ASSET SALE TO HEALGEN	12 Months Ended
Dec. 31, 2022
ASSET SALE TO HEALGEN
ASSET SALE TO HEALGEN	NOTE K –ASSET SALE TO HEALGEN Over the last several years, the Company has retained financial consultants to seek out alternative solutions; most recently in early Fiscal 2022. The consultants were seeking solutions including but not limited to potential mergers, acquisitions, investment in the Company, and strategic relationships. Simultaneously, the Company’s management was seeking alternative solutions and began discussions with Healgen. With the current financial condition of the Company, the Company was not able to find a suitable alternative apart from the Asset Sale to Healgen. After carefully weighing the facts and circumstances associated with the Asset Sale to Healgen as well as alternative courses of action, the Company’s Board of Directors (the “Board”) unanimously concluded that the proposed sale of substantially all of our assets is the best available alternative to maximize value for shareholders. The Board believes the Company’s status as a fully reporting public company is an asset which may be sufficiently attractive to induce others to enter into business combinations with the Company. The Company is exploring strategic transactions which may result in entering into a new line of business (subject to specific competitive limitations under the Asset Sale to Healgen). The Company believes strategic acquisitions using the Company’s publicly traded stock as transaction consideration could enhance shareholder value. Nonetheless, the Board may later determine to dissolve the Company and distribute any remaining assets to the Company’s shareholders if the Company is unable to make any strategic acquisitions. On December 19, 2022, the Company entered into an Asset Purchase Agreement (“APA”) with Healgen, pursuant to which the Company agreed, subject to the approval of its shareholders, to sell substantially all of the Company’s operating assets (excluding its cash, accounts receivables arising prior to the closing date, and certain other assets). Under the New York Business Corporation Law, the Asset Sale to Healgen requires approval by the affirmative vote of the holders of at least a majority of the voting power of all outstanding shares of common stock. Accordingly, the Company submitted the Asset Sale to Healgen to a shareholder vote via a preliminary Proxy Statement filed on December 22, 2022 (See Note L – Subsequent Events for more information on the Proxy Statement filing). The Closing of the Asset Sale to Healgen occurs when the required number of affirmative shareholder votes is received and customary closing conditions are satisfied (the “Closing”). The total consideration for the Asset Sale to Healgen is $3 million in cash (the “Purchase Price”), plus the assumption by Healgen of certain limited liabilities relating to the business. $300,000 of the Purchase Price will be held back in a retention fund to cover potential indemnification claims during the six months following the Closing. The amount of consideration paid in connection with Asset Sale to Healgen was determined in arm’s-length negotiations between the Company and Healgen. Through December 31, 2022, Healgen has already advanced $715,000 of the Purchase Price to the Company in the form of loans (See Note L – Subsequent Events for more information on the Healgen Loan)., At Closing, Healgen will waive any interest that may be due on the loans. Therefore, excluding the $300,000 hold back, the remaining $2.7 million of the Purchase Price, less any loans advanced prior to Closing will be paid to the Company at Closing. In connection with the Asset Sale to Healgen, Melissa Waterhouse, the Chief Executive Officer of the Company, has agreed to enter into an employment agreement with the Healgen effective upon Closing. The business being acquired by Healgen is the only area of operations in which the Company is engaged. If the Asset Sale to Healgen is approved by shareholders and the sale of the business is completed, the Company will no longer engage in the development, manufacturing and selling of point of collection diagnostic products, including onsite drug test products (the “Business”) and instead the Company intends to pursue opportunities in other areas. Upon the consummation of the Asset Sale to Healgen, the Company will no longer be engaged in the Business, which accounted for all of its revenues, costs and expenses (with the exception of costs associated with being a public entity), for Fiscal 2022 and all years prior. (See Note L – Subsequent Events for information on the results of the shareholder vote on the Asset Sale to Healgen). For a more complete description of the terms of the Asset Sale to Healgen and the Healgen Loan, see the Company’s Current Report on Form 8-K filed with the SEC on December 21, 2022, the Company’s preliminary Proxy Statement filed with the SEC on December 22, 2022 and our definitive Proxy Statement filed with the SEC on January 11, 2023.

ASSET SALE TO HEALGEN

12 Months Ended

Dec. 31, 2022

NOTE K –ASSET SALE TO HEALGEN

Over the last several years, the Company has retained financial consultants to seek out alternative solutions; most recently in early Fiscal 2022. The consultants were seeking solutions including but not limited to potential mergers, acquisitions, investment in the Company, and strategic relationships. Simultaneously, the Company’s management was seeking alternative solutions and began discussions with Healgen. With the current financial condition of the Company, the Company was not able to find a suitable alternative apart from the Asset Sale to Healgen.

After carefully weighing the facts and circumstances associated with the Asset Sale to Healgen as well as alternative courses of action, the Company’s Board of Directors (the “Board”) unanimously concluded that the proposed sale of substantially all of our assets is the best available alternative to maximize value for shareholders.

The Board believes the Company’s status as a fully reporting public company is an asset which may be sufficiently attractive to induce others to enter into business combinations with the Company. The Company is exploring strategic transactions which may result in entering into a new line of business (subject to specific competitive limitations under the Asset Sale to Healgen). The Company believes strategic acquisitions using the Company’s publicly traded stock as transaction consideration could enhance shareholder value. Nonetheless, the Board may later determine to dissolve the Company and distribute any remaining assets to the Company’s shareholders if the Company is unable to make any strategic acquisitions.

On December 19, 2022, the Company entered into an Asset Purchase Agreement (“APA”) with Healgen, pursuant to which the Company agreed, subject to the approval of its shareholders, to sell substantially all of the Company’s operating assets (excluding its cash, accounts receivables arising prior to the closing date, and certain other assets).

Under the New York Business Corporation Law, the Asset Sale to Healgen requires approval by the affirmative vote of the holders of at least a majority of the voting power of all outstanding shares of common stock. Accordingly, the Company submitted the Asset Sale to Healgen to a shareholder vote via a preliminary Proxy Statement filed on December 22, 2022 (See Note L – Subsequent Events for more information on the Proxy Statement filing). The Closing of the Asset Sale to Healgen occurs when the required number of affirmative shareholder votes is received and customary closing conditions are satisfied (the “Closing”).

The total consideration for the Asset Sale to Healgen is $3 million in cash (the “Purchase Price”), plus the assumption by Healgen of certain limited liabilities relating to the business. $300,000 of the Purchase Price will be held back in a retention fund to cover potential indemnification claims during the six months following the Closing. The amount of consideration paid in connection with Asset Sale to Healgen was determined in arm’s-length negotiations between the Company and Healgen.

Through December 31, 2022, Healgen has already advanced $715,000 of the Purchase Price to the Company in the form of loans (See Note L – Subsequent Events for more information on the Healgen Loan)., At Closing, Healgen will waive any interest that may be due on the loans. Therefore, excluding the $300,000 hold back, the remaining $2.7 million of the Purchase Price, less any loans advanced prior to Closing will be paid to the Company at Closing.

In connection with the Asset Sale to Healgen, Melissa Waterhouse, the Chief Executive Officer of the Company, has agreed to enter into an employment agreement with the Healgen effective upon Closing.

The business being acquired by Healgen is the only area of operations in which the Company is engaged. If the Asset Sale to Healgen is approved by shareholders and the sale of the business is completed, the Company will no longer engage in the development, manufacturing and selling of point of collection diagnostic products, including onsite drug test products (the “Business”) and instead the Company intends to pursue opportunities in other areas. Upon the consummation of the Asset Sale to Healgen, the Company will no longer be engaged in the Business, which accounted for all of its revenues, costs and expenses (with the exception of costs associated with being a public entity), for Fiscal 2022 and all years prior. (See Note L – Subsequent Events for information on the results of the shareholder vote on the Asset Sale to Healgen).

For a more complete description of the terms of the Asset Sale to Healgen and the Healgen Loan, see the Company’s Current Report on Form 8-K filed with the SEC on December 21, 2022, the Company’s preliminary Proxy Statement filed with the SEC on December 22, 2022 and our definitive Proxy Statement filed with the SEC on January 11, 2023.