panther discovered questionable board relationships and practices amongst themselves and Mr. Boyd. Also, certain statements and actions from Alchemia appeared contradictory to the expectations of the relationship. During the relevant time, Panther made every attempt to understand and resolve the situation, however, Panther suspects that possible collusion amongst the parties made the transaction absolutely impossible to consummate. Although Panther is still willing to explore a relationship with Alchemia and remains interested in how the technology was originally represented, currently there is no negotiation or agreement in place. Panther believes it is entitled to damages. Panther has initiated litigation against Tim Boyd and Blueprint Partners and is determining whether other parties should be part of the litigation in any capacity. This is not expected to have a material impact on Panther.
Principal Products, Services and Their Markets
Historically, through our 100% wholly-owned subsidiary, PubCo Reporting Services, Inc., we have operated as a filing agent offering both EDGAR and XBRL services for filing and uploading on the U.S. SEC (Securities and Exchange Commission). However, on June 1, 2015, we agreed to sell 100% of the subsidiary back to the former owners. The subsidiary is considered a discontinued operation.
Panther owns and is planning on searching for additional in-licensing opportunities and new technology assets from universities or other companies and begin to develop the assets for the treatment of cancer and other life threatening diseases. As of the date of this report the Company has entered into a License Agreement with Northwestern University for the in-licensing of certain patents and patent applications, an Exclusive Patent License Agreement with the University of Rochester for the license of certain patent rights and closed on an Asset Purchase Agreement with Faulk Pharmaceuticals, Inc. and acquired the right to miscellaneous patents and other assets as described herein.
Panther is an entity focused on the acquisition and development of enhanced therapeutics for the treatment of neoplastic, autoimmune and antiviral disorders. The Company is currently developing three clinical candidates, TRF-DOX which is a combination of transferrin glycoproteins with Doxorubicin for targeted delivery to tumors with the reduction of serious side effects, Numonafide, which is a derivative of the widely studied anticancer drug Amonafide optimized to eliminate toxic metabolites and reduce side effects, and TDZD-8, a kinase inhibitor targeting cancer stem cells. Panther is continuing its acquisition strategy focusing on identifying undervalued companies and clinical assets, including those programs that have missed clinical endpoints, and bring scientific and medical personnel capable of running the trials and extracting value from the assets.
Talent Sources and Names of Principal Suppliers
Panther believes there are many sources available to find the potential drugs that will comport to the Company’s business plan. The Company will focus on Universities and private sector companies.
Dependence on One or a Few Major Customers
The Company is not dependent on any one customer and no customer accounts for more than ten (10%) of the Company’s revenues.
Patents, Trademarks, Licenses, Agreements or Contracts
Panther plans on in-licensing new certain technology assets from universities or other companies to begin to develop the assets for the treatment of cancer and other life threatening diseases. As of the date of this report the Company has entered into a License Agreement with Northwestern University for the in-licensing of certain patents and patent applications, an Exclusive Patent License Agreement with the University of Rochester for the license of certain patent rights and closed on an Asset Purchase Agreement with Faulk Pharmaceuticals, Inc. and acquired misc. patents and other assets.
Governmental Controls, Approval and Licensing Requirements
The Company, through its biotechnology business will be subject to certain regulations in the future, as indicated herein and in the Risk Factors section below.
Research and Development Activities and Costs
We have spent no time on specialized research and development activities. Panther Biotechnology, Inc. future business operations are designed to evaluate attractive medical technologies for the treatment of cancer and will require a substantial amount of research and development.
Number of Employees
Panther has no employees, though two people currently work for Panther as officers at no current cost. The officers and directors of Panther are currently donating their time to the development of the company, and intend to do whatever work is necessary in order to bring us to the point of earning revenues and raising capital. We have no other employees. Commencing in the next fiscal year, the two officers will be receiving compensation as described in Note 11 of the financial statements contained in this Form 10K.
Reports to Security Holders
We are required to file quarterly, annual and current reports, proxy statements and other information with the Securities and Exchange Commission pursuant to Section 12(b) or (g) of the Exchange Act. The public may read and copy any materials filed by us with the SEC at the SEC's Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The Company files its reports electronically with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements, and other electronic information regarding issuers that file electronically with the SEC at http://www.sec.gov.
Item 1A.
Item 1A. Risk Factors
Risks Associated With Panther Biotechnology, Inc.
Our independent auditors have issued an audit opinion for Panther Biotechnology, Inc. which includes a statement describing our going concern status. Our financial status creates a doubt whether we will continue as a going concern.
Our auditors have issued a going concern opinion regarding the Company. This means there is substantial doubt we can continue as an ongoing business for the next twelve months. The financial statements do not include any adjustments that might result from the uncertainty regarding our ability to continue in business. As such, we may have to cease operations and investors could lose part or all of their investment in the Company.
We lack an operating history and have nominal operating results which we expect to continue into the future. There is no assurance our future operations will result in continued profitable revenues. If we cannot generate sufficient revenues to operate profitably, we may suspend or cease operations.
Our ability to achieve sustained profitability and positive cash flow is dependent upon:
· Our ability to generate sufficient revenue through the sale of our services, licensing or sale of products, etc.
We will be incurring expenses for acquisitions and operations, with no guarantees we can raise the capital necessary to cover such costs. We cannot guarantee that we will be successful in generating sufficient revenues in the future. In the event the Company is unable to generate sufficient revenues, it may be required to seek additional funding. Such funding may not be available, or may not be available on terms which are beneficial and/or acceptable to the Company. In the event the Company cannot generate sufficient revenues and/or secure additional financing, the Company may be forced to cease operations and investors will likely lose some or all of their investment in the Company.
Our new line of business is an early clinical-stage specialty biopharmaceutical company with limited or no operating history upon which you can evaluate our business and prospects. We are not profitable and we expect to incur significant losses in the future for the foreseeable future. We anticipate financing our operations primarily through the sale of equity, convertible or debt securities. However, there is no guaranty we will be successful in such financings.
We have minimal clients or customers and even if we obtain more clients or customers, there is no assurance that we will make a profit.
We have minimal clients or customers. If we are unable to attract enough customers/clients to purchase services (and any products we may develop or sell) it will have a negative effect on our ability to continue to generate sufficient revenue from which we can operate or expand our business. The lack of sufficient revenues will have a negative effect on the ability of the Company to continue operations and it could force the Company to cease operations.
Some of our competitors have significantly greater financial and marketing resources than us.
Some of our competitors have significantly greater financial and marketing resources than us. There are no assurances that our efforts to compete in the marketplace will be successful.
We are dependent upon our current officers.
We currently are managed by two officers and we are entirely dependent upon them in order to conduct our operations. If they should resign or die, there temporarily may be no one to run Panther Biotechnology, Inc., and the company has no Key Man insurance. If our current officers are no longer able to serve as such and we are unable to find other persons to replace them, it will have a negative effect on our ability to continue active business operations and could result in investors losing some or all of their investment in the Company.
Risks related to development, regulatory approval and commercialization.
With the 2015 agreements with Northwestern University, University of Rochester and Faulk Pharmaceuticals, our new line of business to better serve the unmet medical needs of patients with the most difficult to treat cancers, antiviral and autoimmune diseases, will be dependent on the successful development, regulatory approval and commercialization of our products, which are in early stage development. The success of our business, including our ability to finance our Company and generate any revenue in the future, primarily will depend on the successful development, regulatory approval and commercialization of our products. In the future, we may also become dependent on one or more of other product candidates of any future product candidates that we my in-license, acquire or develop.
The clinical and commercial success of our products will depend on a number of factors, including the following:
- The ability to raise additional capital on acceptable terms, or at all;
- Timely completion of our clinical trials, once commenced;
- Whether the U.S. Food and Drug Administration or similar foreign regulatory agencies to conduct additional clinical trials beyond those planned to support the approval and commercialization of our products or future products;
- Our ability to manufacture and scale the target and portfolio candidate products;
- Acceptance of our proposed indications and primary endpoint assessments relating to the proposed indications of our products by the FDA and similar foreign regulatory authorities;
- Our ability to demonstrate to the satisfaction of the FDA and similar foreign authorities: 1) the safety and efficacy of our products or any future products, 2) the timely receipt of marketing approvals, and 3) the prevalence, duration and severity of potential side effects experienced with our products or future products;
- Our ability to successfully commercialize our products or any future products in the United States and internationally;
- Acceptance by physicians and patients of the benefits, safety and efficacy of our products or any future products, if approved, including relative to alternative and competing treatments;
- Our ability to establish and enforce intellectual property rights in and to our products or any future products;
- Our ability to avoid third-party patent interference or intellectual property infringement claims; and
- Our ability to in-license or acquire additional products or commercial-stage products that we believe can be successfully developed and commercialized.
If we do not achieve one or more of these factors, many of which are beyond our control, in a timely manner or at all, we could experience significant delays or an inability to obtain regulatory approvals or commercialize our products. Even if regulatory approvals are obtained, we may never be able to successfully commercialize any of our products. Accordingly, we cannot assure you that we will be able to generate sufficient revenue through the sale of our products or any future products to continue our business.
Risks Associated with Our Common Stock
Our shares may be defined as "penny stock", the rules imposed on the sale of the shares may affect your ability to resell any shares you may purchase, if at all.
Our shares may be defined as a “penny stock” under Section 15(g) of the Securities and Exchange Act of 1934, and rules of the Commission. The Exchange Act and such penny stock rules generally impose additional sales practice and disclosure requirements on broker-dealers who sell our securities to persons other than certain accredited investors who are, generally, institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 jointly with spouse, or in transactions not recommended by the broker-dealer. For transactions covered by the penny stock rules, a broker-dealer must make a suitability determination for each purchaser and receive the purchaser's written agreement prior to the sale. In addition, the broker-dealer must make certain mandated disclosures in penny stock transactions, including the actual sale or purchase price and actual bid and offer quotations, the compensation to be received by the broker-dealer and certain associated persons, and deliver certain disclosures required by the Commission. Consequently, the penny stock rules may affect the ability of broker-dealers to make a market in or trade our common stock and may also affect your ability to resell any shares you have purchased.
Market for penny stock has suffered in recent years from patterns of fraud and abuse.
Stockholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include:
· Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
· Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
· Boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons;
· Excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and,
· The wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequential investor losses.
Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility of our share price.
Due to a limited amount of trading volume for our securities and may continue to be volatile you may have difficulty selling your shares.
There is limited trading volume of our securities, and as such the pricing is volatile and could fluctuate widely due to factors beyond our control and therefore may have a negative effect on your ability to sell your shares in the future and it also may have a negative effect on the price, if any, for which you may be able to sell your shares. As a result an investment in the Shares may be illiquid in nature and investors could lose some or all of their investment in the Company.
Our financial statements may not be comparable to those of companies that comply with new or revised accounting standards.
We have elected to take advantage of the benefits of the extended transition period that Section 107 of the JOBS Act provides an emerging growth company, as provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Our financial statements may, therefore, not be comparable to those of companies that comply with such new or revised accounting standards. We cannot predict if investors will 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.
Our status as an “emerging growth company” under the JOBS Act OF 2013 may make it more difficult to raise capital when we need to do it.
Because of the exemptions from various reporting requirements provided to us as an “emerging growth company” and because we will have an extended transition period for complying with new or revised financial accounting standards, we may be less attractive to investors and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.
We will not be required to comply with certain provisions of the Sarbanes-Oxley Act for as long as we remain an “emerging growth company”.
We are not currently required to comply with the SEC rules that implement Sections 302 and 404 of the Sarbanes-Oxley Act, and are therefore not required to make a formal assessment of the effectiveness of our internal controls over financial reporting for that purpose. Upon becoming a public company, we are required to comply with certain of rules relating to Sections 302 and 404 of the Sarbanes-Oxley Act, which will require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting. Though we will be required to disclose changes made in our internal control procedures on a quarterly basis, we will not be required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 until the later of the year following our first annual report required to be filed with the SEC, or the date we are no longer an “emerging growth company” as defined in the JOBS Act.
Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting until the later of the year following our first annual report required to be filed with the SEC, or the date we are no longer an “emerging growth company.” At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.
Reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors.
As an “emerging growth company,” we may 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 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 shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will 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.
As an “emerging growth company” under the jumpstart our business startups act (JOBS), we are permitted to rely on exemptions from certain disclosure requirements.
We qualify as an "emerging growth company" under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:
· have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
· comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);
· submit certain executive compensation matters to shareholder advisory votes, such as "say-on-pay" and "say-on-frequency;" and
· disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO's compensation to median employee compensation.
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We will remain an emerging growth company for up to five full fiscal years, although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any January 31 before that time, we would cease to be an emerging growth company as of the following July 31, or if our annual revenues exceed $1 billion, we would cease to be an emerging growth company the following fiscal year, or if we issue more than $1 billion in non-convertible debt in a three-year period, we would cease to be an emerging growth company immediately.
Notwithstanding the above, we are also currently a "smaller reporting company," meaning that we are not an investment company, an asset-backed issuer, nor a majority-owned subsidiary of a parent company that is not a smaller reporting company, and has a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. If we are still considered a "smaller reporting company" at such time as we cease to be an "emerging growth company," we will be subject to increased disclosure requirements. However, the disclosure requirements will still be less than they would be if we were not considered either an "emerging growth company" or a "smaller reporting company." Specifically, similar to "emerging growth companies", "smaller reporting companies" are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; are not required to conduct say-on-pay and frequency votes until annual meetings occurring on or after January 21, 2014; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. Decreased disclosures in its SEC filings due to its status as an "emerging growth company" or "smaller reporting company" may make it harder for investors to analyze the Company's results of operations and financial prospects.
We will incur ongoing costs and expenses for SEC reporting and compliance, without increased revenue we may not be able to remain in compliance, making it difficult for investors to sell their shares, if at all.
Going forward, the Company will have ongoing SEC compliance and reporting obligations, estimated as approximately $75,000 annually. Such ongoing obligations will require the Company to expend additional amounts on compliance, legal and auditing costs. In order for us to remain in compliance, we will require increased revenues to cover the cost of these filings, which could comprise a substantial portion of our available cash resources. If we are unable to generate sufficient revenues or raise additional capital to remain in compliance, it may be difficult for you to resell any shares you may purchase, if at all.
We are unlikely to pay dividends.
To date, we have not paid dividends on our common stock, nor do we intend to pay dividends in the foreseeable future, even if we become profitable. Earnings, if any, are expected to be used to advance our activities and for general corporate purposes, rather than to make distributions to stockholders. Investors will likely need to rely on an increase in the price of Company stock to profit from his or her investment. There are no guarantees that any market for our common stock will ever develop or that the price of our stock will ever increase.
Since we are not in a financial position to pay dividends on our common stock, and future dividends are not presently being contemplated, investors are advised that return on investment in our common stock is restricted to an appreciation in the share price. The potential or likelihood of an increase in share price is questionable at best.
Item 1B.
Item 1B. Unresolved Staff Comments
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 2.
Item 2. Properties
Panther’s principal business and corporate address is 888 Prospect Street, La Jolla, CA 92037, telephone number 858-263-2744. We rent this space on a month to month lease. Our books and records are kept at 2801 Lakeside Drive, Suite 207B, Bannockburn, IL 60015; the telephone number is 847-582-9901. This space is being provided by management on a rent free basis.
Panther does not currently have any investments or interests in any real estate, nor do we have investments or an interest in any real estate mortgages or securities of persons engaged in real estate activities.
Item 3.
Item 3. Legal Proceedings
We know of no material, existing or pending legal proceedings against our company, except for the litigation initiated against Tim Boyd and Blue Print Partners as earlier described. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
Item 4.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock is quoted on the pink sheets of OTC Markets Group.
Holders
As of May 31, 2015, there were approximately 41 stockholders of record and an aggregate of 4,662,500 shares of our common stock were issued and outstanding. As of January 20, 2016, there were approximately 75 stockholders of record and an aggregate 6,692,060 shares of our common stock were issued and outstanding. Of these common shares, 4,084,929 are restricted shares held by our officers and directors and 2,496,032 common shares are issued in registered form to approximately 30 unrelated investors, including 1,326,151 shares subject to various lock-up agreements. The transfer agent of our company's common stock is Signature Stock Transfer Inc. at 2632 Coachlight Court, Plano, TX 75093.
Description of Securities
The authorized capital stock of our company consists of 100,000,000 shares of common stock, at $0.001 par value, and 10,000,000 shares of preferred stock, at $0.001 par value.
Dividend Policy
We have not paid any cash dividends on our common stock and have no present intention of paying any dividends on the shares of our common stock. Our current policy is to retain earnings, if any, for use in our operations and in the development of our business. Our future dividend policy will be determined from time to time by our Board of Directors.
Equity Compensation Plan Information
We do not have in effect any compensation plans under which our equity securities are authorized for issuance and we do not have any outstanding stock options.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
We did not sell any equity securities which were not registered under the Securities Act during the year ended May 31, 2015, that were not otherwise disclosed on any of our current reports either on Form 10Q’s or on Form 8-K filed during the year ended May 31, 2015.
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
We did not purchase any of our shares of common stock or other securities during our fiscal years ended May 31, 2015 and 2014.
Item 6.
Item 6. Selected Financial Data
As a “smaller reporting company,” we are not required to provide the information required by this Item.
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this annual report, particularly in the section entitled "Risk Factors" beginning on page 7 of this annual report.
Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
In accordance with Accounting Standards Codification (ASC) 205-20, Presentation of Financial Statements-Discontinued Operations, the Company reported the results of its PubCo Subsidiary operations as a discontinued operation.
Results of Operations
The following table provides selected financial data about our company as of May 31, 2015 and 2014.
Our increase in cash of $20,571 can be attributed to increased advances from related parties less the use in operations of the Company. Our total liabilities increased $4,628,516 almost entirely due to the increase in stock payable for common shares granted (with restrictions) to various directors, officers, and consultants of the Company for services and intangible assets and the $62,500 increase in related party advances.
The following summary of our results of operations, for the years ended May 31, 2015 and 2014 are as follows:
Revenue
Due to the start-up of the biomedical technology operations of the Company, we had minimal revenues for the period and presently do not anticipate any significant revenues for the immediate future.
Expenses
Operating expenses for the year ended May 31, 2015, increased by $4,210,386 as compared to the comparative year ended May 31, 2014. The increase in expenses can be attributed primarily to stock-based compensation of $4,141,169 related to the grant of restricted common shares to various directors, officers, and consultants of the Company.
Other expenses in 2014 consisted of $1,000 related to a forfeited option for a license with Northwestern University. The Company did end up licensing an asset from Northwestern University.
Discontinued Operations
Our PubCo Subsidiary, which has been reclassified as discontinued operations and was sold to its former owners on June 1, 2015, had an increase in net income of $9,588 from the year ended May 31, 2015 from May 31, 2014, due primarily to increased revenues and a reduction in certain operating expenses.
Plan of Operation
We are in the process of building a budget and timeline for development plans for the described product portfolio. We will be in a position to offer more details after completion of the next fundraising.
Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital and/or generate sufficient revenues to pay for our expenses. Our only source for cash at this time is investments and loans by others. We do not expect meaningful revenue for the current portfolio for the next seven years. We must raise cash to stay in business. We are currently in late stage discussions with several funding sources. Although there are no guarantees that a capital transaction will be consummated, we are confident that the efforts being put forth will be successful.
Panther Biotechnology, Inc. is an early stage company that has active operations, limited revenue, limited financial backing and limited assets. We are a biotechnology business and will grow and develop.
We will endeavor to proceed with our plan of operations by locating alternative sources of financing and growth of our business through revenues.
We are a public entity, subject to the reporting requirements of the Securities Exchange Act of 1934, and will incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses for annual reports and proxy statements. We estimate that these accounting, legal and other professional costs to be a minimum of $75,000 in the next year and will be higher, in the following years, if our business volume and activity increases. Increased business activity could greatly increase our professional fees for reporting requirements, and this could have a significant impact on future operating costs. The difference between having the ability to sustain our cash flow requirements over the next twelve months and the need for additional outside funding will be dependent upon whether we can sustain and/or increase our sales revenue and raise the appropriate amount of capital.
Limited Operating History and Need for Additional Capital
There is limited historical financial information about us on which to base an evaluation of our performance. We are a development stage company and generated limited revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in our rebranding efforts, and possible cost overruns due to the price and cost increases in supplies and services.
Liquidity and Capital Resources
Currently we do not have sufficient capital to fund our business development for the next 12 months. We have no committed source of outside future financing but continue to pursue such financing and are in discussions with various sources although there is no guaranty we will close on any of them. Our current directors have provided some funds to cover some of the Company’s costs. The following information does not include our PubCo Subsidiary, as its operations have been presented as Discontinued Operations.
Working Capital
Cash Flows
On May 31, 2015, the cash balance was $22,815 compared to $2,244 at May 31, 2014 and our total current assets from continued operations were $42,815 compared with $2,244 at May 31, 2014. The increase in cash and total current assets was primarily due an increase in advances from related parties less expenses for the Company.
On May 31, 2015, total liabilities from continued operations of $4,676,958 compared with total liabilities from continued operations of $25,480 as at May 31, 2014, the increase was primarily related to the $4,528,383 increase in stock payable related to the issuance of restricted shares to various directors, officers, and consultants of the Company for services and intangible assets.
On May 31, 2015, we had a working capital deficit from continued operations of $4,634,143 compared with a working capital deficit of $23,236 as of May 31, 2014. The increase in our working capital deficit was again primarily attributed to the increase in the stock payable for the issuance of grants of restricted shares to various directors, officers, and consultants of the Company for services and intangible assets.
Cash Flow from Operating Activities
During the year ended May 31, 2015, the Company had cash used in operating activities from continued operations of $1,516 as compared to cash used in operating activities from continued operations of $541 for the year ended May 31, 2014. The decrease was primarily attributed to corporate overhead at the Company, which was not in existence in the prior year.
Cash Flow from Investing Activities
During the year ended May 31, 2015, the Company had cash used in investing activities from continued operations of $0 as compared to cash used of $25,000 during the year ended May 31, 2014. This decrease in cash used was primarily related to the deposit of the acquisition of a license for $25,000 paid in 2014.
Cash Flow from Financing Activities
During the year ended May 31, 2015, the Company had cash provided by financing activities from continued operations of $62,500 from funds advanced from related parties, compared to $45,500 of funds advanced from related parties for the year ended May 31, 2014.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.
Recent Accounting Pronouncements
The Company does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 8.
Item 8. Financial Statements and Supplementary Data
Panther Biotechnology, Inc.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 2015 AND 2014
Page
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Panther Biotechnology, Inc.
We have audited the accompanying consolidated balance sheets of Panther Biotechnology, Inc. (the “Company”) as of May 31, 2015 and 2014, and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for the years then ended. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Panther Biotechnology, Inc. as of May 31, 2015 and 2014, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that Panther Biotechnology, Inc. will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, Panther Biotechnology, Inc. has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ GBH CPAs, PC
GBH CPAs, PC
www.gbhcpas.com
Houston, Texas
January 20, 2016
Panther Biotechnology, Inc.
Consolidated Balance Sheets
The accompanying notes are an integral part of these consolidated financial statements.
Panther Biotechnology, Inc.
Consolidated Statements of Operations
For the Years Ended May 31, 2015 and 2014
The accompanying notes are an integral part of these consolidated financial statements.
Panther Biotechnology, Inc.
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
For the Years Ended May 31, 2015 and 2014
The accompanying notes are an integral part of these consolidated financial statements.
Panther Biotechnology, Inc.
Consolidated Statements of Cash Flows
For the Years Ended May 31, 2015 and 2014
The accompanying notes are an integral part of these consolidated financial statements.
Panther Biotechnology, Inc.
Notes to Consolidated Financial Statements
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Organization and Business Activity
Panther Biotechnology, Inc. (the “Company”) was incorporated in the State of Nevada on July 11, 2011. The Company was originally incorporated as New Era Filing Services Inc., changed its name to NEF Enterprises, Inc. on October 4, 2011 and then changed its name to Panther Biotechnology, Inc. on May 29, 2014. The Company incorporated a wholly-owned subsidiary, PubCo Reporting Services, Inc., formerly known as New Era Filing Services, Inc., in Florida on November 20, 2012.
The Company is an early stage bio-medical technology company that pursues and is continuing to pursue in-licensing of certain technologies so that they may be able to develop those technologies for treatments of patients with cancer. Panther’s current purpose is to better serve the unmet medical needs of patients with the most difficult to treat cancers. Panther’s mission is to identify, license and acquire unique molecules that are designed to heal without causing harm and are either optimized derivatives of existing products, repurposed approved products or new classes of drugs.
The Company’s prior operations, through its wholly-owned subsidiary, PubCo Reporting Services, Inc. (“PubCo”), which is in the Securities Exchange Commission compliance filing services, was sold as of June 1, 2015 and is reflected as discontinued operations in these consolidated financial statements.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, PubCo Reporting Services, Inc. All significant intercompany balances and transactions have been eliminated in these consolidated financial statements.
Basis of Presentation
The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”). These consolidated financial statements include all adjustments that, in the opinion of management, are necessary in order to make the financial statements not misleading.
Discontinued Operations
In accordance with Accounting Standards Codification (ASC) 205-20, Presentation of Financial Statements - Discontinued Operations, the Company reported the results of our PubCo subsidiary operations as discontinued operations. On June 1, 2105, the Company sold its PubCo subsidiary.
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s periodic filings with the Securities and Exchange Commission include, where applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect the financial statements and future operations of the Company.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of less than three months, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value, to be cash equivalents.
Intangible Assets
Intangible assets are amortized using the straight-line method over their estimated period of benefit. We evaluate the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. All of our intangible assets are subject to amortization. No impairment of intangible assets was identified for the years ended May 31, 2015 and 2014.
Impairment of Long-Lived Assets
The Company reviews the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of the asset by estimating the future net undiscounted cash flows expected to result from the asset, including eventual disposition. If the future net undiscounted cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and estimated fair value.
Revenue Recognition
The Company recognizes revenue from the sale of services in accordance with ASC 605, “Revenue Recognition”. Revenue from discontinued operations consists of SEC compliance services; focusing on corporate and individual reporting requirements for our Discontinued Operations. Sales income is recognized only when all of the following criteria have been met:
i) Persuasive evidence for an agreement exists;
ii) Service has been provided;
iii) The fee is fixed or determinable; and
iv) Collection is reasonably assured.
Income Taxes
Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
Share-based Expenses
ASC 718 "Compensation - Stock Compensation" prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50, "Equity - Based Payments to Non-Employees." Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
Loss per Share
Basic loss per common share equals net loss divided by weighted average common shares outstanding during the period. Diluted loss per share includes the impact on dilution from all contingently issuable shares, including options, warrants and convertible securities. The common stock equivalents from contingent shares are determined by the treasury stock method. The Company incurred net losses for the years ended May 31, 2015 and 2014, and therefore, basic and diluted loss per share for those periods are the same as all potential common equivalent shares would be antidilutive.
The Company had no potentially dilutive securities, such as options or warrants, currently issued and outstanding as of May 31, 2015 and 2014.
Recent Accounting Pronouncements
The Company does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on its financial position, results of operations or cash flows.
Subsequent Events
The Company has evaluated all transactions through the date the consolidated financial statements were issued for subsequent event disclosure consideration.
NOTE 3 - GOING CONCERN AND LIQUIDITY CONSIDERATIONS
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has a cumulative net loss since inception of $4,215,869 and has required additional capital raises and advances from shareholders’ to support its operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The Company’s continuation as a going concern is dependent upon its ability to generate revenues and its ability to continue receiving capital from shareholders and other related parties and obtain financing from third parties. No assurance can be given that the Company will be successful in these efforts.
The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
License Agreement with Northwestern University
On January 26, 2015, the Company entered into a license agreement with Northwestern University (“Northwestern”). Northwestern is the owner of certain patents and grants for cancer treatments of which the Company has obtained an exclusive license under a Patent Rights agreement and a non-exclusive license under a Know-How agreement (together the “Licensed Product”).
According to the agreement, the Company must reach the following milestones to maintain the licenses:
a) Raise funds of at least $3 million by January 26, 2016. (The Company plans to request an extension from Northwestern but there is no guarantee that such extension will be granted);
b) Initiate good laboratory practices in preclinical studies with a Licensed Product within 18 months of the closing date;
c) File an Investigational new drug application within 4 years of the closing date;
d) First dosing of a patient in a phase I clinical trial for a Licensed Product within 5 years of the closing date;
e) First dosing of a patient in a phase II clinical trial for a Licensed Product within 6 years of the closing date;
f) First dosing of a patient in a phase III clinical trial for a Licensed Product within eight years of the closing date;
g) Submit a new drug application for a Licensed Product within 10 years of the closing date;
h) Complete and submit to Northwestern a business plan for commercialization of a Licensed Product within 1 year of submission of a new drug application (“NDA”) for such Licensed Product.
In consideration of the license granted by Northwestern, the Company shall pay to Northwestern the following:
a) A non-creditable, non-refundable licensing fee of $24,000 within 30 days of the closing date. The license fee was paid during the year ended May 31, 2014 and recorded as a license deposit. On January 26, 2015, the license deposit was capitalized as part of the intangible license purchase upon closing of the transaction.
b) In partial consideration of the grant of the exclusive rights and license to the assigned patent rights and non-exclusive license to the know-how of Northwestern, the Company agreed to issue Northwestern a number of shares of its common stock that will represent 2% of the total outstanding shares of the Company and, in consideration of Dr. Sui Huang’s role as co-founder and in anticipation of entering into a research agreement with Northwestern to support research in Dr. Sui Huang’s laboratory, the Company will issue to Dr. Sui Huang a number of shares of common stock that will represent 2% of the total outstanding shares of the Company; The fair value of the 186,282 common shares, based on the January 26, 2015 closing stock price of $2.01, was $374,427. The Company recorded an intangible license asset in the amount of $187,214 for the shares owed to Northwestern and recorded share-based compensation of $187,213 for the shares owed to Dr. Sui Huang. As of May 31, 2015, none of these shares had been issued and a stock payable in the amount of $374,427 was recorded. On September 12, 2015, one of the Company’s shareholders, and former Chairman of the Board, transferred 186,282 common shares of his own on behalf of the Company for the 4% of outstanding shares to be issued above.
c) The Company shall pay to Northwestern a non-creditable, non-refundable annual maintenance fee on each anniversary of the closing date according to the following schedule until the Company receives regulatory approval from the Federal Drug Administration (or foreign equivalent) (“Regulatory Approval”) of the first Licensed Product(s):
Time Periods
Amount
1st anniversary
2nd-4th anniversaries
$7,000
5th and 6th anniversaries
$25,000
7th anniversary and each year thereafter
$50,000
In the first full calendar year following Regulatory Approval, Northwestern shall credit 1/12 of the annual maintenance fee paid by the Company against the minimal royalty payments (see item (e) below) due for each full month remaining between January 1 of that year and the anniversary of the closing date.
d) The following non-creditable and non-refundable milestone payments upon the achievement of particular milestones in the development of Licensed Products (none of which have occurred as of May 31, 2015 and through the date of this filing):
(1) $25,000 upon filing of Investigational new drug application for a Licensed Product
(2) $50,000 upon dosing first patient in Phase I trial (or foreign equivalent) for a Licensed Product
(3) $100,000 upon dosing first patient in Phase II trial (or foreign equivalent) for a Licensed Product
(4) $250,000 upon dosing first patient in Phase III trial (or foreign equivalent) for a Licensed Product
(5) $1,500,000 upon Regulatory Approval of a Licensed Product
e) Beginning the first full calendar year after Regulatory Approval of a Licensed Product in the United States, Canada, Japan, France, Germany, United Kingdom, Australia, or Italy, or the year 2025, whichever comes first, the Company shall pay to Northwestern minimum royalty payments of $200,000 per year, on a quarterly basis.
f) The Company will reimburse Northwestern's out of pocket patent expenses totaling approximately $25,000 as of November 18, 2014. All future patent costs for the preparation, filing, prosecution, and maintenance of the Patent rights, shall be borne by the Company. Payment of out of pocket patent expenses will be deferred until the earlier of a) the date the Company closes on its first round of financing after the closing date or b) one year from the closing date. None of these events have occurred as of May 31, 2015 and through the date of this filing and the $25,000 reimbursement remains in deferral.
g) A running royalty of (a) 5% of net sales of Licensed Products if such Licensed Product is covered by patent rights in the country where such Licensed Product is manufactured or sold and (b) 2% of net sales of Licensed Products in all other countries. In the event that Licensee enters into other license agreements) with third parties with respect to intellectual property which in the Company's opinion is legally required for the manufacture, use or sale of Licensed Product(s), the Company may offset amounts paid to such third parties against earned royalties due Northwestern hereunder, by reducing Licensee's obligation to Northwestern by 0.25% for each 1% of royalty rate payable to third parties; provided, however, that in no event will the royalty rate otherwise due to Northwestern be less than 2.5%;
h) In addition to the running royalties described above, 15% of any payments, including, but not limited to, sublicense issue fees or milestones received from sub licensees as consideration for Patent Rights or Licensed Products prior to filing of an NDA; 5% after filing an NDA;
i) In the event of a corporate partnership for the development and/or commercialization of a Licensed Product, 10% of any payments received from such corporate partner as consideration for patent rights or Licensed Products. Payments received by the Company for equity and payments allocated solely for research are excluded;
j) The Company subject to certain payments if the Company issues sublicenses, permit assignments on the agreement, or in the event of a corporate partnership for the development and /or commercialization of a licensed product;
k) In the event of a permitted assignment of the agreement, 10% of any payments received from such assignee as consideration for patent rights or Licensed Products.
The agreement will continue in effect, on a country-by country basis, until the expiration of the last to expire of patent rights. However, we maintain a close relationship with Northwestern, as they are a significant shareholder in the Company, the Inventor of the Licensed Products sits on our Board of Directors as well as a venerated Professor of Hematology at the Feinberg Medical School (Northwestern’s medical school).
Blue Print Partners Group
On April 7, 2015, the Company entered into a twelve-month consulting agreement with Blue Print Partners and its principal, Tim Boyd, to assist in, among other items, the daily merger and acquisition activities of the Company, raising capital, and the possible acquisition of pre-identified biotech assets. Mr. Boyd was to be paid a signing fee of 6,250 shares of the Company’s common stock with a fair value of $50,000 on closing and a retainer of $12,500 per month plus out-of-pocket costs. Mr. Boyd would also have been entitled to various success fees ranging from seven percent (7%) to ten percent (10%), based on the type of transaction, of the total value of any transaction, and would be payable in shares of the Company’s common stock. Mr. Boyd would have earned a success fee of $100,000 plus 10% of the transaction value in the Company’s stock in the event of a closing of a transaction of an acquisition of an agreed upon target company, a success fee upon the closing of a financing of 5% cash or 10% in Company stock (7% cash or 12% stock for Mezzanine or Equity financing) if Boyd had introduced us to the investor or lender, or a success fee of $100,000 on the sale of any of the Company assets through Mr. Boyd. None of these potential targets had been met by Mr. Boyd prior to the termination of this Agreement. Due to Mr. Boyd’s improper and unauthorized activities in a number of transactions, the Company terminated this agreement on August 18, 2015, and informed Mr. Boyd he would not be receiving any shares and the Company demanded the return of $10,000 delivered to Mr. Boyd for the purposes of legal fees for a possible transaction. The Company has instituted legal proceedings against Mr. Boyd due to a pattern of conduct by Mr. Boyd after the consulting agreement was signed that the Company believes was wholly improper and is seeking significant damages from Mr. Boyd for damages caused due to his actions. The Company recorded a stock payable of $50,000 for the 6,250 signing fee shares and accrued $25,000 for the April and May retainer amounts due under the agreement as of May 31, 2015, pending resolution of this matter.
License Agreement with University of Rochester
On April 16, 2015, the Company entered into an exclusive patent license agreement with University of Rochester (“Rochester”). Rochester grants to the Company a worldwide exclusive, royalty-bearing license, with the right to sublicense, for patents and technology related to the treatment of diabetes (the “Patent Products”). According to the agreement, the Company will reimburse Rochester for all mutually agreed fees and costs relating to the filing, prosecution, and maintenance of patent applications, including without limitation, interferences, oppositions, and reexaminations, and the maintenance and defense of patents in patent rights, including fees and cost incurred on, and after the closing date of the agreement.
As partial consideration for the rights conveyed by Rochester under this agreement, the Company agreed to issue 25,437 shares of the Company’s common stock to Rochester as a one-time, non-refundable, non-creditable license issue fee valued at $200,000 based upon the average price per share during the week preceding the closing date, which was $7.86. Rochester may not transfer the shares before August 30, 2016. The Company capitalized the $200,000 as an intangible license asset on the consolidated balance sheet. As of May 31, 2015, the shares had not been issued and a stock payable of $200,000 was recorded.
In addition to the above license fee, for the term of the agreement on an annual basis measured from the closing date of the agreement, the Company will pay at the beginning of the following year a non-refundable minimum annual maintenance fee of $15,000 in cash or Company stock each year prior to the onset of clinical trials. Rochester will waive the pre-clinical trial annual maintenance fee if the Company spends at least $200,000 annually on the drug development that would impinge the patent rights conveyed. After onset of clinical trials, the Company will pay a non-refundable minimum annual maintenance fee of $25,000 in cash or Company stock each year or part of year until the first product is commercialized and sales royalty payments begin. Annual maintenance fees paid in cash will be credited against the costs of maintaining the Patent Rights for that year.
During the term of this Agreement, the Company agreed to pay to Rochester an earned royalty of 5% of the first $10,000,000, 4% of the second $10,000,000, 3% of the third $10,000,000, 2% of the fourth $10,000,000 in net sales revenue produced from Patent Products, and l % of all remaining net sales revenue produced from Patent Products. Earned royalty payments are due and payable within 30 days of the end of each calendar quarter.
The Company agreed to pay to Rochester 50% of all cash and non-cash consideration derived from sublicenses granted by the Company in Patent Products, excluding earned royalties, loans, equity investments, and research and development support.
The Company agreed to pay Rochester the milestone payments per product as set forth below:
a) If the Company sponsors Phase I, II and III clinical trials, the Company will pay $500,000 within 30 days of approval of any Patent Product;
b) If the Company sells a controlling interest in or sublicenses substantially all of the Patent Products before the initiation of Phase II clinical trial, the Company will pay:
1) $200,000 within 30 days of initiation of Phase II clinical trial;
2) $200,000 within 30 days of initiation of Phase III clinical trial; and
3) $300,000 within 30 days of approval of a Patent Product
As of May 31, 2015, and through the date of this filing, none of the milestones noted above for Rochester have been met.
The term of this Agreement will commence on the closing date and will end upon the latest of (i) expiration of the last-to-expire valid claim of the Patent Products; or (ii) the 10 year anniversary of commercial launch of any Patent Product.
NOTE 5 - INTANGIBLE ASSETS
Intangible assets consisted of the following as of May 31, 2015 and 2014:
The Company is amortizing the intangible licenses over the 10 year term of the license agreements with Northwestern and Rochester, see Note 4. The Company recorded amortization of $10,374 and $0, respectively, for the years ended May 31, 2015 and 2014.
NOTE 6 - RELATED PARTY ADVANCES
As of May 31, 2015 and 2014, total advances from certain officers, directors and shareholders of the Company were $87,500 and $25,000, respectively, which was used for payment of general operating expenses. The related parties advances have no conversion provisions into equity, are due on demand and do not incur interest.
NOTE 7 - STOCK PAYABLE
On January 26, 2015, the Company entered a license agreement with Northwestern University, see Note 4. As part of the agreement, the Company agreed to issue 186,282 shares, for which it recorded as an intangible license asset in the amount of $187,214 for the shares owed to Northwestern and recorded share-based compensation of $187,213 for shares owed to Dr. Sui Huang. As of May 31, 2015, none of these shares had been issued and a stock payable in the amount of $374,427 was recorded. On September 12, 2015, one of the Company’s shareholders, and former Chairman of the Board, transferred 186,282 common shares of his own on behalf of the Company for the 4% of outstanding shares to be issued above.
On February 4, 2015, the Board of Directors approved the issuance of 1,320,000 shares of restricted common stock, with a fair market value of $3,432,000 based on our stock closing price of $2.60, to the directors and the Chairman of the board for their services. The shares will vest monthly and be amortized over the following periods:
1) 33% of the restriction will be removed on February 4, 2016,
2) an additional 33% of the restriction will be removed on February 4, 2017,
3) and the final 34% of the restriction will be removed on February 4, 2018.
On February 12, 2015, the Board of Directors approved the issuance of 280,000 shares of restricted common stock, with a fair market value of $1,069,600 based on our stock closing price of $3.82, to the CEO for services. The shares will vest monthly and be amortized over the following periods:
1) 33% of the restriction will be removed on February 12, 2016,
2) an additional 33% of the restriction will be removed on February 12, 2017,
3) and the final 34% of the restriction will be removed on February 12, 2018.
On April 2, 2015, the Board of Directors approved the issuance of 260,000 shares of restricted common stock, with a fair market value of $1,807,000 based on our stock closing price of $6.95, to a consultant and the CFO of the Company for services. The shares will vest monthly and be amortized over the following periods:
1) 33% of the restriction will be removed on April 2, 2016,
2) an additional 33% of the restriction will be removed on April 2, 2017,
3) and the final 34% of the restriction will be removed on April 2, 2018.
As of May 31, 2015, a stock payable in the amount of $1,047,167 was recorded for the vested shares related to the transactions above on February 4th, February 12th, and April 2nd, for which none of the shares had been issued as of May 31, 2015. Unamortized share-based compensation of $5,009,720 remained as of May 31, 2015 for unvested common shares.
On April 7, 2015, the Company entered into a twelve-month consulting agreement with Blue Print Partners, see Note 4. Per the terms of the agreement, the Company granted 6,250 common shares, with a fair market value of $50,000 based on our stock closing price of $8.00, as a signing fee and recorded a stock payable of $50,000. All shares remained unissued as of May 31, 2015.
On April 16, 2015, the Company agreed to issue 25,437 shares of the Company’s common stock to Rochester as a one-time, non-refundable, non-creditable license issue fee valued at $200,000 based upon the average price per share during the week preceding the closing date, which was $7.86, see Note 4. The Company capitalized the $200,000 as an intangible license asset on the consolidated balance sheet. As of May 31, 2015, the shares had not been issued and a stock payable of $200,000 was recorded.
During the year ended May 31, 2015, the Company granted 488,340 common shares to various individuals for services with a fair value of $2,856,789. The shares remained unissued as of May 31, 2015 and a stock payable was recorded.
NOTE 8 - INCOME TAXES
We recognize the financial statement effects of tax positions when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by a taxing authority. Recognized tax positions are initially and subsequently measured as the largest amount of tax benefit that is more likely than not of being realized upon ultimate settlement with a taxing authority. We have not taken a tax position that, if challenged, would have a material effect on the consolidated financial statements or the effective tax rate for the years ending May 31, 2015 and 2014.
Each of the three tax years the Company has been in operation are subject to examination by the Internal Revenue Service. The Company has net operating losses of approximately $100,000 that begin to expire on May 31, 2031. The change in the Company’s valuation allowance for the years ended May 31, 2015 and 2014 was $94,735 and $18,876, respectively.
The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 34% to the net income/(loss) before provision for income taxes for the following reasons:
Net deferred tax assets at statutory rates consisted of the following components as of:
NOTE 9 - SHAREHOLDERS’ EQUITY
Authorized Stock
The Company has authorized 100,000,000 common shares and 10,000,000 preferred shares, both with a par value of $0.001 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.
NOTE 10 - DISCONTINUED OPERATIONS
On June 1, 2015, the Board of Directors determined that is would cease all operations and sell its PubCo subsidiary. The Company’s board of directors decided that is was in the best interest of the Company to sell PubCo due to the operations not fitting into the mission and future business operations of the Company. The summarized operating results for discontinued operations for PubCo are as follows:
Summary of assets and liabilities of discontinued operations is as follows:
NOTE 11 - SUBSEQUENT EVENTS
On June 1, 2015, the Company entered into a stock purchase agreement to sell 100% of the outstanding common shares of its wholly owned subsidiary, PubCo Reporting Services, Inc., for $10. As a result of the transaction, the Company recorded a loss on deconsolidation in the amount of $71,674 in June 2015.
In June 2015, the Company entered into consulting agreements with two individuals to provide the following services, one for the city of Kansas City, and one for the balance of the greater area of Missouri:
(1) In a capacity of investor relations, facilitating and coordinating conference calls, one on one meetings, and group meetings between the Company and potential public market investors.
(2) In a capacity of business development, facilitating and coordinating conference calls, one on one meetings, and group meetings between the Company and potential synergistic corporate alliances.
(3) In a capacity of product development, facilitating and coordinating conference calls, one on one meetings, and group meetings between the Company and potential medical alliances such as physicians, nurses and medical executives.
Each consultant was compensated with an initial amount of 3,000 common shares of the Company, with a fair market value of $34,800 based on our stock closing price of $5.80, upon execution of their agreements and these shares were issued on July 6, 2015. The consultants will also each be paid 1,000 common shares a month, until the agreements are terminated, which are terminable by either party at any time and as of the date of this filing 12,000 accrued shares had yet to be issued.
Alchemia Oncology / Blueprint Partners
On June 27, 2015, the Company entered into a binding term sheet to acquire Alchemia Oncology Pty LTD (“Alchemia”), a subsidiary of Alchemia LTD listed on the Australian Stock Exchange. The transaction was brought to the Company by Tim Boyd of Blueprint Partners, whom the Company engaged to seek potential acquisitions of Australian biotechnology candidates on a success fee basis, see Note 4. Mr. Boyd identified and negotiated directly with Alchemia and agreed on the transaction terms. Mr. Boyd subsequently presented those terms to the Company. Mr. Boyd guaranteed the due diligence and a financing of $10,000,000 should the Company engage in the transaction, with a short term guarantee of $500,000 simply to execute the term sheet. The agreement that Mr. Boyd negotiated required a final mutually agreed upon asset purchase agreement containing certain milestone achievements in the short term, including but not limited to, a filing of an S-1 registration statement and applying for a listing on the NASDAQ. The acquisition consideration was $15,000,000 worth of the Company’s common shares. The guaranteed price of the first tranche of the Blueprint Partners financing was $5 per share. The Company believed the transaction to be of minimal risk. However, initial failure of Blueprint to deliver the financing resulted in the failure to achieve certain milestones per the term sheet which then subjected the Company to a break fee of $500,000 (which the Company takes the position that it is not liable if such fee were ever pursued). The Company was unable to agree upon the terms of the asset purchase agreement as well as unable to achieve the milestones on a timely basis due to both Alchemia withholding critical data and Mr. Boyd improperly misrepresented his ability to deliver the requisite financing concurrent with the execution of the term sheet. In addition, the Company discovered questionable board relationships and practices amongst themselves and Mr. Boyd. Also, certain statements and actions from Alchemia appeared contradictory to the expectations of the relationship. The Company made every attempt to understand and resolve the situation, however, the Company suspects that possible collusion amongst the parties made the transaction absolutely impossible to consummate. Although the Company is still willing to explore a relationship with Alchemia and remains interested in how the technology was originally represented, currently there is no negotiation or agreement in place. The Company believes it is entitled to damages and has initiated litigation against Tim Boyd and Blueprint Partners and determining whether other parties should be part of the litigation in any capacity. This is not expected to have a material impact on the Company.
On July 6, 2015, the Company issued 1,771,687 common shares for the settlement of $1,297,167 of stock payable recorded as of May 31, 2015. The Company also issued 65,000 additional common shares to the chief financial officer for services and 6,873 shares to a consultant for services with an aggregate fair value of $394,583.
Faulk Pharmaceuticals
On July 14, 2015, the Company closed on an asset acquisition agreement with Faulk Pharmaceuticals, Inc. (“Faulk”). The assets include 23 granted patents owned by Faulk, related to treatment of cancer, virus infections, and treatment of parasitic infections.
The Company issued 50,000 shares of common stock, with a fair market value of $274,000 based on our stock closing price of $5.48. The shares may be sold by Faulk, assigned or transferred in the open market subject to compliance with securities laws and vest monthly over the following schedule:
1) 33% of the shares beginning 6 months after the closing date
2) an additional 33% of the shares beginning 9 months after the closing date
3) the remaining 34% of the shares beginning 12 months after the closing date
For each calendar year continuing until the date that is 10 years after the expiration of the last of the patents conveyed to the Company, a royalty on net revenue received by the Company in that year from the sales or licenses of any products commercialized by the Company, its successors or assignees as a direct result of the assets acquired or the technology or processes related to the assets acquired, in the following amount:
1) 5% of the first $10,000,000 in such net revenue;
2) 4% of the second $10,000,000 in such net revenue
3) 3% of the third $10,000,000 in such net revenue
4) 2% of the forth $10,000,000 in such net revenue and
5) 1% of such net revenue in excess of $40,000,000
Typhenex
On August 20, 2015, the Company entered into certain agreements with Typhenex Co-Investment, LLC (“Typhenex”), whereby the Company issued $1,215,000, 9.1% original issue discount, convertible notes, which may be drawn down upon over a period of time, as described below. The notes bear interest at the rate of 10%, and each note will be due 31 months after its issue date. The notes can be drawn down in tranches, with the first tranche of $220,000 pulled down on closing, and the second tranche of $220,000 will be funded three months after the first one. Thereafter the last three tranches can be funded anytime based on the mutual consent of the Company and Typhenex. The balance of the tranches can be funded if the Company is not in default of any term of the agreements, the average and median daily dollar volume of the Company’s common stock for the previous 20 trading days prior to a drawdown must be greater than $15,000, and the market capitalization of the Company’s common stock must be greater than $25,000,000. The notes have a conversion price of $7.50 per share, subject to reduction if the Company issues other convertible securities below the conversion price. The first payment due on any given note will be 180 days after a drawdown, and then continue in equal installments for the next 24 months until paid back in full. For each $220,000 drawdown, the installment due will be $9,680. Such installment can be paid in either cash or the Company’s common stock (issued at market price as defined). Typhenex and its affiliates have agreed to not short the Company’s stock during any market price calculation period under the terms of the agreements. Events of default under the terms of the agreements consist of i) failure to repay any note when it is due, ii) failure to deliver shares to the holder within 3 days of conversion, iii) a judgment entered against the Company for an amount greater than $100,000, and iv) failure to maintain authorized but unissued shares of the Company’s common stock equal to 3 times the number of shares required to convert any outstanding notes. In the event of a default, Typhenex shall have the right to have the notes redeemed at 125% of the outstanding balance immediately due prior to such default, and interest accrues at the rate of 22% until paid. Typhenex or its affiliates shall never own more than 9.99% of the Company’s common stock. The notes may be prepaid at any time in an amount equal to 125% of the outstanding amount of principal plus the accrued and unpaid interest. An 8% fee, or $17,600, was paid to Wellington Shields on behalf of Typhenex and a 3% fee, or $6,600, was paid to Frank McGloin on behalf of the Company based on the first drawdown.
Stock Purchase Agreement
On August 28, 2015, the Company entered into a Stock Purchase Agreement with a private non-affiliated investor to sell 33,000 shares of the Company’s common stock, at a price of $5.00 per share. The closing occurred on August 28, 2015. The investor also received a common stock purchase warrant for the right to purchase 33,000 shares at a purchase price of $6.00 per share. The warrant expires on August 27, 2020. The investor also received 22,000 shares of the Company’s common stock, with a fair market value of $112,200 based on our stock closing price of $5.10 that will vest over six months, as consideration for a one year consulting agreement to the Company. The investor has agreed to assist the Company in the capacity of investor relations, introductions to potential public market investors in the Chicago area, business development and facilitating with potential synergistic corporate alliances, and potential alliances with medical practices, etc. in the Chicago area.
Excelsior Global Advisors
On September 1, 2015, the Company entered into a Master Services Agreement with Excelsior Global Advisors LLC (“Excelsior”). Excelsior will:
· Advise and assist company in developing and implementing appropriate plans and materials for presenting the Company and its business plans, strategy and personnel to the financial community
· Introduce said Company to the financial community
· With the cooperation of the Company, maintain an awareness during the term of the agreement of the Company’s plans and strategy as it relates to the financial community
· Assist in monthly geographically organized introductions to broker dealers, micro-cap funds and high net worth individuals to compliment the below services.
· Introductions to call centers, bloggers, media and newsletter writers.
· Upon receipt of the Company’s approval and in consultation with the Company, conduct meetings in person or by telephone, with prospective brokers or the investment public in combination with above marketing programs.
· Assist company in necessary steps for financial and public relations.
In consideration for services, the Company shall pay to Excelsior:
(a) $35,000 cash payment due on signing and the 1st day of each month, subject to (c) below.
(b) 15,000 shares of the Company’s common stock that will be eligible for Rule 144 as promulgated under the Securities Act of 1933, as amended, earned on the first day of the month and deliverable by the 20th day of each month during the term of this agreement.
(c) Excelsior acknowledges that the Company will defer the cash payment due each month until the Company raises a minimum of $3 million dollars. This deferment will not last more than 3 months.
(d) The Company will reimburse Consultant for any pre-approved, in writing, travel or other expenses and the Consultant shall submit such expenses to the Company monthly for reimbursement.
The initial term of the Master Services Agreement is six (6) months with an additional six-month continuation unless terminated by either party in writing.
As of the date of this filing, the Company owed Excelsior 60,000 common shares under this agreement which have not been issued.
On September 12, 2015, a shareholder of the Company issued 674,622 shares of his own on the Company’s behalf for the settlement of $3,231,216 of stock payable recorded as of May 31, 2015. Of these shares, 488,340 were related to services and 186,282 were for the Company’s license purchase from Northwestern, see Note 4.
Officer Compensation
In November 2015, the Compensation Committee authorized compensation for Mr. Levine, the Chief Executive Officer of the Company and Mr. Ruben, the Chief Financial Officer and General Counsel of the Company, as follows:
· A $25,000 lump sum payment to be payable between November and December 2015 (which was paid)
· 2016 salary established at $15,000 per month commencing January 15th, 2016
· Healthcare reimbursement as is reasonable as determined by management
· 2016 bonus, if warranted, will be determined at the discretion of the compensation committee and paid in a lump sum between November and December 2016.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
On September 11, 2014, the Board of Directors of Panther appointed GBH CPAs, PC as its registered public accounting firm replacing Sadler, Gibbs & Associates.
Item 9A.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 (Exchange Act) Rules 13a-15(e) or 15d-15(e)) as of the end of the period covered by this annual report, has concluded that our disclosure controls and procedures were not effective and that material weaknesses described below exists in our internal control over financial reporting based on his evaluation of these controls and procedures as required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and the Chief Financial Officer and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Our evaluation of internal control over financial reporting includes using the COSO framework, an integrated framework for the evaluation of internal controls issued by the Committee of Sponsoring Organizations of the Treadway Commission, to identify the risks and control objectives related to the evaluation of our control environment.
Based on our evaluation under the frameworks described above, our management concluded that as of May 31, 2015, that our internal controls over financial reporting were not effective and that material weakness exists in our internal control over financial reporting. The material weaknesses consists of controls associated with segregation of duties, no audit committee, and a lack of written policies and procedures for internal controls. To address the material weaknesses we performed additional analyses and other post-closing procedures to ensure that our consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Notwithstanding this material weakness, management believes that the financial statements included in this Annual Report on Form 10-K fairly present, in all material respects, our financial condition, result of operations and cash flows for the periods presented.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation requirements by the Company’s registered public accounting firm pursuant to an exemption provided by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Changes in Internal Control over Financial Reporting
There was no change in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the quarter ended May 31, 2015 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 9B.
Item 9B. Other Information
None.
PART III
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance
All directors of our company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. The officers of our company are appointed by the Board of Directors and hold office until their death, resignation or removal from office. The directors and executive officers, their ages, positions held, and duration as such, are as follows:
Business Experience
The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of our company, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.
Richard Rainey - former President, Chief Executive Officer, Secretary and Treasurer
(1) Richard Rainey held the title of President, CEO, CFO and treasurer, from May 20, 2014 until his termination on February 12, 2015. The Company is in a dispute with Mr. Rainey regarding his performance and termination from the Company.
Mr. Rainey is a Certified Public Accountant and has over twenty years of experience in forming, capitalizing and running biotechnology companies at all stages of development. Mr. Rainey has worked for Pharmaceutical and Biotechnology companies in many capacities, most recently as Chief Executive Officer of a publicly traded company and Chief Operating and Financial Officer for multiple private companies. As a CPA, Mr. Rainey has worked with multiple small, large and international companies providing consulting and business expertise.
Irwin Zalcberg - former Chairman of the Board
(2) Irwin “Izzy” Zalcberg resigned as the Chairman of the Board of the Company on June 1, 2015. Mr. Zalcberg was a founding member of the Company. Mr. Zalcberg is a well-known small cap investor, visionary stock market guru and cancer survivor, graduated from the University of Illinois with a BA in finance. Between 1971 and 1974, he worked at Merrill Lynch as an account executive. Thereafter, he worked on the floor of the Chicago Board of Trade (CBOE) representing Merrill Lynch’s proprietary risk arbitrage department.
From 1975-1991 Mr Zalcberg was an independent floor trader on the CBOE and held a Chicago Board of Trade mini seat.
Mr Zalcberg is a survivor of Non -Hodgkin’s Lymphoma.
Jayesh Mehta, M.D. - Director
Dr, Mehta is a professor of medicine with Northwestern University Feinberg School of Medicine. Dr. Mehta is also a Director of the Hematopolietic Stem Cell Transplant Program and the Deputy Director of the Comprehensive Transplant Center with Northwestern Medicine. Dr. Mehta did fellowships in Stem Cell Transplantation and Hematology at Hadassah University, in Jerusalem, Israel and the Royal Marsden Hospital in the United Kingdom.
Richard Corbin - Director
Mr. Corbin is a co-founder of Panther Biotechnology, Inc. and has over 16 years of investment analysis and operational experience with early state companies. Currently, Mr. Corbin is the Chief Financial Officer and co-founder of Level Funded Health Partners, an institutionally backed national health insurance agency focused on bringing innovative healthcare cost solutions to small businesses. Prior to Level Funded Health Partners, Mr. Corbin was the CFO for ForeverCar, a venture-backed start-up focused on improving and bringing transparency to the vehicle service contract industry. Prior to ForeverCar, Mr. Corbin performed financial analysis on capital raises with early state private and public companies while at Daybreak Special situations Fund. Mr. Corbin all manages Corbin Capital LLC a fund focused on early stage and seed round investments. Mr. Corbin holds a BBA from Mendoza College of Business at the University of Notre Dame and an MBA from DePaul’s Kellstadt Graduate School for Business.
David Barshis - Director
Mr. Barshis is the President and COO of Arizona Isotopes Science Research Corp., a company which plans to build and operate a cyclotron facility for the manufacture and sale of medical isotopes. Mr. Barshis is an accomplished senior healthcare executive with over 25 years of experience in organizing, building and managing life sciences businesses and brands in the United States and internationally. As a consultant with a focus on startups and early-stage ventures over the past five years, he has helped to raise more than $50 million in venture funding and PIPE financings. Mr. Barshis brings a strong background in biotech/pharmaceuticals, as well as the vitamins, minerals and supplements (VMS0 and consumer (OTC0 pharmaceutical markets having led the startup of new enterprises, launched multiple new products and guided the growth of several iconic healthcare brands. Prior to that, Mr. Barshis served in senior management roles for Warner Lambert, Procter & Gamble, Burroughs Wellcome Pharmaceuticals, Zila Pharmaceuticals and Sigma Tau Consumer Healthcare. Mr. Barshis received his B.B.B A from the College of William and Mary and earned an MBA from the Kellogg School of Management at Northwestern University.
John Norton, Ph.D. - Director
Dr. Norton currently works as a Scientist for Bionomics Inc., which conducts oncology drug discovery experiments with cancer and CNS drugs. Prior to that Dr. Norton was a Scientist for a start-up, Eclipse Therapeutics, which was subsequently purchased by Bionomics Inc. Dr. Norton is a co-founder of Panther Biotechnology, Inc. and was part, as a graduate student at Northwestern University, of the inventive team that created Numonafide, which has been licensed by the Company. Dr. Norton has a PHD in Cancer Biology and Drug Discovery from Northwestern University. Dr. Norton completed post-doctoral fellowship at UCSD Moores Cancer Center in the laboratory of Dennis Carson for three years. Dr. Norton completed an Advanced Certification in Clinical Research at UCSD and has almost completed his MBA at USD.
Heinz-Josef Lenz, M.D. - Director
Dr. Heinz is the Associated Director for Adult Oncology and Co-Leader of the Gastrointestinal Cancers Program at the USC Morris. Dr. Heinz is a Professor of Medicine and Preventive Medicine, Section Head of GI Oncology in the Division of Medical Oncology and Co-Director of the Colorectal Center at the Keck School of Medicine of the University of Southern California. Dr. Heinz received his medical degree from Johannes-Gutenberg Universitat in Mainz, Germany in 1985. Dr. Heinz completed his residency in Hematology and Oncology at the University Hospital Tubingen in Germany, a clerkship in Oncology at George Washington University in Washington D.C. and a clerkship in Hematology at Beth Israel Hospital of Harvard Medical School in Boston, Massachusetts. Dr. Heinz also served subsequent fellowships in Biochemistry and Molecular Biology at the USC Morris. Dr. Heinz has been awarded a number of honors and awards and is a member of a number of professional societies and has authored a number of peer-reviewed publications and papers.
James Sapirstein, R.Ph. - Director
Mr. Sapirstein is currently the Chief Executive Officer and a Director of Contravir Pharmaceuticals, Inc. since March 19, 2014. Mr. Sapirstein was the chief executive officer of Alliqua Inc., where he helped lead the transformation of transdermal wound care and drug delivery technology into a premier wound care organization from October 2012 to February 2014. Mr. Sapirstein was the chief executive officer of Tobira Therapeutics, a New Jersey based biopharmaceutical company focused on the development of novel HIV and infectious disease compounds, from October 2006 to April 2011. From June 2002 until May 2005, Mr. Sapirstein was Executive Vice President for Serono Laboratories where he led a team of over 100 professionals to rebuild a struggling HIV and pediatric growth hormone business.
Evan Levine - Chairman of the Board, President, and Chief Executive Officer
Mr. Levine has served as a Director and our President, Chief Executive Officer and Chief Financial Officer since February 2015. Mr. Levine also became the Chairman of the Board on June 1, 2015. Mr. Levine encompasses over two decades plus of in-depth expertise in strategic ventures, executive supervision, asset management and the institutional investment business. He is also the Founder and Managing Partner of Mark Capital LLC, a family office focused on microcap restructuring investment and management. Prior to joining Panther, from February 2013 until February 2015, Mr. Levine served as the Chairman of the Board and Chief Executive Officer of Valley Forge Composite Technologies, an entity in the aerospace and securities industries, where he architected and implemented a sophisticated bankruptcy restructuring and reorganization while managing multifarious complex litigation actions designed to return value to the decimated stakeholders. Prior, as Founder and Managing Partner of Mark Capital LLC, Mr. Levine has executed and orchestrated multiple corporate restructurings and change management dealings. From 2002 until 2008, Mr. Levine served in multiple roles including Chief Operating Officer, President, Chief Executive Officer, and Vice Chairman at Adventrx Pharmaceuticals, a publicly traded biotech company focused on oncology and antiviral drug development.
Philip E. Ruben - Chief Financial Officer, Treasurer and Secretary and General Counsel
Mr. Ruben has served as Chief Financial Officer, Treasurer and Secretary since July 9, 2015 and General Counsel since August 6, 2015. Mr. Ruben has been a practicing lawyer with 4 different firms over the last 32 years. Mr. Ruben graduated from the University of Illinois in 1980 with a BS in accounting and received his CPA certificate in 1982. Mr. Ruben graduated from IIT Chicago Kent College of Law in 1983. Mr. Ruben was a partner with the frim of Ruben, Firsel and Ross, LLC from February 2011 until December 2014 and became “Of Counsel” to the firm of Firsel Ross, LLC in January 2015 and continues to act as “Of Counsel to the firm. Mr. Ruben from February 6, 2015 until August 5, 2015 served a suspension issued by the Illinois Registration and Disciplinary Commission of his ability to practice law in the state of Illinois. The suspension did not involve securities in any manner but related to his representation of a client in a much disputed matter. Prior to February 2011, Mr. Ruben was a partner with Arnstein & Lehr, Chicago, Illinois. Mr. Ruben also filed a Chapter 7 Bankruptcy case in April 2010 and received a discharge in September 2010. Mr. Ruben’s career has been focused on representing private and public companies and has extensive experience in securities, mergers & acquisitions, venture capital investment and both public and private equity and leveraged transactions. Mr. Ruben has been General Counsel or special securities counsel for many public companies, including AG&E Holdings, Inc. (formerly known as Well-Gardner Electronics Corporation), Rymer Foods, Inc., Entrade, Inc., The Lori Corporation, among others. Mr. Ruben is also the principal of RFR Tax Services, LLC, a business preparing individual and business tax returns and providing tax services. Mr. Ruben served as president of the North Suburban YMCA and recently saved the facility from foreclosure by restructuring loans, attracting new donors and members, and reorganizing management.
Employment Agreements
For the year ended May 31, 2015, we had no formal employment agreements with any of our employees, directors or officers.
Family Relationships
There are no family relationships between any of our directors, executive officers and proposed directors or executive officers.
Involvement in Certain Legal Proceedings
Except as may have been noted above, none of our directors, executive officers, promoters or control persons has been involved in any of the following events during the past five years:
1. A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
2. Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
3. Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
i.
Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity
ii.
Engaging in any type of business practice; or
iii.
Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
4. Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;
5. Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
6. Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
7. Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
i.
Any Federal or State securities or commodities law or regulation; or
ii.
Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
iii.
Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
8. Such person was 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.
Compliance with Section 16(a) of the Exchange Act
Our Company’s common stock is registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, officers, directors and principal shareholders are subject to the beneficial ownership reporting requirements of Section 16(a) of the Exchange Act. The directors and officers are not current in their filings but the Company is working on them and should be current within a few days of this filing. However, the filings are late for every director and officer but no director or officer has sold shares of the Company’s common stock in violation of Section 16(a).
Code of Ethics
We have adopted a Code of Business Conduct and Ethics that applies to, among other persons, members of our Board of Directors, our company's officers including our president, chief executive officer and chief financial officer, employees, consultants and advisors. As adopted, our Code of Business Conduct and Ethics sets forth written standards that are designed to deter wrongdoing and to promote:
1. honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
2. full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission and in other public communications made by us;
3. compliance with applicable governmental laws, rules and regulations;
4. the prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons identified in the Code of Business Conduct and Ethics; and
5. accountability for adherence to the Code of Business Conduct and Ethics.
Our Code of Business Conduct and Ethics requires, among other things, that all of our company's senior officers commit to timely, accurate and consistent disclosure of information; that they maintain confidential information; and that they act with honesty and integrity.
In addition, our Code of Business Conduct and Ethics emphasizes that all employees, and particularly senior officers, have a responsibility for maintaining financial integrity within our company, consistent with generally accepted accounting principles, and federal and state securities laws. Any senior officer, who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to our company. Any failure to report such inappropriate or irregular conduct of others is to be treated as a severe disciplinary matter. It is against our company policy to retaliate against any individual who reports in good faith the violation or potential violation of our company's Code of Business Conduct and Ethics by another.
Our Code of Business Conduct and Ethics is attached hereto as Exhibit 14. We will provide a copy of the Code of Business Conduct and Ethics to any person without charge, upon request. Requests can be sent to: Panther Biotechnology, Inc., 2801 Lakeside Drive, Suite 207B, Bannockburn, IL 60015.
Board and Committee Meetings
Our Board of Directors currently consists of Messrs. Mehta, Corbin, Barshis, Lenz, Sapirstein and Levine and Norton. The Board held three formal meetings during the year ended May 31, 2015. As our company develops a more comprehensive Board of Directors, all proceedings will be conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Nevada General Corporate Law and our Bylaws, as valid and effective as if they had been passed at a meeting of the directors duly called and held. On February 2, 2015, the Board of Directors created the Audit Committee (consisting of Messrs. Barshis and Sapirstein), the Nominating and Governance Committee (consisting of Messrs. Levine, Mehta, Norton, Corbin and Lenz) and the Compensation Committee (consisting of Messrs. Levine, Sapirstein, Barshis and Corbin). Each committee is to create their own charter, which have not been completed nor approved by the date hereof.
Nomination Process
As of May 31, 2015, we did not affect any material changes to the procedures by which our shareholders may recommend nominees to our Board of Directors. Our Board of Directors does not have a policy with regards to the consideration of any director candidates recommended by our shareholders. Our Board of Directors has determined that it is in the best position to evaluate our company’s requirements as well as the qualifications of each candidate when the board considers a nominee for a position on our Board of Directors. If shareholders wish to recommend candidates directly to our board, they may do so by sending communications to the President of our company at the address on the cover of this annual report.
Audit Committee and Audit Committee Financial Expert
Our Board of Directors has determined that it does not have a member of the audit committee that qualifies as an "audit committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K, and is "independent" as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended. Our newly established Audit Committee is capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome, at this time, and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material revenues to date.
Item 11.
Item 11. Executive Compensation
The particulars of the compensation paid to the following persons:
(a)
our principal executive officer;
(b)
each of our two most highly compensated executive officers who were serving as executive officers at the end of the years ended May 31, 2015 and 2014; and
(c)
up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the years ended May 31, 2015 and 2014,
who we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than the principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year.
(1)
Mr. Rainey became President, CEO, CFO and Treasurer effective May 20, 2014 and was terminated around February 12, 2015.
(2)
Mr. Ellerbeck has held the positions of Director since July 13, 2011 and of president, CEO, CFO, treasurer, since July 14, 2011. He held the position of secretary from July 14, 2011 until June 1, 2013. Effective May 20, 2014 he no longer served in any of these roles.
(3)
Mr. Estevez was appointed as secretary and a director of the Company on June 1, 2013. Effective May 20, 2014 he no longer served in any of these roles.
(4)
Mr. Levine received 600,000 shares of common stock on February 4, 2015 with vesting restrictions as described herein. See Note 11 to the Company’s financial statements contained in this Form 10K for information relating to 2016 executive compensation, including to Mr. Levine.
Narrative Disclosure to Summary Compensation Table
Other than set out below there are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive share options at the discretion of our Board of Directors in the future. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that share options may be granted at the discretion of our Board of Directors.
While there are no written employment agreements with our officers and directors, the Company intends to pay nominal fees for management services based on available funds. That fee may vary from year to year.
Stock Option Plan
Currently, we do not have a stock option plan in favor of any director, officer, consultant or employee of our company.
Grants of Plan-Based Awards
There were no grants of plan-based awards during the year ended May 31, 2015.
Outstanding Equity Awards at Fiscal Year End
There were no outstanding equity awards at the year ended May 31, 2015.
Option Exercises and Stock Vested
During our fiscal year ended May 31, 2015 there were no options exercised by our named officer.
Compensation of Directors
We do not have any agreements for compensating our directors for their services in their capacity as directors.
As described in footnote 4 in Item 12
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
On May 20, 2014, substantially all of the shares of the outstanding common stock were transferred to new owners pursuant to securities purchase agreements.
The following table sets forth, as of May 31, 2015, certain information with respect to the beneficial ownership of our common shares by each shareholder known by us to be the beneficial owner of more than 5% of our common shares, as well as by each of our current directors and executive officers as a group. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated.
Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.
(1) Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on May 31, 2015. As of May 31, 2015, there were 4,662,500 shares of our company’s common stock issued and outstanding.
(2) Mr. Rainey had been President, CEO, CFO, treasurer, from May 20, 2014 until his termination on February 12, 2015; The Company is in a dispute with Mr. Rainey and is seeking his shares back for the Company.
(3) Messrs. Zalcberg, Mehta, Norton and Sapirstein joined the Company as Directors on May 20, 2014. Mr. Zalcberg resigned from the Board on June 1, 2015. Mr. Corbin joined the Company as a director on January 12, 2015. Messrs. Barshis and Lenz joined the Board on August 26, 2014 Mr. Levine joined the Company on February 4, 2015. Mr. Ruben became an officer of the Company on July 9, 2015.
(4) The amounts included in each person’s shares include shares granted by the Company for acting as board, officer and committee members but not yet issued as of May 31, 2015 but were subsequently issued, and such shares have a three year vesting (on a monthly basis over 36 months) for remaining on the Board, or with the Company. The amounts for each person listed under these provisions are as follows: Zalcberg-120,000, Corbin-120,000, Mehta-110,000, Norton-110,000, Barshis-235,000, Lenz-110,000, Sapirstein-135,000, Levine-600,000 and Ruben - 130,000. 106,667 of Mr. Zalcberg’s shares were forfeited upon his resignation.
(5) The 34,810 shares of Indirect Ownership for Mr. Ruben are shares owned by his former law firm, Firsel Ross, LLC. Mr Ruben is entitled to 50% of the proceeds of such shares, if and when sold, but has not voting rights or investment authority over such shares.
Changes in Control
On May 20, 2014, substantially all of the shares of the outstanding common stock were transferred to new owners pursuant to securities purchase agreements.
We are unaware of any contract or other arrangement or provisions of our Articles or Bylaws the operation of which may at a subsequent date result in a change of control of our company. There are not any provisions in our Articles or Bylaws, the operation of which would delay, defer, or prevent a change in control of our company.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Transactions with related persons
There have been no transactions since the beginning of our last fiscal year, or any currently proposed transaction, in which the Company was or is to be a participant and the amount involved exceeds $120,000, and in which any related person had or will have a director or indirect material interest.
Corporate Governance
Messrs. Mehta, Corbin, Norton, Barshis, Lenz and Saperstein all qualify as Independent Directors in accordance with the NASDAQ Marketplace Rule 3200(a)(15). Although the Company does not have in place an Audit Committee it is anticipated that this will be implemented in the next 12 months.
Item 14.
Item 14. Principal Accounting Fees and Services
The aggregate fees billed for the most recently completed fiscal year ended May 31, 2015 and 2014, for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:
(1) Audit fees consist of fees incurred for professional services rendered for the audit of our financial statements, for reviews of our interim financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided in connection with statutory or regulatory filings or engagements.
(2) Audit-related fees consist of fees billed for professional services that are reasonably related to the performance of the audit or review of our financial statements, but are not reported under “Audit fees.”
(3) Tax fees consist of fees billed for professional services relating to tax compliance, tax planning, and tax advice.
Our Audit Committee (or Board of Directors as a whole) pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved or ratified by the Board of Directors either before or after the respective services were rendered.
Our Audit Committee and our Board of Directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.
PART IV
Item 15.
Item 15. Exhibits, Financial Statement Schedules
(a)
Financial Statements
(1)
Financial statements for our company are listed in the index under Item 8 of this document
(2)
All financial statement schedules are omitted because they are not applicable, not material or the required information is shown in the financial statements or notes thereto.
(b)
Exhibits
Exhibit Number
Description of Exhibit
(10)
Material Contracts
10.1
License Agreement between Northwestern University and the Company dated January 26, 2015 incorporated by reference and previously filed as an exhibit with Form 10-K for the year ended May 31, 2014 dated June 15, 2015.
10.2
Exclusive License Agreement between the University of Rochester and the Company dated March 31, 2105 incorporated by reference and previously filed as an exhibit with Form 10-K for the year ended May 31, 2014 dated June 15, 2015.
10.3
Asset Purchase Agreement between Faulk Pharmaceuticals, Inc. and the Company dated April 6, 2015 incorporated by reference and previously filed as an exhibit with Form 10-K for the year ended May 31, 2014 dated June 15, 2015.
10.4*
Securities Purchase Agreement dated as of August 20, 2015, by and between the Company and Typenex Co-Investment, LLC and all related notes, security agreements, etc.
10.5*
Master Services Agreement dated September 1, 2015 by and between Excelsior Global Advisors LLC and the Company.
(14)
Code of Ethics
14.1
Incorporated by reference and previously filed as an exhibit with Form 10-K for the year ended May 31, 2013 filing dated August 29, 2013.
(21)
Subsidiaries of the Company
21.1*
Subsidiary of the Company
(31)
Rule 13a-14(a) / 15d-14(a) Certifications
31.1*
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer.
31.2*
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer and Principal Accounting Officer.
(32)
Section 1350 Certifications
32.1*
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer
Interactive Data File
101**
Interactive Data File (Form 10-K for the year ended May 31, 2014 furnished in XBRL).
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
XBRL Instance Document
XBRL Taxonomy Extension Schema Document
XBRL Taxonomy Extension Calculation Linkbase Document
XBRL Taxonomy Extension Definition Linkbase Document
XBRL Taxonomy Extension Label Linkbase Document
XBRL Taxonomy Extension Presentation Linkbase Document
*
Filed herewith.
**
Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under these sections.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
PANTHER BIOTECHNOLOGY, INC.
(Registrant)
Dated: January 22, 2015
/s/Evan Levine
Evan Levine
President and Chief Executive Officer
(Principal Executive)
/s/ Philip E. Ruben
Philip E. Ruben
Chief Financial Officer, Treasurer and Secretary
(Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Dated: January 22, 2015
/s/Evan Levine
Evan Levine
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Philip E. Ruben
Philip E. Ruben Chief Financial Officer, Treasurer and Secretary
(Principal Financial Officer)