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DESCRIPTION OF BUSINESS
12 Months Ended
Dec. 31, 2021
Accounting Policies [Abstract]  
DESCRIPTION OF BUSINESS

1. DESCRIPTION OF BUSINESS

 

Overview

 

We have developed and intend to commercialize our patented miniform pads (“PADs”) and PAD based over-the-counter products for the treatment of hemorrhoids, minor vaginal infection, urinary incontinence, general catamenial uses and other medical needs. We are also developing and intend to commercialize genomic diagnostics for the laboratory market, based on our lateral flow patents. Our platforms include: inSync®, UniqueTM, and OEM branded over-the-counter and laboratory testing products based on our core intellectual property related to our PAD technology.

 

The continuation of our operations remains contingent upon the receipt of additional financing required to execute our business and operating plan, which is currently focused on the commercialization of our PAD technology either directly or through a joint venture or other relationship intended to increase shareholder value. In the interim, we have nominal operations, focused principally on maintaining our intellectual property portfolio and maintaining compliance with the public company reporting requirements. In order to continue as a going concern, we will need to raise capital, which may include the issuance of debt and/or equity securities. No assurances can be given that we will be able to obtain additional financing under terms favorable to us, if at all, or otherwise successfully develop a business and operating plan or enter into an alternative relationship to commercialize our PAD technology.

 

Our principal business line consists of over-the-counter commercialization of our InSync feminine hygienic interlabial pad, the Unique® Miniform for hemorrhoid application, and other treated miniforms (the “OTC Business”), as well as maintaining established and continuing licensing relationships related to these products. We also own certain diagnostic testing technology (the “Diagnostic Business”, and collectively with the OTC Business, the “Business”) that is based on our lateral flow patents. Management believes this corporate structure permits us to more efficiently explore options to maximize the value of our products and intellectual property portfolio, with the objective of maximizing the value of the Businesses for the benefit of the Company and our shareholders.

 

Our current focus is to obtain additional working capital necessary to continue as a going concern, and to develop a longer term financing and operating plan to: (i) commercialize our over-the-counter products either directly or through joint ventures, mergers or similar transactions intended to capitalize on potential commercial opportunities; (ii) contract manufacturing of our over-the-counter products to third parties while maintaining control over the manufacturing process; (iii) maintain our intellectual property portfolio with respect to patents and licenses pertaining to both the OTC Business and the Diagnostics Business; and (iv) maximize the value of our investments in non-core assets. As a result of our current financial condition, however, our efforts in the short-term will be focused on obtaining financing necessary to maintain the Company as a going concern.

 

Preprogen Transaction

 

On December 15, 2017 (“Closing Date”), we executed an agreement with Preprogen LLC (“Preprogen”) (the “Preprogen Agreement”), pursuant to which we agreed to the sale, assignment, and license-back of certain of our assets pertaining to our Diagnostic Business (the “Purchased Assets”). Under this agreement, we retained all rights and assets relating to the OTC Business, which includes all assets necessary to pursue marketing the over-the-counter miniform products for female hygiene and hemorrhoid treatment.

 

As set forth in the Preprogen Agreement, as consideration for the sale, assignment and transfer of the Purchased Assets (the “Preprogen Transaction”)on the Closing Date, Preprogen(A) paid us $1.0 million (“Cash Amount”) as follows: (i) approximately $38,000 was paid to the City of Portland to payoff certain indebtedness owed by us to the City of Portland, (ii) $65,000 in principal amount of notes held by Preprogen was credited toward the purchase price as a result of the cancellation and termination of those certain promissory notes payable to Preprogen by us, and (iii) the remaining balance was paid to us in cash at closing (the “Closing Balance”); and (B) issued to us that number of membership interests in Preprogen equal to 15% of the issued and outstanding membership interests in Preprogen on a fully diluted basis as of the Closing Date. Under the terms of the Preprogen Agreement, Preprogen is obligated to pay to us such additional amounts calculated based on the aggregate gross revenue generated by Preprogen from the sale of products after the Closing Date that utilize, or royalty payments or licensing fees received by Preprogen with respect to, the Purchased Assets, if any, as more particularly set forth in the Preprogen Agreement.

 

 

At closing, and as required by the Preprogen Agreement, we deposited $400,000 of the Cash Balance in escrow, which funds were to be used to fund up to 50% of the costs incurred by Preprogen in connection with the development and manufacturing of materials to be used by us for our over-the-counter miniform products and to be used by Preprogen for diagnostic products related to the Purchased Assets. As additional consideration for the Purchased Assets, we issued a warrant to Preprogen’s designee to purchase up to 15.0 million shares of our common stock, par value $0.01 per share (“Common Stock”), at an exercise price of $0.05 per share (the “Warrant”). The Warrant is immediately exercisable and expires on December 14, 2022.

 

On October 8, 2018, the Preprogen Agreement was amended to provide for, among other things, the release of funds held in escrow related to the manufacture of the miniform pads (the “Preprogen Amendment”), which resulted in both parties receiving $200,583 in cash. As consideration for the Preprogen Amendment, we agreed to pay Preprogen a royalty of 5% from the sale of all over-the-counter miniform products; provided, however, that such royalty payments shall terminate when Preprogen has received $200,000 in aggregate consideration from the royalties paid by us, and that we shall be entitled to offset such royalty payments due and payable to Preprogen by amounts equal to certain other payments otherwise due and payable to us by Preprogen pursuant to the terms of the Preprogen Agreement. At December 31, 2018, we revalued our investment in Preprogen to $222,000, recording an impairment of $278,000. At December 31, 2019, we revalued our investment in Preprogen to $0, recording an impairment of $222,000.