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Description of Business
12 Months Ended
Dec. 31, 2013
Notes to Financial Statements  
Note 1. Description of Business

2013 Developments

 

Settlement of GUSA Note Receivable and Litigation.  On May 24, 2013, the Company and Genomics USA, Inc. ("GUSA") settled the Company’s complaint filed against GUSA, wherein the Company sought to recover all amounts due under the terms of a promissory note in the principal amount of $200,000 (the "GUSA Note").  The Complaint was filed in the Supreme Court of the State of New York, and sought repayment of all amounts due under the terms of the GUSA Note, and accrued interest thereon, plus attorney's fees.   The settlement agreement entered into by the parties provides for the payment to the Company of $200,000, of which $20,000 was paid on June 7, 2013, and $10,000 per month shall be paid on the 7th day of each consecutive month thereafter for a total of 18 months.   During the year ended December 31, 2013, the Company received payments of $80,000 towards the GUSA Note.

 

Issuance of Additional Promissory Notes.  During the year ended December 31, 2013, the Company issued promissory notes to two investors in the principal amounts of $25,000 (the “$25K Note”), $2,000 (the “$2K Note”), $20,000 (the “$20K Note”) and $17,000 (the "$17K Note") (together, the “Notes”). As additional consideration for the purchase of the Notes, the Company issued an aggregate total of 64,000 warrants to purchase shares of FluoroPharma Medical, Inc. (“FPMI”) common stock, for $1.00 per share (“$1.00 FPMI Warrants”). The $1.00 FPMI Warrants expire on February 15, 2019.

 

The Notes accrue interest at the rate of 6% annually, and are currently due and payable on demand. The Notes are convertible at the option of each respective holder into shares of the Company’s common stock, par value $0.01 per share (“Common Stock”), at a conversion price equal to $0.10 per share. In addition, the holders may exchange the Notes for Common Stock in the event the Company consummates a qualified financing resulting in gross proceeds to the Company of at least $500,000 (“Qualified Financing”). While the Company intends to pay the Notes using proceeds from a Qualified Financing, such Qualified Financing may not occur prior to the date the holders of the Notes demand repayment.

 

On October 29, 2013, the holder of certain outstanding Notes totaling approximately $217,000 in principal and accrued interest agreed to cancel such notes in exchange for a new note with a face amount of $217,000, maturing on June 30, 2014, and 100,000 $1.00 FPMI Warrants.

 

Separately, our financial advisor, agreed to exchange $216,000 of fees accrued from May 15, 2011  to October 15, 2012  that are payable in cash on December 31, 2013 for a note in the face amount of $250,000 maturing on June 30, 2014 and 100,000 FPMI warrants.  These notes accrue 8% interest per annum, and are due and payable on June 30, 2014. Additionally, we entered into a new financial advisory agreement on October 29, 2013, which replaced the previous agreement that expired on October 15, 2012.  Pursuant to this Agreement, we agreed to pay a retainer in the amount of $100,000 and $15,000 per month beginning on November 29, 2013. The initial term of the Agreement expires on December 31, 2014. The advisor agreed to defer the cash fees due under the new Agreement until June 30, 2014.

 

The Company presently intends to issue additional Notes to finance its current working capital needs. However, there can be no assurance that the Company will be able to issue additional Notes.

 

Exchange Agreement. On March 1, 2013, the Company entered into an Exchange Agreement with NuRx Pharmaceuticals, Inc. (“NuRx”) and QN Diagnostics, LLC (“QND”), pursuant to which the Company exchanged the shares of NuRx Common Stock received under the terms of the settlement agreement with NuRx in July 2011 for certain patents, trademarks and other intellect property formerly held by NuRx and QND covering point-of-care lateral flow diagnostics (RapidSense™) and related oral fluid collection technologies. The Company recorded the value associates with this exchange at $13,200, and will amortize these costs over the remaining useful lives of the intellectual property exchanged.

 

Overview

 

The Company has developed and ultimately intends to commercialize its innovative PAD based products for the OTC and laboratory markets based on its patented technology platforms, and its genomic diagnostics, based on its patented PadKit® technology for the worldwide healthcare industry. These platforms include: inSync®, Unique™, PadKit®, and OEM branded OTC and laboratory testing products based on the Company’s core intellectual property related to its PAD technology.  These products are intended for the treatment of hemorrhoids, minor vaginal infection, urinary incontinence, general catamenial uses and other medical needs. 

 

The Company’s efforts to commercialize its products are currently contingent on the receipt of additional financing required to execute its business and operating plan, which is currently focused on the commercialization of the Company’s PAD technology either directly or through a joint venture or other relationship intended to increase shareholder value.  In the interim, the Company has had nominal operations, focused principally on the limited online sale of our Unique® Miniform PAD product and maintaining compliance with the public company reporting requirements.   No assurances can be given that the Company will obtain financing, or otherwise successfully develop a business and operating plan or enter into an alternative relationship to commercialize the Company’s PAD technology.

  

     On June 20, 2012, the Company formed a wholly-owned subsidiary, QX Labs, Inc. (“QX”), to convey and transfer to QX all intellectual property and assets related to the Company’s diagnostic testing business ("Diagnostics Business"). The Diagnostic Business is based principally on the Company’s proprietary PadKit® technology, which the Company believes provides a patented platform technology for genomic diagnostics, including fetal genomics. Following the transfer of the Diagnostics Business to QX, which the Company intends to affect during the current fiscal year, the Company’s other business line will consist of its over-the-counter business, including the InSync feminine hygienic interlabial pad, the Unique® Miniform for hemorrhoid application, and other treated miniforms (the “OTC Business”), as well as established and continuing licensing relationships related to the OTC Business. Management believes the creation of QX permits the Company to more efficiently explore different options to maximize the value of the Diagnostics Business and the OTC Business (collectively, the “Businesses”), with the objective of maximizing the value of the Businesses for the benefit of the Company and its stakeholders.

 

     The Company’s current focus is to obtain additional working capital necessary to continue as a going concern, and develop a longer term financing and operating plan to: (i) leverage its broad-based intellectual property (“IP”) and patent portfolio to develop new and innovative diagnostic products; (ii) commercialize its OTC Business and its Diagnostics Business either directly or through joint ventures, mergers or similar transactions intended to capitalize on commercial opportunities presented by each of the Businesses; (iii) contract manufacturing to third parties while maintaining control over the manufacturing process; and (iv) maximize the value of the Company’s investments in non-core assets.  As a result of its current financial condition, however, the Company’s efforts in the short-term will be focused on limited online sale of our Unique® Miniform PAD product, and obtaining financing necessary to maintain the Company as a going concern.