-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HgMrrWDdZssEyrVBzGXUEdUwTLNd7M7a/fqtUNQOFJKK/TyQZSKZkzw2ldEYOEwp X3zIGEbSWfOcyrONUlpE2g== 0000950005-04-000659.txt : 20040816 0000950005-04-000659.hdr.sgml : 20040816 20040816154102 ACCESSION NUMBER: 0000950005-04-000659 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HUMAN PHEROMONE SCIENCES INC CENTRAL INDEX KEY: 0000878616 STANDARD INDUSTRIAL CLASSIFICATION: PERFUMES, COSMETICS & OTHER TOILET PREPARATIONS [2844] IRS NUMBER: 943107202 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-23544 FILM NUMBER: 04978529 BUSINESS ADDRESS: STREET 1: 84 WEST SANTA CLARA STREET STREET 2: SUITE 720 CITY: SAN JOSE STATE: CA ZIP: 95113 BUSINESS PHONE: 4089383030 FORMER COMPANY: FORMER CONFORMED NAME: EROX CORP DATE OF NAME CHANGE: 19940307 10QSB 1 p18825_10qsb.txt FORM 10-QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (MARK ONE) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2004 ------------- [ ] TRANSITION REPORT UNDER SECTION 13 OR A5(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-23544 HUMAN PHEROMONE SCIENCES, INC. ----------------------------------------------- (Name of small business issuer in its charter) California 94-3107202 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. employee Identification No.) incorporation or organization) 84 West Santa Clara Street, San Jose, California 95113 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Issuer's telephone number: (408) 938-3030 Not applicable ------------------------------------------------------------- (Former name or former address, if changed since last report) Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 4,151,954 shares of Common Stock as of July 23, 2004. HUMAN PHEROMONE SCIENCES, INC. INDEX
Page ---- PART I FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets as of June 30, 2004 (Unaudited) and December 31, 2003........................... 3 Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2004 and 2003......................................................................... 4 Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2004 and 2003......................................................................... 5 Notes to Financial Statements (Unaudited) ..................................................... 6 Item 2. Management's Discussion and Analysis Management's Discussion and Analysis of Financial Conditions and Results of Operations ........ 7 Item 3. Controls and Procedures......................................................................... 11 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K ................................................................ 12 SIGNATURES........................................................................................................ 13
2 PART I FINANCIAL INFORMATION Item 1. Financial Statements - ------- -------------------- Human Pheromone Sciences, Inc. Balance Sheets
June 30, December 31, (in thousands except share data) 2004 2003 -------- -------- (unaudited) Assets Current assets: Cash and cash equivalents $ 1,473 $ 1,950 Accounts receivable, net of allowances of $4,000 at each date 79 38 Inventories, net 74 52 Other current assets 46 19 -------- -------- Total current assets 1,672 2,059 Property and equipment, net 22 9 -------- -------- $ 1,694 $ 2,068 ======== ======== Liabilities, Convertible Redeemable Preferred Stock and Shareholders' Equity Current liabilities: Accounts payable $ 40 $ 23 Accrued professional fees 42 54 Accrued employee benefits 28 39 Accrued income tax 23 24 Other accrued expenses 28 33 -------- -------- Total current liabilities 161 173 -------- -------- Convertible redeemable preferred stock: Preferred stock, issuable in series, no par value, 10,000,000 shares authorized, Series AA 100,000 convertible shares issued and outstanding at December 31, 2003 (total liquidation value $150); none at June 30, 2004 -- 150 -------- -------- Total liabilities 161 323 Commitments and Contingencies Shareholders' equity: Common stock, no par value, 13,333,333 shares authorized, 4,151,954 and 4,105,116 shares issued and outstanding at each date, respectively 20,809 20,659 Accumulated deficit (19,276) (18,914) -------- -------- Total shareholders' equity 1,533 1,745 -------- -------- $ 1,694 $ 2,068 ======== ======== See accompanying notes to financial statements.
3 Human Pheromone Sciences, Inc. Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited)
Three months ended June 30, Six months ended June 30, ---------------------------- -------------------------- (in thousands except per share data) 2004 2003 2004 2003 ------- ------- ------- --------- Net revenues 149 61 408 279 Cost of goods sold 33 19 73 84 ------- ------- ------- --------- Gross profit 116 42 335 195 Operating Expenses: Research and development 7 4 16 7 Selling, general and administrative 388 264 689 527 ------- ------- ------- --------- Total operating expenses 395 268 705 534 ------- ------- ------- --------- Loss from operations (279) (226) (370) (339) Other income Interest income (net) 4 5 7 8 Income tax benefit from on-going operations -- 33 -- 33 ------- ------- ------- --------- Loss from on-going operations (275) (188) (363) (298) Net income from discontinued operations -- 7 -- 79 Net gain from sale of assets 1 1,226 1 1,226 ------- ------- ------- --------- Net income (loss) $ (274) $ 1,045 $ (362) $ 1,007 ======= ======= ======= ========= Net income (loss) per common share - basic From on-going operations $ (0.07) $ (0.05) $ (0.09) $ (0.08) From discontinued operations $ 0.00 $ 0.00 $ 0.00 $ 0.02 From assets sold $ 0.00 $ 0.33 $ 0.00 $ 0.34 ------- ------- ------- --------- Net income (loss) $ (0.07) $ 0.28 $ (0.09) $ 0.28 ======= ======= ======= ========= Net income (loss) per common share - diluted From on-going operations $ (0.07) $ (0.04) $ (0.09) $ (0.06) From discontinued operations $ 0.00 $ 0.00 $ 0.00 $ 0.02 From assets sold $ 0.00 $ 0.26 $ 0.00 $ 0.24 ------- ------- ------- --------- Net income (loss) $ (0.07) $ 0.22 $ (0.09) $ 0.20 ======= ======= ======= ========= Weighted average common shares outstanding -basic 4,106 3,686 4,105 3,558 ======= ======= ======= ========= Weighted average common shares outstanding -diluted 4,106 4,773 4,105 5,011 ======= ======= ======= ========= See accompanying notes to consolidated financial statements.
4 Human Pheromone Sciences, Inc. Consolidated Statements of Cash Flows (unaudited) Six months ended June 30, ------------------------- (in thousands) 2004 2003 ------- ------- Cash flows from operating activities Net loss from on-going operations $ (362) $ (298) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 3 2 Changes in operating assets and liabilities: Accounts receivable (41) 41 Inventories (22) 40 Other current assets (27) (30) Accounts payable and accrued liabilities (12) (79) ------- ------- Net cash used in on-going operating activities (461) (324) Net cash provided by operations of assets sold -- 156 ------- ------- Net cash used in operating activities (461) (168) Cash flows provided by (used in) investing activities Sale of Realm assets -- 1,342 Acquisition of fixed assets (16) (6) ------- ------- Net cash provided by (used in) investing activities (16) 1,336 Cash flows used in financing activities Purchase of Series BB preferred stock -- (505) ------- ------- Net cash used in financing activities -- (505) Net increase in cash and cash equivalents (477) 663 Cash and cash equivalents at beginning of period 1,950 1,394 ------- ------- Cash and cash equivalents at end of period $ 1,473 $ 2,057 ======= ======= See accompanying notes to financial statements. 5 Human Pheromone Sciences, Inc. Notes to Financial Statements (unaudited) June 30, 2004 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of Operations Human Pheromone Sciences, Inc. (the "Company") was incorporated in the State of California in 1989 under the name of EROX Corporation. The Company changed the name to Human Pheromone Sciences, Inc. in May 1998. The Company is engaged in the research, development, manufacturing and marketing of consumer products containing synthetic human pheromones as a component. The Company initiated commercial operations in late 1994 with a line of fine fragrances and toiletries. In April 2000, the Company licensed the sale of its REALM(R) fragrance products and in April 2003 the Company sold the REALM and innerREALM(R) brands and trademarks to Niche Marketing Group, Inc. The Company's strategic focus is now on expanding the market for its existing patented pheromones to other consumer product and fragrance companies and to the development of its internally developed brand of pheromone-based products under the Natural Attraction(R) brand, and mood based products under the licensed Demeter Natural Attraction label. The Company will seek to add to this group of products with new, patented compounds that might be developed through the research efforts that the Company is now directly managing. Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2004 are not necessarily indicative of the results that may be expected for the calendar year ending December 31, 2004. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-KSB for the year ended December 31, 2003. Certain prior period balances have been reclassified to conform to the current period presentation. Revenue Recognition Revenue is recorded at the time of merchandise shipment, net of provisions for potential returns. License fees are earned over the license period according to the terms of the license agreement and interpretative guidance provided by Staff Accounting Bulletin (SAB) No. 101. The majority of the Company's sales are to distributors and licensees, and these distributors and licensees have no right to return products. Inventories Inventories are stated at the lower of cost (first in - first out method) or market. The inventory at June 30, 2004 consists of finished goods inventory valued at $18,000 and raw materials of $56,000. At December 31, 2003, these balances were $13,000 and $39,000, respectively. Earnings (Loss) Per Share The Company follows the provisions of SFAS No. 128, Earnings Per Share. SFAS No. 128 provides for the calculation of "Basic" and Diluted" earning per share. Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding. Diluted earnings (loss) per share is computed using the weighted-average number of common shares and dilutive common shares outstanding during the period. For the three and six months ended June 30, 2004, options to purchase 80,001 shares of common stock, respectively, and 46,323 and 46,331 shares of convertible preferred stock, respectively, were excluded from the computation of diluted earnings per share since their effect would be antidilutive. 6 As of June 30, 2004 and 2003, the unaudited components of basic and diluted earnings per share are as follows (all amounts are in thousands): 2004 2003 ------- ------- Net income (loss) available to common shareholders $ (362) $ 1,007 ======= ======= Weighted-average common shares outstanding during the period 4,105 3,558 Incremental shares from assumed conversions of convertible preferred stock and stock options -- 1,453 ------- ------- Fully diluted weighted-average common shares and potential commons stock (unaudited) 4,105 5,011 ======= ======= Capital Stock and Stock Options The Company converted the remaining 100,000 shares of Series AA Preferred Stock into 46,838 shares of common stock as required by the terms of the offering. As of June 30, 2004 the Company has no Preferred Stock outstanding. During the quarter 6,666 stock options expired and no stock options were issued. 2. SEGMENT INFORMATION Revenues by geographic markets for the three and six months ended June 30, 2004 and 2003 were as follows: Three months ending Six months ending June 30, June 30, -------------- -------------- 2004 2003 2004 2003 ---- ---- ---- ---- Markets: U.S Markets $132 $ 60 $350 $278 International Markets 17 1 58 1 ---- ---- ---- ---- Net Sales $149 $ 61 $408 $279 ==== ==== ==== ==== Item 2. Management's Discussion and Analysis of Financial Conditions and - ------------------------------------------------------------------------ Results of Operations --------------------- This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Except for the historical information contained in this discussion and analysis of financial condition and results of operations, the matters discussed herein are forward looking statements. These forward looking statements include but are not limited to the Company's plans for sales growth and expansion into new channels of trade, expectations of gross margin, expenses, new product introduction, and the Company's liquidity and capital needs. These matters involve risks and uncertainties that could cause actual results to differ materially from the statements made. In addition to the risks and uncertainties described in "Risk Factors", below, these risks and uncertainties may include consumer trends, business cycles, scientific developments, changes in governmental policy and regulation, currency fluctuations, economic trends in the United States and inflation. These and other factors may cause actual results to differ materially from those anticipated in forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. CRITICAL ACCOUNTING POLICIES Our discussion and analysis of our financial conditions and results of operations are based upon our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of financial statements require managers to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues 7 and expenses and disclosures on the date of the financial statements. On an on-going basis, we evaluate our estimates, including, but not limited to, those related to revenue recognition and license fees. We use authoritative pronouncements, historical experience and other assumptions as the basis for making judgments. Actual results could differ from those estimates. We believe that the following critical accounting policies affect our more significant judgments and estimates in the preparation of our consolidated financial statements. Revenue Recognition Revenue is recorded at the time of merchandise shipment, net of provisions for returns. License fees are earned over the license period according to the terms of the license agreement and interpretative guidance provided by Staff Accounting Bulletin (SAB) No. 104. The majority of the Company's sales are to distributors and licensees, and these distributors and licensees have no right to return products. COMPANY OVERVIEW On April 14, 2003, the Company sold to Niche Marking Group, Inc. the assets and worldwide ownership rights to the REALM(R) Women, REALM Men and innerREALM(R) product lines. All REALM and innerREALM financial activities have been classified as income from operations sold as a result of 2003 sale. The Company's operations are focused on the marketing of its patented technology to companies with established consumer product franchises while directly managing the on-going development of identified compounds for potential new products. On July 13, 2004 the Company signed a Research Agreement with the University of Utah to conduct research and provide services. The five year agreement, which became effective July 15, 2004, provides that the University will provide professional research and services for specific research programs mutually initiated by the Company and accepted by the University. While the University shall own any inventions and improvements conceived or reduced to practice from the work performed, the Company retains the exclusive option to license any inventions or improvements conceived or reduced to practice and market the products developed from the research results. Results of Operations Three Months ended June 30, 2004 compared to the Three Months ended - ------------------------------------------------------------------- June 30, 2003 - ------------- Net revenues for the second quarter of 2004 were $149,000, representing an increase of 144% from revenues of $61,000 for the prior year's quarter. Domestically, revenues were $72,000 greater than the prior year, attributable to the launch of the Demeter Natural Attraction(R) product line in April 2004, and increased pheromone sales in the same quarter. International revenues were $16,000 greater than the prior year and represents sales for both our Natural Attraction products and private label manufacturing for a new licensee. The increased international revenues is attributable to increased private label sales in 2004 and reduced sales in 2003 due to manufacturing delays caused by the conversion to new Natural Attraction bottles . Net revenue for the quarters ended June 30, 2004 and 2003 were as follows (in thousands): 2004 2003 ---- ---- Markets: U.S Markets $132 $ 60 International Markets 17 1 ---- ---- Net Revenue $149 $ 61 ==== ==== Gross profit for the quarter ended June 30, 2004 of $116,000 is 176% higher than last year's gross profit of $42,000. As a percentage of sales, gross profit of 77% was more than last year's of 68% due to lower product costs realized in the current period. Research and Development expenses for the second quarters of 2004 and 2003 were $7,000 and $4,000, respectively. The Company incurred very minimal expenses during both periods since its independent research and development operations had not commenced. Effective July 15, 2004 the Company's recently 8 completed Research Agreement with the University of Utah became effective. Research and development spending has been limited pending the execution of this agreement with the University. Selling, general and administrative expenses of $388,000 are $124,000 more than last years $264,000. Selling, marketing and distribution expenses were $85,000 more than the prior year as the Company initiated a program to introduce its Natural Attraction(R) from Demeter line of fragrances in the U.S. marketplace. Sales and marketing expenses incurred in the current quarter exceeded the initial customer's shipments. General and administrative and facility costs increased by $36,000, primarily as a result of the Company's efforts to expand new investment potential and increase its shareholder base. The Company earned $4,000 and $5,000 in net interest income in both of the periods, respectively. The Company recorded no income tax provision in 2004 and an income tax benefit for 2003. No provision was recorded in 2004 due to a valuation allowance on deferred tax assets being recorded and the expected utilization of net operating losses carried forward from prior years to offset any significant tax liability. As of June 30, 2004, the Company's gross deferred tax asset, which relates primarily to net operating losses carried forward was $6,506,000. However, a full valuation allowance is provided for the gross deferred tax asset as management can not determine whether its realization is more likely than not. On April 14, 2003 the Company sold to Niche Marking Group, Inc. the assets and worldwide ownership rights to the REALM Women, REALM Men and innerREALM product lines. The operating results from these product lines have been classified as net income from operations sold and accounted for as a separate line item on the financial statements. Six Months ended June 30, 2004 as compared to the Six Months ended June 30, 2003 - -------------------------------------------------------------------------------- Net revenues for the six months ended June 30, 2004 were $408,000. This was a 46% increase from net revenues of $279,000 for the first half of 2003. Domestically, revenues were $72,000 greater than the prior year with the launch of the Natural Attraction(R) from Demeter product line, increased pheromone sales and lower sales of the original Natural Attraction(R) products. International revenues were $57,000 greater than the prior year as a result of higher sales to distributors of private label products. Net revenues for the six months ended June 30, 2004 and 2003 were as follows: 2004 2003 ---- ---- Markets U.S Markets $350 $278 International Markets 58 1 ---- ---- Net Revenues $408 $279 ==== ==== Gross profit for the first half of 2004 increased 71% to $335,000 from $195,000 in 2003. The increase is the result of the higher sales levels, a favorable sales mix and reduced product costs. Gross margin increased to 82% compared to 70% in 2003 as a result of the reduced product costs. Research and Development expenses for the first half of 2004 and 2003 were $16,000 and $7,000, respectively. Effective July 15, 2004 the Company's recently completed Research Agreement with the University of Utah became effective. Research and development spending has been limited pending the execution of this agreement with the University. Selling, general and administrative expenses for the first half of 2004 were $689,000 and $527,000 for the comparable period of 2003. Selling, marketing and distribution expenses are $120,000 more than the prior year as the Demeter Natural Attraction product line was launched in April 2004 and the Company began efforts to license the Natural Attraction brand. Selling, administrative and facilities expense were $ 41,000 more than last year primarily due to increased investor relation costs and general cost increases. The Company's cash balances generated $8,000 in net interest income during the first half of 2004, as compared to $9,000 in 2003. The decrease is due to reduced cash balances. 9 LIQUIDITY AND CAPITAL RESOURCES At June 30, 2004, the Company had cash of $1,473,000 with no outstanding bank borrowings. At December 31, 2003, it had cash of $1,950,000 with no outstanding bank borrowings and working capital of $1,886,000. Net cash used in on-going activities for the second quarter of 2004 of $254,000 is consistent with last years $243,000. On April 26, 2004, the Company renewed its Business Loan Agreement with Mid-Peninsula Bank of Palo Alto, California (the "Bank") providing for a revolving line of credit. The Company may borrow up to $500,000 at an interest rate equal to the Bank's prime rate plus 0.75% with borrowings secured primarily by the Company's trade receivables and inventory. The agreement, which expires on May 3, 2005, contains certain debt-to-equity and working capital covenants. At June 30, 2004 the Company was in compliance with such covenants and had no amounts outstanding under this agreement. The Company converted the remaining 100,000 shares of Series AA Preferred Stock into 46,838 shares of common stock as required by the terms of the offering. As of June 30, 2004 the Company has no Preferred Stock outstanding. Assuming the Company's activities proceed substantially as planned, the Company's current cash position and projected results of operations for the next twelve months are not expected to require additional outside financing. Risk Factors The Company's future results may be affected to a greater or lesser degree by the following factors among others: The Company has not had sustained profitable operations since 1997. Since 1997, the Company has incurred losses from operations. However, beginning in May 2000 the Company refocused its business model based on product licensing agreements. While the Company anticipates that this change in its business will result in profitable operations, it has not to date, and the Company's license based business model may not be successful in the future. The Company may not be able to effectively compete with larger companies or with new products. The prestige fragrance market is extremely competitive. Many fragrance products are better known than the Company's products with which they compete for advertising and retail shelf space. Many competitors have significantly greater resources that will allow them to develop and introduce new competing products or increase the promotion of current products. The product life cycle of fragrances and toiletries can be very short. Changing fashions and fads can dramatically shift consumer preferences and demands. Traditional fragrance companies introduce a new fragrance every year or so. Changing fashions and new products may reduce the chance of creating long-term brand loyalty to the Company's or its licensees/distributors product lines. The Company's marketing strategy may not be successful. The Company or its distributors may not be able to establish and maintain the necessary sales and distribution channels. Retail outlets and catalogs may choose not to carry the products. The Company or its distributors may not have sufficient funds to successfully market its products if the current marketing strategy is not successful. Seasonality in sales may cause significant variation in quarterly results. Sales in the fragrance industry are generally seasonal with sales higher in the second half of the year because of Christmas. This seasonality could cause a significant variation in the Company's royalty income and could cause significant fluctuations in its quarterly results. The Company may not be able to protect its technology or trade secrets. The Company's patents and patent applications may not protect the Company's technology or ensure that the Company's technology does not infringe another's 10 valid patent. Others may independently develop substantially equivalent proprietary information. The Company may not be able to protect its technology, proprietary information or trade secrets. The Company may not be able to recruit and retain key personnel. The Company's success substantially depends upon recruiting and retaining key employees and consultants with research, product development and marketing experience. The Company may not be successful in recruiting and retaining these key people. The Company relies upon other companies to manufacture its products. The Company and its distributors/licensees rely upon other companies to manufacture its pheromones, supply components, and to blend, fill and package its fragrance products. The Company and its distributors/licensees may not be able to obtain or retain pheromones manufacturers, fragrance suppliers, or component manufacturers on acceptable terms. This would adversely affect operating results. Item 3. Controls and Procedures - -------------------------------- Evaluation of Disclosure Controls and Procedures. Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-QSB, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting identified in connection with our evaluation that occurred during our second fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 11 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- a. Exhibits Exhibit 10.30 Promissory Note with Mid-Peninsula Bank dated April 26, 2004 Exhibit 10.31 Research Agreement with University of Utah effective July 15, 2004 Exhibit 31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act Exhibit 31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act Exhibit 32 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. 1350 b. Reports on Form 8-K None 12 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant had duly caused this Report to be signed on behalf by the undersigned thereunto duly authorized. HUMAN PHEROMONE SCIENCES, INC. Date: August 11, 2004 /s/ William P. Horgan ------------------------------------- William P. Horgan Chairman and Chief Executive Officer Date: August 11, 2004 /s/ Gregory S. Fredrick ------------------------------------- Gregory S. Fredrick Chief Financial Officer 13 EX-10 2 p18825-ex10_30.txt EXHIBIT 10.30 EXHIBIT 10.30 PROMISSORY NOTE
- ------------------------------------------------------------------------------------------------------------------------------------ Principal Loan Date Maturity Loan No Call/Coll Account Officer Initials $500,000.00 04-26-2004 05-03-2005 108143856 2000 016 - ------------------------------------------------------------------------------------------------------------------------------------ References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular loan or item. Any item above containing "***" has been omitted due to text length limitations. - ------------------------------------------------------------------------------------------------------------------------------------ Borrower. Human Pheromone Sciences, Inc. Lender: Mid-Peninsula Bank - part of Greater Bay Bank NA. 84 West Santa Clara Street. Suite 720 Palo Alto Office San Jose, CA 95113 420 Cowper Street Palo Alto, CA 94301 - ------------------------------------------------------------------------------------------------------------------------------------ Principal Amount: $500,000.00 Initial Rate: 4.750% Date of Note: April 26, 2004
PROMISE TO PAY. Human Pheromone Sciences, Inc. ("Borrower") promises to pay to Mid-Peninsula Bank - part of Greater Bay Bank N.A. ("Lender"), or order, in lawful money of the United States of America, the principal amount of Five Hundred Thousand & 00/100 Dollars ($500,000.00) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance. Interest shall be calculated from the date of each advance until repayment of each advance. PAYMENT. Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on May 3, 2005. In addition, Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning June 3, 2004, with all subsequent interest payments to be due on the same day of each month after that. Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any unpaid collection costs; and then to any late charges. The annual interest rate for this Note is computed on a 365/360 basis; that is, by applying the ratio of the annual interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing. VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an independent index which is the Prime Rate as published in the Wall Street Journal (Western Edition) (the "Index"). The Index is not necessarily the lowest rate charged by Lender on its loans, If the Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notice to Borrower. Lender will tell Borrower the current Index rate upon Borrower's request. The interest rate change will not occur more often than each day. Borrower understands that Lender may make loans based on other rates as well. The Index currently is 4.000%. The interest rate to be applied to the unpaid principal balance of this Note will be at a rate of 0.750 percentage points over the Index, resulting in an initial rate of 4.750%. NOTICE: Under no circumstances will the interest rate on this Note be more than the maximum rate allowed by applicable law. PREPAYMENT; MINIMUM INTEREST CHARGE. Borrower agrees that all loan fees and other prepaid finance charges are earned fully as of the date of the loan and will not be subject to refund upon early payment whether voluntary or as a result of default), except as otherwise required by law. In any event, even upon full prepayment of this Note, Borrower understands that Lender is entitled to a minimum interest charge of $250.00. Other than Borrower's obligation to pay any minimum interest charge, Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments of accrued unpaid interest. Rather, early payments will reduce the principal balance due. Borrower agrees not to send Lender payments marked "paid in full", "without recourse", or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Mid-Peninsula Bank - part of Greater Bay Bank N.A., Palo Alto Office, 420 Cowper Street, Palo Alto, CA 94301. LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment. INTEREST AFTER DEFAULT, Upon default, the variable interest rate on this Note shall immediately increase to 5.750 percentage points over the Index, if permitted under applicable law. DEFAULT. Each of the following shall constitute an event of default ("Event of Default") under this Note: Payment Default. Borrower fails to make any payment when due under this Note. Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower. Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's ability to repay this Note or perform Borrower's obligations under this Note or any of the related documents. False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter. Insolvency. The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower. Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note. In the event of a death, Lender, at its option, may, but shall not be required to, permit the guarantor's estate to assume unconditionally the obligations arising under the guaranty in a manner satisfactory to Lender, and, in doing so, cure any Event of Default. PROMISSORY NOTE Loan No: 108143856 (Continued) Page 2 ================================================================================ Change In Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower. Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note is impaired. Cure Provisions. If any default, other than a default in payment is curable and if Borrower has not been given a notice of a breach of the same provision of this Note within the preceding twelve (12) months, it may be cured land no event of default will have occurred) if Borrower, after receiving written notice from Lender demanding cure of such default: (1) cures the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical. LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance on this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount. (PLEASE INITIAL) * reasonable ATTORNEYS' FEES: EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender that amount. This includes, subject to any limits under applicable law, Lender's attorneys' fees* and Lender's legal expenses,* whether or not there is a lawsuit, including attorneys' fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. Borrower also will pay any court costs, in addition to all other sums provided by law. JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other. (Initial Here _______) GOVERNING LAW. This Note will be governed by, construed and enforced in accordance with federal law and the laws of the State of California. This Note has been accepted by Lender in the State of California. CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of Santa Clara County, State of California. COLLATERAL. Borrower acknowledges this Note is secured by the Collateral as described in that certain Commercial Security Agreement dated April 19, 2002. LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under this Note may be requested either orally or in writing by Borrower or as provided in this paragraph. Lender may, but need not, require that all oral requests be confirmed in writing. All communications, instructions, or directions by telephone or otherwise to Lender are to be directed to Lender's office shown above. The following persons currently are authorized to request advances and authorize payments under the line of credit until Lender receives from Borrower, at Lender's address shown above, written notice of revocation of their authority: William Horgan, Chairman & CEO of Human Pheromone Sciences. Inc.; and Robert Brooks, VP of Operations. Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person or (B) credited to any of Borrower's accounts with Lender. The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender's internal records, including daily computer print-outs. Lender will have no obligation to advance funds under this Note if: (A) Borrower or any guarantor is in default under the terms of this Note or any agreement that Borrower or any guarantor has with Lender, including any agreement made in connection with the signing of this Note; (B) Borrower or any guarantor ceases doing business or is insolvent; (C) any guarantor seeks, claims or otherwise attempts to limit, modify or revoke such guarantor's guarantee of this Note or any other loan with Lender; or (D) Borrower has applied funds provided pursuant to this Note for purposes other than those authorized by Lender. BUSINESS LOAN AGREEMENT. In addition to the terms and conditions contained in the Note, it is also subject to the terms and conditions contained in that certain Business Loan Agreement ("Agreement") dated May 2, 2003, executed by Borrower in favor of Lender. PRIOR NOTE. Promissory Note dated May 2, 2003 in the original principal amount of $500,000.00, (the "Note"). SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns. GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive any applicable statute of limitations, presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several. PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE. BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE. BORROWER: HUMAN PHEROMONE SCIENCES INC. By: /s/ WILLIAM P. HORGAN ----------------------------------------- William Horgan, Chairman & CEO of Human Pheromone Sciences, Inc. EX-10 3 p18825-ex10_31.txt EXHIBIT 10.31 EXHIBIT 10.31 THE U UNIVERSITY OF UTAH MASTER AGREEMENT #_______________ BETWEEN HUMAN PHEROMONE SCIENCES, INC. AND THE UNIVERSITY OF UTAH This Agreement ("Agreement") is entered into and effective as of July 15, 2004 by and between Human Pheromone Sciences Inc., a California Corporation (Tax ID # 94-3107202) having its principal place of business at 84 West Santa Clara Street, Suite 720, San Jose, California 95113 ("Company") and the University of Utah, a body politic and corporate of the State of Utah, on behalf of the University of Utah ("University"). RECITALS WHEREAS, Company wishes from time to time to have certain research and services performed by University; WHEREAS, the performance of such research and services is consistent, compatible and beneficial to the academic role and mission of University as an institution of higher education; and WHEREAS, University is qualified to provide such research and services. AGREEMENT NOW, THEREFORE, for and in consideration of the mutual covenants, conditions and undertakings herein set forth, the parties agree as follows: 1. Term. This Agreement shall commence as July 15, 2004 and shall remain in effect for a term of five (5) years, or in the event any Task Orders (as hereinafter defined) are outstanding at the time of expiration of such five-year period, until such time as all obligations thereunder have been completed and discharged including expiration of applicable Task Orders. 2. Task Orders. All professional research and services ("Research or Services") to be provided hereunder shall be as authorized and defined in mutually agreed upon Task Orders to be executed by the parties which shall reference this Agreement and become a part hereof. Each such Task Order shall, at a minimum, contain the following: a. A detailed description of the Scope of the Work ("Work") to be performed b. Applicable specifications c. A detailed budget for the Scope of Work to be performed 1 d. Cost, payment schedule, and whether fixed price or cost reimbursable e. Deliverables, and reporting requirements f. Project start and end dates g. University Principal Investigator h. Approved by the Office of Technology Transfer 3. Supervision by University. The person with primary responsibility for supervision of the performance of the Research or Services on behalf of University shall be designated in the Task Orders. No other person shall replace or substitute for him/her in the supervisory responsibilities hereunder without the prior written approval of University, which may be granted or withheld at University's sole discretion. 4. Assignments/Subcontracts. Neither party shall assign this Agreement or any Task Order issued pursuant to the terms hereof, or assign or subcontract any of its obligations under the Agreement or any such Task Order, without the express written consent of the other party, which consent shall not be unreasonably withheld. 5. Place of Performance. It is anticipated that substantially all of the Work under this Agreement will be performed by University at University's place of business. However, at the request of Company, University's personnel may, from time to time, be required to travel and work at Company's offices operated by Company or Company's affiliated and associated companies (as designated in the applicable Task Order). Company shall, where necessary or appropriate for the performance of Work under this Agreement, provide University with reasonable working space including necessary office furniture and telephones, stationery supplies and materials, typing services, document reproduction and mail distribution services at such other offices and/or facilities. 6. Payment for Research or Services. Payment for Research or Services rendered will be made on a fixed price basis or on the basis of a mutually agreed upon cost-reimbursable billing rate schedule, in accordance with the terms set forth in each Task Order issued hereunder. In the event that the Task Order provides for payment to be made in accordance with a cost-reimbursable billing rate schedule, University shall be compensated at the rate(s) specified in the applicable Task Order. Unless otherwise stated in the Task Order, University will invoice Company on a monthly basis. In the event that the Task Order provides for payment on a fixed price basis, University shall be compensated in accordance with a predetermined price set forth in the Task Order, regardless of the percent of effort of work actually performed. Unless otherwise stated in the Task Order, Company will pay 2 University one-third of the total fixed price within thirty (30) days of the start date stated in the Task Order, one-third of the total fixed price during the performance of the agreed work, and the final one-third of the total fixed price within thirty (30) days after receipt of the final Task Order deliverable. Except as otherwise expressly provided below, or in the applicable Task Order, Company will also reimburse University for actual and reasonable costs incurred for travel expenses, associated living expenses and other out-of-pocket expenses, in accordance with University's Travel Policy and Procedures. Invoices received by Company are due and payable within thirty (30) days of receipt. Notwithstanding any other conditions of this Agreement, the books and records of University hereunder will be made available upon request, at the University's regular place of business, for audit by personnel authorized by the Company. Additionally, the books and records must be retained for a period of three years following final payment. The period of access and examination described above, for the records which relate to (a) litigation or settlement of claims arising out of the performance of this Agreement or (b) costs and expenses of this Agreement as to which exception has been taken by any of the organizations named shall continue until such litigation, claims, or exceptions have been disposed of. 7. Equipment. All equipment, instruments and materials purchased or used by University in connection with performance of the Research or Services shall at all times remain under the sole control and ownership of University, except where Company is providing their equipment, and in that case ownership resides with the Company. 8. Publication and Confidentiality. 8.1 Publication. In furtherance of University's role as a public institution of higher education, it is necessary that significant results of Research or Services activities be reasonably available for publication by the University, and Company acknowledges that University may publish the results of Research or Services conducted in connection with this Agreement. Notwithstanding the foregoing, University agrees that it shall not publish the results of Research or Services conducted in connection with, each Task Order without the prior written consent of Company, until the expiration of six (6) months following the first to occur of either the termination of this Agreement or submission of the final written report required with each Task Order. In the event University wishes to publish Research or Services results prior to the expiration of the above described six (6) month period, University shall first provide to Company written notice of University's intent to publish and a draft of such publication. Company shall have thirty (30) days after receipt of the draft publication to request in writing the removal of portions deemed by Company to contain confidential or patentable material owned by Company, or to request a delay in submission of the draft for publication pending Company's application for patent protection. In either event, University shall have no obligation to delay publication of the draft for longer than six (6) months following delivery of University's notice to Company of intent to publish. If 3 University does not receive Company's written response to the notice of intent to publish within the thirty (30) day period, then Company shall be deemed to have consented to such publication. Information supplied to University by Company and identified by Company as proprietary information shall not be included in any material published by University without prior written consent of Company. Company shall also publish providing the same prior notification to University and to allow appropriate authorship as appropriate and as may be required and/or appropriate. 8.2 Confidentiality. Company acknowledges that University is a governmental entity and thus subject to the Utah Governmental Records Access Management Act, Section 63-2-101 et seq., Utah Code Ann. (1997 and supp 1998 as amended) ("GRAMA") and Section 53B-16-301 et seq., Utah Code Ann. (1994 and Supp. 1998). Pursuant to GRAMA and Section 53B-16-301 et seq., this Agreement, and confidential information provided pursuant hereto, may be subject to public disclosure. Any person who provides University with records that such person believes should be protected from disclosure for business reasons must, pursuant to Section 63-2-308 of GRAMA and Section 53B-16-304, provide University with a written claim of business confidentiality and a concise statement of reasons supporting such claim. 9. Indemnification. 9.1 Indemnification by University. Indemnification by University. University is a governmental entity and is subject to the Utah Governmental Immunity Act, Section 63-30-1 et seq., Utah Code Ann. (1993 and Supp. 1999 as amended) ("Act"). Nothing in this Agreement shall be construed as a waiver of any rights or defenses applicable to the University under the Act, including without limitation, the provisions of Section 63-30-34 regarding limitation of judgements. Subject to the provisions of the Act, University agrees to indemnify, defend and hold harmless Sponsor, its directors, officers, agents and employees against any actions, suits, proceedings, liabilities and damages that may result from the negligent acts or omissions of University, its officers, agents or employees in connection with this Agreement up to the limits of the Utah Governmental Immunity Act. 9.2 Indemnification by Company. Company shall indemnify, defend and hold harmless University, its directors, officers, agents and employees against any actions, suits, proceedings, liabilities and damages that may result from the negligent acts or omissions of Company, its officers, agents or employees in connection with this Agreement. 10. Compliance With Laws. In performance of the Research or Services, University shall comply with all applicable federal, state and local laws, codes, regulations, rules and orders. 4 11. Patents and Inventions. Except as otherwise expressly provided in an applicable Task Order, the University shall own all right, title and interest in all inventions and improvements conceived or reduced to practice by University or University personnel in the performance of the Research (hereinafter collectively "Invention") and may, at its election, file all patent applications relating thereto. In consideration of Sponsor's support of University in performance of the Research, University grants to Sponsor an option for an exclusive license on said option shall expire six months after University has provided written notice to Sponsor of any such invention, improvement, application or patent ("Option Period"). Upon execution of the option in writing, the parties will meet within thirty (30) days to begin negotiating the terms of the license. The parties agree to negotiate in good faith and the terms of the license will be reasonable in relation to licenses in the field and industry. In the event a license is not executed within six (6) months from the exercise of the option, or the option is not exercised within the Option Period the University shall be free to license the Invention to others in the University's sole discretion. In the event the University shall abandon its rights to any such Invention prior to exercise of said option, University shall assign to Sponsor all of the University's rights, title and interest therein. 12. Relationship of Parties. In assuming and performing the obligations of this Agreement, University and Company are each acting as independent parties and neither shall be considered or represent itself as a joint venturer, partner, agent or employee of the other. Neither party shall use the name or any trademark of the other party in any advertising, sales promotion or other publicity matter without the prior written approval of the other party. Such approval will not be unreasonably withheld. 13. Termination. This Agreement or any Task Order may be terminated by either party at any time and from time to time, by giving written notice thereof to the other party. Such termination shall be effective thirty (30) days after receipt of such notice. Termination shall not relieve either party of any obligation or liability accrued hereunder prior to such termination, or rescind or give rise to any right to rescind any payments made prior to the time of such termination. Termination of this agreement will terminate all Task Orders existing at the time of termination. 14. Uncontrollable Forces. Neither Company nor University shall be considered to be in default of this Agreement if delays in or failure of performance shall be due to uncontrollable forces the effect of which, by the exercise of reasonable diligence, the nonperforming party could not avoid. The term "uncontrollable forces" shall mean any event which results in the prevention or delay of performance by a party of its obligations under this Agreement and which is beyond the control of the nonperforming party. It includes, but is not limited to, fire, flood, earthquakes, storms, lightning, epidemic, war, riot, civil disturbance, sabotage, inability to procure permits, licenses, or authorizations from any state, local, or federal agency or person for any of the supplies, materials, accesses, or services required to be provided by either Company or University under this Agreement, strikes, work slowdowns or other labor disturbances, and judicial restraint. 5 15. Miscellaneous. 15.1 Assignment. Neither party shall assign or transfer any interest in this Agreement, nor assign any claims for money due or to become due under this Agreement, without the prior written consent of the other party. 15.2 Entire Agreement. This Agreement, with its attachments, constitutes the entire agreement between the parties regarding the subject matter hereof and supersedes any other written or oral understanding of the parties. This Agreement may not be modified except by written instrument executed by both parties 15.3 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties, their successors and permitted assigns. 15.4 Notices. Except as provided in Section 3 hereof regarding payment of invoices, any notice or other communication required or permitted to be given to either party hereto shall be in writing and shall be deemed to have been properly given and effective: (a) on the date of delivery if delivered in person during recipient's normal business hours; or (b) on the date of delivery if delivered by courier, express mail service or first-class mail, registered or certified, return receipt requested. Such notice shall be sent or delivered to the respective addresses given below, or to such other address as either party shall designate by written notice given to the other party as follows: In the case of Company: HUMAN PHEROMONE SCIENCES, INC. ------------------------------ 84 W. Santa Clara St. ------------------------------ Suite 720 ------------------------------ San Jose, CA 95113 ------------------------------ Attn: CEO ------------------------------ In the case of University: AMY SIKALIS UNIVERSITY OF UTAH OFFICE OF SPONSORED PROJECTS 1471 E FEDERAL WAY SALT LAKE CITY UT 84102-1870 15.5 Order of Precedence. In the event of any conflict, inconsistency or discrepancy amount, the Agreement and any other documents listed below shall be resolved by giving precedence in the following order. 6 (a) Task Orders with Appendixes (b) This Agreement (c) Purchase Order issued by Company. In the event a purchase order is issued under this Agreement and such purchase order contains standardized terms and conditions, the terms and conditions of this Agreement shall supercede and replace all such purchase order standardized terms and conditions. 15.6 Governing Law and Disputes. This Agreement shall be interpreted and construed in accordance with the laws of the State of Utah, without application of any principles of choice of laws. Disputes that cannot be resolved by Company and University shall be determined by a court of competent jurisdiction in the State of Utah. 15.7 Nonwaiver. A waiver by either party of any breach of this Agreement shall not be binding upon the waiving party unless such waiver is in writing. In the event of a written waiver, such a waiver shall not affect the waiving party's rights with respect to any other or further breach. 15.8 Attorney Fees. The prevailing Party in any action or suit to enforce the terms or conditions of this Agreement shall be entitled to recover its costs of court and reasonable attorneys' fees incurred in enforcing the terms or conditions of this Agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives effective as of the day and year first written above. HUMAN PHEROMONE SCIENCES, INC. UNIVERSITY OF UTAH "Company" "University" By: /s/ WILLIAM P. HORGAN By: /s/ ELLIOTT C. KULAKOWSKI, PH.D. -------------------------------- -------------------------------- Signature Signature Name: WILLIAM P. HORGAN Name: Elliott C. Kulakowski, Ph.D. -------------------------------- -------------------------------- (Please print) Title: Chairman, CEO Title: Director, Sponsored Projects -------------------------------- -------------------------------- Date: 7/13/04 Date: 6/23/04 -------------------------------- -------------------------------- 7 EX-31 4 p18825-ex31_1.txt EXHIBIT 31.1 Exhibit 31.1 CERTIFICATION I, William P. Horgan, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Human Pheromone Sciences, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 11, 2004 /s/ William P. Horgan - ------------------------------------ Chairman and Chief Executive Officer 14 EX-31 5 p18825-ex31_2.txt EXHIBIT 31.2 Exhibit 31.2 CERTIFICATION I, Gregory S. Fredrick, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Human Pheromone Sciences, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 11, 2004 /s/ Gregory S. Fredrick - --------------------------- Chief Financial Officer 15 EX-32 6 p18825-ex32_1.txt EXHIBIT 32.1 Exhibit 32 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 In connection with the Quarterly Report of Human Pheromone Sciences, Inc. (the "Company") on Form 10-QSB for the period ending June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, William P. Horgan, Chief Executive Officer of the Company, and Gregory S. Fredrick, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1394; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ William P. Horgan - -------------------------- August 11, 2004 /s/ Gregory S. Fredrick - -------------------------- August 11, 2004 16 -----END PRIVACY-ENHANCED MESSAGE-----