Power3 Medical Products, Inc. |
(Name of Registrant as Specified in its Charter) |
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
Common stock, par value $0.001 per share, of Power3 Medical Products, Inc. |
1,000,000,000 shares of common stock |
The filing fee was determined based upon a maximum aggregate transaction value of $20,700,000. The maximum aggregate transaction value was determined based upon the product of: (i) 1,000,000,000 shares of Power3’s common stock, multiplied by (ii) $0.0207, which was the average of the high and low bid prices reported on January 21, 2011. The filing fee, calculated in accordance with Section 14(g) of the Securities Exchange Act of 1934, as amended, and Rule 0-11(c)(1) promulgated thereunder, was determined by multiplying 0.0001161 by the maximum aggregate transaction value of $20,700,000.
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$20,700,000 |
$2,403.27 |
/s/ Ira L. Goldknopf | |
Ira L. Goldknopf | |
President and Chief Scientific Officer |
1.
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To consider and vote upon the issuance of shares of Power3 common stock in the merger;
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2.
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To consider and vote upon an increase in the number of shares of common stock authorized for issuance from 600,000,000 to 3,100,000,000;
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3.
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To consider and vote upon a change of the name of the company from “Power3 Medical Products, Inc.” to “Rozetta-Cell Life Sciences, Inc.”;
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4.
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To consider and vote upon a change of Power3’s state of incorporation from New York to Nevada;
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5.
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To consider and vote upon the adoption of the Power3 Medical Products, Inc. 2011 Stock Incentive Plan;
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6.
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To consider and vote upon the addition of a provision to the proposed articles of incorporation of Power3 in Nevada (the “Nevada Charter”) opting out of Nevada Revised Statutes Sections 78.378 to 78.3793, inclusive (the “Nevada Control Share Acquisition Statute”);
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7.
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To consider and vote upon the addition of a provision to the Nevada Charter opting out of Nevada Revised Statutes Sections 78.411 through 78.444, inclusive (the “Nevada Business Combinations Statute”);
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8.
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To consider and vote upon a proposal to remove the provision stating the number of directors of Power3 from the Nevada Charter so that the number of directors of Power3 will be stated in the proposed bylaws of Power3 in Nevada (the “Nevada Bylaws”; together with the Nevada Charter, the “Nevada Charter Documents”) exclusively;
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9.
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To consider and vote upon the addition of a provision to the Nevada Bylaws fixing the number of directors of Power3 at no less than one director and no more than nine directors;
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10.
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To consider and vote upon the addition of a provision to the Nevada Bylaws to authorize the board of directors to change the authorized number of directors to a number outside the range specified in the bylaws;
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11.
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To consider and vote upon the addition of a provision to the Nevada Charter Documents to provide indemnification for Power3’s officers and directors to the maximum extent permitted by Nevada law;
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12.
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To consider and vote upon the addition of a provision to the Nevada Charter Documents to limit the liability of Power3’s officers and directors to the maximum extent permitted by Nevada law;
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13.
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To consider and vote upon an adjournment of the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1 and 2; and
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14.
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To transact such other business as may properly come before the special meeting or any adjournment or postponement thereof.
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By order of the board of directors, | |
/s/ Ira L. Goldknopf | |
Ira L. Goldknopf | |
President and Chief Scientific Officer |
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting of Shareholders to Be Held on ___________________, 2011: The accompanying proxy statement is available at: www.shareholdermaterial.com/PWRM.
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ANNEXES
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B-1 | |||
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I-1
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Q:
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What is the Merger?
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A:
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Power3 and Rozetta-Cell have entered into an Agreement and Plan of Merger, dated September 7, 2010, as amended by that certain First Amendment and Waiver to Agreement and Plan of Merger, dated December 31, 2010, between Power3 and Rozetta-Cell, which are collectively referred to as the merger agreement. The merger agreement contains the terms and conditions of the proposed business combination of Power3 and Rozetta-Cell. Under the merger agreement, Rozetta-Cell will merge with and into Power3, whereupon the separate corporate existence of Rozetta-Cell will cease and Power3 will continue as the surviving company. This transaction is referred to as the merger. In connection with the merger, Power3 will issue a total of 1,000,000,000 shares of its common stock to the shareholders of Rozetta-Cell. The shares of Power3 common stock issued to Rozetta-Cell shareholders will represent approximately 68% of the outstanding shares of the combined company immediately following the consummation of the merger, without giving effect to any shares issuable pursuant to Power3’s outstanding warrants and other convertible securities. There will be no adjustment to the total number of shares of Power3 common stock to be issued to Rozetta-Cell shareholders for changes in the market price of Power3 common stock. For a more complete description of the merger, please see the section entitled “The Merger Agreement” beginning on page 81 of this proxy statement.
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Q:
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Why are the two companies proposing to merge?
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A:
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Power3 believes Rozetta-Cell brings valuable adult stem cell therapy technology, know-how and experience to Power3. Rozetta-Cell provides Power3 with rights to a patent relating to new technology for the imaging of stem cells. With the addition of Rozetta-Cell, Power3 will significantly strengthen its intellectual property portfolio. Power3 believes that together, the two companies will be better able to achieve the goals of providing new stem cell therapy products for patients and returns for shareholders. For a discussion of Power3’s reasons for the merger, please see the section entitled “The Merger—Reasons for the Merger” on page 71 of this proxy statement.
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Q:
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Why am I receiving this proxy statement?
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A:
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You are receiving this proxy statement because you have been identified as a shareholder of Power3. This proxy statement is being used to solicit proxies on behalf of the Power3 board of directors for the special meeting, including any adjournments or postponements of the meeting. This document contains important information about the merger and the special meeting of Power3, and you should read it carefully.
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Q:
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What is required to consummate the merger?
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A:
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To consummate the merger, Power3 shareholders must approve: (a) the issuance of shares of Power3 common stock in the merger, which requires the affirmative vote by holders of outstanding shares of Power3 common stock and Series B Preferred Stock holding two-thirds (2/3) of the total votes entitled to vote at the special meeting and voting together as a single class, and (b) an increase in the number of shares of common stock of Power3 authorized for issuance from 600,000,000 to 3,100,000,000, which requires the affirmative vote by holders of outstanding shares of Power3 common stock and Series B Preferred Stock holding a majority of the total votes entitled to vote at the special meeting and voting together as a single class. In addition to obtaining shareholder approval, each of the other closing conditions set forth in the merger agreement must be satisfied or waived. For a discussion of the risk that Power3 may not be able to complete the merger, please see the risk factor entitled “Failure to satisfy the closing conditions of the merger and complete the merger could adversely affect Power3’s stock price and Power3’s future business and operations” on page 34 of this proxy statement. For a more complete description of the closing conditions under the merger agreement, please see the section entitled “The Merger Agreement—Conditions to Completion of the Merger” on page 86 of this proxy statement.
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Q:
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What will Rozetta-Cell shareholders receive in the merger?
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A:
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Power3 will issue a total of 1,000,000,000 shares of its common stock to the shareholders of Rozetta-Cell in connection with the merger, representing approximately 68% of the outstanding shares of the combined company immediately following the consummation of the merger, without giving effect to any shares issuable pursuant to Power3’s outstanding warrants and other convertible securities. The aggregate amount of merger consideration will be allocated to holders of Rozetta-Cell common stock in the manner set forth in the merger agreement. Each share of Rozetta-Cell common stock will be converted into the right to receive 10 shares of Power3 common stock. There will be no adjustment to the total number of shares of Power3 common stock to be issued to Rozetta-Cell shareholders for changes in the market price of Power3 common stock. For a more complete description of what Rozetta-Cell shareholders will receive in the merger, please see the section entitled “The Merger Agreement—Merger Consideration” on page 81.
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Q:
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What if the merger is not approved?
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A:
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If the merger is not approved at the special meeting, Power3 will submit to the Power3 shareholders Proposal No. 13 to consider and vote upon an adjournment of the special meeting, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1 and, if necessary, Proposal No. 2. If the merger is not approved at the special meeting or any adjournment thereof, Power3 will not issue any shares of common stock to the Rozetta-Cell shareholders in connection with the merger. Instead, Power3 and Rozetta-Cell will remain independent companies, and Power3’s shares of common stock will continue to be listed and traded on the Over-the-Counter Bulletin Board (“OTC Bulletin Board”). For a more complete description of the effects of a failure to approve the merger, please see “Effect of Failure to Approve the Merger by the Shareholders” beginning on page 80 of this proxy statement.
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Q:
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Did Power3 obtain a fairness opinion?
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A:
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Power3’s board of directors decided not to obtain a fairness opinion in connection with the proposed merger with Rozetta-Cell. The primary reason for this decision was the substantial cost entailed in obtaining a fairness opinion in light of Power3’s limited funds and the ability of its management to properly evaluate Rozetta-Cell. Power3 believes that its management was well qualified to conduct the due diligence and other investigations and analyses required in connection with its evaluation of Rozetta-Cell. Power3 also believes that this experience made its management highly qualified to determine Rozetta-Cell’s value and assess the merits of the merger. For a complete discussion of the factors considered by Power3’s board of directors in deciding to approve the merger, see the section entitled “Reasons for the Merger” beginning on page 71 of this proxy statement. As a result, the board concluded that Power3’s funds would be better spent developing Power3’s business and operations.
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Because no fairness opinion has been obtained, Power3’s shareholders will not have the benefit of an independent expert’s evaluation of the fairness of the terms of Power3’s proposed merger with Rozetta-Cell; Power3’s shareholders will only have the evaluation conducted by Power3’s board of directors. If Power3’s board of directors incorrectly valued Rozetta-Cell, the merger may not be fair to Power3’s shareholders.
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Q:
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Do the executive officers, directors and principal shareholders of Power3 have interests in the merger that are different from mine?
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A:
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In considering the Power3 board of directors’ recommendation that you vote to approve Proposal Nos. 1 and 2, you should be aware that some Power3 officers and directors may have interests in the merger that are different from, or in addition to, your interests that may present actual or potential conflicts of interest. |
As of January 21, 2011, the officers and directors of Power3, together with their affiliates, beneficially owned as a group approximately 16.3% of Power3’s outstanding common stock. In addition, Ira L. Goldknopf, Power3’s President, Chief Scientific Officer, Secretary and Chairman of the Board, owned 100% of Power3’s outstanding Series B Preferred Stock, which gives him that number of votes equal to the number of votes of all outstanding shares of Power3 common stock plus one additional vote. Immediately following the merger, the officers and directors of the combined company, together with their affiliates, will beneficially own approximately 28.8% of the outstanding common stock of the combined company, including shares subject to outstanding warrants and other convertible securities, after the consummation of the merger based upon shares outstanding as of January 21, 2011. Dr. Goldknopf will not own any Series B Preferred Stock after the consummation of the merger because, pursuant to the terms of the merger agreement, he is required to convert the Series B Preferred Stock into common stock immediately prior to the consummation of the merger. |
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Power3’s board of directors was aware of the foregoing interests and considered them, among other matters, in approving and adopting the merger agreement and the transactions contemplated thereby, including the merger, and in determining to recommend that Power3 shareholders vote “FOR” the approval of the issuance of shares of Power3 common stock in the merger. You should consider these and other interests of Power3’s directors and executive officers that are described more fully in this proxy statement in the section entitled “Interests of Power3’s Executive Officers and Directors in the Merger” beginning on page 77 of this proxy statement.
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Q:
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What happens to existing shares of Power3 common stock in the merger?
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A:
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The shares of Power3 common stock held by Power3 shareholders will not be changed by the merger and Power3 shareholders will continue to hold their existing shares following completion of the merger. Such shares will be diluted by the shares received by shareholders of Rozetta-Cell in the merger. The shares held by Power3’s shareholders will represent a smaller percentage of the combined company. For more information regarding dilution, please see the answer to the question, “Will these proposals dilute shareholders’ ownership interest in Power3?”.
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Q:
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Am I entitled to appraisal rights?
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A:
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Under the New York Business Corporation Law (the “NYBCL”), the holders of Power3 common stock are not entitled to appraisal rights in connection with the merger or the other proposals described in this proxy statement.
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Q:
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Who will be the directors of Power3 following the merger?
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A:
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Following the merger, the board of directors of Power3 will consist of Dr. Ira L. Goldknopf and Helen R. Park.
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Q:
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Who will be the executive officers of Power3 following the merger?
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A:
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Following the merger, the executive management team of the combined company will likely include the following individuals:
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Name
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Position in the
Combined Company
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Current Position
|
||
Helen R. Park
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Interim Chief Executive Officer and Interim Chief Financial Officer
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Power3’s Interim Chief Executive Officer and Interim Chief Financial Officer
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Ira L. Goldknopf
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President, Chief Scientific Officer and Secretary
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Power3’s President, Chief Scientific Officer and Secretary
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Q:
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What risks should I consider in deciding whether to vote in favor of the share issuance or the adoption of the merger agreement?
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A:
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You should carefully review the section of this proxy statement entitled “Risk Factors” beginning on page 33 of this proxy statement, which sets forth certain risks and uncertainties related to the merger.
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Q:
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When do you expect the merger to be consummated?
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A:
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Power3 anticipates that the consummation of the merger will occur sometime during the first quarter of 2011, but cannot predict the exact timing. For more information concerning the events that must occur prior to the consummation of the merger, please see the section entitled “The Merger Agreement—Conditions to Completion of the Merger” on page 86 of this proxy statement.
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Q:
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What are the material federal income tax consequences of the merger?
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A:
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The merger is not a taxable event with respect to shares of Power3 common stock currently outstanding. The merger has been structured to qualify as a tax-free reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”.
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Q:
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How do I attend the special meeting?
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A:
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The meeting will be held on _________________, 2011 at ___________ a.m., local time, at the offices of Power3 Medical Products, 26022 Budde Road, The Woodlands, Texas 77380. Information on how to vote in person at the special meeting is discussed below.
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Q:
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Who may vote at the special meeting?
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A:
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Only shareholders of record of Power3 common stock at the close of business on January 25, 2011 will be entitled to notice of and to vote at the special meeting. On this record date, 472,237,565 shares of common stock of Power3 were outstanding and entitled to vote.
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Q:
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What am I voting on?
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A:
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There are 13 matters scheduled for a vote:
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●
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Approval of the issuance of shares of Power3 common stock in the merger, contingent upon approval of Proposal No. 2;
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||
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●
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Approval of an increase in the number of shares of common stock authorized for issuance from 600,000,000 to 3,100,000,000, contingent upon approval of Proposal No. 1;
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●
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Approval of a change of the name of the company from “Power3 Medical Products, Inc.” to “Rozetta-Cell Life Sciences, Inc.”, contingent upon approval of Proposal Nos. 1 & 2;
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||
●
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Approval of a change of Power3’s state of incorporation from New York to Nevada, contingent upon approval of Proposal Nos. 1 & 2;
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●
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Approval of the adoption of the Power3 Medical Products, Inc. 2011 Stock Incentive Plan;
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||
●
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Approval of the addition of a provision to the Nevada Charter opting out of the Nevada Control Share Acquisition Statute, contingent upon approval of Proposal No. 4;
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●
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Approval of the addition of a provision to the Nevada Charter opting out of the Nevada Business Combinations Statute, contingent upon approval of Proposal No. 4;
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||
●
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Approval of a proposal to remove the provision stating the number of directors of Power3 from the Nevada Charter so that the number of directors of Power3 will be stated in the Nevada Bylaws exclusively, contingent upon approval of Proposal No. 4;
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||
●
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Approval of the addition of a provision to the Nevada Bylaws fixing the number of directors of Power3 at no less than one director and no more than nine directors, contingent upon approval of Proposal No. 4;
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||
●
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Approval of the addition of a provision to the Nevada Bylaws to authorize the board of directors to change the authorized number of directors to a number outside the range specified in the bylaws, contingent upon approval of Proposal No. 4;
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||
●
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Approval of the addition of a provision to the Nevada Charter Documents to provide indemnification for Power3’s officers and directors to the fullest extent permitted by Nevada law, contingent upon approval of Proposal No. 4;
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||
●
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Approval of the addition of a provision to the Nevada Charter Documents to limit the liability of Power3’s officers and directors to the fullest extent permitted by Nevada law, contingent upon approval of Proposal No. 4; and
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||
●
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Approval of an adjournment of the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1 and 2.
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Q:
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Why is the increase in the number of shares of common stock of Power3 necessary?
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A:
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The NY Charter currently authorizes the issuance of 650,000,000 shares of stock, consisting of 600,000,000 shares of common stock, par value of $0.001 per share, and 50,000,000 shares of preferred stock, par value $0.001 per share. As of the record date, Power3 had a total of 472,237,565 shares of common stock issued and outstanding. If the merger is approved, Power3 will issue a total of 1,000,000,000 shares of common stock to the Rozetta-Cell shareholders. Power3 does not currently have enough shares of common stock available for issuance to the shareholders of Rozetta-Cell under the merger agreement. As a result, approval of an increase in the number of shares authorized for issuance as described in this proposal is a condition that Power3 must satisfy to complete the merger with Rozetta-Cell. If the increase in the number of authorized shares is not approved, Power3 will not be able to complete the merger with Rozetta-Cell and the other transactions contemplated by the merger agreement unless Rozetta-Cell agrees to waive this condition to closing.
In addition, the availability of additional authorized shares will provide the combined company with the flexibility to issue securities for other proper corporate purposes, which may be identified in the future, such as to raise equity capital, to issue shares (or reserve additional shares for issuance) under additional employee benefit plans, to acquire other companies and to grant warrants and other securities convertible into shares of our common stock. No additional action or authorization by our shareholders would be necessary prior to the issuance of such additional shares, unless required by applicable law or the rules of any stock exchange or national securities association trading system on which our common stock is then listed or quoted. Except as described in this proxy statement, Power3 does not currently have any commitment, arrangement, understanding or agreement to issue shares of its common stock subsequent to the increase in authorized shares.
|
Q:
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Will these proposals dilute the shareholders’ ownership interests in Power3?
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A:
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Yes. Power3’s shareholders will incur immediate and significant dilution of their percentage of stock ownership in Power3 if Proposal Nos. 1 and 2 are approved. Please see the section of this proxy statement entitled “Risk Factors” beginning on page [__].
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Q:
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What if another matter is properly brought before the meeting?
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A:
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The board of director knows of no other matters that will be presented for consideration at the special meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment.
|
Q:
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How do I vote?
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A:
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For each of the matters to be voted on, you may vote “For” or “Against” or abstain from voting. The procedures for voting are fairly simple:
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●
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To vote in person, come to the special meeting and Power3 will give you a ballot when you arrive.
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To vote using the proxy card, simply complete, sign and date your proxy card and return it promptly in the postage-paid envelope provided. If you return your signed proxy card to Power3 before the special meeting, Power3 will vote your shares as you direct.
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To vote through the Internet, go to www.proxyease.com to complete an electronic proxy card. You will be asked to provide the company number and control number from the enclosed proxy card. Your vote must be received by 11:59 p.m., Eastern Standard Time, on ___________, 2011 to be counted.
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Power3 provides Internet proxy voting to allow you to vote your shares online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies. |
Q:
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What does it mean if I receive more than one set of proxy materials?
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A:
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If you receive more than one set of proxy materials, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on the proxy cards in the proxy materials to ensure that all of your shares are voted.
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Q:
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How many votes do Power3 shareholders have?
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A:
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Each holder of record of Power3 common stock as of January 25, 2011 will be entitled to one vote for each share of common stock held on that record date. The holders of the common stock of Power3 along with the holders of the Series B Preferred Stock of Power3 vote as a single class with respect to all matters subject to the vote of shareholders at the special meeting.
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Q:
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How are votes counted?
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A:
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Votes will be counted by the inspector of election appointed for the meeting, who will separately count “For” and “Against” votes, abstentions and broker non-votes. Abstentions and broker non-votes will be counted towards the vote total for each proposal except Proposal No. 5, and, for each proposal except Proposal No. 5, will have the same effect as “Against” votes. With respect to Proposal No. 5, abstentions and broker non-votes will not be counted towards the vote total and will have no effect on the total vote.
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Q:
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What are “broker non-votes”?
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A:
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Broker non-votes occur when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed “non-routine.” Generally, if shares are held in street name, the beneficial owner of the shares is entitled to give voting instructions to the broker or nominee holding the shares. If the beneficial owner does not provide voting instructions, the broker or nominee can still vote the shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. Under the rules and interpretations of the New York Stock Exchange (“NYSE”), “non-routine” matters are generally those involving a proxy contest or a matter that may substantially affect the rights or privileges of shareholders, such as mergers or shareholder proposals.
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Q:
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What is the quorum requirement?
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A:
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A quorum of shareholders is necessary to hold a valid meeting. A quorum will be present if shareholders holding at least a majority of the outstanding shares entitled to vote are present at the meeting in person or represented by proxy. On the record date, there were 472,237,565 shares outstanding and entitled to vote. Thus, the holders of 236,118,783 shares must be present in person or represented by proxy at the meeting to have a quorum.
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Q:
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How many votes are needed to approve each proposal?
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A:
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The affirmative vote by holders of outstanding shares of Power3 common stock and Series B Preferred Stock holding two-thirds (2/3) of the total votes entitled to vote at the special meeting and voting together as a single class is required for approval of Proposal No. 1. The affirmative vote by holders of outstanding shares of Power3 common stock and Series B Preferred Stock holding a majority of the total votes entitled to vote at the special meeting and voting together as a single class is required for approval of Proposal Nos. 2 through 4 and 6 through 13. A majority of the votes cast in favor of Proposal No. 5 at the Power3 special meeting by the holders of outstanding shares of Power3 common stock and Series B Preferred Stock entitled to vote thereon and voting together as a single class is required for approval of such action.
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Q:
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What voting rights does the Power3 Series B Preferred Stock have?
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A:
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The outstanding shares of Power3 Series B Preferred Stock have that number of votes equal to the number of votes of all outstanding shares of Power3 common stock plus one additional vote. On the record date, there were 472,237,565 shares of Power3 common stock outstanding and entitled to vote at the meeting. Since each holder of record of Power3 common stock will be entitled to one vote for each share of common stock held on the record date, the Power3 Series B Preferred Stock will be entitled to 474,237,566 votes at the meeting. Since Ira L. Goldknopf is the only holder of Power3’s Series B Preferred Stock, he will have the ability to cast 474,237,566 votes for or against each proposal submitted to the shareholders at the meeting.
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Q:
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How does Power3’s board of directors recommend that I vote?
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A:
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After careful consideration, Power3’s board of directors recommends that Power3 shareholders vote:
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“FOR” Proposal No. 1 to approve the issuance of shares of Power3 common stock in the merger;
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“FOR” Proposal No. 2 to approve an increase in the number of shares of common stock authorized for issuance from 600,000,000 to 3,100,000,000;
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“FOR” Proposal No. 3 to approve a change of the name of the company from “Power3 Medical Products, Inc.” to “Rozetta-Cell Life Sciences, Inc.”;
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“FOR” Proposal No. 4 to approve a change of Power3’s state of incorporation from New York to Nevada;
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“FOR” Proposal No. 5 to approve the adoption of the Power3 Medical Products, Inc. 2011 Stock Incentive Plan;
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“FOR” Proposal No. 6 to approve the addition of a provision to the Nevada Charter opting out of the Nevada Control Share Acquisition Statute;
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“FOR” Proposal No. 7 to approve the addition of a provision to the Nevada Charter opting out of the Nevada Business Combinations Statute;
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“FOR” Proposal No. 8 to approve the proposal to remove the provision stating the number of directors of Power3 from the Nevada Charter so that the number of directors of Power3 will be stated in the Nevada Bylaws exclusively;
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“FOR” Proposal No. 9 to approve the addition of a provision to the Nevada Bylaws fixing the number of directors of Power3 at no less than one director and no more than nine directors;
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“FOR” Proposal No. 10 to approve the addition of a provision to the Nevada Bylaws to authorize the board of directors to change the authorized number of directors to a number outside the range specified in the bylaws;
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“FOR” Proposal No. 11 to approve the addition of a provision to the Nevada Charter Documents to provide indemnification for Power3’s officers and directors to the fullest extent permitted by Nevada law;
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“FOR” Proposal No. 12 to approve the addition of a provision to the Nevada Charter Documents to limit the liability of Power3’s officers and directors to the maximum fullest permitted by Nevada law; and
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“FOR” Proposal No. 13 to approve an adjournment of the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1 and 2.
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Q:
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What do I need to do now?
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A:
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We urge you to read this proxy statement carefully, including its annexes, and consider how the merger affects you.
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Q:
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What happens if I do not return a proxy card or otherwise provide proxy instructions?
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The failure to return your proxy card or otherwise provide proxy instructions could be a factor in establishing a quorum for the special meeting of Power3 shareholders. It will have the same effect as voting against the adoption of the Power3 Medical Products, Inc. 2011 Stock Incentive Plan described in Proposal No. 5, but will not have any effect on any of the other proposals.
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May I change my vote after I have provided proxy instructions?
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Yes. You can revoke your proxy at any time before the final vote at the meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:
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You may submit another properly completed proxy card with a later date;
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● | You may grant a subsequent proxy through the Internet; | ||
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You may send a timely written notice that you are revoking your proxy to Power3’s Secretary at Power3 Medical Products, Inc., 26022 Budde Road, The Woodlands, Texas 77380; or
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You may attend the special meeting and vote in person. Simply attending the meeting will not, by itself, revoke your proxy.
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How can I find out the results of the voting at the special meeting?
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Preliminary voting results will be announced at the special meeting. Final voting results will be published in a Current Report on Form 8-K to be filed with the Securities and Exchange Commission (“SEC”) within four business days of the date of the special meeting.
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Who is paying for this proxy solicitation?
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A:
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Power3 is conducting this proxy solicitation and will bear the cost of soliciting proxies, including the preparation, assembly, printing and mailing of this proxy statement, the proxy card and any additional information furnished to shareholders. Power3 may also reimburse brokerage houses and other custodians, nominees and fiduciaries for their costs of forwarding proxy and solicitation materials to beneficial owners. In addition to solicitation by mail and the Internet, Power3’s officers, directors and employees may also solicit proxies in person, by telephone, by facsimile or by e-mail. Officers, directors and employees will not be paid any additional compensation for soliciting proxies.
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Q:
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What proxy materials are available on the Internet?
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A:
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The proxy statement is available at www.shareholdermaterial.com/PWRM.
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Q:
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Who can help answer my questions?
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A:
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If you would like additional copies, without charge, of this proxy statement or if you have questions about the merger, including the procedures for voting your shares, you should contact:
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SUMMARY |
This summary highlights selected information from this proxy statement. To understand the merger fully, you should read carefully this entire proxy statement and the documents to which we refer, including the annexes attached hereto. See “Where You Can Find More Information” on page 196 of this proxy statement. The merger agreement is attached as Annex A and B to this proxy statement. We encourage you to read the merger agreement as it is the legal document that governs the merger. We have included page references in parentheses to direct you to a more detailed description of the topics presented in this summary.
To facilitate a reading of this proxy statement, where we use words such as “we,” “us,” “our,” and other first person declarations in this proxy statement, we are referring to Power3 as a stand-alone company. Where we use the words describing either Power3 or Rozetta-Cell, as the case may be, we are referring to such entity as a stand-alone company. Where we use the words describing the combined company, we are referring to the combined company as it will exist following the merger.
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THE COMPANIES |
Power3 Medical Products, Inc. (Page 59) |
26022 Budde Road |
The Woodlands, Texas 77380 |
(281) 298-7944 |
Power3 Medical Products, Inc. is a leading bio-technology company focused on the development of innovative diagnostic tests in the fields of cancer and neurodegenerative diseases such as Alzheimer’s disease, Parkinson’s disease and amyotrophic lateral sclerosis (commonly known as ALS or Lou Gehrig’s disease). Power3 applies proprietary methodologies to discover and identify protein biomarkers associated with diseases. Through these processes, Power3 has developed a portfolio of products including BC-SeraPro™, a proteomic blood serum test for the early detection of breast cancer for which it has completed Phase I clinical trials, and NuroPro®, a proteomic blood serum test for the detection of neurodegenerative diseases, including Alzheimer’s, Parkinson’s and ALS diseases, for which it is currently engaged in Phase II clinical trials. These tests are designed to analyze an individual’s proteins to detect the presence of disease, a patient’s disease progression, a patient’s response to a particular drug, and the mechanisms of disease present in the patient for optimal targeted therapy. |
Rozetta-Cell Life Sciences, Inc. (Page 59) |
214 Nursery Road |
Spring, Texas 77380 |
(866) 923-2226 |
Rozetta-Cell is a medical bio-technology company that concentrates on stem cell therapy using human autologous material. Its mission is to cure a variety of diseases through the creation of personalized stem cell therapies. Rozetta-Cell will acquire a patent in the area of stem cell transfusion, stem cell protection during therapy, and stem cell imaging pre-therapy, during therapy and post-therapy using innovative technologies immediately upon an acquisition of Rozetta-Cell by a publicly-traded company if the acquisition is completed by June 30, 2011. The proposed acquisition of Rozetta-Cell by Power3 will constitute such an acquisition if it is completed by June 30, 2011. Accordingly, if Power3 completes the acquisition of Rozetta-Cell by June 30, 2011, Power3 will obtain this patent. |
The Combined Company (Page 71) |
The combined company’s headquarters following the consummation of the merger will be at Power3’s current principal executive offices in The Woodlands, Texas. As a result of the merger, former Rozetta-Cell shareholders will possess majority control of the combined company. Members of the current management of Power3 will be responsible for the day-to-day management of the combined company. Management of the combined company will seek to identify synergies and redundancies in Power3’s and Rozetta-Cell’s operations and intends to continue developing Power3’s and Rozetta-Cell’s intellectual property and future product candidates. |
THE SPECIAL MEETING |
Time, Date and Place (Page 60) |
The special meeting of the shareholders of Power3 will be held on ______________, 2011, at ___________ a.m., local time, at Power3’s offices at Power3 Medical Products, Inc., 26022 Budde Road, The Woodlands, Texas 77380. |
Proposals to be Voted Upon (Page 60) |
The following proposals are being submitted to the Power3 shareholders for approval at the special meeting: (i) Proposal No. 1 to approve the issuance of shares of Power3 common stock in the merger, contingent upon approval of Proposal No. 2; (ii) Proposal No. 2 to increase the number of shares of common stock authorized for issuance from 600,000,000 to 3,100,000,000, contingent upon approval of Proposal No. 1; (iii) Proposal No. 3 to change the name of the company from “Power3 Medical Products, Inc.” to “Rozetta-Cell Life Sciences, Inc.”, contingent upon approval of Proposal Nos. 1 & 2; (iv) Proposal No. 4 to approve a change of Power3’s state of incorporation from New York to Nevada, contingent upon approval of Proposal Nos. 1 & 2; (v) Proposal No. 5 to approve the adoption of the Power3 Medical Products, Inc. 2011 Stock Incentive Plan; (vi) Proposal No. 6 to approve the addition of a provision to the Nevada Charter to opt out of the Nevada Control Share Acquisition Statute, contingent upon approval of Proposal No. 4; (vii) Proposal No. 7 to approve the addition of a provision to the Nevada Charter to opt out of the Nevada Business Combinations Statute, contingent upon approval of Proposal No. 4; (viii) Proposal No. 8 to remove the provision stating the number of directors of Power3 from the Nevada Charter so that the number of directors of Power3 will be stated in the Nevada Bylaws exclusively, contingent upon approval of Proposal No. 4; (ix) Proposal No. 9 to approve the addition of a provision to the Nevada Bylaws fixing the number of directors of Power3 at no less than one director and no more than nine directors, contingent upon approval of Proposal No. 4; (x) Proposal No. 10 to approve the addition of a provision to the Nevada Bylaws to authorize the board of directors to change the authorized number of directors to a number outside the range specified in the bylaws, contingent upon approval of Proposal No. 4; (xi) Proposal No. 11 to approve the addition of a provision to the Nevada Charter to provide indemnification for Power3’s officers and directors to the fullest extent permitted by Nevada law, contingent upon approval of Proposal No. 4; (xii) Proposal No. 12 to approve the addition of a provision to the Nevada Charter to limit the liability of Power3’s officers and directors to the fullest extent permitted by Nevada law, contingent upon approval of Proposal No. 4; and (xiii) Proposal No. 13 to adjourn the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1 and 2. |
Record Date and Voting Power (Page 61) | |||
You are entitled to vote at the Power3 special meeting if you owned shares of Power3 common stock at the close of business on January 25, 2011, the record date for the Power3 special meeting. You will have one vote at the special meeting for each share of Power3 common stock you owned at the close of business on the record date. There are 472,237,565 shares of Power3 common stock entitled to vote at the special meeting. | |||
Required Vote (Page 63) | |||
The affirmative vote by holders of outstanding shares of Power3 common stock and Series B Preferred Stock holding two-thirds (2/3) of the total votes entitled to vote at the special meeting and voting together as a single class is required for approval of Proposal No. 1. The affirmative vote by holders of outstanding shares of Power3 common stock and Series B Preferred Stock holding a majority of the total votes entitled to vote at the special meeting and voting together as a single class is required for approval of Proposal Nos. 2 through 4 and 6 through 13. A majority of the votes cast in favor of Proposal No. 5 at the Power3 special meeting by the holders of outstanding shares of Power3 common stock and Series B Preferred Stock entitled to vote thereon and voting together as a single class is required for approval of such action. | |||
Series B Preferred Stock (Page 63) | |||
The outstanding shares of Power3 Series B Preferred Stock have that number of votes equal to the number of votes of all outstanding shares of Power3 common stock plus one additional vote. On the record date, there were 472,237,565 shares of Power3 common stock outstanding and entitled to vote at the meeting. Since each holder of record of Power3 common stock will be entitled to one vote for each share of common stock held on the record date, the Power3 Series B Preferred Stock will be entitled to 474,237,566 votes at the meeting. Since Ira L. Goldknopf is the only holder of Power3’s Series B Preferred Stock, he will have the ability to cast 472,237,566 votes for or against each proposal submitted to the shareholders at the meeting. | |||
Share Ownership of Management (Page 77) | |||
As of January 21, 2011, the directors and executive officers of Power3, together with their affiliates, beneficially owned: (i) approximately 16.3% of the common stock entitled to vote at the Power3 special meeting; and (ii) 100% of the Series B Preferred Stock entitled to vote at the Power3 special meeting. | |||
Recommendations to Shareholders (Page 64) | |||
Power3’s board of directors has determined and believes that the issuance of shares of Power3 common stock in the merger is advisable and fair to, and in the best interest of, Power3 and its shareholders. Power3’s board of directors recommends that the holders of Power3 common stock vote: | |||
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“FOR” Proposal No. 1 to approve the issuance of shares of Power3 common stock in the merger;
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“FOR” Proposal No. 2 to approve an increase in the number of shares of common stock authorized for issuance from 600,000,000 to 3,100,000,000;
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“FOR” Proposal No. 3 to approve a change of the name of the company from “Power3 Medical Products, Inc.” to “Rozetta-Cell Life Sciences, Inc.”;
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“FOR” Proposal No. 4 to approve a change of Power3’s state of incorporation from New York to Nevada;
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“FOR” Proposal No. 5 to approve the adoption of the Power3 Medical Products, Inc. 2011 Stock Incentive Plan;
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“FOR” Proposal No. 6 to approve the addition of a provision to the Nevada Charter opting out of the Nevada Control Share Acquisition Statute;
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“FOR” Proposal No. 7 to approve the addition of a provision to the Nevada Charter opting out of the Nevada Business Combinations Statute;
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“FOR” Proposal No. 8 to approve the proposal to remove the provision stating the number of directors of Power3 from the Nevada Charter so that the number of directors of Power3 will be stated in the Nevada Bylaws exclusively;
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“FOR” Proposal No. 9 to approve the addition of a provision to the Nevada Bylaws fixing the number of directors of Power3 at no less than one director and no more than nine directors;
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“FOR” Proposal No. 10 to approve the addition of a provision to the Nevada Bylaws to authorize the board of directors to change the authorized number of directors to a number outside the range specified in the bylaws;
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“FOR” Proposal No. 11 to approve the addition of a provision to the Nevada Charter Documents to provide indemnification for Power3’s officers and directors to the fullest extent permitted by Nevada law;
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“FOR” Proposal No. 12 to approve the addition of a provision to the Nevada Charter Documents to limit the liability of Power3’s officers and directors to the fullest extent permitted by Nevada law; and
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“FOR” Proposal No. 13 to approve an adjournment of the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1 and 2.
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THE MERGER | |||
Overview (Page 66) | |||
In the merger, Rozetta-Cell will merge with and into Power3, whereupon the separate corporate existence of Rozetta-Cell will cease and Power3 will continue as the surviving company. The Rozetta-Cell common stock will be converted into the right to receive Power3 common stock following the merger, in accordance with Rozetta-Cell’s articles of incorporation and as set forth in the merger agreement. The approval of the merger is contingent upon receiving shareholder approval of Proposal No. 2. |
Merger Consideration (Page 81) |
As a result of the merger, all shares of Rozetta-Cell capital stock will automatically be cancelled and the Rozetta-Cell shareholders will receive a total of 1,000,000,000 shares of Power3 common stock representing approximately 68% of the outstanding shares of the combined company immediately following the consummation of the merger, without giving effect to any shares issuable pursuant to Power3’s outstanding warrants and other convertible securities. There will be no adjustment to the total number of shares of Power3 common stock to be issued to Rozetta-Cell shareholders for changes in the market price of Power3’s common stock. The merger agreement does not include a price-based termination right. Accordingly, the market value of the shares of Power3 issued in connection with the merger will depend on the market value of the shares of Power3 common stock at the time of effectiveness of the merger, and could vary significantly from the market value on the date of this proxy statement. |
Manner and Basis of Converting Shares (Page 82) |
The number of shares of Power3 common stock to be issued in exchange for all of the outstanding shares of Rozetta-Cell common stock at the consummation of the merger will be allocated among holders of Rozetta-Cell’s common stock, which is the only class of Rozetta-Cell capital stock issued and outstanding. The number of shares of Power3 common stock to be issued in the merger does not in any way depend on the actual closing sale price of a share of Power3 common stock on the Over-the-Counter Bulletin Board at or prior to the effective time of the merger. Upon the consummation of the merger, each share of Rozetta-Cell common stock will be converted into the right to receive 10 shares of Power3 common stock. The current Power3 shareholders will hold approximately 32% of the outstanding common stock of the combined entity, and the current Rozetta-Cell shareholders will hold approximately 68% of the combined entity. The percentage ownership will be based on the combined company after the merger, without giving effect to any shares issuable pursuant to Power3’s outstanding warrants and other convertible securities. |
No fractional shares of Power3 common stock will be issued in the merger. Instead, each Rozetta-Cell shareholder otherwise entitled to a fractional share of Power3 common stock (after aggregating all fractional shares of Power3 common stock issuable to such shareholder) will receive that number of shares of Power3 common stock that such shareholder would have received if such fraction share of Power3 common stock was rounded up to the nearest whole number (see the section entitled, “The Merger Agreement” beginning on page 81 of this proxy statement). |
If the number of shares of common stock of Power3 changes before the merger is completed because of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar event, then an appropriate and proportionate adjustment will be made to the number of shares of Power3 common stock to be issued to the Rozetta-Cell shareholders. |
Reasons for the Merger | |||
Mutual Reasons (Page 71) | |||
Power3 and Rozetta-Cell believe that the combined company represents a medical biotechnology company with the following potential advantages: | |||
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Faster Road to Commercialization. The merger provides both companies with a faster road from discovery to commercialization that encompasses the research market, the stem cell market and the diagnostic market, resulting in a total package of solutions for many diseases.
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Broader Intellectual Property. The combined company will have a broader array of intellectual property, complementary adult stem cell therapy technology, know-how and experience.
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Deep Pipeline. The combined company will have a more robust pipeline of future product candidates which will effectively supplement Power3’s existing diagnostic tests, NuroPro® and BC-SeraPro™;
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Experienced Management Team. The management of the combined company will be composed of accomplished professionals with substantial experience in the development of stem cells and protein-based biomarkers; and
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Synergies. There are potential synergies and cost savings that Power3 and Rozetta-Cell believe can be achieved by allowing management to fully leverage the combined research, development and intellectual property capabilities of the two companies across the combined company’s business.
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Power3’s Reasons (Page 72) | |||
Power3’s board of directors approved the merger based on a number of factors, including, but not limited to, the following: | |||
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Revenue Opportunities. The acquisition of an avenue for the discovery of protein biomarkers that can be immediately targeted to the research market through stem cell cluster of differentiation (“CD”) biomarkers;
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Intellectual Property. The acquisition of intellectual property involving new technology for imaging of stem cells, as well as additional intellectual property for which new patents can be obtained; and
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Broad Pipeline. The addition of Rozetta-Cell’s future product candidates broaden Power3’s product pipeline. The combined company will have multiple current and future product candidates that will provide numerous partnership and licensing opportunities for the combined company in the future.
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In the course of its deliberations, Power3’s board of directors also considered a variety of risks and other countervailing factors related to entering into the merger agreement, including, among other risks and countervailing factors, the following: | |||
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Dilution. The immediate and substantial dilution of the equity interests and voting power of Power3’s shareholders upon the consummation of the merger;
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Stock Price. The price volatility of Power3’s common stock, which may increase the value of the Power3 common stock that Rozetta-Cell shareholders will receive upon the consummation of the merger;
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Risks of Combination. The challenges and costs of combining the operations of the two companies and the expenses to be incurred in connection with the merger, including the risks that delays or difficulties in completing the integration could adversely affect the combined company’s operating results and preclude the achievement of some benefits anticipated from the merger; and
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Reputation. The possibility that the merger might not be completed and the potential adverse effect of the public announcement of the merger on Power3’s reputation, including its ability to attract and retain key personnel and its overall competitive position.
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Rozetta-Cell’s Reasons (Page 75) | |||
The Rozetta-Cell board of directors approved the merger based on a number of factors, including, among other factors, the following: | |||
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Business Expansion. Rozetta-Cell’s current intellectual property portfolio consists primarily of rights to acquire new technology for the imaging of stem cells. Merging with Power3 will provide Rozetta-Cell with access to Power3’s proteomics platform for the discovery of new and specific protein CD biomarkers needed to customize an individual’s autologous stem cell therapy.
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● | Broader Intellectual Property. The combined company will have a broader array of complementary intellectual property, know-how and experience; | ||
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Management Team. Power3’s proteomics and diagnostics experts and their status as industry leaders in biomarkers and innovative diagnostic tests who can quickly develop and expand Rozetta-Cell’s business; and
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Access to Capital. Power3’s ability to raise additional capital through the public markets due to its status as a publicly-traded company.
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In the course of its deliberations, Rozetta-Cell’s board of directors also considered a variety of risks and other countervailing factors related to entering into the merger agreement, including, among other risks and countervailing factors, the following: | |||
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Risks of Combination. The challenges and costs of combining the operations of the two companies and the expenses to be incurred in connection with the merger, including the risks that delays or difficulties in completing the integration could adversely affect the combined company’s operating results and preclude the achievement of some benefits anticipated from the merger;
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Raising Additional Capital. The likelihood that the combined company will be able to raise additional capital;
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Stock Price. The price volatility of Power3’s common stock, which may reduce the value of the Power3 common stock that Rozetta-Cell shareholders will receive upon the consummation of the merger;
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Value. The inability of Rozetta-Cell’s shareholders to realize the long-term value of the successful execution of Rozetta-Cell’s current strategy as an independent company; and
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Reputation. The possibility that the merger might not be completed and the potential adverse effect of the public announcement of the merger on Rozetta-Cell’s reputation and ability to obtain financing in the future.
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Risks Associated with Power3, Rozetta-Cell and the Merger (Page 33) | |||
The merger, including the possibility that the merger may not be completed, poses a number of risks. These risks are discussed in detail under the caption “Risk Factors” beginning on page 33 of this proxy statement. Power3 encourages you to read and consider all of these risks carefully. | |||
No Fairness Opinion (Page 77) | |||
Power3’s board of directors decided not to obtain a fairness opinion in connection with the proposed merger with Rozetta-Cell. The primary reason for this decision was the substantial cost entailed in obtaining a fairness opinion in light of Power3’s limited funds and the ability of its management to properly evaluate Rozetta-Cell. Power3 believes that its management was well qualified to conduct the due diligence and other investigations and analyses required in connection with its evaluation of Rozetta-Cell. Power3 also believes that this experience made its management highly qualified to determine Rozetta-Cell’s value and assess the merits of the merger. For a complete discussion of the factors considered by Power3’s board of directors in deciding to approve the merger, see the section entitled “Reasons for the Merger” beginning on page 71 of this proxy statement. As a result, the board concluded that Power3’s funds would be better spent developing Power3’s business and operations. |
Interests of Power3’s Executive Officers and Directors in the Merger (Page 77) |
When considering the recommendations by Power3’s board of directors, you should be aware that Power3’s executive officers and directors have interests in the merger that are different from those of other Power3 shareholders. |
As of January 21, 2011, the officers and directors of Power3, together with their affiliates, beneficially owned as a group approximately 16.3% of Power3’s outstanding common stock. In addition, Ira L. Goldknopf, Power3’s President, Chief Scientific Officer, Secretary and Chairman of the Board, owned 100% of Power3’s outstanding Series B Preferred Stock, which gives him that number of votes equal to the number of votes of all outstanding shares of Power3 common stock plus one additional vote. Immediately following the merger, the officers and directors of the combined company, together with their affiliates, will beneficially own approximately 28.8% of the outstanding common stock of the combined company after the consummation of the merger based upon shares outstanding as of January 21, 2011. Dr. Goldknopf will not own any Series B Preferred Stock after the consummation of the merger because, pursuant to the terms of the merger agreement, he is required to convert the Series B Preferred Stock into common stock immediately prior to the consummation of the merger. |
Directors and Management Following the Merger (Page 90) |
The board of directors and management of Power3 immediately prior to the consummation of the merger will continue to constitute the board of directors and management of Power3 immediately following the consummation of the merger. Thus, immediately following the consummation of the merger, Helen R. Park will remain the interim Chief Executive Officer, the interim Chief Financial Officer and a director of Power3, and Ira L. Goldknopf will remain the President, Chief Scientific Officer, Secretary and Chairman of the Board of Power3. While Power3 intends to hire additional individuals to serve as executive officers and members of the board of directors after the merger is consummated, it has not entered into offer letters with any individuals to serve in such capacities as of the record date. |
Approval of an Increase in the Number of Shares of Common Stock Authorized for Issuance (Page 91) |
The Power3 board of directors has determined and believes that an increase in the number of shares of common stock authorized for issuance from 600,000,000 to 3,100,000,000 is in the best interests of Power3 and its shareholders. The increase in the number of shares of common stock authorized for issuance is necessary to ensure that Power3 will have enough shares of common stock available to issue to the Rozetta-Cell shareholders in the merger, and is a condition to the obligations of the parties under the merger agreement. No fractional shares will be issued as a result of the increase in the number of shares of common stock authorized for issuance, and the increase in the number of shares of common stock authorized for issuance will have no effect on the par value. The approval of this matter is contingent upon approval of Proposal No. 1. The board of directors of Power3 will not effectuate the increase in the number of shares of common stock authorized for issuance as proposed in this Proposal No. 2 unless shareholder approval for Proposal No. 1 is received. |
Limitation on Soliciting, Discussing and Negotiating Other Acquisition Proposals (Page 86) |
Rozetta-Cell has agreed to not, and has further agreed to ensure that its representatives do not, prior to the consummation of the merger, directly or indirectly, solicit, initiate, knowingly encourage, induce or facilitate the making, submission or announcement of, or enter into discussions or negotiations with any person with respect to, any alternative acquisition proposal or any inquiry that would reasonably be expected to lead to an alternative acquisition proposal for the company. |
Conditions to the Completion of the Merger (Page 86) |
The respective obligations of Power3 and Rozetta-Cell to consummate the merger are subject to the satisfaction of certain conditions, including: (i) approval of the merger by the shareholders of Power3 and Rozetta-Cell; (ii) approval of an increase in the number of shares of common stock authorized for issuance from 600,000,000 to 3,100,000,000; (iii) the performance and compliance by Power3 and Rozetta-Cell, in all material respects, with all agreements and covenants required by the merger agreement to be performed or complied with by Power3 and Rozetta-Cell prior to the effective time of the merger; (iv) the non-occurrence of any material adverse effect with respect to each of Power3 and Rozetta-Cell; (v) the obtaining of all consents, approvals and authorizations set forth in the disclosure schedules of the merger agreement; and (vi) the accuracy of the representations and warranties made by the parties to the merger agreement at and as of the effective time of the merger as if made at and as of such time except where the failure of such representations and warranties would not, individually or in the aggregate, result in a material adverse effect. |
Termination of the Merger Agreement (Page 88) |
Either Power3 or Rozetta-Cell can terminate the merger agreement under certain circumstances, which would prevent the merger from being consummated. |
Expenses and Termination Fees (Page 90) |
Subject to limited exceptions, all fees and expenses incurred in connection with the merger agreement will be paid by the company incurring such expenses. No termination fees, expenses or reimbursement are payable by Power3 or Rozetta-Cell in the event Power3 or Rozetta-Cell terminates the merger agreement. |
Regulatory Approvals (Page 78) |
As of the date of this proxy statement, neither Power3 nor Rozetta-Cell is required to make filings or to obtain approvals or clearances from any antitrust regulatory authorities in the United States or other countries to consummate the merger. In the United States, Power3 must comply with applicable federal and state securities laws in connection with the issuance of shares of Power3 common stock in the merger and the filing of this proxy statement with the SEC. |
Anticipated Accounting Treatment (Page 78) |
For accounting purposes, Power3 is considered to be acquiring Rozetta-Cell in this transaction. The merger between Power3 and Rozetta-Cell is considered a transaction between entities under common control. Acquisitions of entities under common control are accounted for in a manner similar to the pooling of interests method. The assets and liabilities transferred between entities under common control should be recorded by the receiving entity based on their carrying amounts (or at the historical cost basis, if these amounts differ). No goodwill or other intangible assets are recorded. Power3, as the predecessor that is under common control with Rozetta-Cell, has recorded Rozetta-cell’s assets and liabilities in the pro forma financial statements at Rozetta-Cell’s historical basis as of the date that common control was first established for all periods presented. |
Material U.S. Federal Income Tax Consequences of the Merger (Page 79) |
Power3 expects the merger to qualify as a tax-free reorganization under Section 368 of the Internal Revenue Code. As a result, Power3 expects that there will be no material federal income tax consequences from the merger for Power3 or its shareholders. |
Appraisal Rights (Page 79) |
Holders of Power3 common stock are not entitled to appraisal rights in connection with the merger. Certain shareholders of Rozetta-Cell will be entitled to statutory appraisal rights under the Nevada General Corporation Law (“NGCL”). The merger agreement provides that if holders of more than 5% of the outstanding capital stock of Rozetta-Cell exercise and perfect such appraisal rights, Power3 may terminate the merger agreement. |
Comparison of Shareholder Rights (Page 80) |
Power3 is currently incorporated under the laws of the State of New York. The rights of holders of Power3 common stock are currently governed by the NYBCL, and the NY Charter and NY Bylaws. After the consummation of the merger, assuming approval of the reincorporation and the other proposals set forth herein, the rights of Power3 shareholders will be governed by the NGCL, and the Nevada Charter and Nevada Bylaws. A comparison of the material differences in the rights of shareholders of Power3 before and after the consummation of the merger are set forth under “Proposal No. 4 – Comparison of Shareholder Rights Under New York and Nevada Corporate Law and Organizational Documents.” |
Effect of Failure to Approve the Merger by the Shareholders (Page 80) |
If the merger is not approved at the special meeting, but a quorum is present, Power3 will submit to the Power3 shareholders Proposal No. 13 to consider and vote upon an adjournment of the special meeting to solicit additional proxies if there are not sufficient votes in favor of Proposal No. 1 and, if necessary, Proposal No. 2. If the merger is not approved at the special meeting or any adjournment thereof, Power3 will not issue any shares of common stock to the Rozetta-Cell shareholders in connection with the merger. Instead, Power3 and Rozetta-Cell will remain independent companies and Power3’s shares of common stock will continue to be listed and traded on the OTC Bulletin Board. |
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA | ||||||||||||||||
Summary Historical Financial Data of Power3 | ||||||||||||||||
You should read the following tables in conjunction with Power3’s audited financial statements for the year ended December 31, 2009 and unaudited financial statements for the nine months ended September 30, 2010, and the related notes thereto, attached as Annex G and H, respectively, to this proxy statement, and the section of this proxy statement entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Power3” beginning on page 167 of this proxy statement. Historical results are not necessarily indicative of the results to be expected in the future. | ||||||||||||||||
The statements of operations for the years ended December 31, 2009 and 2008 and the balance sheet data as of December 31, 2009 and 2008, attached as Annex G to this proxy statement, have been derived from Power3’s audited financial statements contained in its Annual Report on Form 10-K for the year ended December 31, 2009 and have been audited by M&K CPAS, PLLC (“M&K CPAS”), independent registered public accounting firm. M&K CPAS’ report on the financial statements for the year ended December 31, 2009, which is included in Annex G, includes an explanatory paragraph that describes an uncertainty about Power3’s ability to continue as a going concern. The data should be read in conjunction with the consolidated financial statements, related notes and other financial information included in Annex G. The statement of operations data for the nine months ended September 30, 2010 and the balance sheet data as of September 30, 2010, attached as Annex H to this proxy statement, have been derived from Power3’s unaudited financial statements for the quarter ended September 30, 2010 contained in the Quarterly Report on Form 10-Q for the quarter ended September 30, 2010. | ||||||||||||||||
Period From
|
||||||||||||||||
Nine Months
|
May 18, 2004
|
|||||||||||||||
Ended
|
Through
|
|||||||||||||||
September 30,
2010
|
Twelve Months Ended
December 31,
|
September 30,
2010
|
||||||||||||||
(Unaudited)
|
2009
|
2008
|
(Unaudited)
|
|||||||||||||
Consolidated Statements of Operations Data:
|
||||||||||||||||
Net revenue
|
$ | --- | $ | 115,000 | $ | 1,025 | $ | 542,249 | ||||||||
Total operating expenses
|
1,661,888 | 5,437,193 | 3,496,114 | 64,866,333 | ||||||||||||
Loss from operations
|
(1,661,888 | ) | (5,322,193 | ) | (3,495,089 | ) | 64,324,084 | |||||||||
Total other income (expense)
|
11,915,077 | (13,889,381 | ) | 3,358,305 | 1,225,452 | |||||||||||
Net income (loss)
|
10,253,189 | 19,211,574 | (136,784 | ) | (63,098,632 | ) | ||||||||||
Deemed dividend
|
--- | (1,111,054 | (12,071 | ) | (1,140,760 | ) | ||||||||||
Net income (loss) attributable to common shareholders
|
$ | 10,253,189 | $ | (20,322,628 | ) | $ | (148,855 | ) | $ | (64,239,392 | ) | |||||
Basic net income (loss) per share
|
$ | 0.02 | $ | (0.06 | ) | $ | (0.00 | ) | ||||||||
Diluted net income (loss) per share
|
$ | 0.02 | $ | (0.06 | ) | $ | (0.00 | ) | ||||||||
Shares used in computing basic net income per share
|
449,898,509 | 331,737,780 | 135,096,000 | |||||||||||||
Shares used in computing diluted net income per share
|
459,768,500 | 331,737,780 | 135,096,000 | |||||||||||||
September 30,
2010 |
December 31,
|
||||||||||||
(Unaudited)
|
2009
|
2008
|
|||||||||||
Consolidated Balance Sheet Data:
|
|||||||||||||
Cash and equivalents
|
$ | 6,319 | $ | --- | $ | 8,331 | |||||||
Total assets
|
$ | 19,995 | $ | 5,783 | $ | 26,679 | |||||||
Total liabilities
|
$ | 5,830,332 | $ | 17,022,087 | $ | 5,504,421 | |||||||
Shareholders’ deficit accumulated during development stage
|
$ | (5,810,337 | ) | $ | (17,016,304 | ) | $ | (5,477,742 | ) | ||||
Summary Historical Financial Data of Rozetta-Cell | |||||||||||||
You should read the following tables in conjunction with Rozetta-Cell’s unaudited financial statements for the period beginning May 14, 2010 (date of inception) and ending September 30, 2010, attached as Annex I to this proxy statement, and the section of this proxy statement entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Rozetta-Cell” beginning on page 180 of this proxy statement. Historical results are not necessarily indicative of the results to be expected in the future. | |||||||||||||
The statement of operations data for the period beginning May 14, 2010 (date of inception) and ending September 30, 2010 and the balance sheet data as of September 30, 2010 have been derived from Rozetta-Cell’s unaudited financial statements attached as Annex I to this proxy statement. | |||||||||||||
Period From
May 14, 2010
Through
September 30,
2010
|
|||||||||||||
Consolidated Statements of Operations Data:
|
|||||||||||||
Net revenue
|
$ | --- | |||||||||||
Total operating expenses
|
200 | ||||||||||||
Loss from operations
|
(200 | ) | |||||||||||
Net loss
|
$ | (200 | ) | ||||||||||
Basic and diluted net loss per share
|
$ | (0.00 | ) | ||||||||||
Shares used in computing basic and diluted net income per share
|
100,000,000 | ||||||||||||
September 30,
2010
|
|||||||||||||
(Unaudited)
|
|||||||||||||
Consolidated Balance Sheet Data:
|
|||||||||||||
Cash and equivalents
|
$ | 250 | |||||||||||
Total assets
|
$ | 75,050 | |||||||||||
Total liabilities
|
$ | 69,250 | |||||||||||
Shareholders’ deficit accumulated during development stage
|
$ | (200 | ) |
Summary Unaudited Pro Forma Condensed Combined Financial Information |
For accounting purposes, Power3 is considered to be acquiring Rozetta-Cell in this transaction. The merger between Power3 and Rozetta-Cell is considered a transaction between entities under common control. Acquisitions of entities under common control are accounted for in a manner similar to the pooling of interests method. The assets and liabilities transferred between entities under common control should be recorded by the receiving entity based on their carrying amounts (or at the historical cost basis, if these amounts differ). No goodwill or other intangible assets are recorded. Power3, as the predecessor that is under common control with Rozetta-Cell, has recorded Rozetta-cell’s assets and liabilities in the pro forma financial statements at Rozetta-Cell’s historical basis as of the date that common control was first established for all periods presented. |
The Power3 and Rozetta-Cell unaudited pro forma condensed combined balance sheet data assume that the merger of Power3 and Rozetta-Cell took place on January 1, 2010, and combines Power3’s historical balance sheet at September 30, 2010 with Rozetta-Cell’s historical balance sheet at September 30, 2010. The Power3 and Rozetta-Cell unaudited pro forma condensed combined statement of operations data assumes that the merger of Power3 and Rozetta-Cell took place as of the beginning of the periods presented. The unaudited pro forma condensed combined statement of operations data for the year ended December 31, 2009 combines Power3’s historical statement of operations for the years ended December 31, 2009 and 2008 with Rozetta-Cell’s historical statement of operations for the years ended December 31, 2009 and 2008 and reflects only ongoing operations. However, since Rozetta-Cell did not exist on December 31, 2009 and 2008, the unaudited pro forma condensed combined statement of operations for the years ended December 31, 2009 and 2008 is identical to the historical statement of operations of Power3 for the years ended December 31, 2009 and 2008, with the exception of per-share data. The unaudited pro forma condensed combined statement of operations data for the nine months ended September 30, 2010 combines Power3’s historical statement of operations for the nine months ended September 30, 2010 with Rozetta-Cell’s historical statement of operations for the period beginning May 14, 2010 and ending September 30, 2010 and reflects only ongoing operations. |
The selected unaudited pro forma condensed combined financial data are presented for illustrative purposes only and are not necessarily indicative of the combined financial position or results of operations of future periods or the results that actually would have been realized had the entities been a single entity during these periods. The selected unaudited pro forma condensed combined financial data as of and for the nine months ended September 30, 2010 and for the year ended December 31, 2009 have been derived from the unaudited pro forma condensed combined financial statements set forth under the section of this proxy statement entitled “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 185 of this proxy statement and should be read in conjunction with those statements and the related notes thereto. |
Nine Months
Ended
September 30,
2010
|
Twelve Months
Ended
December 31,
2009
|
Twelve Months
Ended
December 31,
2008
|
|||||||||||
Consolidated Statements of Operations Data:
|
|||||||||||||
Net revenue
|
$ | --- | $ | 115,000 | $ | 1,025 | |||||||
Total operating expenses
|
1,650,088 | 5,437,193 | 3,496,114 | ||||||||||
Loss from operations
|
(1,650,088 | ) | (5,322,193 | ) | (3,495,089 | ) | |||||||
Total other income (expense)
|
11,915,077 | (13,889,381 | ) | 3,358,305 | |||||||||
Net income (loss)
|
10,264,989 | (19,211,574 | ) | (136,784 | ) | ||||||||
Deemed dividend
|
--- | (1,111,054 | ) | (12,071 | ) | ||||||||
Net income (loss) attributable to common shareholders
|
$ | 10,264,989 | $ | (20,322,628 | ) | $ | (148,855 | ) | |||||
Basic net income (loss) per share
|
$ | 0.01 | $ | (0.02 | ) | $ | (0.00 | ) | |||||
Diluted net income (loss) per share
|
$ | 0.01 | $ | (0.02 | ) | $ | (0.00 | ) | |||||
Shares used in computing basic net income per share
|
1,451,398,509 | 1,333,237,780 | 1,136,596,000 | ||||||||||
Shares used in computing diluted net income per share
|
1,461,268,500 | 1,333,237,780 | 1,136,596,000 | ||||||||||
September 30,
2010
|
|||||||||||||
(Unaudited)
|
|||||||||||||
Consolidated Balance Sheet Data:
|
|||||||||||||
Cash and equivalents
|
$ | 6,569 | |||||||||||
Total assets
|
$ | 26,245 | |||||||||||
Total liabilities
|
$ | 5,930,782 | |||||||||||
Shareholders’ deficit accumulated during development stage
|
$ | (79,301,865 | ) |
Comparative Historical and Pro Forma Per Share Data | |||||||||||||||
The information below reflects: | |||||||||||||||
●
|
the historical net income (loss) and book value per share of Power3 common stock and the historical net loss and book value per share of Rozetta-Cell common stock in comparison to the unaudited pro forma net income (loss) and book value per share after giving effect to the consummation of the proposed merger of Power3 and Rozetta-Cell; and
|
||||||||||||||
●
|
the equivalent historical net loss and book value per share attributable to the weighted average shares of Power3 common stock plus the 1,000,000,000 shares of Power3 common stock to be issued to the Rozetta-Cell shareholders upon the closing of the merger, assuming the merger was consummated on January 1, 2009.
|
||||||||||||||
You should read the tables below in conjunction with the respective audited and unaudited financial statements and related notes of Power3 and Rozetta-Cell included elsewhere in this proxy statement and the unaudited pro forma condensed financial information and notes related to such financial statements included elsewhere in this proxy statement. | |||||||||||||||
Power3 | |||||||||||||||
Year Ended
December 31, 2009
|
Nine Months
Ended
September 30,
2010
(Unaudited)
|
||||||||||||||
Historical Per Common Share Data: | |||||||||||||||
Net income (loss) per common share – basic | $ | (0.06 | ) | $ | 0.02 | ||||||||||
Net income (loss) per common share – diluted | $ | (0.06 | ) | $ | 0.02 | ||||||||||
Book value per share – basic | $ | (0.05 | ) | $ | (0.01 | ) | |||||||||
Book value per share – diluted | $ | (0.05 | ) | $ | (0.01 | ) | |||||||||
Rozetta-Cell | |||||||||||||||
Rozetta-Cell did not exist on December 31, 2009. As a result, Rozetta-Cell did not generate historical net income (loss) or book value per share during the year ended December 31, 2009. | |||||||||||||||
Period Beginning
May 14, 2010 and Ending
September 30, 2010
(Unaudited)
|
|||||||||||||||
Historical Per Common Share Data:
|
|||||||||||||||
Net loss per common share – basic and diluted
|
$ | (0.00 | ) | ||||||||||||
Book value per share – basic and diluted
|
$ | 0.00 |
Power3 and Rozetta-Cell | ||||||||||||||||
Rozetta-Cell did not exist on December 31, 2009. As a result, (i) the unaudited pro forma net loss per share of the combined company for the year ended December 31, 2009 after giving effect to the consummation of the proposed merger of Power3 and Rozetta-Cell is identical to the unaudited pro forma net loss per share of Power3 for the year ended December 31, 2009; and (ii) the equivalent historical net loss per share of the combined company attributable to the weighted average shares of Power3 common stock plus the 1,000,000,000 shares of Power3 common stock to be issued to the Rozetta-Cell shareholders upon the closing of the merger plus the 1,500,000 shares of Power3 common stock to be issued upon the conversion of the Series B Preferred Stock immediately prior to the closing of the merger is identical to the historical net loss per share of Power3 attributable to the weighted average shares of Power3 common stock plus the 1,000,000,000 shares of Power3 common stock to be issued to the Rozetta-Cell shareholders upon the closing of the merger plus the 1,500,000 shares of Power3 common stock to be issued upon the conversion of the Series B Preferred Stock immediately prior to the closing of the merger. | ||||||||||||||||
Year Ended
December 31,
2007
|
Year Ended
December 31,
2008
|
Year Ended
December 31,
2009
|
Nine Months
Ended
September 30,
2010
(Unaudited)
|
|||||||||||||
Combined Pro Forma Per Common Share Data:
|
||||||||||||||||
Net income (loss) per common share – basic
|
$ | (0.01 | ) | $ | (0.00 | ) | $ | (0.02 | ) | $ | 0.01 | |||||
Net income (loss) per common share – diluted
|
$ | (0.01 | ) | $ | (0.00 | ) | $ | (0.02 | ) | $ | 0.01 | |||||
Book value per share – basic
|
$ | 0.01 | ||||||||||||||
Book value per share – diluted
|
$ | 0.01 | ||||||||||||||
Equivalent Pro Forma Data:*
|
||||||||||||||||
Net loss per equivalent Rozetta-Cell share – basic
|
$ | (0.05 | ) | $ | (0.00 | ) | $ | (0.15 | ) | $ | 0.07 | |||||
Net loss per equivalent Rozetta-Cell share –diluted
|
$ | (0.05 | ) | $ | (0.00 | ) | $ | (0.15 | ) | $ | 0.07 | |||||
Book value per equivalent Rozetta-Cell share – basic
|
$ | 0.12 | ||||||||||||||
Book value per equivalent Rozetta-Cell share – diluted
|
$ | 0.12 | ||||||||||||||
* The pro forma equivalent per share amounts were calculated by multiplying the pro forma combined per share amounts by the exchange ratio of 10 shares of Power3 common stock for each share of Rozetta-Cell. | ||||||||||||||||
CERTAIN STOCK INFORMATION | ||||||||||||||||
Recent Share Prices | ||||||||||||||||
Power3’s common stock is listed on the Over-the-Counter Bulletin Board under the symbol “PWRM.” On September 7, 2010, the last full trading day prior to the public announcement of the proposed merger, Power3’s common stock closed at $0.0237 per share. On ______________, 2011, Power3’s common stock closed at $___ per share. | ||||||||||||||||
Rozetta-Cell is a private company and no public market exists for shares of its common stock. | ||||||||||||||||
Holders | ||||||||||||||||
As of January 21, 2011, the number of shareholders of record of our common stock was 1,177, and the number of shareholders of record of Rozetta-Cell’s common stock was 14. |
Dividends |
We have never paid any dividends on its common stock and do not intend to pay any dividends on its common stock in the foreseeable future. We intend to use any cash generated from our operations for reinvestment in the growth of our business. Any determination to pay dividends in the future will be made by our board of directors and will depend upon its results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors deemed relevant by our board of directors. |
Rozetta-Cell has never paid any dividends on its common stock and does not intend to pay any dividends on its common stock in the foreseeable future. Rozetta-Cell intends to retain future earnings, if any, to finance the growth of its business. |
●
|
difficulties encountered in integrating merged businesses;
|
||
|
●
|
uncertainties as to the timing of the merger, approval of the transaction by the shareholders of the companies and the satisfaction of closing conditions to the transaction;
|
|
|
●
|
the competitive environment in the life sciences industry;
|
|
|
●
|
whether the companies can successfully develop new products and the degree to which these gain market acceptance;
|
|
|
●
|
the success and timing of our preclinical studies and clinical trials;
|
|
|
●
|
our ability to obtain and maintain regulatory approval for our product candidates and the timing of such approvals;
|
|
|
●
|
our plans to research, develop and commercialize our product candidates;
|
|
|
●
|
regulatory developments in the United States and foreign countries; and
|
|
|
●
|
our ability to obtain and maintain intellectual property protection for our product candidates.
|
|
●
|
the extent to which we enter into licensing arrangements, collaborations or joint ventures;
|
|
●
|
our progress with research and development;
|
|
●
|
the costs and timing of obtaining new patent rights;
|
|
●
|
the extent to which we acquire or license other technologies;
|
|
●
|
regulatory changes and competition and technological developments in the market;
|
|
●
|
upgrade our operational and financial systems, procedures and controls; and
|
|
●
|
comply with state and federal laws governing our business operations, comply with Securities and Exchange Commission (“SEC”) reporting requirements and fulfill the other responsibilities that we have as a public company.
|
●
|
our ability to convince the medical community of the safety and clinical efficacy of our products and their advantages over existing diagnostic products;
|
●
|
our ability to obtain necessary regulatory approval of our diagnostic products;
|
|
●
|
our ability to further establish business relationships with other diagnostic companies that can assist in the commercialization of these products;
|
|
●
|
the willingness of physicians and patients to utilize our products; and
|
|
●
|
the extent to which Medicare and third-party payers provide full or partial reimbursement coverage for our products.
|
|
●
|
collaborators may not pursue further development and commercialization of products resulting from collaborations or may elect not to continue or renew research and development programs;
|
|
●
|
collaborators may delay clinical trials, underfund a clinical trial program, stop a clinical trial or abandon a product, repeat or conduct new clinical trials or require a new formulation of a product for clinical testing;
|
|
●
|
collaborators could independently develop, or develop with third parties, products that could compete with our future products;
|
|
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the terms of our agreements with our current or future collaborators may not be favorable to us;
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a collaborator with marketing and distribution rights to one or more products may not commit enough resources to the marketing and distribution of our products, limiting our potential revenue from the commercialization of a product;
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disputes may arise delaying or terminating the research, development or commercialization of our products, or result in significant litigation or arbitration; and
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collaborations may be terminated and, if terminated, we would experience increased capital requirements if we elected to pursue further development of the product.
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federal and state laws applicable to billing and claims payment;
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federal and state laboratory anti-mark-up laws;
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federal and state anti-kickback laws;
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federal and state false claims laws;
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federal and state self-referral and financial inducement laws, including the federal physician anti-self-referral law, or the Stark Law;
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coverage and reimbursement levels by Medicare and other governmental payors and private insurers;
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federal and state laws governing laboratory licensing and testing, including the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”);
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federal and state laws governing the development, use and distribution of diagnostic medical tests known as “laboratory developed tests”;
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the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), and analogous state laws;
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federal, state and local laws governing the handling and disposal of medical and hazardous waste;
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Occupational Safety and Health Administration rules and regulations; and
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changes to other federal, state and local laws, including tax laws.
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difficulties in integrating operations, technologies, services and personnel;
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the diversion of financial and management resources from existing operations;
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the risk of entering new markets;
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the potential loss of key employees; and
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the inability to generate sufficient revenue to offset acquisition or investment costs.
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announcements of technological innovations or new products by us, our collaborative partners or our present or potential competitors;
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announcements by us or others of results of validation studies and clinical trials;
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developments or disputes concerning patent or other proprietary rights;
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adverse legislation, including changes in governmental regulation and the status of our regulatory approvals or applications;
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changes in healthcare policies and practices; and
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economic and other external factors, including general market conditions.
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continues the development and preparation for possible commercialization of its future product candidates, including establishing sales and marketing capabilities;
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continues preclinical development and commences clinical development of other product candidates;
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expands its development programs; and
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increases administrative functions.
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the time and costs involved in obtaining regulatory approvals;
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delays that may be caused by evolving requirements of regulatory agencies;
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the number of product candidates that Rozetta-Cell pursues in the future;
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the costs involved in filing and prosecuting patent applications and enforcing or defending patent claims;
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Rozetta-Cell’s ability to establish and maintain selected strategic alliances; and
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the acquisition of technologies or products and other business opportunities that require financial commitments.
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terminate or delay research and development activities related to the creation of new intellectual property;
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curtail programs that are designed to identify new product candidates;
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not be in a position to acquire technologies or pursue other business opportunities that require financial commitments; and/or
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relinquish rights to its any product candidates and intellectual property it develops or acquires in the future.
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difficulty in recruiting and retaining adequate numbers of effective sales and marketing personnel;
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the inability of Rozetta-Cell to obtain access to and hire sales personnel to market and sell Rozetta-Cell’s products;
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the lack of complementary products to be offered by sales personnel, which may put Rozetta-Cell at a competitive disadvantage against companies with broader product lines; and
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unforeseen costs associated with creating an independent sales and marketing organization.
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1.
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To consider and vote upon the issuance of shares of Power3 common stock in the merger;
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2.
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To consider and vote upon an increase in the number of shares of common stock authorized for issuance from 600,000,000 to 3,100,000,000;
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3.
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To consider and vote upon a change of the name of the company from “Power3 Medical Products, Inc.” to “Rozetta-Cell Life Sciences, Inc.”;
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4.
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To consider and vote upon a change of Power3’s state of incorporation from New York to Nevada;
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5.
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To consider and vote upon the adoption of the Power3 Medical Products, Inc. 2011 Stock Incentive Plan;
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6.
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To consider and vote upon the addition of a provision to the Nevada Charter opting out of the Nevada Control Share Acquisition Statute;
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7.
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To consider and vote upon the addition of a provision to the Nevada Charter opting out of the Nevada Business Combinations Statute;
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8.
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To consider and vote upon a proposal to remove the provision stating the number of directors of Power3 from the Nevada Charter so that the number of directors of Power3 will be stated in the Nevada Bylaws exclusively;
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9.
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To consider and vote upon the addition of a provision to the Nevada Bylaws fixing the number of directors of Power3 at no less than one director and no more than nine directors;
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10.
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To consider and vote upon the addition of a provision to the Nevada Bylaws to authorize the board of directors to change the authorized number of directors to a number outside the range specified in the bylaws;
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11.
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To consider and vote upon the addition of a provision to the Nevada Charter Documents to provide indemnification for Power3’s officers and directors to the fullest extent permitted by Nevada law;
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12.
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To consider and vote upon the addition of a provision to the Nevada Charter Documents to limit the liability of Power3’s officers and directors to the fullest extent permitted by Nevada law;
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13.
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To consider and vote upon an adjournment of the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1 and 2; and
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14.
|
To transact such other business as may properly come before the special meeting or any adjournment or postponement thereof.
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●
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To vote in person, come to the special meeting and Power3 will give you a ballot when you arrive.
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||
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●
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To vote using the proxy card, simply complete, sign and date your proxy card and return it promptly in the postage-paid envelope provided. If you return your signed proxy card to Power3 before the special meeting, Power3 will vote your shares as you direct.
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|
● | To vote through the Internet, go to www.proxyease.com to complete an electronic proxy card. You will be asked to provide the company number and control number from the enclosed proxy card. Your vote must be received by 11:59 p.m., Eastern Standard Time, on ___________________, 2011 to be counted. |
Power3 provides Internet proxy voting to allow you to vote your shares online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies. |
●
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Faster Road to Commercialization. The merger provides both companies with a faster road from discovery to commercialization that encompasses the research market, the stem cell market and the diagnostic market, resulting in a total package of solutions for many diseases.
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●
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Broader Intellectual Property. The combined company will have a broader array of intellectual property, complementary adult stem cell therapy technology, know-how and experience.
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●
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Deeper Pipeline. The combined company will have a more robust pipeline of future product candidates which will effectively supplement Power3’s existing diagnostic tests, NuroPro® and BC-SeraPro™;
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●
|
Experienced Management Team. The management of the combined company will be composed of accomplished professionals with substantial experience in the development of stem cells and protein-based biomarkers; and
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●
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Synergies. There are potential synergies and cost savings that Power3 and Rozetta-Cell believe can be achieved by allowing management to fully leverage the combined research, development and intellectual property capabilities of the two companies across the combined company’s business.
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●
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Revenue Opportunities. The acquisition of an avenue for the discovery of protein biomarkers that can be immediately targeted to the research market through stem cell CD biomarkers;
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●
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Intellectual Property. The acquisition of intellectual property involving new technology for imaging of stem cells, as well as additional intellectual property for which new patent can be obtained;
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Broader Pipeline. The addition of Rozetta-Cell’s future product candidates broaden Power3’s product pipeline. The combined company will have multiple current and future product candidates that will provide numerous partnership and licensing opportunities for the combined company in the future;
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●
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Enhanced Value. The belief that the combination with Rozetta-Cell will result in a combined company with the potential for enhanced future growth and value as compared to Power3 as an independent, standalone company;
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Future Shareholder Value. The opportunity for Power3’s shareholders to participate in the potential future value of the combined company; and
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●
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Attractive Expansion. Rozetta-Cell’s business plans and intellectual property rights, in addition to other opportunities located through Power3’s due diligence investigation of Rozetta-Cell, provide Power3 with significant opportunities to expand its future product offering.
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the determination that the relative percentage ownership of the combined company by Power3’s shareholders and Rozetta-Cell’s shareholders is consistent with Power3’s perceived valuations of each company when Power3’s board of directors approved the merger agreement on September 7, 2010;
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●
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the non-solicitation provisions of the merger agreement limiting Rozetta-Cell’s ability to engage in discussions or negotiations regarding, or to furnish to any person any information with respect to, assist or participate in any effort or attempt by any person with respect to, or otherwise cooperate in any way with, an alternative acquisition proposal;
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Power3’s rights under the merger agreement to pursue alternative acquisition proposals;
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●
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the qualification of the merger as a reorganization for U.S. federal income tax purposes, which should result in neither Power3’s nor Rozetta-Cell’s shareholders recognizing any gain or loss for U.S. federal income tax purposes; and
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●
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Power3’s right to terminate the merger at any time prior to the closing if Power3 is not satisfied with the results of its due diligence review in its sole and absolute discretion.
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●
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Dilution. The immediate and substantial dilution of the equity interests and voting power of Power3’s shareholders upon the consummation of the merger;
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●
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Stock Price. The price volatility of Power3’s common stock, which may increase the value of the Power3 common stock that Rozetta-Cell shareholders will receive upon the consummation of the merger;
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●
|
Risks of Combination. The challenges and costs of combining the operations of the two companies and the expenses to be incurred in connection with the merger, including the risks that delays or difficulties in completing the integration could adversely affect the combined company’s operating results and preclude the achievement of some benefits anticipated from the merger; and
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●
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Reputation. The possibility that the merger might not be completed and the potential adverse effect of the public announcement of the merger on Power3’s reputation, including its ability to attract and retain key personnel and its overall competitive position.
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●
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the risk that the merger might not be completed in a timely manner or at all due to failure to satisfy the closing conditions, some of which are outside of Power3’s control;
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●
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the lack of the ability of Power3’s current shareholders to significantly influence the combined company’s business after the completion of the merger;
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●
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the risk that the combined company may be unable to raise needed additional capital and that such additional capital, even if available, will be further dilutive to Power3’s shareholders and may be at a lower valuation than reflected in the merger;
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●
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the possible volatility, at least in the short term, of the trading price of Power3’s common stock resulting from the announcement and pendency of the merger;
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●
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the possible loss of key management or other personnel of Power3;
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●
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the risk of diverting management’s attention from day-to-day operations to implement the merger;
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●
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the interests of Power3’s executive officers and directors in the transactions contemplated by the merger agreement, as described in the section of this proxy statement entitled “Interests of Power3’s Directors and Executive Officers in the Merger;” and
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●
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various other applicable risks associated with the business of Power3 and the combined company and the merger, including those described in the section of this proxy statement entitled “Risk Factors.”
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●
|
Business Expansion. Rozetta-Cell’s current intellectual property portfolio consists primarily of rights to acquire new technology for the imaging of stem cells. Merging with Power3 will provide Rozetta-Cell with access to Power3’s proteomics platform for the discovery of new and specific protein CD biomarkers needed to customize the individuals autologous stem cell therapy;
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●
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Broader Intellectual Property. The combined company will have a broader array of complementary intellectual property, know-how and experience; |
●
|
Management Team. Power3’s proteomics experts and diagnostic experts and their status as industry leaders in biomarkers and innovative diagnostic tests who can quickly develop and expand Rozetta-Cell’s business; and
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●
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Access to Capital. Power3’s ability to raise additional capital through the public markets due to its status as a publicly-traded company.
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●
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Power3’s potential to raise further capital, particularly in light of Rozetta-Cell’s cash needs and limited cash resources;
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●
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Power3’s high quality and complementary management team;
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●
|
Power3’s public company infrastructure and stock liquidity;
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●
|
the opportunity for Rozetta-Cell shareholders to participate in the long-term value of the combined company through the ownership of Power3 common stock;
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●
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the aggregate value to be received by Rozetta-Cell shareholders in the merger;
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●
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the terms and conditions of the merger agreement, including the expectation that the merger will be treated as a tax-free reorganization for U.S. federal income tax purposes, with the result that the Rozetta-Cell shareholders will generally not recognize taxable gain or loss for U.S. federal income tax purposes;
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●
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the determination that the relative percentage ownership of Power3 shareholders and Rozetta-Cell shareholders ratio that is subject to adjustment is appropriate to reflect the strategic purpose of the merger, is consistent with market practice for a merger of this type, and captures the respective ownership interests of the Power3 and Rozetta-Cell shareholders in the combined company based on Rozetta-Cell’s perceived valuations of Power3 and Rozetta-Cell at the time of the board’s approval of the merger agreement;
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●
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the reciprocal requirement that the merger agreement be submitted to a vote of the shareholders of Power3 and that the issuance of shares of Power3 common stock in the merger be submitted to a vote of the shareholders of Power3;
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●
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the likelihood that the merger will be consummated on a timely basis; and
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●
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the major risks and uncertainties of alternatives to the merger, such as Rozetta-Cell remaining an independent private company subject to the difficulties of raising capital privately in the current market.
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●
|
Risks of Combination. The challenges and costs of combining the operations of the two companies and the expenses to be incurred in connection with the merger, including the risks that delays or difficulties in completing the integration could adversely affect the combined company’s operating results and preclude the achievement of some benefits anticipated from the merger;
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●
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Raising Additional Capital. The likelihood that the combined company will be able to raise additional capital;
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●
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Stock Price. The price volatility of Power3’s common stock, which may reduce the value of the Power3 common stock that Rozetta-Cell shareholders will receive upon the consummation of the merger;
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●
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Value. The inability of Rozetta-Cell’s shareholders to realize the long-term value of the successful execution of Rozetta-Cell’s current strategy as an independent company; and
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●
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Reputation. The possibility that the merger might not be completed and the potential adverse effect of the public announcement of the merger on Rozetta-Cell’s reputation and ability to obtain financing in the future.
|
●
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the risk of diverting management’s attention from other strategic priorities to implement merger integration efforts;
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●
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the fact that shares of Power3 common stock issued to Rozetta-Cell shareholders will not be registered securities and will not immediately be freely tradable by Rozetta-Cell shareholders;
|
●
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the risk that the merger might not be consummated in a timely manner or at all;
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●
|
the risk that the anticipated benefits of business integration and cost savings will not be realized; and
|
●
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various other applicable risks associated with the combined company and the merger, including those described in the section of this proxy statement entitled “Risk Factors.”
|
●
|
a certificate representing Power3 common stock; and
|
●
|
dividends or other distributions, if any, to which they are entitled under the terms of the merger agreement.
|
●
|
conduct its business in all material respects in the ordinary and usual course consistent with past practice and use its commercially reasonable efforts to preserve intact its business organization and relationships with third parties and keep available the services of its present officers and employees; and
|
●
|
provide Power3 and its representatives reasonable access during normal business hours and upon reasonable prior notice to premises, properties, books, records, assets, liabilities, operations, contracts, personnel, financial information and other data and information of or relating to Rozetta-Cell as Power3 and its representatives may reasonably request.
|
●
|
Subject to limited exceptions, adopt or propose any change to its articles of incorporation, bylaws or other constitutional documents;
|
●
|
issue, authorize or sell any equity or debt securities, securities convertible into, or options with respect to, or warrants to purchase or rights to subscribe for, any equity or debt securities;
|
●
|
split, combine, reclassify or make any other change in its issued and outstanding equity or debt securities;
|
●
|
redeem, purchase or otherwise acquire any of its equity or debt securities;
|
●
|
declare any dividend or make any distribution with respect to its equity or debt securities;
|
●
|
subject to limited exceptions, increase in any manner the compensation of, or enter into any new bonus or incentive agreement or arrangement with, any of their respective directors, officers, employees or managers;
|
●
|
pay or agree to pay any pension, retirement allowance or other employee benefit to any director, officer, employee or manager, whether past or present, other than as required by applicable law, existing contracts or existing plan documents;
|
●
|
enter into any new employment, severance, consulting, or other compensation agreement with any director, officer, employee or manager or other person other than in connection with any new hires or promotions in the ordinary course and consistent with past practice;
|
●
|
commit itself to any additional pension, profit-sharing, deferred compensation, group insurance, severance pay, retirement or other employee benefit plan, fund or similar arrangement, or adopt or amend or commit themselves to adopt or amend any of such plans, funds or similar arrangements;
|
●
|
enter into, extend, renew or terminate any material contract, or make any change to any material contracts;
|
●
|
reclassify any assets or liabilities;
|
●
|
do any other act that would cause any representation or warranty of Rozetta-Cell to be or become untrue in any material respect, or that could reasonably be expected to have a material adverse affect on Rozetta-Cell;
|
●
|
sell, transfer, lease or otherwise dispose of any assets other than in the ordinary course of business consistent with prior practice;
|
●
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create or permit to exist any new lien or encumbrance on any assets;
|
●
|
assume, incur or guarantee any obligation for borrowed money other than in the ordinary course of business consistent with past practices;
|
●
|
enter into any joint venture, partnership or other similar arrangement;
|
●
|
make any investment in or purchase any securities of any person;
|
●
|
incur any indebtedness, issue or sell any new debt securities, enter into any new credit facility or make any capital expenditures;
|
●
|
merge or consolidate with any other person or acquire any other person or a business, division or product line of any other person;
|
●
|
make any change in any method of accounting or accounting practice except as required by reason of a concurrent change in law, SEC guidelines or U.S. generally accepted accounting principles (“GAAP”), or by reason of a change in Rozetta-Cell’s method of accounting or accounting practices that, due to law, SEC guidelines or requirements, or GAAP, requires such a change in any method of accounting or accounting practice; or
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●
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settle or compromise any material tax liability, make or change any material tax election, or file any tax return other than a tax return filed in the ordinary course of business and prepared in a manner consistent with past practice.
|
●
|
as promptly as reasonably practicable following the date of the merger agreement, prepare and file with the SEC proxy materials that shall constitute the proxy statement (and any amendments or supplements thereto);
|
●
|
take all necessary actions to execute and file a certificate of amendment to its certificate of incorporation to increase the number of shares of common stock authorized for issuance by that number of shares necessary to ensure that an adequate number of shares of common stock are available for issuance to the Rozetta-Cell shareholders; and
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●
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provide Rozetta-Cell and its representatives reasonable access during normal business hours and upon reasonable prior notice to premises, properties, books, records, assets, liabilities, operations, contracts, personnel, financial information and other data and information of or relating to Power3 as Rozetta-Cell and its representatives may reasonably request.
|
●
|
solicit, initiate, induce or encourage any inquiries or solicitations for the making of any proposal or offer that constitutes, or could reasonably be expected to lead to, any acquisition proposal; or
|
●
|
enter into, encourage, permit, indicate receptivity to, continue or otherwise participate in any discussions or negotiations regarding, furnish to any person any information with respect to, assist or participate in any effort or attempt by any person with respect to, or otherwise cooperate in any way with, any acquisition proposal.
|
●
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all director, shareholder, lender, lessor and other parties’ consents and approvals, as well as all filings with, and all necessary consents or approvals of, all federal, state and local governmental authorities and agencies, as are required under the merger agreement, applicable law or any applicable contract or agreement (other than as contemplated by the merger agreement) to complete the merger shall have been secured; and
|
●
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no statute, rule, regulation, executive order, decree, preliminary or permanent injunction, or restraining order shall have been enacted, entered, promulgated or enforced by any governmental authority that prohibits or restricts the consummation of the merger.
|
●
|
the representations and warranties of Rozetta-Cell set out in the merger agreement shall be true and correct in all material respects at and as of the time of the closing of the merger as though such representations and warranties were made at and as of such time, subject to certain duties of Rozetta-Cell to update such representations and warranties;
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●
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Rozetta-Cell shall have performed and complied in all material respects with all covenants, conditions, obligations and agreements required by the merger agreement to be performed or complied with by Rozetta-Cell on or prior to the closing date;
|
●
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Rozetta-Cell shall have delivered to Power3 a certificate of the secretary of Rozetta-Cell to the effect that the conditions set forth in the immediately preceding two conditions have been satisfied;
|
●
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Rozetta-Cell shall have delivered to Power3 certificates evidencing the outstanding shares of Rozetta-Cell common stock and any agreements relating to the Rozetta-Cell common stock;
|
●
|
Power3 shall have completed a due diligence review of the business, operations, assets, intellectual property, financial condition and prospects of Rozetta-Cell and shall have been satisfied with the results of its due diligence review in its sole and absolute discretion;
|
●
|
the approval of the merger agreement by the shareholders of Rozetta-Cell holding at least two-thirds of the outstanding shares of Rozetta-Cell common stock shall have been obtained; and
|
●
|
immediately prior to the closing of the merger, the aggregate number of dissenting shares of Rozetta-Cell common stock shall not exceed five percent (5%) of the aggregate number of outstanding shares of Rozetta-Cell common stock.
|
●
|
the representations and warranties of Power3 set out in the merger agreement shall be true and correct in all material respects at and as of the time of the closing of the merger as though such representations and warranties were made at and as of such time, subject to certain duties of Power3 to update such representations and warranties;
|
●
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Power3 shall have performed and complied in all material respects with all covenants, conditions, obligations and agreements required by the merger agreement to be performed or complied with by Power3 on or prior to the closing date;
|
●
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Power3 shall have delivered to Rozetta-Cell an officer’s certificate of Power3 to the effect that the conditions set forth in the immediately preceding two conditions have been satisfied;
|
●
|
Power3 shall have delivered to Rozetta-Cell certificates evidencing the shares of Power3 common stock to be provided to the shareholders of Rozetta-Cell;
|
●
|
the approval of the merger agreement by the affirmative vote by holders of outstanding shares of Power3 common stock and Series B Preferred Stock holding two-thirds (2/3) of the total votes entitled to vote at the special meeting and voting together as a single class shall have been obtained;
|
●
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an increase in the number of shares of common stock of Power3 authorized for issuance from 600,000,000 to 3,100,000,000, which requires the affirmative vote by holders of outstanding shares of Power3 common stock and Series B Preferred Stock holding a majority of the total votes entitled to vote at the special meeting and voting together as a single class, shall have been obtained; and
|
● |
all issued and outstanding shares of Power3 Series B Preferred Stock will have been converted into Power3 common stock by the holders thereof.
|
●
|
if the merger shall not have been consummated prior to June 30, 2011;
|
●
|
if any of the conditions to the closing set forth in Section 6.3 of the merger agreement shall have become incapable of fulfillment by June 30, 2011 and/or shall not have been waived; or
|
●
|
if any governmental entity shall have issued an injunction, order, decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting any material portion of the merger and such injunction, order, decree, ruling or other action shall have become final and nonappealable.
|
●
|
the representations and warranties of Rozetta-Cell in the merger agreement become untrue or inaccurate such that Section 6.2(a) of the merger agreement, which requires that all representations and warranties of Rozetta-Cell contained in the merger agreement be true and correct in all material respects at and as of the time of the closing of the merger as through such representations and warranties were made at and as of such time, subject to certain exceptions, would not be satisfied; or
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●
|
there has been a breach on the part of Rozetta-Cell of any of its covenants or agreements contained in the merger agreement such that Section 6.2(b) of the merger agreement, which requires Rozetta-Cell to have performed or complied in all material respects with all covenants, conditions, obligations and agreements required by the merger agreement to be performed or complied with on or prior to the closing date of the merger, would not be satisfied.
|
●
|
the representations and warranties of Power3 in the merger agreement become untrue or inaccurate such that Section 6.1(a) of the merger agreement, which requires that all representations and warranties of Power3 contained in the merger agreement be true and correct in all material respects at and as of the time of the closing of the merger as through such representations and warranties were made at and as of such time, subject to certain exceptions, would not be satisfied; or
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●
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there has been a breach on the part of Power3 of any of its covenants or agreements contained in the merger agreement such that Section 6.1(b) of the merger agreement, which requires Power3 to have performed or complied in all material respects with all covenants, conditions, obligations and agreements required by the merger agreement to be performed or complied with on or prior to the closing date of the merger, would not be satisfied.
|
●
|
the development in Nevada over the last century of a well-established body of case law construing the NGCL, which provides businesses with a greater measure of predictability than exists in most of the other jurisdictions;
|
●
|
the certainty afforded by the well-established principles of corporate governance under the NGCL are of benefit to Power3 and its shareholders and should enhance Power3’s ability to attract and retain quality directors and officers;
|
●
|
the NGCL itself, which is generally acknowledged to be one of the most advanced and flexible corporate statutes in the country; and
|
●
|
the Nevada Business Courts, which bring to its handling of complex corporate issues a level of experience, a speed of decision and a degree of sophistication and understanding unparalleled by most other court systems in the country.
|
●
|
the liability of any director if a judgment or other final adjudication adverse to the director establishes that the director acted in bad faith or engaged in intentional misconduct or a knowing violation of law, personally gained a financial profit to which the director was not legally entitled, or violated certain provisions of the NYBCL; or
|
●
|
the liability of any director for any act or omission prior to the adoption of such provision in the certificate of incorporation.
|
●
|
the officer’s or director’s act or failure to act constituted a breach of his or her fiduciary duties as an officer or director; and
|
●
|
the breach of those duties involved intentional misconduct, fraud or a knowing violation of law.
|
● |
the fact of the common directorship, office or financial interest is known to the board of directors or committee, and the board or committee authorizes, approves or ratifies the contract or transaction in good faith by a vote sufficient for the purpose without counting the vote or votes of the common or interested director or directors;
|
●
|
the fact of the common directorship, office or financial interest is known to the shareholders, and they approve or ratify the contract or transaction in good faith by a majority vote of shareholders holding a majority of the voting power;
|
●
|
the fact of the common directorship, office or financial interest is not known to the director or officer at the time the transaction is brought before the board of directors of the corporation for action; or
|
● | the contract or transaction is fair as to the corporation at the time it is authorized or approved. |
●
|
consummation of a plan of merger to which the domestic corporation is a constituent entity (i) if approval by the shareholders is required for the merger by the NGCL or the articles of incorporation, regardless of whether the shareholder is entitled to vote on the plan of merger; or (ii) if the domestic corporation is a subsidiary and is merged with its parent;
|
●
|
consummation of a plan of conversion to which the domestic corporation is a constituent entity as the corporation whose subject owner’s interests will be converted;
|
●
|
consummation of a plan of exchange to which the domestic corporation is a constituent entity as the corporation whose subject owner’s interests will be acquired, if the shareholder’s shares are to be acquired in the plan of exchange; or
|
●
|
any corporate action taken pursuant to a vote of the shareholders to the extent that the articles of incorporation, bylaws or a resolution of the board of directors provides that voting or nonvoting shareholders are entitled to dissent and obtain payment for their shares.
|
Number of
securities to be issued upon exercise of outstanding options, warrants and rights (a) |
Weighted-
average exercise price of outstanding options, warrants and rights (b) |
Number of
securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
||||||||||
Equity compensation plans approved by security holders
|
-0- | -0- | -0- | |||||||||
Equity compensation plans not approved by security holders:
|
||||||||||||
2008 Compensation Plan
|
-0- | -0- | -0- | |||||||||
2009 Stock Incentive Plan
|
-0- | -0- | -0- | |||||||||
Warrants issued to directors, officers and employees
|
5,000,000 | $ | 0.04 | -0- | ||||||||
Total
|
5,000,000 | $ | 0.04 | -0- |
Fiscal Year Ended December 31, 2009
|
|
High
|
Low
|
||||||
Quarter ended March 31, 2009
|
$ | 0.04 | $ | 0.0095 | |||||
Quarter ended June 30, 2009
|
$ | 0.025 | $ | 0.013 | |||||
Quarter ended September 30, 2009
|
$ | 0.155 | $ | 0.01 | |||||
Quarter ended December 31, 2009
|
$ | 0.209 | $ | 0.048 |
Fiscal Year Ended December 31, 2010
|
|
High
|
Low
|
||||||
Quarter ended March 31, 2010
|
$ | 0.04 | $ | 0.0095 | |||||
Quarter ended June 30, 2010
|
$ | 0.025 | $ | 0.013 | |||||
Quarter ended September 30, 2010
|
$ | 0.039 | $ | 0.023 | |||||
Quarter ended December 31, 2010
|
$ | 0.042 | $ | 0.0168 |
Name and Address of Beneficial Owner |
Amount and Nature
of Beneficial Ownership (1) |
Percentage
of Class (1) |
|||||||
Helen R. Park (2)
|
28,532,337 | 6.0% | |||||||
Ira L. Goldknopf (3)
|
49,513,516 | 10.5% | |||||||
All officers and directors as a group (2 persons) (4)
|
78,045,853 | 16.3% |
Name and Address of Beneficial Owner |
|
Percentage
of Shares in Power3 |
Percentage
of Shares in Rozetta-Cell |
Percentage
of Shares in Combined Company |
|||||||||
Helen R. Park (1)
|
6.0% | 30.0% | 22.3% | ||||||||||
Ira L. Goldknopf
|
10.5% | 5.0% | 6.5% | ||||||||||
O. Lee Tawes
|
* | 10.0% | 8.2% | ||||||||||
Shang Ti, LLC (2)
|
* | 10.0% | 6.8% | ||||||||||
Waco Capital Management, Inc. (3)
|
* | 30.0% | 20.4% | ||||||||||
All officers and directors as a group (2 persons) (4)
|
16.3% | 35.0% | 28.8% |
|
●
|
Discover important disease proteins, understand their function and determine their role in human disease. We will continue to use our proprietary technologies in an effort to efficiently discover important proteins and to understand their role in human disease.
|
|
●
|
Acquire promising biomarkers/patents from other organizations. We intend to take advantage of in-licensing or acquisition opportunities to augment our in-house product development programs. We recognize that we cannot meet all of our research discovery needs internally and can benefit from the research performed by other organizations. We intend to leverage our product development expertise to acquire new product opportunities in diagnostic areas of focus.
|
|
●
|
Grow our diagnostic test business in the U.S. We will seek to increase sales of our existing diagnostic products in the U.S. Additionally, we will pursue new product opportunities in the areas of predictive, personalized, and prognostic medicine. We believe that our diagnostic products will play an increasingly important role in the management of a patient’s healthcare.
|
|
●
|
Expand our diagnostic product business internationally. We intend to establish operations in Europe in the future and market our current and future diagnostic products and any future products in the major market countries in Europe for which we believe there is an attractive commercial opportunity, subject to any required regulatory approvals and the license rights to our products.
|
|
●
|
Dr. Ira L. Goldknopf, our President and Chief Scientific Officer, published an invited editorial in the February 2008 issue of the peer reviewed scientific journal Expert Review of Proteomics. The editorial, entitled “Blood Based Proteomics for Personalized Medicine, Examples from Neurodegenerative Disease,” outlined how proteins in the blood serum can tell us what disease pathways and mechanisms are active in patients.
|
|
●
|
We co-authored an article regarding the discovery of protein biomarkers for esophageal malignancies in the International Journal of Cancer in 2008. The article, titled “Alterations in Barrett’s-related adenocarcinomas: A proteomic approach,” was authored by Dr. Wael El-Rifai, MD, PhD, Professor of Surgery, Medicine and Cancer Biology and Director of Surgical Oncology Research at Vanderbilt University Medical Center, Nashville, Tennessee. Dr. El Rifai stated that through the use of our leading edge proteomic discovery platform, twenty-three biomarkers were identified that have not been described before in this lethal malignancy.
|
|
●
|
Dr. Goldknopf presented our results with Neurodegenerative diseases and drug resistance in leukemia at the Cambridge Healthtech Biomarker Discovery Summit in Philadelphia, Pennsylvania on October 1, 2008.
|
|
●
|
Dr. Goldknopf and co-authors Dr. Katerina Markopoulou, academic partner at the University of Thessaly in Greece, Dr. Bruce Chase, Dr. Stanly H. Appel and Dr. Marwan Sabbagh presented the overall results of NuroPro® blood tests, from discovery through clinical validation of blood protein biomarkers and tests for Parkinson’s disease, ALS, and Alzheimer’s disease, to the Alzheimer’s Association’s International Congress of Alzheimer’s Disease (ICAD) in Vienna, Austria in July 2009.
|
|
●
|
Dr. Goldknopf was the keynote speaker and served as a member of the Scientific Advisory Board of BIT Life Sciences’ 2nd Annual International Congress and Expo of Molecular Diagnostics (ICEMD-2009) in Beijing, China in November 2009. Along with his keynote address, “Principles of Omic Medicine Applied to Early Detection and Differential Diagnosis of Breast Cancer and Neurodegenerative Diseases,” Dr. Goldknopf chaired the session on “Biomarkers and Diagnostics in Personalized Medicine.”
|
|
●
|
identify proteomic biomarkers that will enable the clinical development program with the potential for clinical utility;
|
|
●
|
establish validated proteomic tests with adequate predictive characteristics;
|
|
●
|
understand the complexity of the proteomic underpinnings of disease, and the related complexity of identifying and validating proteomic biomarkers;
|
|
●
|
obtain patent protection for protein biomarkers and their clinical utility;
|
|
●
|
establish efficacy and safety in a clinical development program;
|
|
●
|
demonstrate data that supports test adoption and reimbursement; and
|
|
●
|
gain marketing approval under CLIA and, later, the FDA and other regulatory agencies.
|
|
●
|
Celera Corporation, a company engaged in proteomics, bioinformatics and genomics that identifies and develops drug targets and discover and develop new therapeutics;
|
|
●
|
Vermillion Inc., a biomarker discovery assay development and characterization company;
|
|
●
|
BioRad, a seller of biomarker discovery equipment;
|
|
●
|
Satoris, a developer of cytokines-based plasma biomarkers test for Alzheimer’s disease;
|
|
●
|
Myriad Genetics, a developer of therapeutic and diagnostic products using genomic and proteomic technologies; and
|
|
●
|
Provista Life Sciences, a developer of blood serum protein biomarker diagnostic tests for breast cancer and Alzheimer’s disease.
|
Name and
Principal Position |
|
Year
|
Salary ($)
|
Bonus ($)
|
Stock
Awards ($) (1) |
Total ($)
|
|||||||||||||
Helen R. Park
|
2010
|
100,008 | (2) | -0- | -0- | 100,008 | |||||||||||||
Interim Chief Executive Officer and
|
2009
|
113,714 | (3) | 277,500 | (4) | -0- | 391,214 | ||||||||||||
Chief Financial Officer | |||||||||||||||||||
Ira L. Goldknopf
|
2010
|
125,000 | (5) | -0- | -0- | 125,000 | |||||||||||||
President, Chief Scientific Officer
|
2009
|
215,335 | (6) | -0- | -0- | 215,335 | |||||||||||||
and Secretary |
Warrant Awards
|
|||||||||||||||||
Name
|
|
Number of Securities
Underlying Unexercised Warrants (#) Exercisable |
Number of Securities
Underlying Unexercised Warrants (#) Unexercisable |
Warrant
Exercise Price ($) |
Warrant
Expiration Date |
||||||||||||
Helen R. Park
|
5,000,000 | (1) | -0- | 0.04 |
11/18/11
|
||||||||||||
Ira L. Goldknopf
|
--- | --- | --- | --- |
Contractual Obligations
|
Total
|
2011
|
2012
|
2013
|
2014
|
2015
|
||||||||||||||||||
Employment and Consulting Agreements (1)
|
$ | 213,246 | $ | 166,670 | $ | 46,576 | $ | -0- | $ | -0- | $ | -0- | ||||||||||||
Office Leases (2)
|
370,542 | 98,532 | 86,514 | 73,008 | 74,496 | 37,992 | ||||||||||||||||||
Total
|
$ | 583,788 | $ | 265,202 | $ | 133,090 | $ | -0- | $ | -0- | $ | -0- |
Power3
|
Rozetta-Cell
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|||||||||||||
Assets
|
||||||||||||||||
Cash and equivalents
|
$ | 6,319 | $ | 250 | $ | - | $ | 6,569 | ||||||||
Prepaid rent
|
- | 6,000 | - | 6,000 | ||||||||||||
Notes receivable
|
- | 68,800 | (68,800 | ) A | - | |||||||||||
Total current assets
|
6,319 | 75,050 | (68,800 | ) | 12,569 | |||||||||||
Property and equipment, net
|
2,244 | - | - | 2,244 | ||||||||||||
Deposits
|
11,332 | - | - | 11,332 | ||||||||||||
Other assets
|
100 | - | - | 100 | ||||||||||||
Total assets
|
$ | 19,995 | $ | 75,050 | $ | (68,800 | ) | $ | 26,245 | |||||||
Liabilities and stockholders’ deficit
|
||||||||||||||||
Accounts payable
|
$ | 1,213,217 | $ | - | $ | - | $ | 1,213,217 | ||||||||
Accounts payable – related party
|
433,406 | - | - | 433,406 | ||||||||||||
Notes payable
|
68,800 | - | (68,800 | ) | 0 | |||||||||||
Notes payable – in default
|
451,000 | - | - | 451,000 | ||||||||||||
Notes payable – related party
|
15,000 | 69,250 | - | 84,250 | ||||||||||||
Convertible debentures, net
|
50,000 | - | - | 50,000 | ||||||||||||
Convertible debentures – in default
|
351,255 | - | - | 351,255 | ||||||||||||
Convertible debentures – related party
|
30,000 | - | - | 30,000 | ||||||||||||
Derivative liabilities
|
2,457,358 | - | - | 2,457,358 | ||||||||||||
Other current liabilities
|
760,296 | - | 100,000 | E | 860,296 | |||||||||||
Total current liabilities
|
5,830,332 | 69,250 | 31,200 | 5,930,782 | ||||||||||||
Total liabilities
|
5,830,332 | 69,250 | 31,200 | 5,930,782 | ||||||||||||
Stockholders’ deficit:
|
||||||||||||||||
Preferred Stock
|
1,500 | - | (1,500 | ) B | 0 | |||||||||||
Common Stock
|
471,237 | 100,000 | 900,000 | B | 1,471,237 | |||||||||||
Additional paid-in capital
|
72,899,791 | (94,000 | ) | (998,700 | ) C | 71,807,091 | ||||||||||
Treasury stock
|
(16,000 | ) | - | - | (16,000 | ) | ||||||||||
Common stock payable
|
135,000 | - | - | 135,000 | ||||||||||||
Deficit accumulated during development stage
|
(67,620,365 | ) | (200 | ) | 200 | D | (67,620,365 | ) | ||||||||
Deficit accumulated before entering development stage
|
(11,681,500 | ) | - | - | (11,681,500 | ) | ||||||||||
Total stockholders’ deficit
|
(5,810,337 | ) | 5,800 | (100,000 | ) | (5,904,537 | ) | |||||||||
Total liabilities and stockholders’ deficit
|
$ | 19,995 | $ | 75,050 | $ | (68,800 | ) | $ | 26,245 |
Power3
|
Rozetta-Cell
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|||||||||||||
Net revenue
|
$ | 1,025 | $ | - | $ | - | $ | 1,025 | ||||||||
Operating expenses:
|
||||||||||||||||
Employee compensation and benefits
|
1,041,522 | - | - | 1,041,522 | ||||||||||||
Professional and consulting fees
|
1,962,113 | - | - | 1,962,113 | ||||||||||||
Other selling, general and administrative expenses
|
492,479 | - | - | 492,479 | ||||||||||||
Total operating expenses
|
3,496,114 | - | - | 3,496,114 | ||||||||||||
Loss from operations
|
(3,495,089 | ) | - | - | (3,495,089 | ) | ||||||||||
Other income (expense):
|
||||||||||||||||
Derivative gain (loss)
|
4,415,110 | - | - | 4,415,110 | ||||||||||||
Gain on legal settlement
|
17,875 | - | - | 17,875 | ||||||||||||
Interest income
|
576 | - | - | 576 | ||||||||||||
Gain (loss) on settlement of debt
|
464,872 | - | - | 464,872 | ||||||||||||
Interest expense
|
(1,541,418 | ) | - | - | (1,541,418 | ) | ||||||||||
Other income / (expense)
|
1,290 | - | - | 1,290 | ||||||||||||
Total other income/(expense)
|
3,358,305 | - | - | 3,358,305 | ||||||||||||
Net loss
|
(136,784 | ) | - | - | (136,784 | ) | ||||||||||
Deemed dividend
|
(12,071 | ) | - | - | (12,071 | ) | ||||||||||
Net loss attributable to common stockholders
|
$ | (148,855 | ) | $ | - | $ | - | $ | (148,855 | ) | ||||||
Net loss per share - basic and diluted
|
$ | (0.00 | ) | $ | - | $ | (0.00 | ) | ||||||||
Weighted average number of shares outstanding - basic and diluted
|
135,096,000 | 1,001,500,000 | 1,136,596,000 |
Power3
|
Rozetta-Cell
|
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|||||||||||||
Net revenue
|
$ | 115,000 | $ | - | $ | - | $ | 115,000 | ||||||||
Operating expenses:
|
||||||||||||||||
Employee compensation and benefits
|
368,067 | - | - | 368,067 | ||||||||||||
Professional and consulting fees
|
4,925,829 | - | - | 4,925,829 | ||||||||||||
Other selling, general and administrative expenses
|
143,297 | - | - | 143,297 | ||||||||||||
Total operating expenses
|
5,437,193 | - | - | 5,437,193 | ||||||||||||
Loss from operations
|
(5,322,193 | ) | - | - | (5,322,193 | ) | ||||||||||
Other income (expense):
|
||||||||||||||||
Derivative gain (loss)
|
(13,045,921 | ) | - | - | (13,045,921 | ) | ||||||||||
Gain (loss) on settlement of debt
|
(426,574 | ) | - | - | (426,574 | ) | ||||||||||
Interest expense
|
(416,886 | ) | - | - | (416,886 | ) | ||||||||||
Total other income/(expense)
|
(13,889,381 | ) | - | - | (13,889,381 | ) | ||||||||||
Net loss
|
(19,211,574 | ) | - | - | (19,211,574 | ) | ||||||||||
Deemed dividend
|
(1,111,054 | ) | - | - | (1,111,054 | ) | ||||||||||
Net loss attributable to common stockholders
|
$ | (20,322,628 | ) | $ | - | $ | - | $ | (20,322,628 | ) | ||||||
Net loss per share - basic and diluted
|
$ | (0.06 | ) | $ | 0.04 | $ | (0.02 | ) | ||||||||
Weighted average number of shares outstanding - basic and diluted
|
331,737,780 | 1,001,500,000 | 1,333,237,780 |
Power3
|
Rozetta-Cell
|
Pro Forma
Adjustments
|
Pro Forma
Combined |
|||||||||||||
Net revenue
|
$ | - | $ | - | $ | - | $ | - | ||||||||
Operating expenses:
|
||||||||||||||||
Employee compensation and benefits
|
113,785 | - | - | 113,785 | ||||||||||||
Professional and consulting fees
|
1,153,419 | - | - | 1,153,419 | ||||||||||||
Other selling, general and administrative expenses
|
394,684 | 200 | (12,000 | ) F | 382,884 | |||||||||||
Total operating expenses
|
1,661,888 | 200 | (12,000 | ) | 1,650,088 | |||||||||||
Loss from operations
|
(1,661,888 | ) | (200 | ) | 12,000 | (1,650,088 | ) | |||||||||
Other income (expense):
|
||||||||||||||||
Derivative gain (loss)
|
11,999,065 | - | - | 11,999,065 | ||||||||||||
Interest expense
|
(83,988 | ) | - | - | (83,988 | ) | ||||||||||
Total other income/(expense)
|
11,915,077 | - | - | 11,915,077 | ||||||||||||
Net income (loss)
|
$ | 10,253,189 | $ | (200 | ) | $ | 12,000 | $ | 10,264,989 | |||||||
Net income (loss) per share - basic
|
$ | 0.02 | $ | 0.01 | G | $ | 0.01 | |||||||||
Net income (loss) per share - diluted
|
$ | 0.02 | $ | 0.01 | G | $ | 0.01 | |||||||||
Weighted average number of shares outstanding - basic
|
449,898,509 | 1,001,500,000 | G | 1,451,398,509 | ||||||||||||
Weighted average number of shares outstanding - diluted
|
459,768,500 | 1,001,500,000 | G | 1,461,268,500 |
Power3’s Series B preferred stock
|
$ | (1,500 | ) | ||
Rozetta-Cell’s common stock
|
(100,000 | ) | |||
Power3’s common stock
|
1,001,500 | ||||
$ | 900,000 |
Conversion of Rozetta-Cell’s common stock and Power3’s Series B Preferred Stock
|
$ | (900,000 | ) | ||
Power3’s common stock
|
23,700,000 | ||||
Adjustment to reflect historical cost basis of business combination between entities under common control
|
(21,801,300 | ) | |||
$ | (998,700 | ) |
Elimination of Rozetta-Cell’s historical accumulated deficit
|
$ | 200 | |||
Estimated merger and acquisition costs
|
100,000 | ||||
$ | 100,200 |
●
|
The Agreement and Plan of Merger attached to this proxy statement as Annex A;
|
●
|
The First Amendment and Waiver to Agreement and Plan of Merger attached to this proxy statement as Annex B;
|
●
|
The Agreement and Plan of Merger for the reincorporation attached to this proxy statement as Annex C;
|
●
|
The proposed Articles of Incorporation for Power3 Medical Products, Inc. (Nevada) attached to this proxy statement as Annex D;
|
●
|
The proposed Bylaws for Power3 Medical Products, Inc. (Nevada) attached to this proxy statement as Annex E;
|
●
|
Power3 Medical Products, Inc. 2011 Stock Incentive Plan attached to this proxy statement as Annex F;
|
●
|
The Audited Financial Statements of Power3 for the years ended December 31, 2009 and 2008 attached to this proxy statement as Annex G;
|
●
|
The Interim Financial Statements of Power3 for the Three and Nine Months Ended September 30, 2010 attached to this proxy statement as Annex H; and
|
●
|
The Interim Financial Statements of Rozetta-Cell for the Period Beginning May 14, 2010 (Date of Inception) and Ending September 30, 2010 attached to this proxy statement as Annex I.
|
By Order of the Board of Directors | |
/s/ Ira L. Goldknopf | |
Ira L. Goldknopf | |
President and Chief Scientific Officer | |
__________, 2011 |
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1.1
|
|
4.4
|
POWER3 MEDICAL PRODUCTS, INC.
|
||
By:
|
/s/ Ira L. Goldknopf
|
|
Ira L. Goldknopf
|
||
President and Chief Scientific Officer
|
||
ROZETTA-CELL LIFE SCIENCES, INC.
|
||
By:
|
/s/ Sara Parks
|
|
Sara Parks
|
||
President and Chief Executive Officer
|
POWER3 MEDICAL PRODUCTS, INC.
|
|||
|
By:
|
/s/ Ira L. Goldknopf | |
Ira L. Goldknopf | |||
President and Chief Scientific Officer |
ROZETTA-CELL LIFE SCIENCES, INC.
|
|||
|
By:
|
/s/ Sara Parks | |
Sara Parks | |||
President and Chief Executive Officer |
POWER3 MEDICAL PRODUCTS, INC. | |||
|
By:
|
/s/ Ira L. Goldknopf | |
Ira L. Goldknopf | |||
President and Chief Scientific Officer |
POWER3 NEVADA, INC. | |||
|
By:
|
/s/ Helen R. Park | |
Helen R. Park | |||
Chief Executive Officer |
|
|
/s/ Helen R. Park | |
Helen R. Park | |||
Incorporator | |||
|
1.1
|
Registered Office.
|
|
1.2
|
Other Offices.
|
|
7.2
|
Indemnification of Officers and Directors in Actions by or in the Right of the Corporation.
|
/s/ Helen R. Park
|
|
|
||
Helen R. Park | ||||
Secretary |
Report of Independent Registered Public Accounting Firm
|
1
|
Balance Sheets at December 31, 2009 and 2008
|
2
|
Statements of Operations for the Years Ended December 31, 2009 and 2008 and the period beginning May 18, 2004 (inception) through December 31, 2009
|
3
|
Statements of Stockholders’ Deficit for all Years Subsequent to May 18, 2004 (inception)
|
4
|
Statements of Stockholders’ Deficit – Other Equity Items for all Years Subsequent to May 18, 2004 (inception)
|
5
|
Statements of Cash Flows for the Years Ended December 31, 2009 and 2008 and the period beginning May 18, 2004 (inception) through December 31, 2009
|
6
|
Notes to Financial Statements
|
7
|
December 31,
|
||||||||
2009
|
2008
|
|||||||
Assets
|
||||||||
Cash and equivalents
|
$ | - | $ | 8,331 | ||||
Other current assets
|
- | 6,645 | ||||||
Total current assets
|
- | 14,976 | ||||||
Property and equipment, net of accumulated depreciation of $107,581 and $101,253 at December 31, 2009 and 2008, respectively
|
683 | 6,253 | ||||||
Deposits
|
5,000 | 5,450 | ||||||
Other assets
|
100 | - | ||||||
Total assets
|
$ | 5,783 | $ | 26,679 | ||||
Liabilities and stockholder’s deficit
|
||||||||
Accounts payable
|
$ | 999,631 | $ | 1,043,682 | ||||
Accounts payable — related party
|
96,507 | - | ||||||
Notes payable – in default
|
451,000 | 451,000 | ||||||
Notes payable – net of unamortized discount of $-0- and $45,825 at December 31, 2009 and 2008, respectively
|
- | 64,174 | ||||||
Notes payable – related parties
|
15,000 | 68,927 | ||||||
Convertible debentures – in default, net of unamortized discount of $-0- and $97,036 at December 31, 2009 and 2008, respectively
|
351,255 | 767,974 | ||||||
Convertible debentures, net of unamortized discount of $21,621 and $577,668 at December 31, 2009 and 2008, respectively
|
28,379 | 442,332 | ||||||
Convertible debentures – related party, net of unamortized discount of $-0- and $672,836 at December 31, 2009 and 2008, respectively
|
30,000 | 696,599 | ||||||
Derivative liabilities
|
14,456,424 | 1,352,247 | ||||||
Other current liabilities
|
593,891 | 617,486 | ||||||
Total current liabilities
|
17,022,087 | 5,504,421 | ||||||
Total liabilities
|
17,022,087 | 5,504,421 | ||||||
Stockholders’ deficit:
|
||||||||
Preferred Stock – $0.01 par value: 50,000,000 shares authorized; 1,500,000 shares issued and outstanding as of December 31, 2009 and 2008, respectively
|
1,500 | 1,500 | ||||||
Common Stock – $0.001 par value: 600,000,000 shares authorized; 434,167,000 and 149,959,290 shares issued and outstanding as of December 31, 2009 and 2008, respectively
|
434,167 | 149,960 | ||||||
Additional paid-in capital
|
71,984,083 | 63,499,938 | ||||||
Treasury stock
|
(16,000 | ) | - | |||||
Stock held in escrow
|
- | (20,000 | ) | |||||
Common stock payable
|
135,000 | 123,286 | ||||||
Deficit accumulated during development stage
|
(77,873,554 | ) | (57,550,926 | ) | ||||
Deficit accumulated before entering development stage
|
(11,681,500 | ) | (11,681,500 | ) | ||||
Total stockholders’ deficit
|
(17,016,304 | ) | (5,477,742 | ) | ||||
Total liabilities and stockholders’ deficit
|
$ | 5,783 | $ | 26,679 |
Period From
|
||||||||||||
May 18, 2004
|
||||||||||||
For the Twelve Months Ended
|
Through
|
|||||||||||
December 31,
|
December 31,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
(unaudited)
|
||||||||||||
Net revenue
|
$ | 115,000 | $ | 1,025 | $ | 542,249 | ||||||
Operating expenses:
|
||||||||||||
Employee compensation and benefits
|
368,067 | 1,041,522 | 31,417,579 | |||||||||
Professional and consulting fees
|
4,925,829 | 1,962,113 | 16,228,769 | |||||||||
Impairment of goodwill
|
- | - | 13,371,776 | |||||||||
Other selling, general and administrative expenses
|
143,297 | 492,479 | 2,186,321 | |||||||||
Total operating expenses
|
5,437,193 | 3,496,114 | 63,204,445 | |||||||||
Loss from operations
|
(5,322,193 | ) | (3,495,089 | ) | (62,662,196 | ) | ||||||
Other income (expense):
|
||||||||||||
Derivative gain (loss)
|
(13,045,921 | ) | 4,415,110 | (6,022,948 | ) | |||||||
Gain on legal settlement
|
- | 17,875 | 36,764 | |||||||||
Interest income
|
- | 576 | 7,867 | |||||||||
Gain (loss) on settlement of debt
|
(426,574 | ) | 464,872 | 1,582,872 | ||||||||
Interest expense
|
(416,886 | ) | (1,541,418 | ) | (5,679,294 | ) | ||||||
Mandatory prepayment penalty
|
- | - | (420,000 | ) | ||||||||
Other income/(expense)
|
- | 1,290 | (194,886 | ) | ||||||||
Total other income/(expense)
|
(13,889,381 | ) | 3,358,305 | (10,689,625 | ) | |||||||
Net loss
|
(19,211,574 | ) | (136,784 | ) | (73,351,821 | ) | ||||||
Deemed dividend
|
(1,111,054 | ) | (12,071 | ) | (1,140,760 | ) | ||||||
Net loss attributable to common stockholders
|
$ | (20,322,628 | ) | $ | (148,855 | ) | $ | (74,492,581 | ) | |||
Net loss per share - basic and diluted
|
$ | (0.06 | ) | $ | (0.00 | ) | ||||||
Weighted average number of shares
|
||||||||||||
outstanding - basic and diluted
|
331,737,780 | 135,096,000 |
Additional
|
||||||||||||||||||||||||||||||||
Common Stock
|
Preferred Stock
|
Paid-in
|
Other Equity
|
Accumulated
|
||||||||||||||||||||||||||||
Shares
|
Par Value
|
Shares
|
Par Value
|
Capital
|
Items (1)
|
Deficit
|
Total
|
|||||||||||||||||||||||||
Balances as of Beginning of Development Stage — May 18, 2004
|
14,407,630 | $ | 14,407 | 3,870,000 | $ | 3,870 | $ | 14,225,974 | $ | - | $ | (11,681,500 | ) | $ | 2,562,751 | |||||||||||||||||
Issued shares for compensation
|
27,945,000 | 27,945 | - | - | 25,423,555 | (25,451,500 | ) | - | - | |||||||||||||||||||||||
Issued shares for services
|
4,910,000 | 4,910 | - | - | 4,850,090 | (535,000 | ) | - | 4,320,000 | |||||||||||||||||||||||
Issued shares for acquisition of equipment
|
15,000,000 | 15,000 | - | - | 13,485,000 | - | - | 13,500,000 | ||||||||||||||||||||||||
Stock option expense
|
- | - | - | - | 626,100 | (626,100 | ) | - | - | |||||||||||||||||||||||
Issued shares for cash
|
242,167 | 242 | - | - | 314,575 | - | - | 314,817 | ||||||||||||||||||||||||
Cancelled shares per cancellation agreement
|
(160,000 | ) | (160 | ) | - | - | (71,840 | ) | - | - | (72,000 | ) | ||||||||||||||||||||
Issued shares to convert Series A perferred shares to common shares
|
3,000,324 | 3,001 | (3,870,000 | ) | (3,870 | ) | 3,377,974 | - | (3,380,975 | ) | (3,870 | ) | ||||||||||||||||||||
Stock based compensation
|
- | - | - | - | - | 8,311,012 | - | 8,311,012 | ||||||||||||||||||||||||
Net reclassification of derivative liabilities
|
- | - | - | - | (3,347,077 | ) | - | - | (3,347,077 | ) | ||||||||||||||||||||||
Net loss (from May 18, 2004 to December 31, 2004)
|
- | - | - | - | - | - | (15,236,339 | ) | (15,236,339 | ) | ||||||||||||||||||||||
Balance at December 31, 2004
|
65,345,121 | 65,345 | - | - | 58,884,351 | (18,301,588 | ) | (30,298,814 | ) | 10,349,294 | ||||||||||||||||||||||
Cancelled shares returned from employee
|
(1,120,000 | ) | (1,120 | ) | - | - | (1,307,855 | ) | - | - | (1,308,975 | ) | ||||||||||||||||||||
Issued shares for compensation
|
140,000 | 140 | - | - | 41,860 | - | - | 42,000 | ||||||||||||||||||||||||
Issued shares for services
|
850,000 | 850 | - | - | 155,150 | - | - | 156,000 | ||||||||||||||||||||||||
Amortize deferred compensation expense
|
- | - | - | - | - | 13,222,517 | - | 13,222,517 | ||||||||||||||||||||||||
Net loss
|
- | - | - | - | - | - | (27,134,865 | ) | (27,134,865 | ) | ||||||||||||||||||||||
Balance at December 31, 2005
|
65,215,121 | 65,215 | - | - | 57,773,506 | (5,079,071 | ) | (57,433,679 | ) | (4,674,029 | ) | |||||||||||||||||||||
Issued shares for services
|
2,449,990 | 2,449 | - | - | 311,865 | - | - | 314,314 | ||||||||||||||||||||||||
Issued shares for cash
|
2,452,746 | 2,452 | - | - | 222,548 | - | - | 225,000 | ||||||||||||||||||||||||
Issued shares for compensation
|
1,253,098 | 1,254 | - | - | 176,763 | - | - | 178,017 | ||||||||||||||||||||||||
Adoption of FAS 123R
|
- | - | - | - | (475,324 | ) | 475,324 | - | - | |||||||||||||||||||||||
Amortize deferred compensation expense
|
- | - | - | - | - | 4,603,747 | - | 4,603,747 | ||||||||||||||||||||||||
Net loss
|
- | - | - | - | - | - | (6,415,969 | ) | (6,415,969 | ) | ||||||||||||||||||||||
Balance at December 31, 2006
|
71,370,955 | 71,370 | - | - | 58,009,358 | - | (63,849,648 | ) | (5,768,920 | ) | ||||||||||||||||||||||
Issued shares for services
|
1,810,000 | 1,810 | - | - | 282,390 | - | - | 284,200 | ||||||||||||||||||||||||
Issued shares for conversion of debt
|
22,265,224 | 22,264 | - | - | 606,412 | - | - | 628,676 | ||||||||||||||||||||||||
Issued shares for warrants exercised
|
5,270,832 | 5,272 | - | - | 336,396 | - | - | 341,668 | ||||||||||||||||||||||||
Issued shares for cash
|
7,630,625 | 7,632 | - | - | 992,818 | - | - | 1,000,450 | ||||||||||||||||||||||||
Placement agent fees
|
- | - | - | - | (58,500 | ) | - | - | (58,500 | ) | ||||||||||||||||||||||
Stock received
|
- | - | - | - | 100 | - | - | 100 | ||||||||||||||||||||||||
Unreturned shares
|
5,000 | 5 | - | - | 4,495 | - | - | 4,500 | ||||||||||||||||||||||||
Deemed dividend
|
- | - | - | - | 17,635 | - | (17,635 | ) | - | |||||||||||||||||||||||
Net loss
|
- | - | - | - | - | - | (5,216,288 | ) | (5,216,288 | ) | ||||||||||||||||||||||
Balance at December 31, 2007
|
108,352,636 | 108,353 | - | - | 60,191,104 | - | (69,083,571 | ) | (8,784,114 | ) | ||||||||||||||||||||||
Common stock issued for services
|
7,482,910 | 7,483 | - | - | 584,858 | - | - | 592,341 | ||||||||||||||||||||||||
Common stock issued for cash
|
7,492,875 | 7,493 | - | - | 639,911 | - | - | 647,404 | ||||||||||||||||||||||||
Common stock issued for conversion of debt
|
22,172,536 | 22,173 | - | - | 1,568,626 | - | - | 1,590,799 | ||||||||||||||||||||||||
Common stock issued for lawsuit settlement
|
325,000 | 325 | - | - | 30,550 | - | - | 30,875 | ||||||||||||||||||||||||
Issued shares for payables
|
2,133,333 | 2,133 | - | - | 186,867 | - | - | 189,000 | ||||||||||||||||||||||||
Common stock held in escrow
|
2,000,000 | 2,000 | - | - | 18,000 | (20,000 | ) | - | - | |||||||||||||||||||||||
Preferred stock issued for services
|
- | - | 1,500,000 | 1,500 | 357,000 | - | - | 358,500 | ||||||||||||||||||||||||
Deemed dividends
|
- | - | - | - | 12,071 | - | (12,071 | ) | - | |||||||||||||||||||||||
Loss on related party debt conversion
|
- | - | - | - | (89,049 | ) | - | - | (89,049 | ) | ||||||||||||||||||||||
Common stock payable
|
- | - | - | - | - | 123,286 | - | 123,286 | ||||||||||||||||||||||||
Net loss
|
- | - | - | - | - | - | (136,784 | ) | (136,784 | ) | ||||||||||||||||||||||
Balance at December 31, 2008
|
149,959,290 | 149,960 | 1,500,000 | 1,500 | 63,499,938 | 103,286 | (69,232,426 | ) | (5,477,742 | ) | ||||||||||||||||||||||
Common stock issued for conversion of debt
|
150,701,039 | 150,701 | - | - | 2,154,621 | (82,944 | ) | - | 2,222,378 | |||||||||||||||||||||||
Common stock payable
|
- | - | - | - | - | 116,000 | - | 116,000 | ||||||||||||||||||||||||
Common stock issed upon exercise of warrants
|
11,789,509 | 11,790 | - | - | 267,042 | - | - | 278,832 | ||||||||||||||||||||||||
Common stock issued for services
|
112,201,562 | 112,201 | - | - | 4,403,503 | (14,286 | ) | - | 4,501,418 | |||||||||||||||||||||||
Common stock issued for cash
|
11,515,600 | 11,516 | - | - | 73,640 | - | - | 85,156 | ||||||||||||||||||||||||
Return of common stock held in escrow
|
(800,000 | ) | (800 | ) | - | - | 800 | - | - | - | ||||||||||||||||||||||
Deemed dividends
|
- | - | - | - | 1,111,054 | - | (1,111,054 | ) | - | |||||||||||||||||||||||
Release of common stock held in escrow
|
- | - | - | - | 20,000 | 4,000 | - | 24,000 | ||||||||||||||||||||||||
Common stock rescinded for debt
|
(1,200,000 | ) | (1,200 | ) | - | - | - | (7,056 | ) | - | (8,256 | ) | ||||||||||||||||||||
Common stock contributed for debt payment
|
- | - | - | - | 276,558 | - | - | 276,558 | ||||||||||||||||||||||||
Options issued for services
|
- | - | - | - | 176,927 | - | - | 176,927 | ||||||||||||||||||||||||
Net loss
|
- | - | - | - | - | - | (19,211,574 | ) | (19,211,574 | ) | ||||||||||||||||||||||
Balance at December 31, 2009
|
434,167,000 | $ | 434,167 | 1,500,000 | $ | 1,500 | $ | 71,984,083 | $ | 119,000 | $ | (89,555,054 | ) | $ | (17,016,304 | ) |
Deferred
Compensation
Expense
|
Treasury
Stock
|
Stock Held
in Escrow
|
Common
Stock
Payable
|
Total
|
||||||||||||||||
Balances as of beginning of development stage May 18, 2004
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Issued shares for compensation
|
(25,451,500 | ) | - | - | - | (25,451,500 | ) | |||||||||||||
Issued shares for services
|
(535,000 | ) | - | - | - | (535,000 | ) | |||||||||||||
Stock option expense
|
(626,100 | ) | - | - | - | (626,100 | ) | |||||||||||||
Stock based compensation
|
8,311,012 | - | - | - | 8,311,012 | |||||||||||||||
Balance at December 31, 2004
|
(18,301,588 | ) | - | - | - | (18,301,588 | ) | |||||||||||||
Amortize deferred compensation expense
|
13,222,517 | - | - | - | 13,222,517 | |||||||||||||||
Balance at December 31, 2005
|
(5,079,071 | ) | - | - | - | (5,079,071 | ) | |||||||||||||
Adoption of FAS 123R
|
475,324 | - | - | - | 475,324 | |||||||||||||||
Amortize deferred compensation expense
|
4,603,747 | - | - | - | 4,603,747 | |||||||||||||||
Balance at December 31, 2006
|
- | - | - | - | - | |||||||||||||||
Balance at December 31, 2007
|
- | - | - | - | - | |||||||||||||||
Stock held in escrow
|
- | - | (20,000 | ) | - | (20,000 | ) | |||||||||||||
Common stock payable
|
- | - | - | 123,286 | 123,286 | |||||||||||||||
Balance at December 31, 2008
|
- | - | (20,000 | ) | 123,286 | 103,286 | ||||||||||||||
Common stock issued for conversion of debt
|
- | 7,056 | - | (90,000 | ) | (82,944 | ) | |||||||||||||
Common stock payable
|
- | - | - | 116,000 | 116,000 | |||||||||||||||
Common stock issued for services
|
- | - | - | (14,286 | ) | (14,286 | ) | |||||||||||||
Return of common stock held in escrow
|
- | (16,000 | ) | 16,000 | - | - | ||||||||||||||
Release of common stock held in escrow
|
- | - | 4,000 | - | 4,000 | |||||||||||||||
Common stock rescinded for debt
|
- | (7,056 | ) | - | - | (7,056 | ) | |||||||||||||
Balance at December 31, 2009
|
$ | - | $ | (16,000 | ) | $ | - | $ | 135,000 | $ | 119,000 |
Period From
|
||||||||||||
May 18, 2004
|
||||||||||||
For the Twelve Months Ended
|
Through
|
|||||||||||
December 31,
|
December 31,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
(unaudited)
|
||||||||||||
Cash flows from operating activities
|
||||||||||||
Net loss
|
$ | (19,211,574 | ) | $ | (136,784 | ) | $ | (73,351,821 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||||||
(Gain) loss on conversion of financial instruments
|
426,574 | (461,670 | ) | (1,579,670 | ) | |||||||
Impairment of goodwill
|
- | - | 13,371,776 | |||||||||
Impairment of intangible assets
|
- | - | 179,788 | |||||||||
Loss on previously capitalized lease
|
- | - | 34,243 | |||||||||
Amortization of debt discounts and deferred finance costs
|
258,384 | 1,198,688 | 3,983,814 | |||||||||
Change in derivative liability, net of bifurcation
|
13,045,921 | (4,415,110 | ) | 7,176,849 | ||||||||
Stock issued for compensation and services
|
4,794,345 | 714,627 | 38,165,017 | |||||||||
Debt issued for compensation and services
|
- | 1,028,927 | 1,028,927 | |||||||||
Stock issued for settlement of lawsuit
|
- | 30,875 | 30,875 | |||||||||
Depreciation expense
|
6,328 | 2,294 | 107,582 | |||||||||
Release of stock held in escrow
|
24,000 | - | 24,000 | |||||||||
Other non-cash items
|
- | - | (34,933 | ) | ||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Prepaid expenses and other current assets
|
- | 16,147 | 186,084 | |||||||||
Inventory and other assets
|
6,995 | 16,602 | 23,597 | |||||||||
Accounts payable and other liabilities
|
207,466 | 558,400 | 3,380,674 | |||||||||
Net cash used in operating activities
|
(441,561 | ) | (1,447,004 | ) | (7,273,198 | ) | ||||||
Cash flows from investing activities
|
||||||||||||
Increase in property and equipment
|
(758 | ) | (2,748 | ) | (142,508 | ) | ||||||
Increase in other assets
|
- | - | (179,786 | ) | ||||||||
Net cash used in investing activities
|
(758 | ) | (2,748 | ) | (322,294 | ) | ||||||
Cash flows from financing activities
|
||||||||||||
Proceeds from sale of common stock
|
85,156 | 647,404 | 2,349,327 | |||||||||
Borrowings on notes payable – related party
|
20,000 | 45,000 | 95,376 | |||||||||
Borrowings on notes payable
|
50,000 | 760,000 | 3,838,430 | |||||||||
Principal payments on notes payable – related party
|
- | (30,000 | ) | (47,300 | ) | |||||||
Principal payments on notes payable
|
- | (90,000 | ) | (122,478 | ) | |||||||
Proceeds from exercise of warrants
|
278,832 | - | 278,832 | |||||||||
Proceeds from CD, warrants and rights net of issuance cost
|
- | - | 1,200,709 | |||||||||
Net cash provided by financing activities
|
433,988 | 1,332,404 | 7,592,896 | |||||||||
Net increase (decrease) in cash and equivalents
|
(8,331 | ) | (117,348 | ) | (2,596 | ) | ||||||
Cash and equivalents, beginning of period
|
8,331 | 125,679 | 10,927 | |||||||||
Cash and equivalents, end of period
|
$ | - | $ | 8,331 | $ | 8,331 | ||||||
Supplemental disclosure of cash flow information
|
||||||||||||
Cash paid for interest
|
- | - | 59,840 | |||||||||
Cash paid for income taxes
|
- | - | - | |||||||||
Schedule of non-cash financing activities
|
||||||||||||
Stock for conversion of debt – related party
|
1,212,826 | 1,014,933 | 2,227,759 | |||||||||
Exchange of debt – related party
|
- | 214,075 | 214,075 | |||||||||
Exchange of convertible notes for stock
|
- | 965,266 | 2,525,070 | |||||||||
Stock issued for settlement of payables
|
582,977 | 189,000 | 778,674 | |||||||||
Deemed dividend
|
1,111,054 | 12,071 | 1,140,760 | |||||||||
Exchange of convertible preferred stock for common stock
|
- | - | 3,380,975 | |||||||||
Preferred stock issued for payables
|
- | 358,500 | 358,500 | |||||||||
Stock held in escrow
|
- | 20,000 | 20,000 | |||||||||
Stock contributed for debt payment
|
276,558 | - | 276,558 | |||||||||
Return of stock held in escrow
|
16,800 | - | 16,800 | |||||||||
Cashless exercise of warrants
|
133 | - | 133 | |||||||||
Stock rescinded for debt
|
8,256 | - | 8,256 |
December 31,
|
||||||||
2009
|
2008
|
|||||||
Deferred tax assets:
|
||||||||
Net operating loss carryforwards
|
$ | 7,423,678 | $ | 6,745,328 | ||||
Deferred tax liabilities
|
-0- | -0- | ||||||
Valuation allowance
|
(7,423,678 | ) | (6,745,328 | ) | ||||
Net deferred tax asset
|
$ | — | $ | — |
Asset
|
2009
|
2008
|
||||||
Computers and Related Devices
|
$ | 15,884 | $ | 15,126 | ||||
Less: Accumulated Depreciation
|
(15,201 | ) | (10,545 | ) | ||||
Total
|
683 | 4,581 | ||||||
Lab Equipment
|
92,380 | 92,380 | ||||||
Less: Accumulated Depreciation
|
(92,380 | ) | (90,708 | ) | ||||
Total
|
-0- | 1,672 | ||||||
Total Property and Equipment, Net
|
$ | 683 | $ | 6,253 |
Liability
|
2009
|
2008
|
||||||
Accrued rent
|
$ | -0- | $ | 28,566 | ||||
Accrued interest and interest payable
|
312,252 | 335,033 | ||||||
Prepayment penalty
|
-0- | 25,000 | ||||||
Accrued payroll taxes
|
21,464 | 44,347 | ||||||
Accrued compensation and salaries payable
|
258,364 | 150,965 | ||||||
Other accrued expenses and liabilities
|
1,811 | 33,575 | ||||||
Total
|
$ | 593,891 | $ | 617,486 |
December 31,
|
||||||||
2009
|
2008
|
|||||||
Common stock warrants
|
$ | 10,267,167 | $ | 554,637 | ||||
Embedded conversion features – convertible promissory notes and debentures
|
4,189,257 | 778,178 | ||||||
Other derivative instruments
|
— | 19,432 | ||||||
Total
|
$ | 14,456,424 | $ | 1,352,247 |
Weighted-
|
||||||||
Average
|
||||||||
Exercise
|
||||||||
Shares
|
Price
|
|||||||
Outstanding, December 31, 2007
|
28,893,119 | $ | 0.04 | |||||
Granted
|
91,420,157 | 0.05 | ||||||
Exercised
|
(666,666 | ) | 0.08 | |||||
Expired/Canceled
|
-0- | -0- | ||||||
Outstanding, December 31, 2008
|
119,646,610 | $ | 0.05 | |||||
Granted
|
15,200,000 | $ |
0.19
|
|||||
Exercised
|
(11,789,509 | ) | $ | 0.02 | ||||
Expired/Canceled
|
(6,019,655 | ) |
0.039
|
|||||
Outstanding, December 31, 2009
|
117,037,446 | $ | 0.05 | |||||
Exercisable, December 31, 2008
|
119,646,610 | $ | 0.05 | |||||
Exercisable, December 31, 2009
|
117,037,446 | $ | 0.05 |
Year Ended
December 31,
|
Range of
Exercise Prices
|
Number
Outstanding
|
Weighted-
Average
Remaining
Contractual
Life (In Years)
|
Weighted-
Average
Exercise
Price
|
||||||||||||
2008
|
$ | 0.03 – $3.00 | 119,646,610 | 2.0 | $ | 0.05 | ||||||||||
2009
|
$ | 0.01 – $0.25 | 117,037,446 | 3.5 | $ | 0.05 |
December 31,
|
||||||||
2009
|
2008
|
|||||||
Notes Payable
|
$ | -0- | $ | 110,000 | ||||
Less: Discount on Notes Payable
|
-0- | (45,825 | ) | |||||
Total
|
-0- | 64,175 | ||||||
Notes Payable – in Default
|
451,000 | 451,000 | ||||||
Notes Payable – Related Party
|
15,000 | 68,927 | ||||||
Total Notes Payable, Net of Discount
|
$ | 466,000 | $ | 584,102 |
December 31,
|
||||||||
2009
|
2008
|
|||||||
Convertible Debentures
|
$ | 50,000 | $ | 1,020,000 | ||||
Less: Unamortized Discount
|
(21,621 | ) | (577,668 | ) | ||||
Total
|
28,379 | 442,332 | ||||||
Convertible Debentures – in Default
|
351,255 | 865,010 | ||||||
Less: Unamortized Discount
|
-0- | (97,036 | ) | |||||
Total
|
351,255 | 767,974 | ||||||
Convertible Debentures – Related Party
|
30,000 | 1,369,435 | ||||||
Less: Unamortized Discount
|
-0- | (672,836 | ) | |||||
Total
|
30,000 | 696,599 | ||||||
Total Convertible Debentures, Net of Unamortized Discount
|
$ | 409,634 | $ | 1,906,905 |
|
Page
|
|
Balance Sheets at September 30, 2010 (unaudited) and December 31, 2009
|
1
|
|
Statements of Operations for the three and nine months ended September 30, 2010 and 2009 (unaudited) and the period beginning May 18, 2004 (inception) through September 30, 2010 (unaudited)
|
2 | |
|
||
Statements of Stockholders’ Deficit for all years subsequent to May 18, 2004 (inception) and the nine months ended September 30, 2010 (unaudited)
|
3 | |
|
|
|
Statements of Stockholders’ Deficit – Other Equity Items for all years subsequent to May 18, 2004 (inception) and the nine months ended September 30, 2010 (unaudited)
|
4 | |
Statements of Cash Flows for the nine months ended September 30, 2010 and 2009 (unaudited) and the period beginning May 18, 2004 (inception) through September 30, 2010 (unaudited)
|
5 | |
Notes to Financial Statements (unaudited)
|
6
|
September 30,
|
||||||||
2010
|
December 31,
|
|||||||
(Unaudited)
|
2009
|
|||||||
Assets
|
||||||||
Cash and equivalents
|
$ | 6,319 | $ | - | ||||
Total current assets
|
6,319 | - | ||||||
Property and equipment, net of accumulated depreciation of
|
||||||||
$108,345 and $107,581 at September 30, 2010 and
|
||||||||
December 31, 2009, respectively
|
2,244 | 683 | ||||||
Deposits
|
11,332 | 5,000 | ||||||
Other assets
|
100 | 100 | ||||||
Total assets
|
$ | 19,995 | $ | 5,783 | ||||
Liabilities and stockholders’ deficit
|
||||||||
Accounts payable
|
$ | 1,213,217 | $ | 999,631 | ||||
Accounts payable – related party
|
433,406 | 96,507 | ||||||
Notes payable
|
68,800 | - | ||||||
Notes payable – in default
|
451,000 | 451,000 | ||||||
Notes payable – related party
|
15,000 | 15,000 | ||||||
Convertible debentures – in default
|
351,255 | 351,255 | ||||||
Convertible debentures, net of unamortized discount of $-0-
|
||||||||
and $21,621 at September 30, 2010 and December 31, 2009,
|
||||||||
respectively
|
50,000 | 28,379 | ||||||
Convertible debentures – related party
|
30,000 | 30,000 | ||||||
Derivative liabilities
|
2,457,358 | 14,456,424 | ||||||
Other current liabilities
|
760,296 | 593,891 | ||||||
Total current liabilities
|
5,830,332 | 17,022,087 | ||||||
Total liabilities
|
5,830,332 | 17,022,087 | ||||||
Stockholders’ deficit:
|
||||||||
Preferred Stock – $0.001 par value: 50,000,000 shares authorized;
|
||||||||
1,500,000 shares issued and outstanding as of September 30,
|
||||||||
2010 and December 31, 2009, respectively
|
1,500 | 1,500 | ||||||
Common Stock – $0.001 par value: 600,000,000 shares authorized;
|
||||||||
471,237,565 and 434,167,000 shares issued and outstanding as
|
||||||||
of September 30, 2010 and December 31, 2009, respectively
|
471,237 | 434,167 | ||||||
Additional paid-in capital
|
72,899,791 | 71,984,083 | ||||||
Treasury stock
|
(16,000 | ) | (16,000 | ) | ||||
Common stock payable
|
135,000 | 135,000 | ||||||
Deficit accumulated during development stage
|
(67,620,365 | ) | (77,873,554 | ) | ||||
Deficit accumulated before entering development stage
|
(11,681,500 | ) | (11,681,500 | ) | ||||
Total stockholders’ deficit
|
(5,810,337 | ) | (17,016,304 | ) | ||||
Total liabilities and stockholders’ deficit
|
$ | 19,995 | $ | 5,783 |
Period From
|
||||||||||||||||||||
May 18, 2004
|
||||||||||||||||||||
For the Three Months Ended
|
For the Nine Months Ended
|
Through
|
||||||||||||||||||
September 30,
|
September 30,
|
September 30,
|
||||||||||||||||||
2010
|
2009
|
2010
|
2009
|
2010
|
||||||||||||||||
Net revenue
|
$ | - | $ | 41,337 | $ | - | $ | 209,814 | $ | 542,249 | ||||||||||
- | ||||||||||||||||||||
Operating expenses:
|
- | |||||||||||||||||||
Employee compensation and benefits
|
33,147 | 117,429 | 113,785 | 393,723 | 31,531,364 | |||||||||||||||
Professional and consulting fees
|
654,920 | 382,533 | 1,153,419 | 1,007,868 | 17,382,188 | |||||||||||||||
Impairment of goodwill
|
- | - | - | - | 13,371,776 | |||||||||||||||
Other selling, general and administrative expenses
|
95,028 | 65,753 | 394,684 | 216,287 | 2,581,005 | |||||||||||||||
Total operating expenses
|
783,095 | 565,715 | 1,661,888 | 1,617,878 | 64,866,333 | |||||||||||||||
Loss from operations
|
(783,095 | ) | (524,378 | ) | (1,661,888 | ) | (1,408,064 | ) | (64,324,084 | ) | ||||||||||
Other income (expense):
|
||||||||||||||||||||
Derivative gain (loss)
|
1,418,710 | (9,211,930 | ) | 11,999,065 | (9,368,581 | ) | 5,976,117 | |||||||||||||
Gain on legal settlement
|
- | - | - | - | 36,764 | |||||||||||||||
Interest income
|
- | - | - | - | 7,867 | |||||||||||||||
Gain (loss) on settlement of debt
|
- | (82,599 | ) | - | (1,090,628 | ) | 1,582,872 | |||||||||||||
Interest expense
|
(23,782 | ) | (53,662 | ) | (83,988 | ) | (368,497 | ) | (5,763,282 | ) | ||||||||||
Mandatory prepayment penalty
|
- | - | - | - | (420,000 | ) | ||||||||||||||
Other income/(expense)
|
- | - | - | - | (194,886 | ) | ||||||||||||||
Total other income/(expense)
|
1,394,928 | (9,348,191 | ) | 11,915,077 | (10,827,706 | ) | 1,225,452 | |||||||||||||
Net income (loss)
|
611,833 | (9,872,569 | ) | 10,253,189 | (12,235,770 | ) | (63,098,632 | ) | ||||||||||||
Deemed dividend
|
- | (13,012 | ) | - | (47,115 | ) | (1,140,760 | ) | ||||||||||||
Net income (loss) attributable to common stockholders
|
$ | 611,833 | $ | (9,885,581 | ) | $ | 10,253,189 | $ | (12,282,885 | ) | $ | (64,239,392 | ) | |||||||
Net income (loss) per share - basic
|
$ | 0.00 | $ | (0.03 | ) | $ | 0.02 | $ | (0.05 | ) | ||||||||||
Net income (loss) per share - diluted
|
$ | 0.00 | $ | (0.03 | ) | $ | 0.02 | $ | (0.05 | ) | ||||||||||
Weighted average number of shares
|
||||||||||||||||||||
outstanding - basic
|
468,521,746 | 385,487,654 | 449,898,509 | 267,016,937 | ||||||||||||||||
Weighted average number of shares
|
||||||||||||||||||||
outstanding - diluted
|
469,832,091 | 385,487,654 | 459,768,500 | 267,016,937 |
Additional
|
||||||||||||||||||||||||||||||||
Common Stock
|
Preferred Stock
|
Paid-in
|
Other Equity
|
Accumulated
|
||||||||||||||||||||||||||||
Shares
|
Par Value
|
Shares
|
Par Value
|
Capital
|
Items (1)
|
Deficit
|
Total
|
|||||||||||||||||||||||||
Balances as of Beginning of
|
||||||||||||||||||||||||||||||||
Development Stage -- May 18, 2004
|
14,407,630 | $ | 14,407 | 3,870,000 | $ | 3,870 | $ | 14,225,974 | $ | - | $ | (11,681,500 | ) | $ | 2,562,751 | |||||||||||||||||
- | ||||||||||||||||||||||||||||||||
Issued shares for compensation
|
27,945,000 | 27,945 | - | - | 25,423,555 | (25,451,500 | ) | - | - | |||||||||||||||||||||||
Issued shares for services
|
4,910,000 | 4,910 | - | - | 4,850,090 | (535,000 | ) | - | 4,320,000 | |||||||||||||||||||||||
Issued shares for acquisition
|
||||||||||||||||||||||||||||||||
of equipment
|
15,000,000 | 15,000 | - | - | 13,485,000 | - | - | 13,500,000 | ||||||||||||||||||||||||
Stock option expense
|
- | - | - | - | 626,100 | (626,100 | ) | - | - | |||||||||||||||||||||||
Issued shares for cash
|
242,167 | 242 | - | - | 314,575 | - | - | 314,817 | ||||||||||||||||||||||||
Cancelled shares per
|
||||||||||||||||||||||||||||||||
cancellation agreement
|
(160,000 | ) | (160 | ) | - | - | (71,840 | ) | - | - | (72,000 | ) | ||||||||||||||||||||
Issued shares to convert Series A perferred shares to common shares
|
3,000,324 | 3,001 | (3,870,000 | ) | (3,870 | ) | 3,377,974 | - | (3,380,975 | ) | (3,870 | ) | ||||||||||||||||||||
Stock based compensation
|
- | - | - | - | - | 8,311,012 | - | 8,311,012 | ||||||||||||||||||||||||
Net reclassification of
|
||||||||||||||||||||||||||||||||
derivative liabilities
|
- | - | - | - | (3,347,077 | ) | - | - | (3,347,077 | ) | ||||||||||||||||||||||
Net loss (from May 18, 2004 to
|
||||||||||||||||||||||||||||||||
December 31, 2004)
|
- | - | - | - | - | - | (15,236,339 | ) | (15,236,339 | ) | ||||||||||||||||||||||
Balance at December 31, 2004
|
65,345,121 | 65,345 | - | - | 58,884,351 | (18,301,588 | ) | (30,298,814 | ) | 10,349,294 | ||||||||||||||||||||||
Cancelled shares returned
|
||||||||||||||||||||||||||||||||
from employee
|
(1,120,000 | ) | (1,120 | ) | - | - | (1,307,855 | ) | - | - | (1,308,975 | ) | ||||||||||||||||||||
Issued shares for compensation
|
140,000 | 140 | - | - | 41,860 | - | - | 42,000 | ||||||||||||||||||||||||
Issued shares for services
|
850,000 | 850 | - | - | 155,150 | - | - | 156,000 | ||||||||||||||||||||||||
Amortize deferred
|
||||||||||||||||||||||||||||||||
compensation expense
|
- | - | - | - | - | 13,222,517 | - | 13,222,517 | ||||||||||||||||||||||||
Net loss
|
- | - | - | - | - | - | (27,134,865 | ) | (27,134,865 | ) | ||||||||||||||||||||||
Balance at December 31, 2005
|
65,215,121 | 65,215 | - | - | 57,773,506 | (5,079,071 | ) | (57,433,679 | ) | (4,674,029 | ) | |||||||||||||||||||||
Issued shares for services
|
2,449,990 | 2,449 | - | - | 311,865 | - | - | 314,314 | ||||||||||||||||||||||||
Issued shares for cash
|
2,452,746 | 2,452 | - | - | 222,548 | - | - | 225,000 | ||||||||||||||||||||||||
Issued shares for compensation
|
1,253,098 | 1,254 | - | - | 176,763 | - | - | 178,017 | ||||||||||||||||||||||||
Adoption of FAS 123R
|
- | - | - | - | (475,324 | ) | 475,324 | - | - | |||||||||||||||||||||||
Amortize deferred compensation expense
|
- | - | - | - | - | 4,603,747 | - | 4,603,747 | ||||||||||||||||||||||||
Net loss
|
- | - | - | - | - | - | (6,415,969 | ) | (6,415,969 | ) | ||||||||||||||||||||||
Balance at December 31, 2006
|
71,370,955 | 71,370 | - | - | 58,009,358 | - | (63,849,648 | ) | (5,768,920 | ) | ||||||||||||||||||||||
Issued shares for services
|
1,810,000 | 1,810 | - | - | 282,390 | - | - | 284,200 | ||||||||||||||||||||||||
Issued shares for conversion of debt
|
22,265,224 | 22,264 | - | - | 606,412 | - | - | 628,676 | ||||||||||||||||||||||||
Issued shares for warrants exercised
|
5,270,832 | 5,272 | - | - | 336,396 | - | - | 341,668 | ||||||||||||||||||||||||
Issued shares for cash
|
7,630,625 | 7,632 | - | - | 992,818 | - | - | 1,000,450 | ||||||||||||||||||||||||
Placement agent fees
|
- | - | - | - | (58,500 | ) | - | - | (58,500 | ) | ||||||||||||||||||||||
Stock received
|
- | - | - | - | 100 | - | - | 100 | ||||||||||||||||||||||||
Unreturned shares
|
5,000 | 5 | - | - | 4,495 | - | - | 4,500 | ||||||||||||||||||||||||
Deemed dividend
|
- | - | - | - | 17,635 | - | (17,635 | ) | - | |||||||||||||||||||||||
Net loss
|
- | - | - | - | - | - | (5,216,288 | ) | (5,216,288 | ) | ||||||||||||||||||||||
Balance at December 31, 2007
|
108,352,636 | 108,353 | - | - | 60,191,104 | - | (69,083,571 | ) | (8,784,114 | ) | ||||||||||||||||||||||
Common stock issued for services
|
7,482,910 | 7,483 | - | - | 584,858 | - | - | 592,341 | ||||||||||||||||||||||||
Common stock issued for cash
|
7,492,875 | 7,493 | - | - | 639,911 | - | - | 647,404 | ||||||||||||||||||||||||
Common stock issued for
|
||||||||||||||||||||||||||||||||
conversion of debt
|
22,172,536 | 22,173 | - | - | 1,568,626 | - | - | 1,590,799 | ||||||||||||||||||||||||
Common stock issued for lawsuit settlement
|
325,000 | 325 | - | - | 30,550 | - | - | 30,875 | ||||||||||||||||||||||||
Issued shares for payables
|
2,133,333 | 2,133 | - | - | 186,867 | - | - | 189,000 | ||||||||||||||||||||||||
Common stock held in escrow
|
2,000,000 | 2,000 | - | - | 18,000 | (20,000 | ) | - | - | |||||||||||||||||||||||
Preferred stock issued for services
|
- | - | 1,500,000 | 1,500 | 357,000 | - | - | 358,500 | ||||||||||||||||||||||||
Deemed dividends
|
- | - | - | - | 12,071 | - | (12,071 | ) | - | |||||||||||||||||||||||
Loss on related party debt
|
||||||||||||||||||||||||||||||||
conversion
|
- | - | - | - | (89,049 | ) | - | - | (89,049 | ) | ||||||||||||||||||||||
Common stock payable
|
- | - | - | - | - | 123,286 | - | 123,286 | ||||||||||||||||||||||||
Net loss
|
- | - | - | - | - | - | (136,784 | ) | (136,784 | ) | ||||||||||||||||||||||
Balance at December 31, 2008
|
149,959,290 | 149,960 | 1,500,000 | 1,500 | 63,499,938 | 103,286 | (69,232,426 | ) | (5,477,742 | ) | ||||||||||||||||||||||
Common stock issued for
|
||||||||||||||||||||||||||||||||
conversion of debt
|
150,701,039 | 150,701 | - | - | 2,154,621 | (82,944 | ) | - | 2,222,378 | |||||||||||||||||||||||
Common stock payable
|
- | - | - | - | - | 116,000 | - | 116,000 | ||||||||||||||||||||||||
Common stock issed upon exercise of warrants
|
11,789,509 | 11,790 | - | - | 267,042 | - | - | 278,832 | ||||||||||||||||||||||||
Common stock issued for services
|
112,201,562 | 112,201 | - | - | 4,403,503 | (14,286 | ) | - | 4,501,418 | |||||||||||||||||||||||
Common stock issued for cash
|
11,515,600 | 11,516 | - | - | 73,640 | - | - | 85,156 | ||||||||||||||||||||||||
Return of common stock held in escrow
|
(800,000 | ) | (800 | ) | - | - | 800 | - | - | - | ||||||||||||||||||||||
Deemed dividends
|
- | - | 1,111,054 | - | (1,111,054 | ) | - | |||||||||||||||||||||||||
Release of common stock held in escrow
|
- | - | 20,000 | 4,000 | - | 24,000 | ||||||||||||||||||||||||||
Common stock rescinded for debt
|
(1,200,000 | ) | (1,200 | ) | - | - | (7,056 | ) | - | (8,256 | ) | |||||||||||||||||||||
Common stock contributed for debt payment
|
- | - | - | - | 276,558 | - | - | 276,558 | ||||||||||||||||||||||||
Options issued for services
|
- | - | - | - | 176,927 | - | - | 176,927 | ||||||||||||||||||||||||
Net loss
|
- | - | - | - | - | - | (19,211,574 | ) | (19,211,574 | ) | ||||||||||||||||||||||
Balance at December 31, 2009
|
434,167,000 | 434,167 | 1,500,000 | 1,500 | 71,984,083 | 119,000 | (89,555,054 | ) | (17,016,304 | ) | ||||||||||||||||||||||
Common stock issued upon exercise of warrants
|
36,799,358 | 36,799 | - | - | 197,735 | - | - | 234,534 | ||||||||||||||||||||||||
Common stock issued for services
|
12,573,456 | 12,573 | - | - | 495,671 | - | - | 508,244 | ||||||||||||||||||||||||
Vesting of common stock issued for services
|
- | - | - | - | 210,000 | - | - | 210,000 | ||||||||||||||||||||||||
Common stock rescinded or canceled
|
(12,302,249 | ) | (12,302 | ) | - | - | 12,302 | - | - | - | ||||||||||||||||||||||
Net income
|
- | - | - | - | - | - | 10,253,189 | 10,253,189 | ||||||||||||||||||||||||
Balance at September 30, 2010
|
471,237,565 | $ | 471,237 | 1,500,000 | $ | 1,500 | $ | 72,899,791 | $ | 119,000 | $ | (79,301,865 | ) | $ | (5,810,337 | ) |
Deferred Compensation Expense
|
Treasury
Stock
|
Stock Held in Escrow
|
Common Stock Payable
|
Total
|
||||||||||||||||
Balances as of beginning of development stage
|
||||||||||||||||||||
May 18, 2004
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Issued shares for compensation
|
(25,451,500 | ) | - | - | - | (25,451,500 | ) | |||||||||||||
Issued shares for services
|
(535,000 | ) | - | - | - | (535,000 | ) | |||||||||||||
Stock option expense
|
(626,100 | ) | - | - | - | (626,100 | ) | |||||||||||||
Stock based compensation
|
8,311,012 | - | - | - | 8,311,012 | |||||||||||||||
Balance at December 31, 2004
|
(18,301,588 | ) | - | - | - | (18,301,588 | ) | |||||||||||||
Amortize deferred compensation expense
|
13,222,517 | - | - | - | 13,222,517 | |||||||||||||||
Balance at December 31, 2005
|
(5,079,071 | ) | - | - | - | (5,079,071 | ) | |||||||||||||
Adoption of FAS 123R
|
475,324 | - | - | - | 475,324 | |||||||||||||||
Amortize deferred compensation expense
|
4,603,747 | - | - | - | 4,603,747 | |||||||||||||||
Balance at December 31, 2006
|
- | - | - | - | - | |||||||||||||||
Balance at December 31, 2007
|
- | - | - | - | - | |||||||||||||||
Stock held in escrow
|
- | - | (20,000 | ) | - | (20,000 | ) | |||||||||||||
Common stock payable
|
- | - | - | 123,286 | 123,286 | |||||||||||||||
Balance at December 31, 2008
|
- | - | (20,000 | ) | 123,286 | 103,286 | ||||||||||||||
Common stock issued for conversion of debt
|
- | 7,056 | - | (90,000 | ) | (82,944 | ) | |||||||||||||
Common stock payable
|
- | - | - | 116,000 | 116,000 | |||||||||||||||
Common stock issued for services
|
- | - | - | (14,286 | ) | (14,286 | ) | |||||||||||||
Return of common stock held in escrow
|
- | (16,000 | ) | 16,000 | - | - | ||||||||||||||
Release of common stock held in escrow
|
- | - | 4,000 | - | 4,000 | |||||||||||||||
Common stock rescinded for debt
|
- | (7,056 | ) | - | - | (7,056 | ) | |||||||||||||
Balance at December 31, 2009
|
- | (16,000 | ) | - | 135,000 | 119,000 | ||||||||||||||
Balance at September 30, 2010
|
$ | - | $ | (16,000 | ) | $ | - | $ | 135,000 | $ | 119,000 |
Period From
|
||||||||||||
May 18, 2004
|
||||||||||||
Through
|
||||||||||||
For the Nine Months Ended
|
September
|
|||||||||||
September 30,
|
30,
|
|||||||||||
2010
|
2009
|
2010
|
||||||||||
(unaudited)
|
||||||||||||
Cash flows from operating activities
|
||||||||||||
Net income (loss)
|
$ | 10,253,189 | $ | (12,235,770 | ) | $ | (63,098,632 | ) | ||||
Adjustments to reconcile net income (loss) to net cash
|
||||||||||||
used in operating activities:
|
||||||||||||
(Gain) loss on conversion of financial instruments
|
- | 1,090,628 | (1,579,670 | ) | ||||||||
Impairment of goodwill
|
- | - | 13,371,776 | |||||||||
Impairment of intangible assets
|
- | - | 179,788 | |||||||||
Loss on previously capitalized lease
|
- | - | 34,243 | |||||||||
Amortization of debt discounts and deferred finance costs
|
21,621 | 234,021 | 4,005,435 | |||||||||
Change in derivative liability, net of bifurcation
|
(11,999,066 | ) | 9,368,581 | (4,822,217 | ) | |||||||
Stock issued for compensation and services
|
718,245 | 947,679 | 38,883,262 | |||||||||
Debt issued for compensation and services
|
- | - | 1,028,927 | |||||||||
Stock issued for settlement of lawsuit
|
- | - | 30,875 | |||||||||
Depreciation expense
|
764 | 12,008 | 108,346 | |||||||||
Release of stock held in escrow
|
- | 24,000 | 24,000 | |||||||||
Other non-cash items
|
- | - | (34,933 | ) | ||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Prepaid expenses and other current assets
|
- | (1,431 | ) | 186,084 | ||||||||
Deposits and other assets
|
(6,332 | ) | (254 | ) | 17,265 | |||||||
Accounts payable and other liabilities
|
716,889 | 413,256 | 4,097,563 | |||||||||
Net cash used in operating activities
|
(294,690 | ) | (147,282 | ) | (7,567,888 | ) | ||||||
Cash flows from investing activities
|
||||||||||||
Increase in property and equipment
|
(2,325 | ) | (52,500 | ) | (144,833 | ) | ||||||
Increase in other assets
|
- | - | (179,786 | ) | ||||||||
Net cash used in investing activities
|
(2,325 | ) | (52,500 | ) | (324,619 | ) | ||||||
Cash flows from financing activities
|
||||||||||||
Proceeds from sale of common stock
|
- | 85,156 | 2,349,327 | |||||||||
Borrowings on notes payable – related party
|
- | 20,000 | 95,376 | |||||||||
Borrowings on notes payable
|
68,800 | 50,000 | 3,907,230 | |||||||||
Principal payments on notes payable – related party
|
- | - | (47,300 | ) | ||||||||
Principal payments on notes payable
|
- | - | (122,478 | ) | ||||||||
Proceeds from exercise of warrants
|
234,534 | - | 513,366 | |||||||||
Proceeds from issuance of convertible debt, warrants,
|
||||||||||||
and rights net of issuance cost
|
- | 74,666 | 1,200,709 | |||||||||
Net cash provided by financing activities
|
303,334 | 229,822 | 7,896,230 | |||||||||
Net increase (decrease) in cash and equivalents
|
6,319 | 30,040 | 3,723 | |||||||||
Cash and equivalents, beginning of period
|
- | 8,331 | 2,596 | |||||||||
Cash and equivalents, end of period
|
$ | 6,319 | $ | 38,371 | $ | 6,319 | ||||||
Supplemental disclosure of cash flow information
|
||||||||||||
Cash paid for interest
|
- | - | 59,840 | |||||||||
Cash paid for income taxes
|
- | - | - | |||||||||
Schedule of non-cash financing activities
|
||||||||||||
Stock for conversion of debt – related party
|
- | 1,047,794 | 2,227,759 | |||||||||
Stock for subscriptions receivable
|
- | - | - | |||||||||
Warrants exercised for subscriptions receivable
|
- | 4,166 | - | |||||||||
Stock issued for common stock payable
|
- | 112,286 | - | |||||||||
Exchange of debt – related party
|
- | - | 214,075 | |||||||||
Exchange of convertible notes for stock
|
- | - | 2,525,070 | |||||||||
Stock issued for services and settlement of payables
|
718,245 | - | 1,496,919 | |||||||||
Deemed dividend
|
- | 47,115 | 1,140,760 | |||||||||
Exchange of convertible preferred stock for common stock
|
- | - | 3,380,975 | |||||||||
Preferred stock issued for payables
|
- | - | 358,500 | |||||||||
Stock held in escrow
|
- | - | 20,000 | |||||||||
Stock contributed for debt payment
|
- | 276,558 | 276,558 | |||||||||
Return of stock held in escrow
|
- | 16,800 | 16,800 | |||||||||
Cashless exercise of warrants
|
32,374 | 133 | 32,507 | |||||||||
Stock rescinded for debt
|
- | 8,256 | 8,256 | |||||||||
Stock rescinded or canceled
|
12,302 | - | 12,302 |
Asset
|
September 30,
2010
|
December 31, 2009
|
||||||
Computers and Related Devices
|
$ | 18,209 | $ | 15,884 | ||||
Less: Accumulated Depreciation
|
(15,964 | ) | (15,201 | ) | ||||
Total
|
2,244 | 683 | ||||||
Lab Equipment
|
92,380 | 92,380 | ||||||
Less: Accumulated Depreciation
|
(92,380 | ) | (92,380 | ) | ||||
Total
|
-0- | -0- | ||||||
Total Property and Equipment, Net
|
$ | 2,244 | $ | 683 |
Liability
|
September 30,
2010
|
December 31, 2009
|
||||||
Accrued interest and interest payable
|
$ | 386,471 | $ | 312,252 | ||||
Accrued payroll taxes
|
23,183 | 21,464 | ||||||
Accrued compensation and salaries payable
|
348,831 | 258,364 | ||||||
Other accrued expenses and liabilities
|
1,811 | 1,811 | ||||||
Total
|
$ | 760,296 | $ | 593,891 |
September 30, 2010
|
December 31, 2009
|
|||||||
Common stock warrants
|
$ | 1,484,232 | $ | 10,267,167 | ||||
Embedded conversion features – convertible promissory notes and debentures
|
973,126 | 4,189,257 | ||||||
Total
|
$ | 2,457,358 | $ | 14,456,424 |
September 30,
2010
|
December 31, 2009
|
|||||||
Notes Payable
|
$ | 68,800 | $ | -0- | ||||
Notes Payable – in Default
|
451,000 | 451,000 | ||||||
Notes Payable – Related Party
|
15,000 | 15,000 | ||||||
Total Notes Payable, Net of Discount
|
$ | 534,800 | $ | 466,000 |
September 30,
2010
|
December 31, 2009
|
|||||||
Convertible Debentures
|
$ | 50,000 | $ | 50,000 | ||||
Less: Unamortized Discount
|
-0- | (21,621 | ) | |||||
Total
|
50,000 | 28,379 | ||||||
Convertible Debentures – in Default
|
351,255 | 351,255 | ||||||
Convertible Debentures – Related Party
|
30,000 | 30,000 | ||||||
Total Convertible Debentures, Net of
Unamortized Discount
|
$ | 431,255 | $ | 409,634 |
Balance Sheet at September 30, 2010
|
1
|
Statements of Operations for the three months ended September 30, 2010 and the period beginning May 14, 2010 (date of inception) through September 30, 2010
|
2
|
Statement of Stockholders’ Equity for the period beginning May 14, 2010 (date of inception) through September 30, 2010
|
3
|
Statement of Cash Flows for the period beginning May 14, 2010 (date of inception) through September 30, 2010
|
4
|
Notes to Financial Statements
|
5
|
September 30,
2010
|
||||
Assets
|
||||
Cash and equivalents
|
$
|
250
|
||
Prepaid rent
|
6,000
|
|||
Notes receivable
|
68,800
|
|||
Total current assets
|
75,050
|
|||
Other assets
|
-
|
|||
Total assets
|
$
|
75,050
|
||
Liabilities and stockholders’ deficit
|
||||
Notes payable -- related party
|
$
|
69,250
|
||
Total current liabilities
|
69,250
|
|||
Total liabilities
|
69,250
|
|||
Stockholders’ equity
|
||||
Common Stock – $0.001 par value: 100,000,000 shares authorized, issued and outstanding as of September 30, 2010
|
100,000
|
|||
Additional paid-in capital
|
(94,000
|
)
|
||
Deficit accumulated during development stage
|
(200
|
)
|
||
Total stockholders’ equity
|
5,800
|
|||
Total liabilities and stockholders’ equity
|
$
|
75,050
|
Period From
|
||||||||
For the Three |
May 14, 2010
|
|||||||
Months Ended |
Through
|
|||||||
September 30,
|
September 30,
|
|||||||
2010
|
2010
|
|||||||
Net revenue
|
$ | - | $ | - | ||||
Operating expenses
|
200 | 200 | ||||||
Loss from operations
|
(200 | ) | (200 | ) | ||||
Net income (loss) attributable to common stockholders
|
$ | (200 | ) | $ | (200 | ) | ||
Net income (loss) per share - basic
|
$ | (0.00 | ) | $ | (0.00 | ) | ||
Net income (loss) per share - diluted
|
$ | (0.00 | ) | $ | (0.00 | ) | ||
Weighted average number of shares outstanding - basic
|
100,000,000 | 100,000,000 | ||||||
Weighted average number of shares outstanding - diluted
|
100,000,000 | 100,000,000 |
Rozetta-Cell Life Sciences, Inc.
|
(A Development Stage Entity)
|
Statement of Stockholders’ Equity (Unaudited)
|
Additional
|
||||||||||||||||||||
Common Stock
|
Paid-in
|
Accumulated
|
||||||||||||||||||
Shares
|
Par Value
|
Capital
|
Deficit
|
Total
|
||||||||||||||||
Balance at Beginning of
|
||||||||||||||||||||
Development Stage -- May 14, 2010
|
- | $ | - | $ | - | $ | - | $ | - | |||||||||||
Shares issued for pre-incorporation services
|
100,000,000 | 100,000 | (94,000 | ) | - | 6,000 | ||||||||||||||
Net loss (from May 14, 2010 to September 30, 2010)
|
- | - | - | (200 | ) | (200 | ) | |||||||||||||
Balance at September 30, 2010
|
100,000,000 | $ | 100,000 | $ | (94,000 | ) | $ | (200 | ) | $ | 5,800 |
Rozetta-Cell Life Sciences, Inc.
|
(A Development Stage Entity)
|
Statement of Cash Flows (Unaudited)
|
Period From
|
||||
May 14, 2010
|
||||
Through
|
||||
September 30,
|
||||
2010
|
||||
(unaudited)
|
||||
Cash flows from operating activities
|
||||
Net income (loss)
|
$ | (200 | ) | |
Adjustments to reconcile net income (loss) to net cash
|
||||
Changes in operating assets and liabilities:
|
||||
Increase in notes receivable
|
(68,800 | ) | ||
Net cash used in operating activities
|
(69,000 | ) | ||
Cash flows from investing activities
|
||||
Net cash used in investing activities
|
- | |||
Cash flows from financing activities
|
||||
Proceeds from notes payable
|
69,250 | |||
Net cash provided by financing activities
|
69,250 | |||
Net increase (decrease) in cash and equivalents
|
250 | |||
Cash and equivalents, beginning of period
|
- | |||
Cash and equivalents, end of period
|
$ | 250 | ||
Supplemental disclosure of cash flow information
|
||||
Cash paid for interest
|
- | |||
Cash paid for income taxes
|
- | |||
Schedule of non-cash financing activities
|
PRELIMINARY | PRELIMINARY |
PROXY
|
PROXY
|
FOR
|
AGAINST
|
ABSTAIN
|
FOR
|
AGAINST
|
ABSTAIN
|
|||||
1.
|
Proposal to issue shares of Power3 common stock in the merger contemplated by and between Power3 and Rozetta-Cell Life Sciences, Inc., contingent upon approval of Proposal No. 2.
|
o | o | o |
8.
|
Proposal to remove the provision stating the number of directors of Power3 from the Nevada articles of incorporation so that the number of directors of Power3 will be stated in the Nevada bylaws exclusively, contingent upon approval of Proposal No. 4.
|
o | o | o | |
2.
|
Proposal to increase the number of shares of common stock authorized for issuance from 600,000,000 to 3,100,000,000, contingent upon approval of Proposal No. 1. | o | o | o | ||||||
|
||||||||||
9.
|
Proposal to add a provision to the Nevada bylaws fixing the number of directors of Power3 at no less than one director and no more than nine directors, contingent upon approval of Proposal No. 4. | o | o | o | ||||||
3.
|
Proposal to change the name of the company from “Power3 Medical Products, Inc.” to “Rozetta-Cell Life Sciences, Inc.”, contingent upon approval of Proposal Nos. 1 & 2.
|
o | o | o | ||||||
|
||||||||||
10.
|
Proposal to add a provision to the Nevada bylaws to authorize the board of directors to change the authorized number of directors to a number outside the range specified in the bylaws, contingent upon approval of Proposal No. 4. | o | o | o | ||||||
4.
|
Proposal to change Power3’s state of incorporation from New York to Nevada, contingent upon approval of Proposal Nos. 1 & 2.
|
o | o | o | ||||||
5.
|
Proposal to adopt the Power3 Medical Products, Inc. 2011 Stock Incentive Plan.
|
o | o | o | ||||||
11.
|
Proposal to add a provision to the Nevada articles of incorporation and Nevada bylaws to provide indemnification for Power3’s officers and directors to the fullest extent permitted by Nevada law, contingent upon approval of Proposal No. 4.
|
o | o | o | ||||||
6.
|
Proposal to add a provision to the Nevada articles of incorporation opting out of the Nevada Revised Statutes Sections 78.378 to 78.3793, inclusive (the “Nevada Control Share Acquisition Statute”), contingent upon approval of Proposal No. 4. | o | o | o | ||||||
12. |
Proposal to add a provision to the Nevada articles of incorporation and Nevada bylaws to limit the liability of Power3’s officers and directors to the fullest extent permitted by Nevada law, contingent upon approval of Proposal No. 4.
|
o
|
o
|
o
|
||||||
7.
|
Proposal to add a provision to the Nevada articles of incorporation opting out of the Nevada Revised Statutes Sections 78.411 through 78.444, inclusive (the “Nevada Business Combinations Statute”), contingent upon approval of Proposal No. 4.
|
o
|
o
|
o
|
||||||
|
|
|
|
|
|
|
|
|||
13.
|
Proposal to adjourn the special meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1 and 2.
|
o | o | o |
![]() |
![]() |
|
INTERNET
|
MAIL
|
|
Vote Your Proxy on the Internet:
|
Vote Your Proxy by Mail:
|
|
Go to www.proxyease.com
|
||
Have your proxy card available
when you access the above
website. Follow the prompts to
vote your shares.
|
Mark, sign, and date your proxy
card, then detach it, and return it
in the postage-paid envelope
provided.
|
p PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. p
|