-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ToBN8qTOWviruPlN3Zom5m2O4ljOw3RvPnA6QiU1LJZqdqvwYd2x2aTxTXZiUqNm FX0cookgzOCMkPlMhZWl6g== 0000889812-99-001567.txt : 19990518 0000889812-99-001567.hdr.sgml : 19990518 ACCESSION NUMBER: 0000889812-99-001567 CONFORMED SUBMISSION TYPE: 10SB12G PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NUONCOLOGY LABS INC CENTRAL INDEX KEY: 0001066719 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 650019376 FILING VALUES: FORM TYPE: 10SB12G SEC ACT: SEC FILE NUMBER: 000-26113 FILM NUMBER: 99628743 BUSINESS ADDRESS: STREET 1: 4870 HAYGOOD ROAD STREET 2: SUITE 107 CITY: VIRGINIA BEACH STATE: VA ZIP: 23455 BUSINESS PHONE: 7575540926 MAIL ADDRESS: STREET 1: 4870 HAYWOOD ROAD STREET 2: SUITE 107 CITY: VIRGINIA BEACH STATE: VA ZIP: 23455 10SB12G 1 REGISTRATION STATEMENT ================================================================================ GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS UNDER THE 1934 ACT U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-SB NuOncology Labs, Inc. ---------------------------------------------- (Name of Small Business Issuer in its charter) FLORIDA 65-0019376 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4870 HAYGOOD ROAD, SUITE 107, VIRGINIA BEACH, VIRGINIA 23455 - ------------------------------------------------------ ------------- (Address of principal executive offices) (Zip Code) Issuer's telephone number (757) 554-0926 -------------- Securities to be registered under Section 12(b) of the Act: NONE Securities to be registered under Section 12(g) of the Act: Common Stock $.001 par value ------------------------------- (Title of class) ================================================================================ PART I ITEM ONE. DESCRIPTION OF THE BUSINESS A. BUSINESS DEVELOPMENT NuOncology Labs, Inc. (the "Company" or the "Registrant") is a Florida Corporation. The Company's principal business address is 4870 Haygood Road, Suite 107, Virginia Beach, Virginia 23455, and its telephone number is (757) 554-0926. The Company was incorporated under the laws of the State of Florida on November 6, 1994 as "Choice Book & Video, Inc." but conducted no business under that name. On April 9, 1998, the Company was renamed Littman Resources, Inc. ("LRI"). LRI's stated business objective was merger with or acquisition of an existing operating company or companies. In June 1998, a preliminary agreement was reached to merge with NuOncology Labs, Inc., a Virginia privately held corporation ("NuLabs Virginia"). The name of LRI was changed to NuOncology Labs, Inc. effective June 26, 1998 in anticipation of the merger. In August 1998, the two companies merged through a tax-free one-to-one conversion of common shares. NuLabs Virginia's Recent Business Combinations NuLabs Virginia was incorporated in February 1998 to acquire interests in corporations in the cancer treatment research and clinical oncology laboratory industries. These corporations had been founded (with others) by the founders of NuLabs Virginia. The founders wished to consolidate the cancer treatment compound research, laboratory operations, proprietary intellectual property and technologies and scientific resources into a single corporation. Prior to the merger with the Company, NuLabs Virginia shareholders participated in a share exchange with the shareholders of Paracure, Inc. ("Paracure") and International Phytochemistry Research Laboratory, Ltd. ("IPRLL"). The founders of NuLabs Virginia were also the founders and controlling shareholders of Paracure and IPRLL. Paracure, with its affiliate intellectual property holding company, IPRLL, owns the controlling patents and worldwide (outside the former Soviet Union) manufacturing and marketing rights for a cancer treatment compound called Arglabin. Immediately after the share exchanges between NuLabs Virginia, Paracure and IPRLL, NuLabs Virginia purchased substantially all of the assets of Baker Sanger, Inc. ("BSI"), including BSI's clinical testing laboratory in Houston, Texas. BSI is a corporation in the field of predictive chemosensitivity testing of cancer biopsies. Following the completion of these business combinations, NuLabs Virginia owned fifty percent (50%) of the outstanding stock of Paracure, eighty point thirty nine percent (80.39%) of the outstanding shares of IPRLL, and substantially all of the financial, physical and intellectual property assets of BSI. The Company has never been a party to any bankruptcy, receivership or similar proceeding. 1 B. BUSINESS OF THE ISSUER 1. General NuOncology Labs, Inc. has two primary business activities: (1) operation of a commercial laboratory which provides predictive chemosensitivity and immunotherapy predictive tests (assays) on biopsy tissues and other oncological laboratory testing services and products; and, (2) research, development, identification, testing and licensing of cancer treatment compounds. The company's lead anti-cancer compound is a Farnesyl Transferase Inhibitor ("FTI"), Arglabin. Predictive Oncology Testing The Company's clinical laboratory, in Houston, Texas, provides "predictive" tests (assays) designed to provided information that will help an oncologist (physician cancer treatment specialist) plan cancer treatment. These include immunohistochemical and flow cytometric tests on fixed tissue for those proteins that bear predictive value such as tumor aggression, and response to certain hormonal or immuno-therapies. Tissue culture based tests on living cancer cells determine growth characteristics and sensitivity to chemotherapy. Overall these tests deduce which available chemotherapy treatment is most likely to be beneficial for a specific patient's cancer. The Company plans to implement certain additional tests to characterize the status of the patient's immune system to determine whether a patient may be a candidate for certain immunotherapy approaches. In addition, the Company plans to implement an anti-viral sensitivity assay to optimize the treatment of HIV patients. Each patient's laboratory report is delivered over a secure Internet site to the attending physician. The Company's web site contains links to conventional therapies that will provide the local practitioner instant descriptions of new, potentially unfamiliar, treatments as well as links to clinical trial sites. Development, Testing and Licensing of Cancer Treatment Drugs The Company's other primary business activity is development, testing and licensing of Arglabin and other cancer treatment, medical and agricultural compounds which have been, or are being, developed by the Company's research partners. Arglabin, the Company's leading cancer treatment drug, is a plant-derived compound which was developed in Kazakstan and is approved for cancer treatment in special clinics in Kazakstan and other republics of the former Soviet Union. Over three hundred (300) patients with a variety of cancers have been treated with Arglabin with promising results and virtually no toxic side effects. The Company's inventions are protected in Kazakstan by eight (8) patents and five (5) pending patent applications; and, in the United States by nine (9) pending patent applications. The U.S. Patent and Trademark Office has allowed claims in two of these U.S. applications. International patent protection is being pursued via the World Intellectual Property Organization under the Patent Cooperation Treaty ("PCT"). A number of PCT filings have been submitted and the 2 Company's inventions will be filed in various countries throughout the world in 1999. Additional patent applications based on recent molecular research are under preparation and will be filed as soon as practicable. Laboratory studies have shown that Arglabin inhibits the enzyme farnesyl transferase ("Ftase") from triggering a wide range of cancers. Ftase activates a protein called Ras. About one-fourth of all human cancers are caused by genetic malfunctions in the Ras biochemical pathway that result in the uncontrolled growth of cancer. Arglabin prevents Ftase from activating a Ras protein and the cancers that depend on the Ras oncogene cannot grow and eventually die. Plans have been initiated to develop registration for Arglabin as an ethical pharmaceutical in the United States and other countries outside the former Soviet Union. Plans are also being developed for clinical trials aimed at securing FDA approval of Arglabin for cancer treatment in the United States. The Company then intends to license the technology to a major pharmaceutical company for formal FDA testing, manufacturing, sales and distribution. 2. Organization The Company presently comprises one corporation with two subsidiaries: International Phytochemistry Research Laboratory, Ltd. ("IPRLL") and Paracure, Inc. ("Paracure"). The Company owns 80.4% of IPRLL and 50% of Paracure. 3. Raw Materials The use of raw materials is not now a material factor in the Company's operations. 4. Competition While there are only a few companies offering clinical oncology predictive testing services similar to those offered by the Company at this time, in general, competition in the clinical laboratory industry is intense. Although the high complexity of in vitro predictive assays prohibits their execution by the large clinical laboratories, the Company competes with at least four other laboratories that provide chemosensitivity testing services and with several large academic institutions for the provision of in vitro predictive testing and with several large specialty testing laboratories for the provision of immunohistochemical and flow cytometric predictive analyses. Some of the Company's competitors are larger and have greater financial resources than the Company. The Company may encounter more intense and varying levels of competition from other independent clinical laboratory companies in the future. In addition, changes in the regulatory environment in which the Company operates could affect the basis for competition in the industry, and could thereby have a material adverse effect on the Company's results of operations. There is also competition in the industry for acquisition candidates, and there can be no assurance that the proposed candidates will be available to the Company on favorable terms, or at all. 3 In addition, the medical/pharmaceutical, agricultural and commercial chemical industries are characterized by intense competition. Many companies, research institutes and universities are working in a number of biotechnology disciplines similar to the Company's fields of research interest. Numerous companies are engaged in the development of traditional medical/pharmaceutical health care, agricultural and commercial products which may be competitive with the Company's proposed products. Many of these entities have substantially greater financial, technical, manufacturing, marketing, distribution or other resources than the Company. Furthermore, the Company's proposed products may be subject to competition from other products using techniques other then those developed by the Company or based on advances that may render the Company's emerging products obsolete. The field of biotechnology is subject to rapid and significant technological changes, and the Company's future success will depend in large part on its ability to maintain a competitive position with respect to its technology. Compounds, products or applications developed by the Company may become obsolete before the Company is able to generate significant revenues or earnings from Arglabin or other products it may attempt to bring to market. In the area of human care, the Company will be competing with companies that have significantly more experience in undertaking pre-clinical testing and human clinical trials of new or improved therapeutic products and obtaining FDA and other regulatory approvals of such products. Some of these companies may be in advanced phases of clinical testing of various drugs that may be competitive with the Company's products. 5. Reliance on Key Customers The Company does not intend to rely on any specific key customer or group of customers. The ultimate customer for predictive testing is the cancer patient. As cancer patients typically do not order their own testing (although that phenomenon is occurring more frequently with cancer patients), for the foreseeable future the de facto customers are surgeons, oncologists, pathologists, hospitals, health maintenance organizations (HMOs), community health centers, and third party insurance companies. To illustrate the size of these market segments, note that in the United States, there are: over 16,000 physicians who treat cancer patients; over 20,000 general surgeons who remove tumors in surgery; and, approximately 1,300 community hospitals with approved cancer treatment programs. The Company's services are primarily provided to oncologists, oncological surgeons, and hospital pathologists who submit their patients' tumor specimens for testing. Over 1.1 million Americans are diagnosed with cancer annually. Over 2.2 million previously treated cancer patients fail primary chemotherapy treatment each year. Approximately 80% of these cases are solid tumors, of which approximately 25% are treated with chemotherapy. In the USA, there are every year over 600,000 new potential customers for a predictive profile, featuring a chemosensitivity test. 4 6. Backlog There are no current backlogs. 7. Proprietary Information, Trademarks and Patents The Company does not own any patents or trademarks. However, as a result of recent business combinations, the Company does own controlling stock interests in Paracure and IPRLL, the current owners of the issued, allowed and pending patent applications and trademarks for Arglabin and its derivatives. The Company will continue to house its intellectual property, patent and trademark assets in these subsidiaries, primarily IPRLL going forward. 8. Need for Government Approval Plans are being developed for clinical trials aimed at securing FDA approval of Arglabin for cancer treatment in the United States. Although certain members of management and consultants have had experience in conducting and supervising pre-clinical and clinical testing and human clinical trials for human drug products, the Company itself has no experience in designing clinical protocols on its own behalf and has not prepared an FDA submission. The process of obtaining required regulatory approvals from the FDA and other United States regulatory authorities often takes years and can vary substantially based on the type, complexity and novelty of the product. As with any new drug, additional governmental regulations may be promulgated which could impose additional costly testing procedures necessary to obtain regulatory approval and delay regulatory approval of the Company's pharmaceutical products. There can be no assurance that, even after investment of time and expenditures, regulatory approval in the USA will be obtained for any of the Company's proposed pharmaceutical products. 9. Government Regulation The Stark Bill and Other Referral Restrictions The Company will be subject to certain self-referral prohibitions of Federal law, commonly known as the "Stark Bill". The Stark Bill, which became law January 1, 1992, generally prohibits the Company from billing the Medicare program if the physician ordering the test (or an immediate family member of such physician, as defined by the Stark Bill) has an ownership or investment interest in the Company or a compensation arrangement with the Company. Ownership interests include ownership of shares of Common Stock purchased in the open market or otherwise. In the event that a significant number of the Company's referring physicians who, in the aggregate, refer to the Company a significant portion of their respective Medicare-billed testing were to acquire and maintain ownership or investment interests in the Company, or enter into compensation agreements with the Company, and in such case, the Company were to continue to perform testing services for such physicians comprising a significant portion of the Company's Medicare-billed testing, then the Company's inability to bill the Medicare program for tests ordered by such physicians would have a material adverse effect on their respective revenues. There can be no assurance that physicians have complied or in the future will comply with these requests or accurately represent ownership of any Common Stock. 5 The Stark Bill requires the Company to comply with certain reporting requirements relating to physicians who have an ownership interest in the Company and physicians who order tests from, and have a compensation arrangement with, the Company. Proposed regulations implementing the Stark Bill prohibit the Company from offering a physician price discounts for laboratory services as an inducement for obtaining Medicare referrals. The regulations also prohibit the purchase by the Company of a physician-owned laboratory unless, for a period of one year before and one year after the transaction, the physician had not had any other financial relationship with the Company. There can be no assurance that either the Company will be able to obtain adequate information concerning its physician stockholders to enable it fully to comply with these reporting obligations. Violation of the Stark Bill could subject the Company to civil penalties or exclusion from the Medicare program. The Omnibus Budget Reconciliation Act of 1993 ("OBRA '93") amended certain important provisions of the Stark Bill. OBRA '93 extended the prohibition on physician self-referrals to all Medicare- and Medicaid-billable clinical laboratory services, prohibiting the billing of such services to Medicare, Medicaid or any other State plan. Under the amendments, physician ownership of shares in a publicly-traded corporation in which the average stockholder equity, either at the end of the corporations' most recent fiscal year or an average over the prior three fiscal years, exceeds $75 million will not be considered ownership or an investment interest subject to the prohibition. While this exception is not relevant to the Company at present, it may apply in the future. In July, 1993, California implemented a comprehensive workers' compensation reform package. One of the statutes prohibits the referral by a physician of workers' compensation medical services to a clinical laboratory in which the physician or his or her family has a financial interest. The term "financial interest" is defined very broadly, covering many forms of direct or indirect payments, and includes interests which are created or transferred to avoid the prohibition. The law also requires disclosure to the patient of any financial interest of the physician in the facility to which the referral is made. Violation of law, which is a misdemeanor, could subject the Company to fines and disciplinary action, including license revocation. Prohibitions Relating to the Mark-up of Laboratory Services. Clinical laboratories, physicians, hospitals and other health care providers in California are subject to Section 655.5 of the California Business and Professions Code. This statute prohibits those subject to the statute, including the Company, in billing patients or third-party payers, from marking up charges for any clinical laboratory services actually not rendered by the provider. A significant portion of the Company revenues are subject to these regulations. In the event that the Company is found in violation of these regulations, it may be subject to fines and/or sanctions. However, at this time the Company sells only its own laboratory services and does not sell laboratory services rendered by any other laboratory service provider. 6 Antikickback Laws The Medicare/Medicaid antikickback statute prohibits laboratories from paying remuneration as inducement for referrals of patients or specimens to third parties for testing and contains severe penalties for violating testing services reimbursed by the Medicare or Medicaid (referred to in California as "MediCal") programs. The Company believes that its existing business relationships do not violate this statute. Court decisions and an administrative decision suggest that any direct or indirect payment conferred upon one who refers Medicare or Medicaid patients by, or on behalf of, the referral recipient may violate the statute if any part of the purpose of such benefits is to provide an incentive for such referrals. In addition, a provider convicted of violating such laws would be excluded from participation in the Medicare and MediCal programs. The Office of Inspector General of the United States Department of Health and Human Services has issued "safe harbor" regulations, which identify certain payment practices which do not violate the antikickback statute. Although these regulations protect certain types of investment interests, they do not protect investments by physicians or hospitals in the Company or the purchase of clinical laboratories from persons in a position to refer business to the laboratory after the purchase occurs. California law also prohibits the receipt or acceptance by licensed physicians of various forms of consideration, including rebates, refunds, discounts or preferences as compensation or inducement for referring patients, clients or customers to any other person (including a clinical laboratory), irrespective of any ownership which the physician may have in the entity to which the referral is made or the source of payment of other services. Laboratories that violate the California antikickback laws may be subject to loss of licensure and substantial fines. In addition, a provider convicted of violating such laws would be excluded from participation in the Medicare and MediCal programs. The Company believes that it satisfies the requirements of California law with respect to its relationship with its physician-owners. Medicare/MediCal Reimbursement Laboratories are required to bill Medicare or MediCal directly for services and supplies provided to patients under these programs, and to accept Medicare or MediCal reimbursements as payment in full. In 1984, Congress established a reimbursement fee schedule for clinical laboratory testing performed for Medicare beneficiaries (excluding hospital in-patients). State Medicaid programs, including MediCal, are prohibited from paying more than the Medicare fee schedule stipulates for testing for Medicaid beneficiaries. When initially established, the Medicare fee schedules were set at 60% of prevailing local charges. Medicare reimbursement rates for clinical laboratory testing subsequently have been reduced several times pursuant to Congressional mandate. The reductions in Medicare reimbursement rates have been offset to some extent by increases in both the national cap and the local fee schedules tied to the Consumer Price Index ("CPI"). Further decreases in such fee schedules, however, could have a material adverse effect on businesses and operations of the Company. Proposals that would reduce the amounts reimbursable to and other independent testing laboratories under the Medicare program are continuously under consideration by Congress and the Executive Branch. 7 The Clinical Laboratories Improvement Act of 1988 The Company is subject to regulation by the Health Care Financing Administration ("HCFA"), a division of the United States Department of Health and Human Services, under the Clinical Laboratories Improvement Act of 1988 ("CLIA"). These regulations mandate that all clinical laboratories be certified to perform testing on human specimens and provide specific conditions for certification. These regulations also contain guidelines for the qualification, responsibilities, training, working conditions and oversight of clinical laboratory employees. In addition, specific standards are imposed for each type of test which is performed in a laboratory. CLIA and the regulations promulgated thereunder are enforced through quality inspections of test methods, equipment, instrumentation, materials and supplies on a biennial and "spot" basis. Any change in CLIA or these regulations or in the interpretation thereof could have a materially adverse effect on the Company's business, prospects, financial condition or results of operations. To its knowledge, the Company is in compliance with the currently applicable regulations of HCFA. At the present time, the United States Food and Drug Administration ("FDA") does not regulate the CSA. In addition, the extent of potentially adverse government regulations that might arise from future legislation or administrative action cannot be predicted. 10. Research and Development The Company incurred $58,420 in direct expenses for R&D during the last fiscal year. This number excludes associated indirect costs and one time research related expenditures such as the provision of equipment and support to research partners in Kazakstan. Including these research related items, expenditures in the broad category were approximately $450,000 for R&D during the last fiscal year. In addition, the Company expects to spend approximately $750,000 on R&D in the current fiscal year. The 1999 expenditures will be largely in areas of molecular modeling of compounds, support for the company's research associates in the United States and Kazakstan in the on-going development of the Company's product pipeline, and improvement and expansion of laboratory testing and analytical techniques and services. 11. Environmental Compliance There are no material environmental compliance issues or costs facing the company. Its laboratory operations in Houston are regulated under the Clinical Laboratory Improvement Act (CLIA), CFR 488.28 administered by the U.S. Department of Health and Human Services, Health Care Financing Administration. The new laboratory facility was inspected November 23, 1998, and found to be in full compliance with zero deficiencies. 12. Employees The Company currently employs ten employees of which seven are full time. The Company expects to hire nine additional employees in the next fiscal year. 8 13. Year 2000 Compliance The Company is Year 2000 compliant. ITEM TWO. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. A. GENERAL Since the merger and acquisition transactions of July and August 1998 the Company has devoted it efforts to research and development with regard to its lead anticancer compound, the compound's mechanism of action and potential derivatives; perfecting and expanding its patent positions with respect to the completed research; developing a significantly improved clinical and research laboratory facility in Houston; and, hiring personnel and implementing operating and management systems to support the consolidated and expanded enterprise. The Company had only modest revenues of $34,173 during this period, generated entirely from laboratory operations and interest on cash balances. The Company anticipates that these revenues will grow significantly in 1999 but may not achieve break even levels at current expenditure levels for several months. The Company anticipates that its revenues for the foreseeable future will be from clinical laboratory fees, research grants and contracts, and possible licensing fees for its lead compound and other compounds under development. No assurance can be given as to the rate of increase of revenues, if any, from laboratory operations; timing or amounts of revenues which may be generated through research grants or contracts; or the success of the Company in securing licensing fees for any of its compounds. The Company anticipates conducting animal trials in the spring and summer of 1999 and initiating Phase 1 human trials directed toward FDA approval of Arglabin immediately thereafter. The Company is now positioned to initiate discussions with major pharmaceutical companies which may be candidates as strategic partners in the completion of the human trials and eventual manufacture and marketing of the compound should FDA approval be secured. However, the Company, if necessary, is prepared to initiate the animal trials in the absence of such a strategic partner. The Company is currently in discussions with sources of investment capital with the intent of securing sufficient additional equity capital or financing to assure the Company's ability to conduct FDA-protocol human trials in the absence of a major pharmaceutical company strategic partner. No assurance can be given that the Company will be successful in securing such equity capital or financing or attracting such a strategic partner. B. TRENDS, EVENTS OR UNCERTAINTIES IMPACTING LIQUIDITY, NET SALES OR REVENUES Now that the Company has substantially completed the development, equipping and launch phase operations of its new clinical and research laboratory facility, management will focus substantially on the marketing and sales of its laboratory services and products. This activity 9 includes the hiring of senior staff and consultants experienced in the marketing of oncological predictive testing assays and other related laboratory services. It is anticipated that the deployment of these added personnel will positively impact laboratory revenues and gross margins. The Company's peer-reviewed research has demonstrated that its lead anticancer compound, Arglabin, is a Farnesyl Transferase ("Ftase") Inhibitor ("FTI") - inhibition of FTase is the compound's mechanism of action. A substantial number of major pharmaceutical companies (at least twelve to management's knowledge) have undertaken programs to develop, or acquire rights to, FTI's. The existence of this active search by major pharmaceutical companies for potentially effective FTI's improves the prospects that the Company will be able to license its compound and secure appropriate licensing fees. Without a substantial increase in laboratory revenues, receipt of licensing fees, and/or an additional infusion of equity capital and/or debt financing, the Company will not be able to sustain laboratory operations for more than a period of several months. There can be no assurance given at this time that the Company will be successful in increasing laboratory revenues, or securing additional equity capital or debt financing. Core executive and management functions, particularly as they apply to the licensing of cancer treatment compounds can be sustained indefinitely. The Company's research partners in Kazakstan are not dependent on Company resources to support on-going basic research on additional compounds. Therefore, a significant portion of the on-going pipeline research would continue regardless of the financial condition of the Company. C. LIQUIDITY AND CAPITAL RESOURCES The Company has, between January and April 1999, raised $406,000 in new equity capital through a Regulation S private placement of stock priced at $7.00 per share. The Company is in discussions with a number of sources for investment capital seeking an additional minimum capital investment of $1,000,000. At this time the Company has less than $150,000 in debt, largely in the form of a short-term loan from the CEO. Future fundings could include convertible debt instruments. At this time, the Company has a verbal commitment for an additional minimum $600,000 in funding from Coleraine Holdings, LLC, secured in part by shares of executive officers of the Company. Details and terms of the funding transaction are under negotiation. As of April 30, Coleraine Holdings has advanced $350,000 to the company under the terms of a short term renewable note, pending resolution of the final terms of the equity investment. Coleraine Holdings currently has 225,218 investment shares of the Company, and its manager members hold 146,673 investment shares personally. The Company has a consulting agreement with Coleraine Co., LLC (common ownership with Coleraine Holdings) which owns 2,000 investment shares and, as of April 30, 1999, has accrued 123,750 five year options exercisable at $3.00 under the terms of its consulting agreement 10 D. COMMITMENTS FOR CAPITAL EXPENDITURE & SOURCE OF FUNDS The Company has no plans for significant or material capital expenditures for its U.S. operations. It does provide support to its research partners in Kazakstan and anticipates allocating resources for the improvement of facilities and provision of equipment to them. No unfunded capital expenditure commitments or liabilities exist with regard to this ongoing support. Funds are only allocated as they are received by the Company and within the context of the Company's other operating requirements. E. ELEMENTS OF INCOME OR LOSS NOT ARISING FROM OPERATIONS No material elements. F. CAUSES OF PERIOD TO PERIOD CHANGES IN FINANCIAL LINE ITEMS The first relevant, quarterly period-to-period comparisons will not be available until the third quarter of 1999. The Company had no business operations until the third quarter of 1998. G. SEASONAL ASPECTS EFFECTING FINANCIAL CONDITIONS OR RESULTS None. ITEM THREE. DESCRIPTION OF PROPERTIES The Company's executive offices are housed in a 1,600 square foot facility located at 4870 Haygood Road, Suite 107, Virginia Beach, Virginia. On August 1, 1998 the Company signed a one-year lease for these premises. Additionally, on September 1, 1998, the Company leased a 7,500 square foot laboratory facility, located in Houston, Texas, for a three-year term where the Company's clinical laboratory services and some laboratory research are conducted. The laboratory facility is comprised of laboratories, clinical space, conference rooms, administrative offices and reception. Approximately half of the facility is laboratory space segregated into the following major areas: a tissue culture suite (a class P2 clean room of some 200 square feet for clinical testing); a biochemistry suite (some 700 square feet consisting of four labs dedicated to the development of anti-cancer compounds; an histology laboratory (some 179 square feet to perform flow cytometric an immunohistochemical predictive tests); a darkroom with an automated film developer; a manufacturing suite (composed of four laboratories totaling some 600 square feet for the manufacture of test kits and other consumables used I predictive testing); and the main laboratory (some 1,300 square feet containing ten lab benches with furnished cubicles for each R&D technician). There are administrative and operations offices for twelve support staff in addition to the reception and conference facilities. The facility also houses the companies internet/intranet servers and computers. The laboratory facility is fully equipped with state-of-the-art laboratory equipment including digital imaging microscopes which are used in analyzing and reporting predictive profile data. The laboratory has self-contained water filtration and purification systems and emergency power back-up. The laboratory portion of the facility can 11 support the completion of one thousand comprehensive biopsy chemosensitivity and immunotherapy profiles per month as well as providing areas for drug development and general R&D. ITEM FOUR. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following sets forth the number of shares of the Registrant's $.001 par value common stock beneficially owned by (i) each person who, as of the date hereof, was known by the Company to own beneficially more than five percent (5%) of its issued and outstanding common stock; (ii) each of the Named Executive Officers; (iii) the individual Directors of the Registrant; and (iv) the Officers and Directors of the Registrant as a group. As of the date hereof, there were 18,859,333 common shares issued and outstanding.
- -------------------------------------------------------------------------------------------------------------------- Title of Class Name and Address of Beneficial Amount of Beneficial Percent of Class Owner Ownership - -------------------------------------------------------------------------------------------------------------------- Common - -------------------------------------------------------------------------------------------------------------------- Philip F. Enlow (officer, 2,558,336 13.57% director) - 4870 Haygood Road, Suite 107, Virginia Beach, Virginia 23455 - -------------------------------------------------------------------------------------------------------------------- Robert Thomas (officer, director) 2,558,336 13.57% (1) - 4870 Haygood Road, Suite 107, Virginia Beach, Virginia 23455 - -------------------------------------------------------------------------------------------------------------------- R. Michael Williams (director) - 2,558,337 13.57% P.O. Box 802, Island Lake, Illinois 60042 - -------------------------------------------------------------------------------------------------------------------- Fraser L. Baker (officer, 1,350,000 7.16% director) - 8000 El Rio, Houston, Texas 77054 - -------------------------------------------------------------------------------------------------------------------- David Simonetti (director) (2)- 9,000 .05% 1862 Mintwood Place NW, Suite 104, Washington, DC 20009-1947 - -------------------------------------------------------------------------------------------------------------------- Officers and Directors as a group 9,025,009 47.92% - --------------------------------------------------------------------------------------------------------------------
(1) This number includes 1,554,168 shares held by Robert Thomas. Of the remainder of the shares, 1,004,168 are held in the name of Mr. Thomas's wife, Evelyn, and 500,000 shares were allocated by voluntary obligation to the Company's Kazak research partners. 12 (2) Mr. Simonetti owns his shares through a corporation which he controls. ITEM FIVE. DIRECTORS, EXECUTIVE OFFICERS, AND CONTROL PERSONS The following information sets forth the names of the officers and directors of the Company, their present positions and responsibilities and biographical information.
- --------------------------------------------------------------------------------------------- NAME POSITION - --------------------------------------------------------------------------------------------- Philip F. Enlow Chairman, Chief Executive Officer & Director - --------------------------------------------------------------------------------------------- Robert Thomas Senior Vice President Business Development & Director - --------------------------------------------------------------------------------------------- Fraser L. Baker, Ph.D. Senior Vice President Clinical Testing & Research, & Director - --------------------------------------------------------------------------------------------- R. Michael Williams, M.D., Ph.D. Director - --------------------------------------------------------------------------------------------- David J. Simonetti Director - --------------------------------------------------------------------------------------------- Anne C. Enlow Director - ---------------------------------------------------------------------------------------------
Philip F. Enlow, 72, Chairman, CEO and Director, received his B.Sc. degree from John B. Stetson University, Deland, Florida. He joined the F.B.I. as a Special Agent and over a period of 27 years held various administrative positions in FBI Headquarters, Washington, D.C. and a number of Field Offices through out the United States. After leaving the F.B.I., he became a vice president of a large regional bank which ultimately became NationsBank. He presently owns an international commodity brokerage & trading company and is the executive vice-president of Paracure, Inc. Robert Thomas, 54, Senior Vice President Business Development and Director, earned his degree in mathematics in the class of 1966 from the Virginia Military Institute. He has had extensive experience in sales and marketing in accounting systems and real estate. He became a stock-broker and joined Dean Witter in 1983. He began to develop business opportunities in the former Soviet Union through the Moscow Aviation Institute and a Russian-American joint venture in housing. In 1992, he developed business ventures as a member of the Karaganda, Kazakstan, inter-regional commodity exchange. He formed a joint venture with Tabigat Laboratories and acquired the worldwide marketing rights (except the former Soviet Union) to a new class of anti cancer compounds derived from plants indigenous to that area. He is presently the Founder, President, and CEO of Paracure, Inc. Fraser L. Baker, Ph.D., 58, Senior Vice President Clinical Testing & Research and Director, received his M.Sc., degree in physical chemistry in 1969 and his Ph.D. in mammalian physiology 13 from Queen's University in 1973. He entered a career in medical science utilizing cell culture techniques. He has over 24 years of hands-on experience with a variety of cell culture methods. In 1979, he established a clinical laboratory for predictive testing at the Loma Linda Medical Center in California and developed the Adhesive Tumor Cell Culture System (ATCCS). To resolve the problem of low growth of primary tumor cells in culture, he developed an enriched monolayer culture system while at Loma Linda University in 1981. While at the University of Texas Anderson Cancer Center validated a chemosensitivity assay based on this enriched monolayer culture methodology between 1983 and 1986. In 1993, he co-founded the Baker Sanger Clinical Laboratory, a diagnostic, immunohistochemistry clinical laboratory which commercialized the chemosensitivity assay. He was the President of Baker Sanger from founding through its acquisition by the Company. He has published 33 peer reviewed scientific articles. R. Michael Williams, MD, Ph.D., 52, Director, received his B.A. degree from Yale College in 1969 and his MS degree in 1970 from Yale University. In 1974, he received his M.D. degree from Harvard Medical School and a Ph.D. degree from Harvard graduate school. He was the Chief of Medical NuOncology and Professor of Medicine at Northwestern University from 1979 to 1981. He was also was in private medical oncology and internal medicine practice while holding various academic positions. He founded the Cancer Consulting Group in 1984 which provides consultations directly to cancer patients. In 1989, Dr. Williams co-founded Cancer Treatment Centers of America and was the Senior Medical Director and Chief Medical Officer until he left CTCA to devote more time to the development of NuOncology Labs. He has over 22 years of experience as a medical oncology practitioner, laboratory scientist and administrator. He has published nearly 100 articles concerning effective cancer treatments. David J. Simonetti, 31, has served as a Director of the Company since August 1998. Since October of 1998, Mr. Simonetti has served as Co-Chairman and Chief Executive Officer of VentureNow, Inc., a private venture capital concern. From August 1997 to December 1998, Mr. Simonetti was Chief Executive Officer of Invoke Distribution, LLC, a marketing and advertising company. From February 1997 to October 1998, Mr. Simonetti was Chief Executive Officer of Projix Corporation, and Internet software company. From October 1994 through February 1997, Mr. Simonetti served as Vice President and Chief Operating Officer of Edmar, Inc., a construction management company. Mr. Simonetti also serves on the Board of Directors of Streamedia Communications, Inc., a privately-held Internet broadcasting company. Mr. Simonetti holds a Bachelor of Arts degree from Marlboro College, Vermont. Anne C. Enlow, is the spouse of Chairman & CEO, Philip F. Enlow, she serves on the board pro tem, pending the appointment of another candidate to that seat. Such appointment is anticipated in the second quarter 1999. 14 ITEM SIX. EXECUTIVE COMPENSATION A. DIRECTORS' COMPENSATION Directors currently receive no compensation for their services to the Company, but are reimbursed for out-of-pocket expenses incurred while attending board meetings. B. COMPENSATION OF EXECUTIVE OFFICERS Philip F. Enlow, Robert S. Thomas, and Fraser L. Baker signed employment agreements with the Company beginning on April 15, 1998 for a five-year period. The officers' initial base salaries under those contracts are each set at $100,000 per year. The following table sets forth all compensation awarded or to be paid by the Company during the period ending December 31, 1998 to its executive officers:
Capacity in Which Cash Long Term Name Employee Serves Compensation Compensation - ---- --------------- ------------ ------------ Philip F. Enlow Chairman, Chief Executive Officer & Director $100,000 base salary 60% deferred. Fraser L. Baker Senior Vice President Clinical Testing & Research, & Director $100,000 base salary 60% deferred. Robert Thomas Senior Vice President Business Development & Director $100,000 base salary 60% deferred.
ITEM SEVEN. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS R. Michael Williams, M.D., Ph.D., a founder and director of the Company, provides medical direction and other services to the Company through Cancer Consulting Group, P.C., a consulting firm, of which he is 100% owner. Dr. Williams is not an officer of the Company. Anne C. Enlow is the spouse of Chairman & CEO, Philip F. Enlow, she serves on the board pro tem, pending the appointment of another candidate to that seat. Such appointment is anticipated in the second quarter of 1999. The Company is currently in the process of negotiating the repurchase of 900,000 shares of common stock which are currently owned by Tidewater Enterprise. On January 7, 1999, the Company issued a promissory note to Philip F. Enlow, Chairman and Chief Executive Officer of the Company. Under the terms of this note, Mr. Enlow will advance money from time to time as needed. Interest shall accrue at the rate of .75% per month on 15 outstanding principal and accrued interest. Mr. Enlow has advanced $120,100 to the Company to date. On April 1, 1999, the Company issued a promissory note to Coleraine Holdings, LLC, a shareholder of the Company, in consideration for an investment of no less than $600,000 and no more than $1,000,000. The note bears interest at the rate of one percent (1%) per month on outstanding balances, including principal and previously accrued but unpaid interest. There have been no other related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404 of Regulation S-B. ITEM EIGHT. DESCRIPTION OF SECURITIES The total number of shares which the Company shall have the authority to issue is 50,000,000 shares of Common stock at $.001 par value. As of the date hereof, the Company had a total of 18,859,333 Common Shares issued and outstanding. There are no other classes of shares issued or outstanding. The holders of Common Stock have one vote per share on all matters without provision for cumulative voting. The Common Stock is not redeemable and has no conversion or preemptive rights. The Common Stock currently outstanding is validly issued, fully paid and non-assessable. The Company may pay dividends, in cash or in securities or other property when and as declared by the Board of Directors from funds legally available therefor, but has paid no cash dividends on its Common Stock. 16 PART II ITEM ONE. MARKET FOR COMMON EQUITY & RELATED STOCKHOLDER MATTERS A. PRINCIPAL MARKET OR MARKETS NASDAQ Bulletin Board The Company's securities began trading on the NASDAQ Bulletin Board under the symbol "NLAB" on July 9, 1998. During the prior two fiscal years the low and high bid prices as reflected by interdealer quotations were:
- -------------------------------------------------------------------------------------------------- QUARTER Low Bid High Bid - -------------------------------------------------------------------------------------------------- Period 3rd Quarter '97 through 2nd Quarter '98 No Trading No Trading - -------------------------------------------------------------------------------------------------- 3rd Quarter '98 5 3/4 7 1/2 - -------------------------------------------------------------------------------------------------- 4th Quarter '98 4 12 3/8 - -------------------------------------------------------------------------------------------------- 1st Quarter '99 5 5/8 12 1/4 - -------------------------------------------------------------------------------------------------- 2nd Quarter '99 to date 6 1/8 8 3/8 - --------------------------------------------------------------------------------------------------
Berlin Stock Exchange The Company's common stock began trading over the counter on the Berlin Stock Exchange on March 3, 1999. The Company's trading symbol on this exchange is "NLA" (ISIN number 916415). A. APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK As of the date hereof, a total of 18,859,333 shares of the Company's common stock were outstanding. Of these, 3,100,000 are free trading and 15,759,333 are investment shares. The number of holders of record of the Company's common stock at that date was estimated to be in excess of 300. Of these 240 are listed by the Company's transfer agent and the balance are thought to hold shares purchased in the market and held in brokerage accounts. B. DIVIDENDS Holders of common stock are entitled to receive such dividends as may be declared by the Company's Board of Directors. No dividends on the Common Stock were paid by the Company during the periods reported herein nor does the Company anticipate paying dividends in the foreseeable future. 17 ITEM TWO. LEGAL PROCEEDINGS The Securities and Exchange Commission is conducting an informal non-public inquiry concerning the Company. The Company has voluntarily cooperated with all of the SEC's requests associated with the inquiry. At this time the Company is not involved in any litigation and is not aware of any pending litigation or the possibility of future litigation which could adversely affect the Company or its Shareholders. ITEM THREE. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS The Company did not have any disagreements on accounting and financial disclosures with its accounting firm during the reporting period or during the preparation of its audited financial statements for the year ending December 31, 1998. ITEM FOUR. RECENT SALES OF UNREGISTERED SECURITIES The Company has issued the following unregistered common stock in the three-year period preceding the date of this Registration Statement: On December 20, 1998, the Company initiated a Regulation S Offering, pursuant to which the Company offered 1,000,000 shares of common stock at $7.00 per share. As of the closing date of the offering, 58,000 shares were subscribed. In October, 1998, the Company initiated a Regulation S Offering, pursuant to which the Company offered 20,000 shares of common stock at $5.00 per share. The offering was fully subscribed and closed. On August 15, 1998, the Company initiated a Regulation D 506 offering of 653,333 shares of common stock at $0.75 per share. The offering was fully subscribed and closed. In August, 1998, the Company merged (effective August with NuOncology Labs, Inc., a Virginia privately held corporation. The shareholders of NuOncology Labs, Inc. (Virginia) exchanged 14,170,014 shares of NuOncology Labs (Virginia) stock, representing 100 percent of the issued and outstanding shares of NuOncology Labs (Virginia) for a equal number of shares of the Company's stock. The shares issued represented 72% of the issued and outstanding securities of the Company, assuming exercise of 3,000,000 outstanding half warrants convertible to 1,500,000 shares. On June 27, 1998, the Company issued 3,000,000 stock Units at $0.17 per Unit in reliance upon Rules 504 and 506 of Regulation D promulgated under the Securities Act of 1933. 18 ITEM FIVE. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Company's Articles of Incorporation limit, to the maximum extent permitted by law, the personal liability of directors and officers for damages for breach of any duty owed to the Company or its shareholders. The Articles of Incorporation provide further that the Company shall have the power, in its By-Laws or in any resolution of its stockholders or directors, to undertake to indemnify the officers and directors of the Company against any contingency or peril as may be determined to be in the best interests of the Company, and in conjunction therewith, to procure, at the Company's expense, policies of insurance. The Company has secured such a policy of insurance in the Limit of Liability amount of $1,000,000 aggregate for Directors & Officers Insurance and Company Reimbursement Insurance. 19 SIGNATURES In accordance with Section 12 of the Securities Exchange Act of 1934, the registrant caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized. NUONCOLOGY LABS, INC. Date: May 14, 1999 By: ---------------------------------------- Philip F. Enlow, Chief Executive Officer 20 PART III FINANCIAL INFORMATION 21 PART IV INDEX TO EXHIBITS 99.1 Articles of Incorporation .................................... 99.2 Amendments to Articles of Incorporation ...................... 99.3 By-laws ....................................................... 22 --------------- NuOncology Labs --------------- NuOncology Labs, Inc. and Subsidiary (A Development Stage Company) Consolidated Financial Report December 31, 1998 TABLE OF CONTENTS Independent Auditor's Report F-2 Consolidated Balance Sheet F-3 Consolidated Statement of Income F-4 Consolidated Statement of Cash Flows F-5 Notes to Consolidated Financial Statements F-6-10 F-1 [LETTERHEAD] 999 Waterside Drive, Suite 2200 Dominion Tower Norfolk, Virginia 23510-3302 May 5, 1999 INDEPENDENT AUDITOR'S REPORT ---------------------------- To the Boards of Directors and Stockholders NuOncology Labs, Inc. and subsidiary Virginia Beach, Virginia We have audited the accompanying consolidated balance sheet of NuOncology Labs, Inc., and subsidiary (a Development Stage Company) as of December 31, 1998, and the related consolidated statements of income and cash flows for the period then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides 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 NuOncology Labs, Inc., and subsidiary (a Development Stage Company) and subsidiary at December 31, 1998, and the results of its operations and its cash flows for the period then ended, in conformity with generally accepted accounting principles. As discussed in the accompanying notes to consolidated financial statements, a valuation of the companies involved in the formation of NuOncology Labs, Inc., and subsidiary (a Development Stage Company) has not been obtained. The basis upon which the transactions were recorded for purposes of the accompanying financial statements is as explained in the accompanying notes to the financial statements. /s/ Edmondson, LedBetter & Ballard LLP 757-627-2100 757-627-0412 fax www.elbcpa.com American Institute of CPAs o Division for CPA Firms o Virginia Society of CPAs o Virginia Group of CPA Firms F-2 NuOncology Labs, Inc. and Subsidiary (A Development Stage Company) CONSOLIDATED BALANCE SHEET December 31, 1998 ASSETS CURRENT ASSETS Cash and cash equivalents $ 114,967 Accounts receivable, trade 11,986 Contract advances 59,602 ---------- TOTAL CURRENT ASSETS $ 186,555 PLANT AND EQUIPMENT 227,320 Less allowance for depreciation and amortization (16,687) ---------- TOTAL PLANT AND EQUIPMENT 210,633 OTHER ASSETS Investment in Paracure, Inc. 5,400,000 Patent costs 6,506 Goodwill 4,434,350 Due from related parties 124,315 Refundable deposits 31,279 ---------- TOTAL OTHER ASSETS 9,996,450 ----------- TOTAL ASSETS $10,393,638 ===========
See Independent Auditor's Report and Accompanying Notes to Consolidated Financial Statements F-3 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term liabilities $ 4,175 Accounts payable, trade 246,703 Payroll taxes payable and accrued 10,087 Due to related parties 8,500 ----------- TOTAL CURRENT LIABILITIES $ 269,465 LONG-TERM LIABILITIES Installment note payable, net of current portion 20,007 STOCKHOLDERS' EQUITY Common stock, $0.001 par value, 50,000,000 shares authorized, 17,522,509 issued and outstanding 17,523 Additional paid-in capital 10,916,827 ----------- Total common stock 10,934,350 Registration costs (232,405) Deficit accumulated during the development stage (597,779) ----------- TOTAL STOCKHOLDERS' EQUITY 10,104,166 ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $10,393,638 ===========
F-4 NuOncology Labs, Inc. and Subsidiary (A Development Stage Company) CONSOLIDATED STATEMENT OF INCOME For the Period April 1, 1998 through December 31, 1998 REVENUE Clinical services, net of discounts $ 29,350 Interest income 4,823 -------- TOTAL REVENUE $ 34,173 EXPENSE Consultant and professional fees 118,207 Contract labor 30,158 Depreciation 16,687 Office expense 12,836 Organization and start-up costs 17,450 Rent 37,760 Research and development 58,420 Salaries, wages and payroll taxes 162,298 Supplies 12,395 Telephone and communications 16,800 Travel 88,535 All other expenses 60,406 -------- TOTAL EXPENSE 631,952 --------- NET LOSS $(597,779) =========
See Independent Auditor's Report and Accompanying Notes to Consolidated Financial Statements F-5 NuOncology Labs, Inc. and Subsidiary (A Development Stage Company) CONSOLIDATED STATEMENT OF CASH FLOWS For the Period April 1, 1998 through December 31, 1998 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (597,779) Adjustments to reconcile net loss to net cash from operating activities Depreciation 16,687 (Increase) decrease in operating assets Accounts receivable, trade (11,986) Contract advances (59,602) Refundable deposits (31,279) Increase (decrease) in operating liabilities Accounts payable, trade 246,703 Payroll taxes payable and accrued 10,087 ---------- NET CASH USED BY OPERATING ACTIVITIES $ (427,169) CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of plant, equipment and computer software (202,584) Patent costs (6,506) Increase in amounts due from related parties (124,315) Increase in amounts due to related parties 8,500 ---------- NET CASH USED BY INVESTING ACTIVITIES (324,905) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of common stock 1,100,000 Repayments of installment note payable (554) Registration costs incurred (232,405) ---------- NET CASH PROVIDED BY FINANCING ACTIVITIES 867,041 ---------- NET INCREASE IN CASH AND CASH EQUIVALENTS 114,967 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - ---------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 114,967 ========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for interest $ 42 ========== SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES Asset acquired using installment note payable $ 24,736 ========== Investments and goodwill acquired using issuance of common stock $9,834,350 ==========
See Independent Auditor's Report and Accompanying Notes to Consolidated Financial Statements F-6 NuOncology Labs, Inc. and Subsidiary (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NATURE OF BUSINESS NuOncology Labs, Inc., (NuLabs, the Company) is a Florida corporation involved in the cancer research and clinical testing laboratories industries. It currently supports the research, development, testing, and licensing of promising cancer treatments and the delivery of predictive chemosensitivity tests for the optimization of contemporary cancer treatment, both of which could improve clinical outcomes while reducing treatment costs. Its two primary business activities are a research activity working towards commercializing cancer treatment compounds and a commercial activity providing clinical laboratory oncology testing services and products. The Company to date has been primarily a development stage enterprise, with limited revenue from its intended business activities. GOING CONCERN The Company's consolidated financial statements have been prepared in conformity with principles of accounting applicable to a development stage company and presuming the Company to be a going concern. However, without a substantial increase in laboratory revenues, receipts of licensing fees, and/or an additional infusion of equity capital and/or debt financing, the Company will not be able to sustain laboratory operations for more than a period of several months. Core executive and management functions, particularly as they apply to the licensing of cancer treatment compounds can, however, be sustained for an extended period of time. CORPORATE FORMATION AND BUSINESS COMBINATIONS NuOncology Labs, Inc., was formed in 1998, as the final transaction in a series of tax-free merger and acquisition events. Prior to that series of transactions, NuLabs was a dormant public "shell" corporation. NuOncology Labs, Inc. resulted from the following business combinations: o A shareholder group representing 50% of the ownership in Paracure, Inc., a Delaware corporation, exchanged their shares in that corporation for 7,200,000 shares of NuOncology Labs, Inc., of Virginia. This transaction was completed July 20, 1998. o NuOncology Labs, Inc., of Virginia acquired an 80.39% ownership in International Phytochemistry Research Laboratory, Ltd. (IPRLL) in exchange for 1,057,524 shares of capital stock. This transaction was effective July 22, 1998. o NuOncology Labs, Inc., of Virginia acquired the assets of Baker Sanger, Inc. (BSI), a clinical testing laboratory located in Houston, Texas, for $40,000 cash and 1,500,000 shares of capital stock. This transaction was effective July 23, 1998. o Following these transactions, NuOncology Labs, Inc., of Virginia exchanged its stock in a one-to-one tax-free exchange with NuOncology Labs, Inc. This transaction was effective August 10, 1998. As previously stated, prior to this series of transactions NuOncology Labs, Inc., was a dormant public "shell" corporation. At delivery of this entity to the founders of NuLabs, $500,000 of initial paid-in capital was provided. Those shares were sold with one-year warrants attached, exercisable through (Continued on Next Page) See Independent Auditor's Report F-7 NuOncology Labs, Inc. and Subsidiary (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CORPORATE FORMATION AND BUSINESS COMBINATIONS (Continued from preceding page) July 8, 1999. None have been exercised to date. An additional $600,000 of restricted common stock was sold through December 31, 1998. The exchange of stock of NuOncology Labs, Inc., of Virginia for shares of NuOncology Labs, Inc., was the final step in the formation process. The recorded valuations of the transactions was based on the eventual issuance of 14,169,991 shares issued to former shareholders of NuOncology Labs, Inc., of Virginia, using an estimated value of $0.75 per share. The per share value of $0.75 was based solely on a simultaneously active private placement offering of similar shares at that price per share, which offering was fully subscribed for 653,333 shares. At the time of the transactions which consummated the formation of the Company, a limited number of free-trading shares were trading at $7.50 per share. Subsequent to the completion of these transactions and through December 31, 1998, a larger but still limited number of shares of NuLabs' common stock traded in the range of from $4.00 to $12.38 per share. Subsequent to December 31, 1998 and through the date of issuance of the accompanying financial statements, shares have sold in the range of from approximately $5.63 to $12.25 per share. A formal valuation of the Company has not been obtained. However, based on using the value of $0.75 per share, the various phases of the corporate formation previously described are valued as follows. Also, see INVESTMENTS on page 8. Acquisition of Paracure, Inc., 50% interest (equity method investment) $5,400,000 =========== Acquisition of International Phytochemistry Research Laboratory, Ltd., 80.39% interest (consolidated subsidiary) $ - =========== Goodwill associated with acquisition of Baker Sanger, Inc., asset acquisition $1,125,000 =========== Goodwill associated with one-to-one exchange of shares of NuOncology Labs, Inc., of Virginia for shares of NuOncology Labs, Inc. $3,309,350 ===========
At December 31, 1998, 3,100,000 of the outstanding common shares issued by the Company were freely tradable shares. SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The accompanying consolidated financial statements include the accounts of NuOncology Labs, Inc. and International Phytochemistry Research Laboratories, Ltd., its 80.39%-owned subsidiary. All significant intercompany accounts and transactions have been eliminated. (Continued on Next Page) See Independent Auditor's Report F-8 NuOncology Labs, Inc. and Subsidiary (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SIGNIFICANT ACCOUNTING POLICIES (Continued from preceding page) Estimates Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported assets and liabilities and the reported revenues and expenses. Actual results could vary from the estimates that were used. Cash Equivalents The Company considers its purchases of certificates of deposit with an original maturity of three months or less to be cash equivalents. Cash equivalents at December 31, 1998 includes a certificate of deposit with a balance of $107,140, which is pledged to secure a letter of credit in an equal amount from NationsBank. Equipment Equipment consists primarily of laboratory and computer equipment and office furniture and equipment. Equipment is recorded at its original cost and is being depreciated using the straight-line method and an estimated useful life of three to five years. Goodwill and Patent Costs Neither goodwill nor patent costs are being amortized since the Company is currently considered a development stage company. In addition, patent costs are associated primarily with pending patent applications. Registration Costs In accordance with generally accepted accounting principles, registration costs associated with the offering of stock of NuOncology Labs, Inc., are presented as a reduction of paid-in capital in the stockholders' equity section of the accompanying balance sheet. Research and Development Costs Direct research and development costs related to both future and present products are expensed as incurred. Expenses associated with research and development activities such as salaries, occupancy, consulting, etc., are presented as expenses in the accompanying income statement according to their natural classification. INVESTMENTS As previously stated, the Company owns 50% of Paracure, Inc., which is currently involved in a joint venture with a foreign partner to conduct further research related to the potential efficacy and use of identified compounds to improve healthcare and to identify and isolate other compounds which may have commercial application in pharmaceutical and agricultural markets. Paracure has the world marketing and manufacturing rights, excluding those in the countries of the former Soviet Union, to certain patents, patents pending, and products resulting from the joint venture. Other patents pending not held in the name of Paracure are held by NuLabs' subsidiary, IPRLL. Paracure has incurred net losses in excess of $700,000 since its formation in 1993 and through December 31, 1997. NuLabs' investment in Paracure is accounted for using the equity method. Its allocable portion of net income or loss since July 20, 1998, the date it acquired a 50% ownership interest in Paracure, is not available at this time but is not considered to be material in relation to the accompanying financial statements. (Continued on Next Page) See Independent Auditor's Report F-9 NuOncology Labs, Inc. and Subsidiary (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS INVESTMENTS (Continued from preceding page) The Company's 80.39% ownership interest in IPRLL represents an ownership interest requiring consolidated financial statements. At December 31, 1998, IPRLL was the owner of certain pending patent applications in the United States but is otherwise substantially inactive. Costs of approximately $6,500 have been incurred and capitalized with respect to these patent applications. Because of its inactivity through December 31, 1998, there was no significant minority interest in this consolidated subsidiary. The Company's acquisition of Baker Sanger, Inc., was an asset acquisition for $40,000 cash and 1,500,000 shares, valued in the accompanying statements at $0.75 per share. The net assets acquired were valued at $40,000, with the excess consideration being presented as goodwill in the accompanying financial statements. LONG-TERM LIABILITIES The installment loan payable is related to the purchase of an automobile. Payments are $510 per month, including interest at 8.75%, through October 2003. The loan is secured by the vehicle, with a net book value of approximately $26,200 at December 31, 1998. STOCK OPTIONS AND WARRANTS Under consulting contracts effective August 11, 1998, two corporate consulting firms entered into one-year contracts with NuLabs and in accordance with which each will accrue 150,000 options at $3 per share. At the effective dates of the contracts, 45,000 options accrued to each firm, with the balance accruing monthly from the effective date, pro rata at 8,750 per month, over the one-year term of the agreements. Accordingly, as of December 31, 1998, each firm had earned 80,000 options. In June of 1998, the Company issued stock units with 3 million half warrants attached, providing for the purchase of one common share of NuOncology Labs, Inc. for $0.33 for each two warrants owned. The warrants are exercisable through July 8,1999. None have been exercised to date. OPERATING LEASES The Company leases various properties and equipment through noncancellable operating leases with terms that range from one to five years with renewal options thereafter. Rent expense includes $37,730 for the period ended December 31, 1998, attributable to operating leases. Minimum future annual rent commitments under these agreements for the next five years and thereafter are: After 1999 2000 2001 2002 2003 2003 Total ---- ---- ---- ---- ---- ---- ----- $151,057 $128,417 $ 92,172 $ 6,889 $ 4,706 - $383,241 See Independent Auditor's Report F-10 NuOncology Labs, Inc. and Subsidiary (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONCENTRATION OF CREDIT RISK As of and at various times during the period ended December 31, 1998, the Company had on deposit with a single financial institution more than $100,000, which is the limit currently insured by the Federal Deposit Insurance Corporation. CONTINGENCIES AND COMMITMENTS At December 31, 1998, the Company is obligated under five-year employment agreements with three owner/officers. The agreements are for $100,000 per year to each of the three owner/officers and include provision for adjustment by the Board of Directors. Furthermore, the agreements indicate that each of the covered employees has agreed to accept 60% of the base salary amount until such time as the Company has two continuous quarters of profitability. Also at December 31, 1998, approximately $59,600 had been advanced to an owner/officer in connection with on-going research and development. The advance is expected to be fully earned by the owner/officer in 1999. EARNINGS PER SHARE INFORMATION Weighted-average loss per share for the period ended December 31, 1998 was $.06 per share based upon weighted average shares outstanding during the period of 9,452,335 shares. Fully diluted loss per share has not been calculated. The effect of such a calculation would likely reduce the per share loss by approximately one-half of one cent. See Independent Auditor's Report F-11 EX-99.1 2 ARTICLES OF INCORPORATION Exhibit 99.1 ARTICLES OF INCORPORATION OF CHOICE BOOK AND VIDEO, INC. The undersigned subscriber to these Articles of Incorporation, a natural person competent to contract, hereby forms a corporation under the laws of the State of Florida. ARTICLE I NAME The name of this corporation is Choice Book and Video, Inc. ARTICLE II NATURE OF THE BUSINESS This corporation shall have the power to transact or engage in any business permitted under the laws of the United States and of the State of Florida. ARTICLE III AUTHORIZED SHARES The capital stock of this corporation shall consist of 1,000 share of common stock having a par value of $.01 per share. ARTICLE IV INITIAL CAPITAL The amount of capital with which this corporation shall commence business shall be not less than One Hundred ($100.00) Dollars. ARTICLE V TERM OF EXISTENCE This corporation shall have perpetual existence. ARTICLE VI INITIAL ADDRESS The initial address of the principal place of business of this corporation in the State of Florida shall be 1428 Brickell Avenue, Suite 202, Miami, Florida 33131. The Board of Directors may at any time and from time to time move the principal office of this corporation to any location within or without the State of Florida. ARTICLE VII DIRECTORS The business of this corporation shall be managed by its Board of Directors. The number of such directors shall be not be less than one (1) and, subject to such minimum may be increased or decreased from time to time in the manner provided in the By-Laws. The number of persons constituting the initial Board of Directors shall be 1. ARTICLE VIII INITIAL DIRECTORS The names and addresses of the initial Board of Directors and officers are as follows: Eric P. Littman, Trustee 1428 Brickell Avenue 8th Floor Miami, Florida 33131 ARTICLE IX SUBSCRIBER The name and address of the person signing these Articles of Incorporation as subscriber is: Eric P. Littman 8th Floor 1428 Brickell Avenue Miami, Florida 33131 ARTICLE X The Board of Directors shall be elected by the Stockholders of the corporation at such time and in such manner as provided in the By-Laws. ARTICLE XI CONTRACTS No contract or other transaction between this corporation and any person, firm or corporation shall be affected by the fact that any officer or director of this corporation is such other party or is, or at some time in the future becomes, an officer, director or partner of such other contracting party, or has now or hereafter a direct or indirect interest in such contract. ARTICLE XII INDEMNIFICATION OF OFFICERS AND DIRECTORS This corporation shall have the power, in its By-Laws or in any resolution of its stockholders or directors, to undertake to indemnify the officers and directors of this corporation against any contingency or peril as may be determined to be in the best interests of this corporation, and in conjunction therewith, to procure, at this corporation's expense, policies of insurance. ARTICLE XIII RESIDENT AGENT The name and address of the initial resident agent of this corporation is: Eric P. Littman 1428 Brickell Avenue 8th Floor Miami, Florida 33131 IN WITHNESS WHEREOF, I have hereunto subscribed to and executed these Articles of Incorporation this on November 18, 1994. ------------------------------ Eric P. Littman, Subscriber Subscribed and Sworn on November 18, 1994. Before me: - -------------------------------------- Isabel Cantera, Notary Public My Commission Expires: CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR SERVICE OF PROCESS WITHIN THIS STATE NAMING THE AGENT UPON WHOM PROCESS MAY BE SERVED Having been named to accept service of process for Choice Book and Video, Inc., the place designated in the Articles of Incorporation, the undersigned is familiar with and accepts the obligations of that position pursuant to F.S. 607.0501(3). ------------------------------- Eric P. Littman EX-99.2 3 ARTICLES OF AMENDMENT Exhibit 99.2 ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF LITTMAN RESOURCES, INC. Pursuant to the provisions of Section 607.1003 of the Florida Business Corporation Act, LITTMAN RESOURCES, INC. (the "Corporation") adopts the following Articles of Amendment to the Articles of Incorporation: 1. Article I of the Articles of Incorporation shall be deleted and the following Article I shall be inserted in its place: ARTICLE I CORPORATE NAME The name of this corporation shall be NuOncology Labs, Inc. 2. The Amendment was duly adopted by unanimous written consent of the directors of the Corporation on June 19, 1998 and by the shareholders owning a majority of the outstanding voting stock of the corporation and such majority of votes was sufficient approval. 3. The effective date of these Articles of Amendment is June 26, 1998. Dated: June 19, 1998 ------------------------------- CHRISTOS KOUMBIS, DIRECTOR/PRESIDENT APPLICATION FLORIDA DEPARTMENT OF STATE FOR Sandra B. Mortham REINSTATEMENT Secretary of State Division of Corporations DOCUMENT # P94000088085 Corporation Name CHOICE BOOK AND VIDEO, INC. Principal Place of Business 7695 SW 104 ST. Suite 210 MIAMI FL 33156 If above address is incorrect in any way, line through incorrect information and enter correct below. 2. New Principal Office Address, If Applicable 3. New Mailing Address, If Applicable 4. Date Incorporated or Qualified To Do Business in Florida 7695 SW 104 ST 11/06/94 Suite 210 5. FEI Number Miami FL 33156 USA 6. Certificate of Status Desired
7. Names and Street Addresses of Each Officer and/or Director (Florida nonprofit corporations must list at least 3 directors)
Name of Officers Street Address of Each Title and/or Director Officer and/or Director City/State/Zip 1. 2. 3. 4. P/D Eric P. Littman 7695 SW 104 ST. Miami FL 33156
8. Name and Address of Current Registered Agent 9. Name and Address of New Registered Agent Eric P. Littman 7695 SW 104 ST Suite 210 MIAMI, FL 33156 10. I, being appointed the registered agent of the above named corporation, am familiar with and accept the obligations of Section 607.0505.F.S. Signature of Registered Agent Date 4/13/98 -------------------------------- ------- REGISTERED AGENT MUST SIGN 11. Does this corporation pay any intangible tax to the Dept. of Revenue under S. 199.032, Florida Statutes. YES NO SIGNATURE EX-99.3 4 BYLAWS OF NUONCOLOGY LABS, INC. Exhibit 99.3 BYLAWS OF NUONCOLOGY LABS, INC. (A FLORIDA CORPORATION) INDEX
PAGE NUMBER ARTICLE ONE - OFFICES Section 1. Principal Office............................................................................1 Section 2. Other Offices...............................................................................1 ARTICLE TWO - MEETINGS OF SHAREHOLDERS Section 1. Place ......................................................................................1 Section 2. Time of Annual Meeting......................................................................1 Section 3. Call of Special Meetings....................................................................1 Section 4. Conduct of Meetings.........................................................................1 Section 5. Notice and Waiver of Notice.................................................................2 Section 6. Business and Nominations for Annual and Special Meetings....................................2 Section 7. Quorum......................................................................................2 Section 8. Voting Rights Per Share.....................................................................3 Section 9. Voting of Shares............................................................................3 Section 10. Proxies.....................................................................................3 Section 11. Shareholder List............................................................................4 Section 12. Action Without Meeting......................................................................4 Section 13. Fixing Record Date..........................................................................5 Section 14. Inspectors and Judges.......................................................................5 Section 15. Voting for Directors........................................................................5 ARTICLE THREE - DIRECTORS Section 1. Number; Term; Election; Qualification.......................................................5 Section 2. Resignation; Vacancies; Removal.............................................................6 Section 3. Powers......................................................................................6 Section 4. Place of Meetings...........................................................................6 Section 5. Annual Meetings.............................................................................6 Section 6. Regular Meetings............................................................................6 Section 7. Special Meetings and Notice.................................................................6 Section 8. Quorum and Required Vote....................................................................7 Section 9. Action Without Meeting......................................................................7 Section 10. Conference Telephone or Similar Communications Equipment Meetings...........................7 Section 11. Committees..................................................................................7 Section 12. Compensation of Directors...................................................................8 ARTICLE FOUR - OFFICERS Section 1. Positions...................................................................................8 Section 2. Election of Specified Officers by Board.....................................................8 Section 3. Election or Appointment of Other Officers...................................................8 Section 4. Compensation................................................................................8 Section 5. Term; Resignation; Removal; Vacancies.......................................................8 Section 6. Chairman of the Board.......................................................................9 Section 7. Chief Executive Officer.....................................................................9 Section 8. President...................................................................................9
Section 9. Vice Presidents.............................................................................9 Section 10. Secretary..................................................................................10 Section 11. Chief Financial Officer....................................................................10 Section 12. Treasurer..................................................................................10 Section 13. Other Officers; Employees and Agents.......................................................10 ARTICLE FIVE - CERTIFICATES FOR SHARES Section 1. Issue of Certificates......................................................................10 Section 2. Legends for Preferences and Restrictions on Transfer.......................................11 Section 3. Facsimile Signatures.......................................................................11 Section 4. Lost Certificates..........................................................................11 Section 5. Transfer of Shares.........................................................................12 Section 6. Registered Shareholders....................................................................12 Section 7. Redemption of Control Shares...............................................................12 ARTICLE SIX - GENERAL PROVISIONS Section 1. Dividends..................................................................................12 Section 2. Reserves...................................................................................12 Section 3. Checks.....................................................................................12 Section 4. Fiscal Year................................................................................12 Section 5. Seal.......................................................................................13 Section 6. Gender.....................................................................................13 ARTICLE SEVEN - AMENDMENT OF BYLAWS..............................................................................13
BYLAWS OF NUONCOLOGY LABS, INC. ARTICLE ONE OFFICES Section 1. Principal Office. The principal office of NuOncology Labs, Inc., a Florida corporation (the "Corporation"), shall be located at such place determined by the Board of Directors of the Corporation (the "Board of Directors") in accordance with applicable law. Section 2. Other Offices. The Corporation may also have offices at such other places, either within or without the State of Florida, as the Board of Directors may from time to time determine or as the business of the Corporation may require. ARTICLE TWO MEETINGS OF SHAREHOLDERS Section 1. Place. All annual meetings of shareholders shall be held at such place, within or without the State of Florida, as may be designated by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof. Special meetings of shareholders may be held at such place, within or without the State of Florida, and at such time as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Time of Annual Meeting. Annual meetings of shareholders shall be held on such date and at such time fixed, from time to time, by the Board of Directors, provided, that there shall be an annual meeting held every calendar year at which the shareholders shall elect a board of directors and transact such other business as may properly be brought before the meeting. Section 3. Call of Special Meetings. Special meetings of the shareholders shall be held if called in accordance with the procedures set forth in the Corporation's Articles of Incorporation (the "Articles of Incorporation") for the call of a special meeting of shareholders. Section 4. Conduct of Meetings. The Chairman of the Board of Directors (or in his absence, the President, or in his absence, such other designee of the Chairman of the Board of Directors) shall preside at the annual and special meetings of shareholders and shall be given full discretion in establishing the rules and procedures to be followed in conducting the meetings, except as otherwise provided by law or in these Bylaws. Section 5. Notice and Waiver of Notice. Except as otherwise provided by law, written or printed notice stating the place, date and time of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting, either personally or by first-class mail or other legally sufficient means, by or at the direction of the Chairman of the Board, President, or the persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If the notice is mailed at least thirty (30) days before the date of the meeting, it may be done by a class of United States mail other than first class. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at the address appearing on the stock transfer books of the Corporation, with postage thereon prepaid. If a meeting is adjourned to another time and/or place, and if an announcement of the adjourned time and/or place is made at the meeting, it shall not be necessary to give notice of the adjourned meeting unless the Board of Directors, after adjournment, fixes a new record date for the adjourned meeting. Whenever any notice is required to be given to any shareholder, a waiver thereof in writing signed by the person or persons entitled to such notice, whether signed before, during or after the time of the meeting stated therein, and delivered to the Corporation for inclusion in the minutes or filing with the corporate records, shall constitute an effective waiver of such notice. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the shareholders need be specified in any written waiver of notice. Attendance of a person at a meeting shall constitute a waiver of (a) lack of or defective notice of such meeting, unless the person objects at the beginning to the holding of the meeting or the transacting of any business at the meeting, or (b) lack of or defective notice of a particular matter at a meeting that is not within the purpose or purposes described in the meeting notice, unless the person objects to considering such matter when it is presented. Section 6. Business and Nominations for Annual and Special Meetings. Business transacted at any special meeting shall be confined to the purposes stated in the notice thereof. At any annual meeting of shareholders, only such business shall be conducted as shall have been properly brought before the meeting in accordance with the requirements and procedures set forth in the Articles of Incorporation. Only such persons who are nominated for election as directors of the Corporation in accordance with the requirements and procedures set forth in the Articles of Incorporation shall be eligible for election as directors of the Corporation. Section 7. Quorum. Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. Except as otherwise provided in the Articles of Incorporation or applicable law, shares representing a majority of the votes pertaining to outstanding shares which are entitled to be cast on the matter by the voting group constitute a quorum of that voting group for action on that matter. If less than a quorum of shares are represented at a meeting, the holders of a majority of the shares so represented may adjourn the meeting from time to time. After a quorum has been established at any shareholders' meeting, the subsequent withdrawal of shareholders, so as to reduce the number of shares entitled to vote at the meeting below the number required for a quorum, shall not affect the validity of any action taken at the meeting or any adjournment thereof. Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting. 2 Section 8. Voting Rights Per Share. Each outstanding share, regardless of class, shall be entitled to vote on each matter submitted to a vote at a meeting of shareholders, except to the extent that the voting rights of the shares of any class are limited or denied by or pursuant to the Articles of Incorporation or the Florida Business Corporation Act. Section 9. Voting of Shares. A shareholder may vote at any meeting of shareholders of the Corporation, either in person or by proxy. Shares standing in the name of another corporation, domestic or foreign, may be voted by the officer, agent or proxy designated by the bylaws of such corporate shareholder or, in the absence of any applicable bylaw, by such person or persons as the board of directors of the corporate shareholder may designate. In the absence of any such designation, or, in case of conflicting designation by the corporate shareholder, the chairman of the board, the president, any vice president, the secretary and the treasurer of the corporate shareholder, in that order, shall be presumed to be fully authorized to vote such shares. Shares held by an administrator, executor, guardian, personal representative, or conservator may be voted by such person, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by such person, either in person or by proxy, but no trustee shall be entitled to vote shares held by such person without a transfer of such shares into his name or the name of his nominee. Shares held by or under the control of a receiver, a trustee in bankruptcy proceedings, or an assignee for the benefit of creditors may be voted by such person without the transfer thereof into his name. If shares stand of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety or otherwise, or if two or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary of the Corporation is given notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, then acts with respect to voting shall have the following effect: (a) if only one votes, in person or by proxy, his act binds all; (b) if more than one vote, in person or by proxy, the act of the majority so voting binds all; (c) if more than one vote, in person or by proxy, but the vote is evenly split on any particular matter, each faction is entitled to vote the share or shares in question proportionally; or (d) if the instrument or order so filed shows that any such tenancy is held in unequal interest, a majority or a vote evenly split for purposes hereof shall be a majority or a vote evenly split in interest. The principles of this paragraph shall apply, insofar as possible, to execution of proxies, waivers, consents, or objections and for the purpose of ascertaining the presence of a quorum. Section 10. Proxies. Any shareholder of the Corporation, other person entitled to vote on behalf of a shareholder pursuant to law, or attorney-in-fact for such persons may vote the shareholder's shares in person or by proxy. Any shareholder of the Corporation may appoint a proxy to vote or otherwise act for such person by signing an appointment form, either personally or by his attorney-in-fact. An executed telegram or cablegram appearing to have been transmitted by such person, or a photographic, photostatic, or 3 equivalent reproduction of an appointment form, shall be deemed a sufficient appointment form. An appointment of a proxy is effective when received by the Secretary of the Corporation (the "Secretary") or such other officer or agent which is authorized to tabulate votes, and shall be valid for up to 11 months, unless a longer period is expressly provided in the appointment form. The death or incapacity of the shareholder appointing a proxy does not affect the right of the Corporation to accept the proxy's authority unless notice of the death or incapacity is received by the Secretary or other officer or agent authorized to tabulate votes before the proxy authority under the appointment is exercised. An appointment of a proxy is revocable by the shareholder unless the appointment form conspicuously states that it is irrevocable and the appointment is coupled with an interest. Section 11. Shareholder List. After fixing a record date for a meeting of shareholders, the Corporation shall prepare an alphabetical list of the names of all its shareholders who are entitled to notice of the meeting, arranged by voting group with the address of, and the number and class and series, if any, of shares held by each. The shareholders' list must be available for inspection by any shareholder for a period of ten (10) days prior to the meeting or such shorter time as exists between the record date and the meeting and continuing through the meeting at the Corporation's principal office, at a place identified in the meeting notice in the city where the meeting will be held, or at the office of the Corporation's transfer agent or registrar. Any shareholder of the Corporation or such person's agent or attorney is entitled on written demand to inspect the shareholders' list (subject to the requirements of law), during regular business hours and at his expense, during the period it is available for inspection. The Corporation shall make the shareholders' list available at the meeting of shareholders, and any shareholder or agent or attorney of such shareholder is entitled to inspect the list at any time during the meeting or any adjournment. The shareholders' list is prima facie evidence of the identity of shareholders entitled to examine the shareholders' list or to vote at a meeting of shareholders. Section 12. Action Without Meeting. Any action required or permitted by law to be taken at a meeting of shareholders may be taken without a meeting or notice if a consent, or consents, in writing, setting forth the action so taken, shall be dated and signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all voting groups and shares entitled to vote thereon were present and voted with respect to the subject matter thereof, and such consent shall be delivered to the Corporation, within the period required by Section 607.0704 of the Florida Business Corporation Act, by delivery to its principal office in the State of Florida, its principal place of business, the Secretary or another officer or agent of the Corporation having custody of the book in which proceedings of meetings of shareholders are recorded. Within ten (10) days after obtaining such authorization by written consent, notice must be given to those shareholders who have not consented in writing or who are not entitled to vote on the action, in accordance with the requirements of Section 607.0704 of the Florida Business Corporation Act. Section 13. Fixing Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of 4 shareholders for any other proper purposes, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy (70) days, and, in case of a meeting of shareholders, not less than ten (10) days, before the meeting or action requiring such determination of shareholders. If no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders or the determination of shareholders entitled to receive payment of a dividend, the date before the day on which the first notice of the meeting is mailed or the date on which the resolutions of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section, such determination shall apply to any adjournment thereof, except where the Board of Directors fixes a new record date for the adjourned meeting. Section 14. Inspectors and Judges. The Board of Directors in advance of any meeting may, but need not, appoint one or more inspectors of election or judges of the vote, as the case may be, to act at the meeting or any adjournment thereof. If any inspector or inspectors, or judge or judges, are not appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors or judges. In case any person who may be appointed as an inspector or judge fails to appear or act, the vacancy may be filled by the Board of Directors in advance of the meeting, or at the meeting by the person presiding thereat. The inspectors or judges, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots and consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate votes, ballots and consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all shareholders. On request of the person presiding at the meeting, the inspector or inspectors or judge or judges, if any, shall make a report in writing of any challenge, question or matter determined by him or them, and execute a certificate of any fact found by him or them. Section 15. Voting for Directors. Unless otherwise provided in the Articles of Incorporation, directors shall be elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. ARTICLE THREE DIRECTORS Section 1. Number; Term; Election; Qualification. The number of directors of the Corporation shall be fixed from time to time, within the limits specified by the Articles of Incorporation, by resolution of the Board of Directors. Directors shall be elected in the manner and hold office for the term as prescribed in the Articles of Incorporation. Directors must be natural persons who are 18 years of age or older but need not be residents of the State of Florida, shareholders of the Corporation or citizens of the United States. 5 Section 2. Resignation; Vacancies; Removal. A director may resign at any time by giving written notice to the Board of Directors or the Chairman of the Board. Such resignation shall take effect at the date of receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. In the event the notice of resignation specifies a later effective date, the Board of Directors may fill the pending vacancy (subject to the provisions of the Articles of Incorporation) before the effective date if they provide that the successor does not take office until the effective date. Director vacancies shall be filled, and directors may be removed, in the manner prescribed in the Corporation's Articles of Incorporation. Section 3. Powers. The business and affairs of the Corporation shall be managed by the Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these Bylaws directed or required to be exercised and done by the shareholders. Section 4. Place of Meetings. Meetings of the Board of Directors, regular or special, may be held either within or without the State of Florida. Section 5. Annual Meetings. Unless scheduled for another time by the Board of Directors, the first meeting of each newly elected Board of Directors shall be held, without call or notice, immediately following each annual meeting of shareholders. Section 6. Regular Meetings. Regular meetings of the Board of Directors may also be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors. Section 7. Special Meetings and Notice. Special meetings of the Board of Directors may be called by the President or Chairman of the Board and shall be called by the Secretary on the written request of any two directors. At least forty-eight (48) hours' prior written notice of the date, time and place of special meetings of the Board of Directors shall be given to each director. Except as required by law, neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. Notices to directors shall be in writing and delivered to the directors at their addresses appearing on the books of the Corporation by personal delivery, mail or other legally sufficient means. Subject to the provisions of the preceding sentence, notice to directors may also be given by telegram, teletype or other form of electronic communication. Notice by mail shall be deemed to be given at the time when the same shall be received. Whenever any notice is required to be given to any director, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before, during or after the meeting, shall constitute an effective waiver of such notice. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting and a waiver of any and all objections to the place of the meeting, the time of the meeting and the manner in which it has been called or convened, except when a director states, at the beginning of the meeting or promptly upon 6 arrival at the meeting, any objection to the transaction of business because the meeting is not lawfully called or convened. Section 8. Quorum and Required Vote. A majority of the prescribed number of directors determined as provided in the Articles of Incorporation shall constitute a quorum for the transaction of business and the act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless a greater number is required by the Articles of Incorporation. Whenever, for any reason, a vacancy occurs in the Board of Directors, a quorum shall consist of a majority of the remaining directors until the vacancy has been filled. If a quorum shall not be present at any meeting of the Board of Directors, a majority of the directors present thereat may adjourn the meeting to another time and place, without notice other than announcement at the time of adjournment. At such adjourned meeting at which a quorum shall be present, any business may be transacted that might have been transacted at the meeting as originally notified and called. Section 9. Action Without Meeting. Any action required or permitted to be taken at a meeting of the Board of Directors or committee thereof may be taken without a meeting if a consent in writing, setting forth the action taken, is signed by all of the members of the Board of Directors or the committee, as the case may be, and such consent shall have the same force and effect as a unanimous vote at a meeting. Action taken under this Section 9 is effective when the last director signs the consent, unless the consent specifies a different effective date. A consent signed under this Section 9 shall have the effect of a meeting vote and may be described as such in any document. Section 10. Conference Telephone or Similar Communications Equipment Meetings. Directors and committee members may participate in and hold a meeting by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in such a meeting shall constitute presence in person at the meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground the meeting is not lawfully called or convened. Section 11. Committees. The Board of Directors, by resolution adopted by a majority of the whole Board of Directors, may designate from among its members an executive committee and one or more other committees, each of which, to the extent provided in such resolution, shall have and may exercise all of the authority of the Board of Directors in the business and affairs of the Corporation except where the action of the full Board of Directors is required by applicable law. Each committee must have two or more members who serve at the pleasure of the Board of Directors. The Board of Directors, by resolution adopted in accordance with this Article Three, may designate one or more directors as alternate members of any committee, who may act in the place and stead of any absent member or members at any meeting of such committee. Vacancies in the membership of a committee may be filled only by the Board of Directors at a regular or special meeting of the Board of Directors. The executive committee shall keep regular minutes of its proceedings and report the same to the Board of Directors when required. The designation of any such committee and the delegation thereto of authority shall not 7 operate to relieve the Board of Directors, or any member thereof, of any responsibility imposed upon it or such member by law. Section 12. Compensation of Directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Similarly, members of special or standing committees may be allowed compensation for attendance at committee meetings or a stated salary as a committee member and payment of expenses for attending committee meetings. Directors may receive such other compensation as may be approved by the Board of Directors. ARTICLE FOUR OFFICERS Section 1. Positions. The officers of the Corporation may consist of a Chairman of the Board, a Chief Executive Officer, a President, one or more Vice Presidents (any one or more of whom may be given the additional designation of rank of Executive Vice President or Senior Vice President), a Secretary, a Chief Financial Officer and a Treasurer. Any two or more offices may be held by the same person. Officers other than the Chairman of the Board need not be members of the Board of Directors. The Chairman of the Board must be a member of the Board of Directors. Section 2. Election of Specified Officers by Board. The Board of Directors at its first meeting after each annual meeting of shareholders shall elect a Chairman of the Board, a Chief Executive Officer, a President, one or more Vice Presidents (including any Senior or Executive Vice Presidents), a Secretary, a Chief Financial Officer and a Treasurer. Section 3. Election or Appointment of Other Officers. Such other officers and assistant officers and agents as may be deemed necessary may be elected or appointed by the Board of Directors, or, unless otherwise specified herein, appointed by the Chairman of the Board. The Board of Directors shall be advised of appointments by the Chairman of the Board at or before the next scheduled Board of Directors meeting. Section 4. Compensation. The salaries, bonuses and other compensation of the Chairman of the Board and all officers of the Corporation to be elected by the Board of Directors pursuant to Section 2 of this Article Four shall be fixed from time to time by the Board of Directors or pursuant to its direction. The salaries of all other elected or appointed officers of the Corporation shall be fixed from time to time by the Chairman of the Board or pursuant to his direction. Section 5. Term; Resignation; Removal; Vacancies. The officers of the Corporation shall hold office until their successors are chosen and qualified. Any officer 8 or agent elected or appointed by the Board of Directors or the Chairman of the Board may be removed, with or without cause, by the Board of Directors, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer or agent appointed by the Chairman of the Board pursuant to Section 3 of this Article Four may also be removed from such office or position by the Board of Directors or the Chairman of the Board, with or without cause. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise shall be filled by the Board of Directors, or, in the case of an officer appointed by the Chairman of the Board, by the Chairman of the Board or the Board of Directors. Any officer of the Corporation may resign from his respective office or position by delivering notice to the Corporation, and such resignation shall be effective without acceptance. Such resignation shall be effective when delivered unless the notice specifies a later effective date. If a resignation is made effective at a later date and the Corporation accepts the future effective date, the Board of Directors may fill the pending vacancy before the effective date if the Board provides that the successor does not take office until such effective date. Section 6. Chairman of the Board. The Chairman of the Board shall preside at all meetings of the shareholders and the Board of Directors. The Chairman of the Board shall also serve as the chairman of any executive committee. Section 7. Chief Executive Officer. Subject to the control of the Board of Directors, the Chief Executive Officer, in conjunction with the President, shall have general and active management of the business of the Corporation, shall see that all orders and resolutions of the Board of Directors are carried into effect and shall have such powers and perform such duties as may be prescribed by the Board of Directors. In the absence of the Chairman of the Board or in the event the Board of Directors shall not have designated a Chairman of the Board, the Chief Executive Officer shall preside at meetings of the shareholders and the Board of Directors. The Chief Executive Officer shall also serve as the vice-chairman of any executive committee. Section 8. President. Subject to the control of the Board of Directors, the President, in conjunction with the Chief Executive Officer, shall have general and active management of the business of the Corporation and shall have such powers and perform such duties as may be prescribed by the Board of Directors. In the absence of the Chairman of the Board and the Chief Executive Officer or in the event the Board of Directors shall not have designated a Chairman of the Board and a Chief Executive Officer shall not have been elected, the President shall preside at meetings of the shareholders and the Board of Directors. The President shall also serve as the vice-chairman of any executive committee. Section 9. Vice Presidents. The Vice Presidents, in the order of their seniority, unless otherwise determined by the Board of Directors, shall, in the absence or disability of the President and the Chief Executive Officer, perform the duties and exercise the powers of the President. They shall perform such other duties and have such other powers as the Board of Directors, the Chairman of the Board or the Chief Executive Officer shall prescribe or as the President may from time to time delegate. Executive Vice Presidents shall be senior to Senior Vice Presidents, and Senior Vice Presidents shall be senior to all other Vice Presidents. 9 Section 10. Secretary. The Secretary shall attend all meetings of the shareholders and all meetings of the Board of Directors and record all the proceedings of the meetings of the shareholders and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The Secretary shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board of Directors and shall keep in safe custody the seal of the Corporation and, when authorized by the Board of Directors, affix the same to any instrument requiring it. The Secretary shall perform such other duties as may be prescribed by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President. Section 11. Chief Financial Officer. The Chief Financial Officer shall be responsible for maintaining the financial integrity of the Corporation, shall prepare the financial plans for the Corporation and shall monitor the financial performance of the Corporation and its subsidiaries, as well as performing such other duties as may be prescribed by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President. Section 12. Treasurer. The Treasurer shall have the custody of corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Chairman of the Board and the Board of Directors at its regular meetings or when the Board of Directors so requires an account of all his transactions as Treasurer and of the financial condition of the Corporation. The Treasurer shall perform such other duties as may be prescribed by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President. Section 13. Other Officers; Employees and Agents. Each and every other officer, employee and agent of the Corporation shall possess, and may exercise, such power and authority, and shall perform such duties, as may from time to time be assigned to such person by the Board of Directors, the officer so appointing such person or such officer or officers who may from time to time be designated by the Board of Directors to exercise such supervisory authority. ARTICLE FIVE CERTIFICATES FOR SHARES Section 1. Issue of Certificates. The shares of the Corporation shall be represented by certificates, provided that the Board of Directors of the Corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder 10 of stock represented by certificates (and upon request every holder of uncertificated shares) shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairman of the Board or a Vice Chairman of the Board, or the Chief Executive Officer, President or Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, representing the number of shares registered in certificate form. Section 2. Legends for Preferences and Restrictions on Transfer. The designations, relative rights, preferences and limitations applicable to each class of shares and the variations in rights, preferences and limitations determined for each series within a class (and the authority of the Board of Directors to determine variations for future series) shall be summarized on the front or back of each certificate. Alternatively, each certificate may state conspicuously on its front or back that the Corporation will furnish the shareholder a full statement of this information on request and without charge. Every certificate representing shares that are restricted as to the sale, disposition, or transfer of such shares shall also indicate that such shares are restricted as to transfer, and there shall be set forth or fairly summarized upon the certificate, or the certificate shall indicate that the Corporation will furnish to any shareholder upon request and without charge, a full statement of such restrictions. If the Corporation issues any shares that are not registered under the Securities Act of 1933, as amended, or not registered or qualified under the applicable state securities laws, the transfer of any such shares shall be restricted substantially in accordance with the following legend: "THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY APPLICABLE STATE LAW. THEY MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR PLEDGED WITHOUT (1) REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE LAW, OR (2) AT HOLDER'S EXPENSE, AN OPINION (SATISFACTORY TO THE CORPORATION) OF COUNSEL (SATISFACTORY TO THE CORPORATION) THAT REGISTRATION IS NOT REQUIRED." Section 3. Facsimile Signatures. Any and all signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. Section 4. Lost Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Corporation may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond in such sum 11 as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed. Section 5. Transfer of Shares. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Section 6. Registered Shareholders. The Corporation shall be entitled to recognize the exclusive rights of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Florida. Section 7. Redemption of Control Shares. As provided by the Florida Business Corporation Act, if a person acquiring control shares of the Corporation does not file an acquiring person statement with the Corporation, the Corporation may, at the discretion of the Board of Directors, redeem the control shares at the fair value thereof at any time during the 60-day period after the last acquisition of such control shares. If a person acquiring control shares of the Corporation files an acquiring person statement with the Corporation, the control shares may be redeemed by the Corporation, at the discretion of the Board of Directors, only if such shares are not accorded full voting rights by the shareholders as provided by law. ARTICLE SIX GENERAL PROVISIONS Section 1. Dividends. The Board of Directors may from time to time declare, and the Corporation may pay, dividends on its outstanding shares in cash, property, stock (including its own shares) or otherwise pursuant to law and subject to the provisions of the Articles of Incorporation. Section 2. Reserves. The Board of Directors may by resolution create a reserve or reserves out of earned surplus for any proper purpose or purposes, and may abolish any such reserve in the same manner. Section 3. Checks. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 4. Fiscal Year. The fiscal year of the Corporation shall end on December 31 of each year, unless otherwise fixed by resolution of the Board of Directors. 12 Section 5. Seal. The Board of Directors may adopt a corporate seal by resolution. The corporate seal, if adopted, shall have inscribed thereon the name and state of incorporation of the Corporation. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. Section 6. Gender. All words used in these Bylaws in the masculine gender shall extend to and shall include the feminine and neutral genders. ARTICLE SEVEN AMENDMENT OF BYLAWS Except as otherwise set forth herein, these Bylaws may be altered, amended or repealed or new Bylaws may be adopted at any meeting of the Board of Directors at which a quorum is present, by the affirmative vote of a majority of the directors present at such meeting. PRESIDENT'S CERTIFICATE OF ADOPTION OF THE BYLAWS OF NUONCOLOGY LABS, INC. I hereby certify: That I am the duly elected President of NuOncology Labs, Inc., a Florida corporation; That the foregoing Bylaws comprising thirteen (13) pages, constitute the Bylaws of said corporation as duly adopted by the Board of Directors of the Corporation on June 26th, 1998. IN WITNESS WHEREOF, I have hereunder signed my name this 26th day of June, 1998. Christos Koumbis, President -----END PRIVACY-ENHANCED MESSAGE-----