UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
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x
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ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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FOR
THE FISCAL YEAR ENDED DECEMBER 31,
2009
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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FOR
THE TRANSITION PERIOD FROM _______ TO _______
000-52320
(Commission
File Number)
SENTISEARCH,
INC.
(Exact
name of registrant as specified in its charter)
Delaware
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20-5655648
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(State
or other jurisdiction
of
incorporation or organization)
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(I.R.S.
Employer Identification No.)
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1217 South Flagler Drive,
3
rd
Floor West Palm
Beach, FL 33401
(Address
of principal executive
offices) (
zip code)
Registrant's
telephone number, including area code:
(561)
653-3284
Securities
registered pursuant to Section 12(b) of the Act: None
Securities
registered pursuant to Section 12(g) of the Act:
Common
Stock, $.0001 Par Value
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes
o
No
x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes
o
No
x
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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.
x
Yes
o
No
Indicate
by check whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post
such files).
o
Yes
o
No
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer”, “accelerated filer”, and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
o
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Accelerated filer
o
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Non-accelerated
filer
o
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Smaller reporting company
x
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(Do not check if a smaller
reporting company)
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes
o
No
x
The
aggregate market value of the registrant's Common Stock held by non-affiliates
of the registrant as of the close of business on June 30, 2009 was approximately
$136,983. For purposes of this calculation only, shares of Common Stock
held by each officer and director as well as and by each person who, as
of June 30, 2009, may be deemed to have beneficially owned more than 10% of
the outstanding voting stock have been have been excluded. This determination of
affiliate status is not necessarily a conclusive determination of affiliate
status for any other purpose.
As of
March 23, 2010 12,747,844 shares of the registrant's Common Stock, par value
$.0001 per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
None.
TABLE
OF CONTENTS
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PAGE
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PART
I
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Forward-Looking
Information
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1
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Item
1.
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Business.
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1
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Item
1A.
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Risk
Factors.
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4
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Item
1B.
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Unresolved
Staff Comments.
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4
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Item
2.
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Properties.
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4
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Item
3.
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Legal
Proceedings.
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4
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Item
4.
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(Removed
and Reserved).
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4
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PART
II
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Item
5.
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Market
For Registrant’s Common Equity And Related Stockholder Matters And Issuer
Purchases Of Equity Securities.
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5
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Item
6.
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Selected
Financial Data.
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6
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Item
7.
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Management’s
Discussion And Analysis Of Financial Condition And Results Of
Operations.
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6
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Item
7A.
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Quantitative
And Qualitative Disclosures About Market Risk.
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11
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Item
8.
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Financial
Statements And Supplementary Data.
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11
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Item
9.
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Changes
In And Disagreements With Accountants On Accounting And Financial
Disclosure.
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27
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Item
9A(T).
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Controls
And Procedures.
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27
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Item
9B.
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Other
Information.
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28
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PART
III
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Item
10.
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Directors,
Executive Officers and Corporate Governance.
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28
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Item
11.
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Executive
Compensation.
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30
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Item
12.
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Security
Ownership Of Certain Beneficial Owners And Management And Related
Stockholder Matters.
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31
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Item
13.
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Certain
Relationships And Related Transactions, And Director
Independence.
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32
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Item
14.
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Principal
Accounting Fees And Services.
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34
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PART
IV
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Item
15.
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Exhibits,
Financial Statement Schedule.
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38
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Signatures
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36
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Exhibit
Index
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39
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PART I
Forward-looking
Information
This
Annual Report on Form 10-K (including the section regarding Management’s
Discussion and Analysis and Results of Operations) contains forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), including statements using terminology
such as “can”, “may”, “believe”, “designated to”, “intend to”, “expect”, “plan”,
“anticipate”, “estimate”, “potential” or “continue”, or the negative thereof or
other comparable terminology regarding beliefs, plans, expectations or
intentions regarding the future. You should read statements that contain these
words carefully because they:
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discuss
our future expectations;
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contain
projections of our future results of operations or of our financial
condition; and
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state
other “forward-looking”
information.
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We
believe it is important to communicate our expectations. However,
forward-looking statements involve risks and uncertainties and our actual
results and the timing of certain events could differ materially from those
discussed in or implied by forward-looking statements as a result of certain
factors, including those set forth under “Management’s Discussion and Analysis
and Results of Operations” and elsewhere in this Annual Report on Form 10-K. All
forward-looking statements included in this document are made as of the date
hereof, based on information available to us as of the date thereof, and we
assume no obligations to update any forward-looking statement or risk factor,
unless we are required to do so by law.
General
SentiSearch,
Inc. (“SentiSearch” or “we” or “us” or the “Company”) is a Delaware corporation
that was incorporated on October 3, 2006. We were previously a wholly-owned
subsidiary of Sentigen Holding Corp. (“Sentigen”) and were incorporated solely
for the purposes of holding the olfaction intellectual property assets of
Sentigen and its then subsidiary, Sentigen Biosciences, Inc. (“Sentigen
Biosciences”). Prior to the merger between Sentigen and Invitrogen Corporation
(“Invitrogen”) that was consummated on December 1, 2006, Sentigen separated
its olfaction intellectual property assets from the businesses to be acquired by
Invitrogen. This separation was accomplished through the contribution of
Sentigen’s olfaction intellectual property assets to us on October 10, 2006
and the subsequent spin-off in which Sentigen distributed 100% of its ownership
interest in us to its then stockholders on December 1, 2006. As a result of
this spin-off, we became a public, stand-alone company. Our principal executive
offices are located at 1217 South Flagler Drive, 3
rd
Floor, West Palm Beach, Florida 33401.
Overview
The
olfaction intellectual property assets that we hold primarily consist of an
exclusive worldwide license issued by The Trustees of Columbia University in the
City of New York (“Columbia”), as described in more detail below under the
heading “Licensed Products and Services” (the “Columbia License”), and certain
patent applications titled “Nucleic Acids and Proteins of Insect or 83b odorant
receptor genes and uses thereof.” The olfaction intellectual property assets are
also referred to in this Form 10-K as “our olfaction intellectual property.” We
are currently a development stage company and have a limited operating history.
Other than with regard to the development and protection of our intellectual
property, our planned principal operations have not commenced. We have not
generated any revenues from operations and have no assurance of any future
revenues. All losses accumulated since the commencement of our business have
been considered as part of our development stage activities.
Licensed
Products and Services
On
April 10, 2000, Sentigen Biosciences entered into the Columbia License
described below. On October 10, 2006, we entered into a contribution
agreement with Sentigen pursuant to which Sentigen transferred to us all of its
olfaction intellectual property, including the Columbia License. On
October 17, 2006, Columbia consented to the assignment of the Columbia
License from Sentigen Biosciences to us subject to certain conditions, all of
which have been satisfied to the extent currently required.
The
Columbia License provides us with worldwide rights to certain of Columbia’s
patent applications and other rights in the areas of insect chemosensation and
olfaction. The Columbia License gives us an exclusive license to develop,
manufacture, have made, import, use, sell, distribute, rent or lease
(i) any product or service the development, manufacture, use, sale,
distribution, rental or lease of which is covered by a claim of a patent
licensed to us under the Columbia License or (ii) any product or service
that involves the know-how, confidential information and physical materials
conveyed by Columbia to us relating to the patents licensed from Columbia
(collectively, the “Licensed Products/Services”). In addition to certain funding
requirements by Sentigen, all of which were satisfied, in consideration of the
Columbia License, Columbia was issued 75,000 shares of Sentigen common stock and
will receive royalties of 1% of the net sales of any Licensed
Products/Services.
The
licenses granted to us under the Columbia License expire on the later of the
date of expiration of the last to expire of the licensed patents relating to any
Licensed Product/Service or ten years from the first sale of any Licensed
Product/Service.
The
potential uses of the olfaction intellectual property assets derived from the
Columbia License consist of three families of patent applications relating to
(i) odorant receptors and their uses, (ii) cloning of vertebrate
pheromone receptors and their uses and (iii) genes encoding insect odorant
receptors and their uses. We believe that the applications most likely to be
useful in the near future are in the area of insect control, because insects
operate entirely through sense of smell and taste for feeding, mating, locating
egg-laying sites and general navigation. Blocking the insect sense of smell and
taste may afford a potential strategy to inhibit insect reproduction, feeding
behavior, and damage to humans, animals, crops and stored products. Such a
technology would not require genetic modification of the plant or insect and may
rely solely on compounds that are natural, non-toxic and compatible with organic
farming methods. This technology has the potential to offer a high level of
specificity providing for the targeting of an individual species, reduction of
environmental disruption and less chance of insect resistance.
In
addition to the Columbia License, we have certain patent applications relating
to nucleic acids and proteins of insect or 83b odorant receptor genes and their
uses. These patent applications relate to the isolation of a gene that appears
to be ubiquitous among insects. This gene has been identified in various species
of insects, including many that have a profound effect on agricultural
production and human health. The identification of this gene, and the protein
that it expresses, may enable the development of high-throughput screening
methods to discover compounds that attract insects to a particular site (and
away from one where their presence is undesirable), or develop materials that
are distasteful to the insects’ sense of “smell,” thereby making agricultural
products, for example, undesirable to them.
During
July 2007, we were issued two patents in the United States and during
November 2007, we were issued a patent in Australia and during 2008, we
were issued one patent in Mexico. One of the U.S. patents and the Australia and
Mexico patents, were issued directly to us and the other U.S. patent was issued
under the Columbia License. All of the issued patents cover nucleic acid
molecules which encode insect odorant receptor proteins, including numerous
variations on insect odorant receptor coding sequence. The patents cover any
nucleic acid molecule as long as the protein it encodes contains a short segment
of amino acids, linked together.
We
believe that our olfaction intellectual property may be of value to commercial
and non-profit partners wishing to develop novel, safer and more effective means
to control pest insects through molecular manipulation of insect olfaction and
taste. This effort would aim to identify receptor molecules that control key
aspects of insect behavior and discovering compounds that block or activate the
function of these receptors and to identify new compounds that may have use in
agricultural crop protection and insect-borne disease management such as agents
that completely block the insect sense of smell rendering an individual or a
field invisible to insects. Other potential products include new and effective
insect repellants and novel potent attractants for use in insect bait stations
and traps.
We
believe the applications offering the greatest potential for developing products
in the intermediate term are for mosquito repellants to be sold by household
product companies. Other potential markets for our olfaction intellectual
property include:
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agricultural
chemical companies; and
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pharmaceutical
companies.
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Our
executive officer and Board of Directors are also seeking opportunities with
non-profit agencies and with potential commercial partners to leverage our
olfaction intellectual property for the development of control agents for biting
insects, in particular, insect vectors of malaria and other diseases. If these
endeavors are successful, additional capital commensurate with such an
undertaking may need to be raised.
In
particular, additional steps to commercialize the intellectual property assets
may include:
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obtaining
research and development grants;
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developing
commercially feasible products;
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filing
and obtaining additional patents;
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entering
into licensing, marketing or joint venture
agreements;
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applying
the olfaction intellectual property to a commercially viable
product;
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developing
and implementing a marketing plan in conjunction with a partner or
licensee;
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controlling
quality and cost in the manufacturing process in conjunction with a
partner or licensee;
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selling
products on a profitable basis in conjunction with a partner or licensee;
and
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structuring
an agreement that will enable us to enjoy the profits of our
products.
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However,
there is no guarantee that commercial opportunities will arise from our efforts
to develop our olfaction intellectual property. We currently do not have any
research and development grant applications outstanding nor can we predict
whether we will receive any research and development grants or other commercial
funding in the near future. Although no commercially feasible products are
imminently foreseeable, we intend to enter into discussions with third parties
concerning a possible development, licensing, marketing or joint venture
agreement to commercialize our olfaction intellectual property. We currently
have limited financial and personnel resources, and believe that we must enter
into an agreement with another party in order to commercialize our intellectual
property assets.
Competition
We face
competition primarily from universities, including Yale University and
Vanderbilt University, who are conducting the research and have patent
applications pertaining to areas relevant to olfaction technology. These
competitors may have greater financial, management, technology, research and
development, sale, marketing and other resources than we do.
Employees
We
currently have one employee, in addition to our Chief Executive Officer. In the
event we are able to commercialize our research and development activities, or
prospects for doing so appear significant, we would expect at that time to hire
additional employees. Presently, Mr. Joseph K. Pagano, our Chairman of the Board
and Chief Executive Officer, devotes his time to our Company without a salary.
In addition, Mr. Dean R. Gresk, one of the members of our Board of Directors,
has agreed to provide non-Board related services to us for a fee of $500 per
day, plus reimbursed travel expenses. No payments were made to Mr.
Gresk in 2009 for non-Board related services.
Government
Regulation
In the
event we are able to commercialize our research and development activities and
depending on the development objectives and uses of any of our potential
products, we may become subject to government regulation by certain government
agencies including the Food and Drug Administration and the Environmental
Protection Agency. In addition, we may become subject to various other federal,
state and local regulatory and licensing requirements as the same are
promulgated from time to time. We intend to monitor and comply with any
requirements which may, from time to time, become applicable to us. Failure by
us to comply with any applicable requirements could result in, among other
things, the imposition of fines by governmental authorities or awards of damages
to private litigants.
We are a
smaller reporting company, as defined by Rule 12b-2 of the Exchange
Act and are not required to provide information under this
item.
ITEM
1B.
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UNRESOLVED
STAFF COMMENTS.
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We are a
smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and are
not required to provide information under this item, however there are no
unresolved staff comments.
ITEM
2.
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DESCRIPTION
OF PROPERTY.
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Our
principal executive office is located at 1217 South Flagler Drive, 3
rd
Floor, West Palm Beach, Florida 33401. We lease this
approximately 411 square foot office space pursuant to a sublease that expires
in June 2010, with an option to renew for an additional year. The lease requires
us to make twelve monthly payments of approximately $1,390 through June 2010. We
do not own any real property.
ITEM
3.
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LEGAL
PROCEEDINGS.
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None.
ITEM
4.
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(REMOVED
AND RESERVED).
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PART II
ITEM
5.
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MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
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Market
Information
Since our
spin-off from Sentigen in late 2006, our common stock has been listed for
quotation on the OTC Bulletin Board under the symbol “SSRC.” The following table
sets forth for the period indicated, the high and low prices for our common
stock. Such quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.
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Price
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Period
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High
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Low
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2009
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First
Quarter
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$
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0.13
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$
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0.02
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Second
Quarter
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$
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0.02
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$
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0.02
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Third
Quarter
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$
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0.03
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$
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0.02
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Fourth
Quarter
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$
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0.10
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$
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0.03
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2008
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First
Quarter
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$
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0.23
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$
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0.19
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Second
Quarter
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$
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0.23
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$
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0.18
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Third
Quarter
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$
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0.18
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$
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0.15
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Fourth
Quarter
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$
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0.15
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$
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0.13
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Holders
As of
March 24, 2010, we had 55 stockholders of record.
Dividends
We have
never declared or paid any cash dividends on our common stock. For the
foreseeable future, we intend to retain any earnings to finance the development
and expansion of our business, and we do not anticipate paying any cash
dividends on our common stock. Any future determination to pay dividends will be
at the discretion of the Board of Directors and will be dependent upon then
existing conditions, including our financial condition and results of
operations, capital requirements, contractual restrictions, business prospects
and other factors that the Board of Directors considers
relevant.
Equity
Compensation Plan Information
The
following table provides certain information as of December 31, 2009 with
respect to our equity based compensation plans.
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(a)
Number of
securities to
be issued
upon
exercise of
outstanding
options,
warrants
and rights
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(b)
Weighted-
average
exercise
price
of
outstanding
options,
warrants
and
rights
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(c)
Number of
securities
remaining
available for
future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a))
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Equity
compensation plans approved by security holders
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—
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—
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—
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Equity
compensation plans not approved by security holders(1)
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675,000
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$
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0.17
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—
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Total
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675,000
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$
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0.17
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—
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(1) Column
(a) and (b) represent the aggregate shares issuable upon exercise of outstanding
five and ten-year stock options granted from May 2007 through October 2009 to
certain consultants to the Company and the three non-officer directors of the
Company. These options expire at various times with the last expiring on October
20, 2019.
ITEM 6.
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SELECTED FINANCIAL
DATA.
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We are a
smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and are
not required to provide information under this item.
ITEM 7.
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MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF
OPERATIONS.
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Introduction
We were
previously a wholly-owned subsidiary of Sentigen. Sentigen and its then
subsidiary, Sentigen Biosciences, previously owned all right and title to the
olfaction intellectual property assets. Prior to its merger with Invitrogen,
Sentigen separated its olfaction intellectual property assets from the
businesses acquired by Invitrogen. This separation was accomplished through the
contribution of Sentigen’s olfaction intellectual property assets to us on
October 10, 2006 and the subsequent spin-off in which Sentigen distributed
100% of its ownership interest in us to its then stockholders on
December 1, 2006.
To date,
we have incurred substantial operating losses. As of December 31, 2009, we
held three patents directly with another patent being issued under our Columbia
License. We also have additional pending patent
applications. We cannot provide any assurance that our additional
patent applications will be successful. While we believe our technology
capabilities in the olfaction area are substantial, we intend to continually
review the commercial validity of our olfaction technology in order to make the
appropriate decisions as to the best way to allocate our limited
resources.
Critical
Accounting Policies and Use of Estimates
The SEC
defines critical accounting policies as those that are, in management’s view,
important to the portrayal of our financial condition and results of operations
and demanding of management’s judgment. Our critical accounting policies
include:
Impairment
of intangibles
Our
intangible assets consist of license and patent costs of $35,922 as of
December 31, 2009, as compared with $89,655 as of December 31, 2008,
and are the result of the Columbia License and certain patents. The value of the
license reflects the closing share price of Sentigen’s common stock on
April 10, 2000 (the closing date of the Columbia License) multiplied by the
75,000 shares of Sentigen common stock issued to Columbia University less
accumulated amortization. The value of the license is subject to an amortization
period of 10 years. The value of the patents mainly consists of legal fees
and is being amortized over the remaining term of the license. Management
reviews the value of the license and patents for impairment whenever events or
changes in circumstances indicate that the carrying amount of the asset may not
be fully recoverable. A review for impairment was conducted by an outside firm
that concluded the fair market value of the olfaction technology was between
$120,000 and $190,000 as of August 2006. The license and patent are
considered to be impaired when the carrying value exceeds the calculation of the
undiscounted net future cash inflows or fair market value. An impairment loss of
$122,996 was recognized as amortization expense in August 2006 in
connection with the license. We believe no further impairment loss is necessary
as of December 31, 2009.
Off-Balance-Sheet
Arrangements
As of
December 31, 2009, we did not have any off-balance-sheet arrangements, as
defined in Item 303(a)(4) of Regulation S-K.
Results
of Operations
General
We are a
development stage company as defined in Financial Accounting Standard Board
(“FASB”) ASC 915, "Development Stage Entities”. Other than with regard to the
development and protection of our intellectual property, our planned principal
operations have not yet commenced. We intend to establish a new business. We
have not generated any revenues from operations and have no assurance of any
future revenues. All losses accumulated since commencement of our business have
been considered as part of our development stage activities.
Prior to
the spin-off on December 1, 2006, our business was operated within Sentigen
as part of its broader corporate organization rather than as a stand-alone
company. Historically, Sentigen performed certain corporate functions for us.
Our historical financial statements included herein do not reflect the expense
of certain corporate functions we would have needed to perform if we were not a
wholly-owned subsidiary. Following the spin-off, Sentigen no longer provided
assistance to us and we are responsible for the additional costs associated with
being an independent public company, including costs related to corporate
governance, quoted securities and investor relations issues. Therefore, you
should not make any assumptions regarding our future performance based on the
financial statements.
Our
financial statements were prepared on a going concern basis, which contemplates
the realization of assets and the satisfaction of liabilities. Funding for the
year ended December 31, 2009 was provided by the proceeds we received from the
$750,000 financing we closed on May 9, 2008, the $145,980 financing we closed on
June 20, 2008 with certain of our largest stockholders, including our Chief
Executive Officer and Chairman of the Board and another member of our Board of
Directors, a $25,000 loan to us by our Chief Executive Officer and Chairman
of the Board in September 2009, referred to as the September loan, and through
the loans made to us in October 2009 by four individuals, including a
rollover of the September loan with our Chief Executive Officer and Chairman of
the Board, another member of our Board of Directors and, a beneficial
owner of more than 5% of our outstanding common stock, discussed in greater
detail below.
On
October 26, 2009, we issued to each of four individuals $50,000 subordinated
convertible promissory notes, referred to as the notes (an aggregate principal
amount of $200,000 of notes). The individuals included our Chief Executive
Officer and Chairman of the Board, another director and one of our greater than
5% stockholders. The $50,000 principal amount of notes issued to the Chief
Executive Officer and Chairman of the Board represented $25,000 of new funds
received by us and a rollover of the September loan. The notes bear
interest of 4% per annum and are payable on demand. For a more detailed
description of the notes, see
Liquidity and Capital
Resources
below.
Our
ability to obtain financing and realize revenue depends upon the status of
future business prospects, as well as conditions prevailing in the capital
markets. These factors, among others, raise doubt about our ability to continue
as a going concern should we be unable to realize revenues from our olfaction
technology or raise sufficient additional funds in the future.
Our Chief
Executive Officer and Board of Directors are also seeking opportunities with
non-profit agencies and with potential commercial partners to leverage our
olfaction intellectual property for the development of control agents for biting
insects, in particular, insect vectors of malaria and other
diseases.
Product
Research and Development
We intend
to continually review the commercial validity of the olfaction technology, in
order to make the appropriate decisions as to the best way to allocate our
limited resources. We currently do not have any research and development grant
applications outstanding nor can we predict whether we will receive any research
and development funding during the next twelve (12) months. We are unable at
this time to predict a level of spending, if any, for product research and
development activities during the next twelve (12) months, all of which will be
dependent upon the implementation of our business plan. Our Chief Executive
Officer and Board of Directors have and intend to continue to seek opportunities
with non-profit agencies and with potential commercial partners to leverage our
olfaction intellectual property for the development of control agents for biting
insects, in particular, insect vectors of malaria and other
diseases.
Acquisition
of Plant and Equipment and Other Assets
We do not
anticipate the purchase or sale of any material property, plant or equipment
during the next 12 months.
Operating
Expenses
For the
year ended December 31, 2009, we had general and administrative
costs of $374,344, compared to $582,372 for the year
ended December 31, 2008. The comparative decrease of $208,028 is
primarily due to a decrease in professional fees of approximately $144,198, a
decrease in travel expense of approximately $38,550, a decrease of approximately
$20,918 in stock-based compensation expense and a decrease of approximately
$4,362 in other expenses.
Amortization
expense includes the amortization of our license and patent costs. For the years
ended December 31, 2009 and 2008, amortization expense was $91,343 and
$55,823, respectively. The increase in amortization expense is
primarily due to the amortization of patent costs capitalized during
2009. For the period April 10, 2000 (Commencement of Business)
to December 31, 2009, amortization expense was $517,410. The original value
of the license of $440,625 reflects the closing share price
of Sentigen’s common stock on April 10, 2000. The value of the
patent of $112,707 mainly consists of legal and application fees. The value of
the license and patent, net of amortization as of the year ended
December 31, 2009 and 2008, was $35,922 and $89,655, respectively. The
remaining licensing and patent costs are being amortized on a straight line
basis through April 2010.
Interest
and financing expense in 2008 reflects the cost of our promissory notes issued
on June 21, 2007, which were cancelled during the second quarter of 2008.
Interest and financing expense in 2009 reflects the cost of our promissory notes
we issued in September and October 2009. For the years ended December
31, 2009 and 2008 accrued interest on our promissory notes amounted to $1,540,
and $6,520, respectively.
Liquidity
and Capital Resources
We have
incurred operating losses since inception. As of December 31, 2009 we had
$73,612 in cash and cash equivalents, compared to $198,187 at December 31,
2008. At December 31, 2009 we had a working capital deficiency
of $328,367 compared to working capital of $77,005 at
December 31, 2008. Net cash used in operating activities for the
year ended December 31, 2009 was $286,965 mainly attributable to our net
loss of $466,729, offset in part by amortization of license and patent costs of
$91,343 stock based compensation expense of $7,624 and an increase in accounts
payable and accrued expenses of $80,797. Net cash used in operating
activities for the year ended December 31, 2008 was $550,633 mainly attributable
to our net loss of $642,303 and cash paid for security deposits of $4,170,
offset in part by amortization of license and patent costs of $55,823
stock-based compensation expense of $28,542 and an increase in accounts payable
and accrued expenses of $11,475.
During
the second quarter of 2008, as previously disclosed, we closed on a financing
for an aggregate amount of $950,000. On May 9, 2008, we closed on the first
tranche of the financing, for an aggregate amount of $750,000, which consisted
of cash in the amount of $563,986 and the conversion of $186,014 of
indebtedness. Participants in the first tranche of the financing subscribed for
an aggregate of 3,947,363 shares of common stock, based on the closing price of
$0.19 per share of our common stock on the closing date. On June 20, 2008, we
closed on the second tranche of the financing, for an aggregate amount of
200,000 of which $145,980 was subscribed for, consisting of cash in the amount
of $62,240 and the conversion of $83,740 of indebtedness. Participants in the
second tranche of the financing subscribed for an aggregate of 768,315 shares of
common stock, based on the closing price of $0.19 per share of our common stock
on the closing date. In the third quarter of 2008, two participants in the
financing elected to exercise their over-allotment options, which consisted of
cash in the amount of $54,020. The participants who exercised their
over-allotment options subscribed for an aggregate of 337,424 shares of common
stock, based on the closing price of $0.16 per share of our common stock on the
closing date. Issuance of the shares were subject to stockholder
approval of the amendment to our certificate of incorporation to increase the
number of shares of common stock, which was approved by the stockholders at our
2008 annual meeting on June 24, 2008.
Ten of
our largest stockholders (each holding 50,000 or more shares of our common
stock) subscribed in the May 2008 financing, of which the following are holders
of 5% or more of our common stock: Joseph K. Pagano, Frederick R. Adler,
Longview Partners L.P., The Joseph A. Pagano Jr. 2007 Trust and Samuel A. Rozzi,
who subscribed for $122,325, $109,350, $112,125, $100,350 and $95,775,
respectively. Also, Mr. Pagano serves as our Chairman of the Board and Chief
Executive Officer, and Mr. Adler is a member of our Board of Directors. The
general partner of Longview Partners L.P. is Susan Chapman, an adult daughter of
Mr. Adler.
The funds
raised in the financing were used for general working capital purposes,
including the funding of research and development efforts and the pursuit of a
joint venture or other form of collaboration with another entity or entities.
Our ability to obtain financing and realize revenue depends upon the status of
future business prospects, as well as conditions prevailing in the capital
markets. It is possible that any such additional financing may be dilutive to
current stockholders and the terms of any debt financings could contain
restrictive covenants limiting our ability to do certain things, including
paying dividends.
On
June 21, 2007, we issued a demand promissory note in favor of each of
Mr. Frederick R. Adler, Mr. Joseph K. Pagano, D.H. Blair Investment
Banking Corp. and Mr. Samuel A. Rozzi (together, the “Lenders”), evidencing
loans extended to us in the principal amount of $50,000, $50,000, $50,000 and
$30,000, respectively, by the Lenders, for an aggregate amount of $180,000. The
promissory notes accrued interest at Citibank N.A.’s reported prime rate plus
3%, which was due and payable at the time the principal amount of each
respective promissory note becomes due. The promissory notes had a maturity date
of June 22, 2009. Each Lender could demand the payment of all of the
outstanding principal and interest of his or its respective promissory note at
any time prior to the maturity date. At the time of the loan transaction, each
of the Lenders was the beneficial owner of a significant number of shares of our
common stock. In addition, Mr. Pagano is our Chief Executive Officer and
the Chairman of our Board of Directors, and Mr. Adler is a member of our
Board of Directors. On May 9, 2008, in connection with the first tranche of
the financing discussed above, (i) $24,675 of the outstanding amount of
Mr. Pagano’s promissory note was applied to the subscriptions made by
Mr. Pagano and a trust for the benefit of his son; and (ii) $54,425, the
entire outstanding amount of D.H. Blair Investment Banking Corp.’s promissory
note, including principal and accrued interest, was applied to the subscriptions
made by each of three affiliates of D.H. Blair Investment Banking Corp. On
May 16, 2008, Mr. Pagano made a demand for repayment of the remaining
outstanding principal and interest $29,750 of his promissory note. On
June 20, 2008, in connection with the second tranche of the financing
discussed above (i) $30,000 of the outstanding principal amount of
Mr. Rozzi’s promissory note was applied to the subscription made by
Mr. Rozzi and he received a payment for $2,961 in accrued interest on
July 10, 2008 and (ii) $53,740 of the outstanding amount of principal and
accrued interest of Mr. Adler’s promissory note was applied to the
subscription made by Mr. Adler and he received a payment for the remaining
$1,195 in accrued interest. All of the promissory notes have been cancelled and
there are no amounts outstanding to date.
On
September 10, 2009 we borrowed $25,000 from our Chief Executive Officer and
Chairman of the Board. This loan bore interest at 6% per annum, and
has been amended as described below.
On
October 26, 2009, we issued to each of four individuals $50,000 subordinated
convertible promissory notes (an aggregate principal amount of $200,000 of
notes). The individuals included our Chief Executive Officer and Chairman of the
Board, another director and one of our greater than 5% stockholders. The $50,000
principal amount of notes issued to the Chief Executive Officer and Chairman of
the Board represent $25,000 of new funds received by us and a rollover of the
September 10, 2009 loan. The notes bear interest at 4% per
annum and are payable on demand. The holders may convert the outstanding
principal amount of the notes and accrued and unpaid interest thereon into
shares of our common stock at any time at the conversion price in effect on the
conversion date. We may prepay the Notes on 20 days prior written
notice to the holders. We have agreed to include the shares of common
stock issuable upon conversion of the Notes in any applicable registration
statement filed by us with the U.S. Securities and Exchange Commission (“SEC”)
covering our equity securities.
Our
ability to obtain financing and realize revenue depends upon the status of
future business prospects, as well as conditions prevailing in the capital
markets. These factors, among others, raise substantial doubt about our ability
to continue as a going concern should we be unable to realize revenues from our
olfaction technology or raise sufficient additional funds in the
future. If we are unable to raise such funds, we may need to cease
our operations. Additionally, if we raise additional funds by issuing
equity securities, our then-existing stockholders will likely experience
dilution, depending upon the terms and conditions of such
financing.
Inflation
Periods
of high inflation could have a material adverse impact on us to the extent that
increased borrowing costs for floating rate debt (if any) may not be offset by
increases in cash flow. At December 31, 2009, we had $0 in floating rate
debt outstanding. There was no significant impact on our operations as a result
of inflation during the years ended December 31, 2009 and
2008.
Recently
Issued Accounting Pronouncements
In March 2008, the FASB
issued an update to ASC 815,
Derivatives and Hedging,
which requires enhanced disclosures related to derivative instruments and
hedging activities, including disclosures regarding how an entity uses
derivative instruments, how derivative instruments and related hedged items are
accounted for and the impact of derivative instruments and related hedged items
on an entity’s financial position, financial performance and cash flows.
It also provided a new two-step model to be applied in determining whether a
financial instrument or an embedded feature is indexed to an issuer’s own
stock. The amended guidance became effective on January 1, 2009. The
adoption of this guidance on January 1, 2009 did not have a material effect on
our financial statements.
In June
2009, the FASB issued revised guidance for the accounting of transfers of
financial assets (codified in December 2009 as Accounting Standards Update
(“ASU”) No. 2009-16). The guidance eliminates the concept of a qualified special
purpose entity) removes the scope exception for qualifying special-purpose
entities when applying the accounting guidance related to the consolidation of
variable interest entities; changes the requirements for derecognizing financial
assets; and requires enhanced disclosure. This accounting guidance is effective
as of the beginning of each reporting entity’s first annual reporting period
that begins after November 15, 2009, and for interim periods within that
first annual reporting period, and for interim and annual reporting periods
thereafter. Earlier application is prohibited. The adoption of this guidance is
not expected to have a material impact on our financial position or results of
operations.
In
June 2009, the FASB issued revised guidance for the accounting of variable
interest entities (codified in December 2009 as ASU No. 2009-17), which replaces
the quantitative-based risks and rewards approach with a qualitative approach
that focuses on identifying which enterprise has the power to direct the
activities of a variable interest entity that most significantly impact the
entity’s economic performance. The accounting guidance also requires an ongoing
reassessment of whether an entity is the primary beneficiary and requires
additional disclosures about an enterprise’s involvement in variable interest
entities. This accounting guidance is effective as of the beginning of each
reporting entity’s first annual reporting period that begins after
November 15, 2009, and for interim periods within that first annual
reporting period, and for interim and annual reporting periods thereafter.
Earlier application is prohibited. The adoption of this pronouncement is not
expected to have a material impact on our financial position or results of
operations.
Management
does not believe that any other recently issued, but not yet effective
accounting pronouncements, if adopted, would have a material effect on the
accompanying financial statements.
ITEM
7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
|
We are a
smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and are
not required to provide information under this item.
ITEM 8.
|
FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA.
|
SENTISEARCH,
INC.
(A
Development Stage Company)
INDEX
TO FINANCIAL STATEMENTS
|
Page No.
|
Report
of Independent Registered Public Accounting Firm
|
12
|
|
|
Financial
Statements:
|
|
|
|
Balance
Sheets
|
13
|
|
|
Statements
of Operations
|
14
|
|
|
Statements
of Changes in Stockholders’ Equity (Deficiency)
|
15
|
|
|
Statements
of Cash Flows
|
16
|
|
|
Notes
to Financial Statements
|
17
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Stockholders of
SentiSearch,
Inc.
West
Palm Beach, Florida
We have
audited the accompanying balance sheets of SentiSearch, Inc. (A Development
Stage Company) (the “Company”) as of December 31, 2009 and 2008, and the
related statements of operations, stockholders’ equity (deficiency),
and cash flows for the years then ended, and the cumulative period
April 10, 2000 (commencement of business) to December 31, 2009. The
Company’s management is responsible for these financial
statements. Our responsibility is to express an opinion on these
financial statements based on our audits.
We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of SentiSearch, Inc. as of December
31, 2009 and 2008, and the results of its operations and its cash flows for the
years then ended and the cumulative period April 10, 2000 (commencement of
business) to December 31, 2009 in conformity with accounting principles
generally accepted in the United States of America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is in the development stage, has a working
capital deficiency, stockholders’ deficit and has suffered recurring
losses. These conditions raise substantial doubt about its ability to
continue as a going concern. Management’s plans in regards to these
matters are also described in Note 2. The accompanying financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Raich
Ende Malter & Co. LLP
Raich
Ende Malter & Co. LLP
New York,
New York
March 30,
2010
SENTISEARCH,
INC.
(A
Development Stage Company)
Balance
Sheets
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
73,612
|
|
|
$
|
198,187
|
|
|
|
|
|
|
|
|
|
|
Security
deposit
|
|
|
4,170
|
|
|
|
4,170
|
|
|
|
|
|
|
|
|
|
|
Total
Current Assets
|
|
|
77,782
|
|
|
|
202,357
|
|
|
|
|
|
|
|
|
|
|
Other
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
License
and patent costs
|
|
|
553,332
|
|
|
|
515,722
|
|
|
|
|
|
|
|
|
|
|
Less:
accumulated amortization
|
|
|
(517,410
|
)
|
|
|
(426,067
|
)
|
|
|
|
|
|
|
|
|
|
Total
Other Assets
|
|
|
35,922
|
|
|
|
89,655
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
113,704
|
|
|
$
|
292,012
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIENCY)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$
|
206,149
|
|
|
$
|
125,352
|
|
|
|
|
|
|
|
|
|
|
Convertible
notes payable – related party
|
|
|
150,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Convertible
note payable
|
|
|
50,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total
Current Liabilities
|
|
|
406,149
|
|
|
|
125,352
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity (Deficiency)
|
|
|
|
|
|
|
|
|
Common
stock — $0.0001 par value, 20,000,000 shares authorized,
12,747,644 and 12,747,644 shares issued and outstanding
|
|
|
1,275
|
|
|
|
1,275
|
|
|
|
|
|
|
|
|
|
|
Additional
paid - in capital
|
|
|
1,963,415
|
|
|
|
1,955,791
|
|
|
|
|
|
|
|
|
|
|
Deficit
accumulated during development stage
|
|
|
(2,257,135
|
)
|
|
|
(1,790,406
|
)
|
|
|
|
|
|
|
|
|
|
Total
Stockholders' Equity (Deficiency)
|
|
|
(292,445
|
)
|
|
|
166,660
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity (Deficiency)
|
|
$
|
113,704
|
|
|
$
|
292,012
|
|
See notes
to financial statements.
SENTISEARCH,
INC.
(A
Development Stage Company)
Statements
of Operations
|
|
|
|
|
|
|
|
For the period
|
|
|
|
|
|
|
|
|
|
April 10, 2000
|
|
|
|
|
|
|
|
|
|
(Commencement
|
|
|
|
For the Years
|
|
|
of Business)
|
|
|
|
Ended December 31,
|
|
|
to December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
after direct costs
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
374,344
|
|
|
|
582,372
|
|
|
|
1,724,173
|
|
Amortization
of license and patent costs
|
|
|
91,343
|
|
|
|
55,823
|
|
|
|
517,410
|
|
|
|
|
465,687
|
|
|
|
638,195
|
|
|
|
2,241,583
|
|
Other
(income) expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
(income)
|
|
|
(498
|
)
|
|
|
(2,412
|
)
|
|
|
(2,910
|
)
|
Interest
and financing expense
|
|
|
1,540
|
|
|
|
6,520
|
|
|
|
18,462
|
|
|
|
|
1,042
|
|
|
|
4,108
|
|
|
|
15,552
|
|
Net
loss before provision for income taxes
|
|
|
(466,729
|
)
|
|
|
(642,303
|
)
|
|
|
(2,257,135
|
)
|
Income
taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(466,729
|
)
|
|
$
|
(642,303
|
)
|
|
$
|
(2,257,135
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per share
|
|
$
|
(0.04
|
)
|
|
$
|
(0.06
|
)
|
|
|
|
|
Weighted
average shares outstanding — basic and dilutive
|
|
|
12,747,644
|
|
|
|
10,317,714
|
|
|
|
|
|
See notes
to financial statements.
SENTISEARCH,
INC.
(A
Development Stage Company)
Statements
of Changes in Stockholders’ Equity (Deficiency)
|
|
Common
Stock
|
|
|
Subscription
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Receivable
|
|
|
Capital
|
|
|
Deficit
|
|
|
Total
|
|
Balance
- April 10, 2000
(Commencement
of Predecessor
Business)
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(47,763
|
)
|
|
|
(47,763
|
)
|
Balance
- December 31, 2000
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(47,763
|
)
|
|
|
(47,763
|
)
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(63,169
|
)
|
|
|
(63,169
|
)
|
Balance
- December 31, 2001
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(110,932
|
)
|
|
|
(110,932
|
)
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(65,936
|
)
|
|
|
(65,936
|
)
|
Balance
- December 31, 2002
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(176,868
|
)
|
|
|
(176,868
|
)
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(77,083
|
)
|
|
|
(77,083
|
)
|
Balance
- December 31, 2003
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(253,951
|
)
|
|
|
(253,951
|
)
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(109,169
|
)
|
|
|
(109,169
|
)
|
Balance
- December 31, 2004
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(363,120
|
)
|
|
|
(363,120
|
)
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(60,870
|
)
|
|
|
(60,870
|
)
|
Balance
- December 31, 2005
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(423,990
|
)
|
|
|
(423,990
|
)
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(320,747
|
)
|
|
|
(320,747
|
)
|
Balance
- October 2, 2006
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(744,737
|
)
|
|
|
(744,737
|
)
|
Issuance
of common stock - October 3, 2006
|
|
|
7,694,542
|
|
|
|
769
|
|
|
|
(769
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Additional
contribution of capital - October 10, 2006
|
|
|
|
|
|
|
|
|
|
|
769
|
|
|
|
249,231
|
|
|
|
|
|
|
|
250,000
|
|
Contribution
to capital of License costs and assumption of liability - October 10,
2006
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
749,334
|
|
|
|
-
|
|
|
|
749,334
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(116,822
|
)
|
|
|
(116,822
|
)
|
Balance
- December 31, 2006
|
|
|
7,694,542
|
|
|
|
769
|
|
|
|
-
|
|
|
|
998,565
|
|
|
|
(861,559
|
)
|
|
|
137,775
|
|
Stock-based
compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,490
|
|
|
|
-
|
|
|
|
1,490
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(286,544
|
)
|
|
|
(286,544
|
)
|
Balance
- December 31, 2007
|
|
|
7,694,542
|
|
|
|
769
|
|
|
|
-
|
|
|
|
1,000,055
|
|
|
|
(1,148,103
|
)
|
|
|
(147,279
|
)
|
Issuance
of common stock -June 29, 2008
|
|
|
5,053,102
|
|
|
|
506
|
|
|
|
-
|
|
|
|
927,194
|
|
|
|
-
|
|
|
|
927,700
|
|
Stock-based
compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,542
|
|
|
|
|
|
|
|
28,542
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(642,303
|
)
|
|
|
(642,303
|
)
|
Balance-
December 31, 2008
|
|
|
12,747,644
|
|
|
|
1,275
|
|
|
|
-
|
|
|
|
1,955,791
|
|
|
|
(1,790,406
|
)
|
|
|
166,660
|
|
Stock-based
compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,624
|
|
|
|
|
|
|
|
7,624
|
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(466,729
|
)
|
|
|
(466,729
|
)
|
Balance
– December 31, 2009
|
|
|
12,747,644
|
|
|
$
|
1,275
|
|
|
$
|
-
|
|
|
$
|
1,963,415
|
|
|
$
|
(2,257,135
|
)
|
|
$
|
(292,445
|
)
|
See notes
to financial statements.
SENTISEARCH,
INC.
(A
Development Stage Company)
Statements
of Cash Flows
|
|
|
|
|
|
|
|
For the period
|
|
|
|
|
|
|
|
|
|
April 10, 2000
|
|
|
|
|
|
|
|
|
|
(Commencement
|
|
|
|
For the
|
|
|
of Business)
|
|
|
|
Year ended
|
|
|
Through
|
|
|
|
December
31,
|
|
|
December
31
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(466,729
|
)
|
|
$
|
(642,303
|
)
|
|
$
|
(2,257,135
|
)
|
Adjustments
to reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
|
7,624
|
|
|
|
28,542
|
|
|
|
37,656
|
|
Amortization
|
|
|
91,343
|
|
|
|
55,823
|
|
|
|
517,410
|
|
Changes
in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Security
Deposits
|
|
|
—
|
|
|
|
(4,170
|
)
|
|
|
(4,170
|
)
|
Increase in
accounts payable and accrued expenses
|
|
|
80,797
|
|
|
|
11,475
|
|
|
|
523,023
|
|
Net
cash used in operating activities
|
|
|
(286,965
|
)
|
|
|
(550,633
|
)
|
|
|
(1,183,216
|
)
|
Cash
flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
in patents
|
|
|
(37,610
|
)
|
|
|
(33,215
|
)
|
|
|
(112,707
|
)
|
Net
cash used in investing activities
|
|
|
(37,610
|
)
|
|
|
(33,215
|
)
|
|
|
(112,707
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
(Repayment)
proceeds of notes payable - related parties
|
|
|
—
|
|
|
|
(25,325
|
)
|
|
|
154,675
|
|
Proceeds
of convertible notes payable
|
|
|
200,000
|
|
|
|
—
|
|
|
|
200,000
|
|
Proceeds
from due to related party
|
|
|
—
|
|
|
|
106,914
|
|
|
|
106,914
|
|
Proceeds
from issuance of common stock
|
|
|
—
|
|
|
|
657,946
|
|
|
|
907,946
|
|
Net
cash provided by financing activities
|
|
|
200,000
|
|
|
|
739,535
|
|
|
|
1,369,535
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Decrease)/Increase
in cash and cash equivalents
|
|
|
(124,575
|
)
|
|
|
155,687
|
|
|
|
73,612
|
|
Cash
and cash equivalents — beginning of period
|
|
|
198,187
|
|
|
|
42,500
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents — end of period
|
|
$
|
73,612
|
|
|
$
|
198,187
|
|
|
$
|
73,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash
from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumption
of liability by Sentigen Holding Corp.
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
308,709
|
|
Stock
of Sentigen Holding Corp. issued for license costs
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
440,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of notes payable and accrued interest to common stock
|
|
$
|
—
|
|
|
$
|
162,840
|
|
|
$
|
162,840
|
|
Conversion
of due to related party for common stock
|
|
$
|
—
|
|
|
$
|
106,914
|
|
|
$
|
106,914
|
|
See notes
to financial statements.
Notes
to Financial Statements
1.
Organization and Nature of Operations
SentiSearch,
Inc. (“we,” “our”, “SentiSearch,” and “the Company”) was a wholly-owned
subsidiary of Sentigen Holding Corp. (“Sentigen”) until the December 1, 2006
“spin-off”, discussed below. We are a development stage company and have a
limited operating history. We were incorporated in the State of Delaware on
October 3, 2006 to hold the olfaction intellectual property assets of Sentigen
and its subsidiaries.
On
October 10, 2006, in connection with its merger with Invitrogen Corporation,
Sentigen separated its olfaction intellectual property assets from the
businesses being acquired by Invitrogen Corporation. The distribution of
SentiSearch shares to the shareholders of Sentigen, commonly referred to as a
“spin-off,” took place immediately prior to the consummation of the merger. In
connection with the distribution, on October 10, 2006, we entered into a
distribution agreement with Sentigen, pursuant to which Sentigen contributed
$250,000 to our capital. Also on October 10, 2006, we entered into a
contribution agreement with Sentigen, pursuant to which Sentigen transferred to
us all of its olfaction intellectual property. The olfaction intellectual
property assets primarily consist of an exclusive license agreement with The
Trustees of Columbia University in the City of New York (“Columbia”), dated
April 10, 2000 (the “Columbia License”), and certain patent applications titled
“Nucleic Acids and Proteins of Insect or 83b odorant receptor genes and uses
thereof.”
During
July 2007, we were issued two patents in the United States. During November
2007, we were issued one patent in Australia and during April 2008, we were
issued one patent in Mexico. Three of these patents were issued directly to us
and the other patent was issued under the Columbia License. All of the issued
patents cover nucleic acid molecules which encode insect odorant receptor
proteins, including numerous variations on insect odorant receptor coding
sequence. The patents cover any nucleic acid molecule as long as the protein it
encodes contains a short segment of amino acids, linked together.
While we
believe our technology capabilities in the olfaction area are substantial, up to
this point, we have incurred substantial operating losses. There have been no
revenues from operations to date. Although we have an exclusive license
agreement with Columbia, only one patent has been issued under the Columbia
License and we cannot provide any assurance that our additional patent
applications will be successful. We intend to continually review the commercial
validity of our olfaction technology in order to make the appropriate decisions
as to the best way to allocate our limited resources.
2.
Basis of Presentation
The
financial statements for the period April 10, 2000 (Commencement of Business) to
December 31, 2009 differ from the results of operations, financial condition and
cash flows that would have been achieved had we been operated independently
during the periods from April 10, 2000 through December 31, 2009. Our business
was operated within Sentigen as part of its broader corporate organization
rather than as a stand-alone company. Our historical financial statements do not
reflect the expense of certain corporate functions that we would have needed to
perform if we were not a wholly-owned subsidiary.
We are a
development stage company whose planned principal operations have not yet
commenced. We intend to establish a new business. We have not generated any
revenues from operations and have no assurance of any future revenues. All
losses accumulated since commencement of our business have been considered as
part of our development stage activities.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern, which contemplates the recoverability of
assets and the satisfaction of liabilities in the normal course of business. The
Company has had no revenue and has incurred accumulated net losses during the
development stage of $2,257,135 and as of December 31, 2009, has a working
capital deficiency of $328,367 and a stockholders' deficit of $292,445. The
Company may need substantial amounts of additional financing to commercialize
the research programs undertaken, for which financing may not be available on
favorable terms, or at all. The Company’s ability to obtain financing and
realize revenue depends upon the status of future business prospects, as well as
conditions prevailing in the capital markets. These factors, among others, raise
substantial doubt about the Company’s ability to continue as a going concern.
The ability of the Company to continue as a going concern is dependent upon
management’s plan to locate opportunities with non-profit agencies and/or
potential commercial partners, raise additional capital from the sale of stock
and, ultimately, income from operations. The accompanying financial statements
do not include any adjustments that might be required should the Company be
unable to recover the value of its assets or satisfy its
liabilities.
3. Summary of Significant Accounting
Policies
a.
Cash and Cash Equivalents –
Cash and cash equivalents include liquid investments with maturities of three
months or less at the time of purchase.
b.
Concentration of Credit Risk -
Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of cash and cash equivalents. The
Company maintains its cash accounts at high quality financial institutions with
balances, at times, in excess of federally insured limits. As of December 31,
2009, the Company had no cash balances in excess of the Federal Deposit
Insurance Corporation ("FDIC") insurance limit. Management believes that the
financial institutions that hold the Company’s deposits are financially sound
and therefore pose minimal credit risk. FDIC deposit insurance is $250,000 per
depositor through December 31, 2013
.
c.
License and Patent Costs –
The
costs of intangible assets that are purchased from others for use in research
and development activities and that have alternative future uses (in research
and development projects or otherwise) are accounted for in accordance with
accounting standards. The amortization of those intangible assets used in
research and development activities is a research and development cost. However,
the costs of intangibles that are purchased from others for a particular
research and development project and that have no alternative future uses (in
other research and development projects or otherwise) and therefore no separate
economic values are research and development costs at the time the costs are
incurred. We determined that the licensing costs arising from our exclusive
licensing agreement with The Trustees of Columbia University have alternative
future uses. These costs have been capitalized and are being amortized on a
straight-line basis through April 2010 (see Note 4).
d.
Impairment –
Intangible and
long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be fully
recoverable. A review for impairment includes comparing the carrying value of an
asset to an estimate of the undiscounted net future cash inflows over the life
of the asset or fair market value. An asset is considered to be impaired when
the carrying value exceeds the calculation of the undiscounted net future cash
inflows or fair market value. An impairment loss is defined as the amount of the
excess of the carrying value over the fair market value of the asset. We believe
that none of our intangible and long-lived assets are impaired as of December
31, 2009 (see Note 4 and 5).
e.
Estimates –
The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the dates of the financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results could differ
from those estimates.
f.
Income Taxes –
The
Company utilizes the liability method of accounting for income taxes. Under the
liability method deferred tax assets and liabilities are determined based on the
differences between financial reporting basis and the tax basis of the assets
and liabilities and are measured using enacted tax rates and laws that will be
in effect, when the differences are expected to reverse. An allowance against
deferred tax assets is recognized, when it is more likely than not, that such
tax benefits will not be realized.
The
Company recognizes the financial statement benefit of an uncertain tax position
only after considering the probability that a tax authority would sustain the
position in an examination. For tax positions meeting a "more-likely-than-not"
threshold, the amount recognized in the financial statements is the benefit
expected to be realized upon settlement with the tax authority. For tax
positions not meeting the threshold, no financial statement benefit is
recognized. The Company recognizes interest and penalties, if any, related to
uncertain tax positions in income tax expense. As of December 31, 2009, the
Company is unaware of any uncertain tax positions.
g.
Loss Per Share –
The
accompanying financial statements include loss per share calculated as required
by Accounting standards on a “pro-forma” basis as if we were a separate entity
from the period April 10, 2000 (commencement of business) until October 3, 2006
(our date of incorporation). Basic loss per share is calculated by dividing net
loss by the weighted average number of shares of common stock outstanding.
Diluted loss per share include the effects of securities convertible into common
stock, consisting of stock options, to the extent such conversion would be
dilutive. Accounting standards prohibits adjusting the denominator of diluted
earnings per share for additional potential common shares when a net loss from
continuing operations is reported. The assumed exercise of common stock
equivalents was not utilized for the twelve months ended December 31, 2009 since
the effect would be anti-dilutive. As of December 31, 2009, 675,000 options were
outstanding of which 541,667 were exercisable.
h.
Fair Value of Financial Instruments
–
The Company adopted the Financial Accounting Standards Board Fair
Value Measurements, as it applies to its financial statements. This standard
defines fair value, outlines a framework for measuring fair value, and details
the required disclosures about fair value measurements.
Fair
value is defined as the price that would be received to sell an asset, or paid
to transfer a liability, in an orderly transaction between market participants
at the measurement date in the principal or most advantageous market. The
standard establishes a hierarchy in determining the fair value of an asset or
liability. The fair value hierarchy has three levels of inputs, both observable
and unobservable. The standard requires the utilization of the lowest possible
level of input to determine fair value. Level 1 inputs include quoted market
prices in an active market for identical assets or liabilities. Level 2 inputs
are market data, other than Level 1, that are observable either directly or
indirectly. Level 2 inputs include quoted market prices for similar assets or
liabilities, quoted market prices in an inactive market, and other observable
information that can be corroborated by market data. Level 3 inputs are
unobservable and corroborated by little or no market data.
The
carrying value of current assets and liabilities approximates fair value due to
the short period of time to maturity. The carrying amount of notes payable
approximate their fair value, using level three inputs, as the current interest
rate on such instruments approximates current market rates on similar
instruments.
i.
Stock-Based Compensation
–
Stock-based compensation expense represents share-based payment awards based
upon the grant date fair value estimated in accordance
with accounting standards. The Company recognizes compensation
expense for stock option awards on a straight-line basis over the requisite
service period of the award. Stock-based compensation expense is recognized
based upon awards ultimately expected to vest, reduced for estimated
forfeitures. Forfeitures to be estimated at the time of grant and revised, if
necessary, in subsequent periods if actual forfeitures differ from those
estimates.
The
expected term of stock options represents the average period the stock options
are expected to remain outstanding. The expected stock price
volatility for the Company’s stock options was determined by examining the
historical volatilities for industry peers for periods that meet or exceed the
expected term of the options, using an average of the historical volatilities of
the Company’s industry peers as the Company did not have sufficient trading
history for the Company’s common stock. The Company will continue to analyze the
historical stock price volatility and expected term assumption as more
historical data for the Company’s common stock becomes available. The risk-free
interest rate assumption is based on the U.S. Treasury instruments whose term
was consistent with the expected term of the Company’s stock options. The
expected dividend assumption is based on the Company’s history and expectation
of dividend payouts.
The
Company accounts for its issuances of stock-based compensation to non-employees
for services using the measurement date guidelines enumerated in the accounting
standards. Accordingly, the value of any awards that were vested and non
forfeitable at their date of issuance were measured based on the fair value
of the equity instruments at the date of issuance. The non-vested portion of
awards that are subject to the future performance of the counterparty are
adjusted at each reporting date to their fair values based upon the then current
market value of the Company’s stock and other assumptions that management
believes are reasonable. The Company believes that the fair value of the stock
options issued to non-employees is more reliably measurable than the fair value
of the services rendered. The fair value of the stock options granted was
calculated using the Black-Scholes option pricing model.
j. Recently
Adopted Accounting Pronouncements
On
January 1, 2009, we adopted Accounting Standards Codification (the “ASC” or
“Codification”) 350-30, “Determination of the Useful Life of Intangible Assets”.
ASC 350-30 amends the factors that should be considered in developing renewal or
extension assumptions used to determine the useful life of a recognized
intangible asset in order to improve the consistency between the useful life of
a recognized intangible asset and the period of expected cash flows used to
measure the fair value of the asset. The adoption did not have a significant
impact on our financial statements.
In
February 2010, the Financial Accounting Standards Board (“FASB”) issued and
update to ASC 855, “Subsequent Events”. This Codification does not require
significant changes regarding recognition or disclosure of subsequent events,
but does require evaluation of subsequent events through the date the financial
statements are issued. The update was effective upon
issuance. The adoption did not have a significant impact on our
financial statements. Subsequent events have been evaluated through
the time of the filing of our annual report on Form 10-K.
On April
1, 2009, we adopted ASC 825-10 and ASC 270-10, “Interim Disclosures about Fair
Value of Financial Instruments”. This Codification requires disclosures about
fair value of financial instruments for interim reporting periods as well as in
annual financial statements. The Codification is effective for interim and
annual reporting periods ending after June 15, 2009. The adoption did
not have a significant impact on our financial statements.
On April
1, 2009, we adopted ASC 320-10, “Recognition and Presentation of
Other-Than-Temporary Impairments”. The Codification amends the
other-than-temporary impairment guidance in U.S. GAAP for debt securities to
make the guidance more operational and to improve the presentation and
disclosure of other-than-temporary impairments on debt and equity securities in
the financial statements. The Codification does not amend existing recognition
and measurement guidance related to other-than-temporary impairments of equity
securities. This Codification is effective for interim and annual
reporting periods ending after June 15, 2009. The adoption did not have a
significant impact on our financial statements.
On April 1, 2009, we
adopted ASC 820-10, “Determining Fair Value When the Volume and Level of
Activity for the Asset or Liability Have Significantly Decreased and identifying
Transactions That Are Not Orderly”. This Codification provides
additional guidance for estimating fair value when the volume and activity for
the asset or liability have significantly decreased. This Codification also
includes guidance on identifying circumstances that indicate a transaction that
is not orderly. The Codification is effective for interim and annual reporting
periods ending after June 15, 2009. The adoption did not have a
significant impact on our financial statements.
In June
2009, the FASB issued
The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles,
which established the FASB as the source of
authoritative principles recognized by the FASB to be applied by nongovernmental
entities in the preparation of financial statements in conformity with generally
accepted accounting principles (“GAAP”). Rules and interpretive
releases of the Securities and Exchange Commission (the “SEC”) under authority
of federal securities laws are also sources of authoritative GAAP for SEC
registrants. This standard is effective for financial statements
issued for interim and annual periods ending after September 15,
2009. The adoption of this standard did not have a material impact on
our financial statements.
4.
Exclusive License Agreement
On April
10, 2000, Sentigen Biosciences, Inc. (“Sentigen Biosciences”), a wholly-owned
subsidiary of Sentigen, entered into the Columbia License.
In
consideration of the Columbia License, Columbia was issued 75,000 shares of
Sentigen common stock and will receive royalties of 1% of the net sales of any
licensed products or services. The Columbia License had certain minimum funding
requirements, all of which have been satisfied.
On
October 10, 2006, the Company entered into a contribution agreement with
Sentigen pursuant to which Sentigen transferred to us all of its olfaction
intellectual property, including the Columbia License. On October 17, 2006,
Columbia consented to the assignment of the Columbia License from Sentigen
Biosciences to SentiSearch subject to certain conditions, all of which have
already been satisfied to the extent currently required.
The value
of the Columbia License is recorded as license costs, net of accumulated
amortization on the accompanying balance sheet. The original value of the
license costs reflects the closing share price of Sentigen’s common stock on
April 10, 2000. The value of the license costs, net of amortization as of
December 31, 2009 was $10,909.
Intangible
and long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be fully
recoverable. A review of the Company’s olfaction technology was performed by
Charter Capital Advisers, Inc. in August 2006 which concluded that the estimated
range of fair value was $120,000 to $190,000. An impairment loss of $122,996 was
recognized as amortization expense in August 2006 as the amount of the excess of
the carrying value over the fair market value of the asset.
The
license costs are being amortized on a straight line basis through April
2010. Expected amortization expense for the year ending December 31,
2010 is $10,909.
5. Patent Costs
During
July 2007, the Company was issued two patents in the United States. During
November 2007, the Company was issued a patent in Australia and during May 2008,
the Company was issued a patent in Mexico. One of the U.S. patents and the
Australia and Mexico patents, were issued directly to the Company and the other
U.S. patent was issued under the Columbia License. All of the issued patents
cover nucleic acid molecules which encode insect odorant receptor proteins,
including numerous variations on insect odorant receptor coding sequence. The
patents cover any nucleic acid molecule as long as the protein it encodes
contains a short segment of amino acids, linked together.
The value
of the patent costs, mainly consisting of legal and application fees in the
amount of $112,707, is recorded as patent costs, net of accumulated amortization
on the accompanying balance sheet. The value of the patent costs, net of
amortization as of December 31, 2009 was $25,013.
The
patent costs are being amortized on a straight line basis through April 2010,
the remaining term of the license costs. Expected amortization
expense for the year ending December 31, 2010 is $25,013.
6.
Share-Based Payments
On May
16, 2007, the Company granted options to purchase 50,000 shares of its common
stock at an exercise price of $0.18 per share to a director. The fair
value of the underlying common stock at the date of grant was $0.18 per
share. The options vested immediately and have a five year
term. Assumptions related to the estimated fair value of these stock
options on their date of grant, which the Company estimated using the
Black-Scholes option pricing model, are as follows: risk-free
interest rate of approximately 5%; expected divided yield of 0%; expected option
life of two and one-half years; and expected volatility of approximately
17%. The aggregate grant date fair value of the award amounted to
$1,490.
On March
27, 2008 and May 14, 2008, the Company granted options to purchase an aggregate
of 425,000 and 100,000 shares, respectively, of its common stock to
three individuals for consulting services rendered to the Company and a
director, respectively, each at an exercise price of $0.19 per share and term of
ten years. The terms of the consulting arrangements are for five years. The fair
value of the underlying common stock at the date of grant was $0.07 per share.
The options granted on March 27, 2008, vest as follows: 158,334 immediately,
133,333 on the first anniversary and 133,333 on the second anniversary. The
options granted on May 14, 2008 vested upon stockholder approval to amend the
Certificate of Incorporation to increase the number of authorized shares of
common stock at the annual stockholder meeting on June 24, 2008, and have a term
of ten years unless cancelled earlier upon director's removal or resignation
from the board. Assumptions related to the estimated fair value of these stock
options on their date of grant, which the Company estimated using the
Black-Scholes option pricing model, are as follows: risk-free interest rate of
approximately 4%; expected dividend yield of 0%; expected option life of ten
years; and expected volatility of approximately 17%. The aggregate grant date
fair value of the award amounted to $36,698.
On
October 20, 2009, the Company granted options to purchase 100,000 shares of its
common stock at an exercise price of $0.05 per share to a
director. The fair value of the underlying common stock at the date
of grant was $0.03 per share. The options vested immediately and have
a ten year term. Assumptions related to the estimated fair value of
these stock options on their date of grant, which the Company estimated using
the Black-Scholes option pricing model, are as follows: risk-free interest rate
of approximately 3%; expected divided yield of 0%; expected option life of ten
years; and expected volatility of approximately 22%. The aggregate
grant date fair value of the award amounted to $634.
The
Company recorded $7,624 and $28,542 of compensation expense for the year ended
December 31, 2009 and 2008, respectively, related to these
options.
The
weighted-average grant date fair value of options granted during the year ended
December 31, 2009 amounted to $0.006 per share. Total unamortized compensation
expense related to unvested stock options at December 31, 2009 amounted to
$1,165 and is expected to be recognized over a weighted average period of
approximately three months.
The
following table summarizes information on all common stock purchase options
issued by us for the years ended December 31, 2009 and 2008:
|
|
December 31, 2009
|
|
|
December 31, 2008
|
|
|
|
Number
|
|
|
Weighted
Average
Exercise Price
|
|
|
Number
|
|
|
Weighted
Average
Exercise Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding,
beginning of the year
|
|
|
575,000
|
|
|
$
|
0.19
|
|
|
|
50,000
|
|
|
$
|
0.18
|
|
Granted
|
|
|
100,000
|
|
|
|
0.05
|
|
|
|
525,000
|
|
|
|
0.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding,
end of the year
|
|
|
675,000
|
|
|
$
|
0.17
|
|
|
|
575,000
|
|
|
$
|
0.19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable,
end of the year
|
|
|
541,667
|
|
|
$
|
0.16
|
|
|
|
308,334
|
|
|
$
|
0.19
|
|
The
number and weighted average exercise prices of all common stock purchase options
as of December 31, 2009 are as follows:
Range
of
Exercise
Prices
|
|
Remaining
Number
Outstanding
|
|
|
Weighted
Average
Contractual
Life
(Years)
|
|
|
Weighted
Average
Exercise
Price
|
|
|
|
|
|
|
|
|
|
|
|
$0.05
to $0.19
|
|
|
675,000
|
|
|
|
8.06
|
|
|
$
|
0.16
|
|
All
options were issued at an option price equal to the market price on the date of
the grant in addition, none of the options currently outstanding have any
intrinsic value.
The
Company issues new shares of common stock upon exercise of stock
options.
7.
Notes Payable
On June
21, 2007, the Company entered into demand promissory notes with four of its
stockholders including its Chief Executive Officer and a member of the Board of
Directors (together, the “Lenders”), providing for loans to the Company in the
aggregate amount of $180,000. The promissory notes accrued interest at Citibank
N.A’s reported prime rate plus 3%, which was due and payable at the time the
principal amount of each respective promissory note became due. Although the
promissory notes had a maturity date of June 22, 2009. Each Lender had the right
to demand the payment of all of the outstanding principal and interest of his or
its respective promissory note at any time prior to the maturity date. At the
time of the loan transaction, each of the Lenders was a beneficial owner of 5%
or more of the Company’s common stock.
In May
and June 2008, these promissory notes were converted into subscriptions
agreements in two phases. The accrued interest expense related to the promissory
notes amounted to $16,921, of which $8,756 was paid in cash and $8,165 was
converted into the subscriptions.
During
October 2009, the Company issued to each of four individuals $50,000
subordinated convertible promissory notes (the “Notes”) aggregating $200,000.
The individuals included the Company’s Chief Executive Officer and Chairman of
the Board, another director, one of the Company’s greater than 5% stockholders
and an accredited investor. The $50,000 principal amount of Notes
issued to the Chief Executive Officer and Chairman of the Board represent
$25,000 of new funds received and a rollover of a $25,000 loan made by him to
the Company on September 10, 2009. The Notes bear interest of 4% per
annum and are payable on demand on the earlier of (i) the date on which the
Company publicly announces a joint venture or strategic relationship, the
execution of a license, or similar agreement with a third-party with respect to
the Company’s technology and (ii) the date on which the Company files with the
SEC its annual report on Form 10-K, which includes audited financial statements
for the year ended December 31, 2009, such date referred to as the target
date. The holders may convert the outstanding principal amount of the
Notes and accrued and unpaid interest thereon into shares of the Company’s
common stock at any time commencing on the fifth trading day immediately
following the target date at the conversion price in effect on such
date. The conversion price will be the greater of (i) the average of
the closing sale price of the Company’s common stock for the five trading days
immediately following the target date and (ii) $0.05 per share.
The
Company may prepay the Notes on 20 days prior written notice to the
holders. The Company has agreed to include the shares of common stock
issuable upon conversion of the Notes in any applicable registration statement
filed by the Company with the SEC covering its equity securities.
8.
Stockholders’ Equity
Common
Stock
During
the second quarter of 2008, the Company closed on a financing in two tranches
resulting in the issuance of common stock for $927,700, net of offering costs of
$22,300. On May 9, 2008, the Company closed on the first tranche of the
financing, for an aggregate amount of $750,000, which consisted of cash in the
amount of $563,986 and the conversion of $186,014 of indebtedness. Participants
in the first tranche of the financing subscribed for an aggregate of 3,947,363
shares of common stock, based on the price of $0.19 per share. On
June 20, 2008, we had an initial closing of $145,980 of the second tranche
of the financing, consisting of cash in the amount of $62,240 and the conversion
of $83,740 of indebtedness. Participants in the initial closing of the second
tranche of the financing subscribed for an aggregate of 768,315 shares of common
stock, based on the price of $0.19 per share.
On July
9, 2008, the Company raised $54,020 of additional funds from the unsubscribed
portion of the second tranche of the financing from the investors who
participated and desired to exercise their over-allotment option in the June 20,
2008 closing. The Company issued an aggregate of 337,424 shares of its common
stock in connection with the over-allotment exercise, based on the price of
$0.16 per share.
Prior to
the issuance of any shares of common stock pursuant to the financing, the
Company was required to receive the approval of its stockholders to amend our
Certificate of Incorporation to increase the number of authorized shares of
common stock to permit the financing shares to be issued (“Stockholder
Approval”). The Company received Stockholder Approval at its annual meeting of
stockholders on June 24, 2008.
Participants
in the financings included ten of our largest stockholders (each holding 50,000
or more shares of our common stock), including, the Company’s Chairman of the
Board and Chief Executive Officer, a director, and certain holders of 5% or more
of the Company’s common stock. All ten stockholders participated in the first
tranche of the financing, and six stockholders (including a director)
participated in the second tranche of the financing.
9.
Income Taxes
SentiSearch
was a member of the Sentigen consolidated group for federal income tax purposes
for the period October 3, 2006 through December 1, 2006. Prior to
October 3, 2006, the assets and the related business of SentiSearch were
owned and operated by Sentigen. Such business was the predecessor of
SentiSearch, which became a separate legal entity on October 3, 2006. As
such, any deductions generated by the Company’s assets prior to October 3,
2006 were utilized by, or remain with, the consolidated group, Sentigen. The
Company was allocated its share of the consolidated group’s net operating loss
for the period October 3, 2006 through December 1, 2006. The table
below reflects the deferred tax assets from net operating loss carryforwards “as
if” the Company was a stand alone legal entity from the period April 10,
2000 through October 2, 2006.
The
Company currently has no federal or state tax examinations in progress nor has
it had any federal or state tax examinations since its inception. The
earliest tax year subject to examination by these taxing authorities is
2006.
Deferred
taxes reflect the tax effects of temporary differences between the amounts of
assets and liabilities for financial reporting and the amounts recognized for
income tax purposes as well as the tax effects of net operating loss
carryforwards. The significant components of net deferred tax assets are as
follows:
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Net
operating loss carryforwards
|
|
$
|
538,245
|
|
|
$
|
374,844
|
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
|
100,850
|
|
|
|
80,608
|
|
|
|
|
|
|
|
|
|
|
Stock
based compensation
|
|
|
15,063
|
|
|
|
12,013
|
|
|
|
|
|
|
|
|
|
|
Less:
Valuation allowance
|
|
|
654,158
|
|
|
|
467,465
|
|
|
|
|
|
|
|
|
|
|
Net
deferred tax assets
|
|
$
|
-
|
|
|
$
|
-
|
|
The
Company believes that it is more likely than not that the deferred tax assets
will not be realized and have therefore provided a valuation allowance in the
accompanying balance sheet equal to the entire amount of the deferred tax
assets. The provision for income taxes on continuing operations differs from the
amount using the statutory federal income tax rate (34%) as
follows:
|
|
|
|
|
|
|
|
For the period
|
|
|
|
|
|
|
|
|
|
April
|
|
|
|
|
|
|
|
|
|
10, 2000
|
|
|
|
|
|
|
|
|
|
(Commencement
|
|
|
|
|
|
|
|
|
|
of Predecessor
|
|
|
|
For the years ended December
|
|
|
Business) to
|
|
|
|
31,
|
|
|
December
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
At
Statutory Rates
|
|
$
|
(158,688
|
)
|
|
$
|
(218,383
|
)
|
|
$
|
(767,426
|
)
|
State
income taxes, net of federal benefit
|
|
|
(28,004
|
)
|
|
|
(38,538
|
)
|
|
|
(135,428
|
)
|
NOL’s
utilized by Sentigen
|
|
|
—
|
|
|
|
—
|
|
|
|
297,895
|
|
Increase
in valuation allowance
|
|
|
186,692
|
|
|
|
256,921
|
|
|
|
604,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
At
December 31, 2009, the Company has federal and state net operating loss
carryforwards of approximately $1,345,615 for each tax jurisdiction, available
to offset future federal and state taxable income through December 31,
2029. There are no tax-related balances due to or from any entities of which the
Company was previously affiliated.
10.
Recently Issued Accounting Pronouncements
In June
2009, the FASB issued an update to ASC 810,
Consolidation
, which modifies
the existing quantitative guidance used in determining the primary beneficiary
of a variable interest entity (“VIE”) by requiring entities to qualitatively
assess whether an enterprise is a primary beneficiary, based on whether the
entity has (i) power over the significant activities of the VIE, and (ii) an
obligation to absorb losses or the right to receive benefits that could be
potentially significant to the VIE. The adoption of this guidance on
January 1, 2010 is not expected to have a material
impact on our financial position or results of
operations.
In
June 2009, the FASB issued revised guidance for the accounting of variable
interest entities (codified in December 2009 as ASU No. 2009-17), which replaces
the quantitative-based risks and rewards approach with a qualitative approach
that focuses on identifying which enterprise has the power to direct the
activities of a variable interest entity that most significantly impact the
entity’s economic performance. The accounting guidance also requires an ongoing
reassessment of whether an entity is the primary beneficiary and requires
additional disclosures about an enterprise’s involvement in variable interest
entities. This accounting guidance is effective as of the beginning of each
reporting entity’s first annual reporting period that begins after
November 15, 2009, and for interim periods within that first annual
reporting period, and for interim and annual reporting periods thereafter.
Earlier application is prohibited. The adoption of this guidance is not expected
to have a material impact on our financial position or results of
operations.
Management
does not believe that any other recently issued, but not yet effective
accounting pronouncements, if adopted, would have a material effect on the
accompanying financial statements.
11.
Commitments and Contingencies
The
Company has entered into a one-year sublease for office space in West Palm
Beach, Florida. The sublease expires in June 2010, with an option to
renew for an additional year. The sublease requires monthly payments of
approximately $1,390 through June 2010.
12.
Related Party Transactions
On
September 10, 2009, the Company entered into a loan agreement with the Chief
Executive Officer in the amount of $25,000 (the “September
Loan”). The loan bore interest at 6% per annum and was settled on
October 27, 2009.
On
October 20, 2009 a newly appointed Director was granted options to purchase
100,000 shares of the Company’s common stock at an exercise price of $0.05 per
share. The options vested immediately and have a ten year
term.
Please
refer to Notes 6 and 7 regarding additional related party
transactions.
ITEM
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
|
None.
ITEM 9A(T).
CONTROLS AND
PROCEDURES.
Controls
and Procedures
As of
December 31, 2009, Mr. Joseph K. Pagano, who as our Chief Executive
Officer, Secretary and Treasurer is our principal executive and principal
financial officer, evaluated the effectiveness of our "disclosure controls and
procedures" as defined in Rules 13a-15(e) and Rule 15d-15(e)of the Securities
Exchange Act of 1934 ("Disclosure Controls"). Based upon this evaluation, Mr.
Pagano concluded that the Disclosure Controls were effective, as of the date of
their evaluation, in reaching a reasonable level of assurance that information
required to be disclosed by us in the 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 the Securities and Exchange Commission's
rules and forms and that any information relating to us that is required to be
disclosed in the reports that we file or submit under the Securities Exchange
Act of 1934 is accumulated and communicated to our management, including our
principal executive/financial officer, to allow timely decisions regarding
required disclosure.
Changes
in Internal Controls Over Financial Reporting
During
the fiscal quarter ended December 31, 2009, there were no changes in our
"internal control over financial reporting" as defined in Rules 13a-15(f) and
15d-15(f) of the Securities Exchange Act of 1934 (“Internal Control”), that have
materially affected or are reasonably likely to materially affect our Internal
Control.
Management’s
Annual Report on Internal Control Over Financial Reporting
We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed pursuant to the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules, regulations and related forms, and that
such information is accumulated and communicated to our principal executive
officer and principal financial officer, as appropriate, to allow timely
decisions regarding required disclosure.
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. Our internal control over financial reporting
is designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles.
Our
internal control over financial reporting includes those policies and procedures
that:
|
•
|
Pertain
to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the
Company;
|
|
•
|
Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being
made only in accordance with authorizations of our management and
directors; and
|
|
•
|
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could have
a material effect on the financial
statements.
|
Management
assessed the effectiveness of our internal control over financial reporting as
of December 31, 2009. In making this assessment, management used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in
Internal Control over
Financial Reporting — Guidance for Smaller Public Companies
.
We are a
development stage organization, with our chief executive officer having control
over all of the detail accounting transactions and the day-to-day activities.
Although this control rests with the chief executive officer, care was taken to
select and employ key controls which are sensitive to the segregation of duties
issue. Based on our assessment of those criteria, management believes that the
Company maintained effective internal control over financial reporting as of
December 31, 2009.
This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit the Company to provide only management’s report in this
annual report on Form 10-K.
ITEM
9B.
OTHER
INFORMATION.
None.
P
ART III
ITEM
10.
DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE.
Directors
and Executive Officer
Set forth
below are the names, ages and current positions of our executive officer and
directors. We have one employee, in addition to Joseph K. Pagano, who presently
serves as our Chief Executive Officer, Secretary and Treasurer for no
compensation.
Name
|
|
Age
|
|
Position
|
Joseph
K. Pagano
|
|
65
|
|
Chief
Executive Officer, Secretary, Treasurer and Chairman of the Board of
Directors
|
Frederick
R. Adler
|
|
84
|
|
Director
|
Erik
R. Lundh
|
|
40
|
|
Director
|
Dean
R. Gresk
|
|
47
|
|
Director
|
The
following information includes information each director and executive officer
has given us about his age, all positions he holds, his principal occupation and
business experience for the past five years, and the names of other
publicly-held companies of which he currently serves as a director or has served
as a director during the past five years. In addition to the information
presented below regarding each director’s specific experience, qualifications,
attributes and skills that led our Board of Directors to the conclusion that he
should serve as a director, we also believe that all of our directors have a
reputation for integrity, honesty and adherence to high ethical standards. They
each have demonstrated business acumen and an ability to exercise sound
judgment, as well as a commitment of service to the Company and our Board of
Directors.
Joseph K.
Pagano
has served as our Chief Executive Officer, Secretary and Treasurer
and as the Chairman of our Board since our formation in October 2006 and as
the Chairman of the Board of Sentigen from 1996 until November 2006. He
served as Sentigen’s Chief Executive Officer and President from 1996 through
March 21, 2006. Mr. Pagano has been a private investor for more than
the past five years. Mr. Pagano has been active in venture capital for over
20 years, with investments in a wide variety of industries, including
information and technology, medical equipment, biotechnology, communications,
retailing and outsourcing. He was a founding investor in Ribi Immunochem, one of
the earliest biotechnology companies to go public and one of the first to focus
on cancer vaccines. He participated in the early round financing of Amcell
Cellular Communication, which was sold to Comcast. He was a founding investor of
NMR of America, the first MRI center business to go public and was also a
founding shareholder and director of Office Depot, the first office warehouse to
go public. Mr. Pagano’s vast experience with Sentigen and our
technology, together with his extensive experience in various industries, makes
him uniquely qualified to serve on our Board of Directors.
Frederick R.
Adler
has been our director since our formation in October 2006 and
was a director of Sentigen from May 1996 until November 2006.
Mr. Adler is Managing Director of Adler & Company, a venture capital
management firm he organized in 1968, and a general partner of its related
investment funds. He is also a director of SIT Investments, Inc., an investment
management firm located in Minneapolis, Minnesota and from 1977 to 1995 was a
trustee and member of the Finance Committee of Teachers Insurance and Annuity
Association. Mr. Adler is a retired partner of the law firm of Fulbright
& Jaworski L.L.P. and was previously a senior partner in the firm and of
counsel to the firm. From 1982 to 1996 he was a director of Life Technologies,
Inc., a significant supplier in the biotechnology area, serving at various times
until January 1, 1988 as either its Chairman or its Chief Executive Officer
and after 1988 as Chairman of its Executive Committee. He has been a founding
investor and a director of a number of technology entities including Data
General Corporation, Applied Materials, Inc., Life Technologies, Inc.,
Biotechnology General (now Savient) and Synaptic. In 1998, Mr. Adler
received an honorary doctorate from the Technion-Israel Institute of Technology
in recognition of his work in the development of the Israeli high technology
industry. Mr. Adler’s extensive experience with Sentigen, our former
parent company, and our technology, as well as experience in the biotechnology
field, makes him uniquely qualified to serve on our Board of
Directors.
Erik R.
Lundh
has been our director since May 2007. Mr. Lundh currently
leads operations in the Western Unites States for J. Robert Scott, a boutique
executive search firm Mr. Lundh joined in November 2009. Mr. Lundh is
also the leader of J. Robert Scott’s life sciences practice. From
2006 to November 2009, Mr. Lundh led the biotechnology sector of Heidrick &
Struggles’ global life sciences practice, and managed the firm’s San Francisco
office. He joined Heidrick & Struggles in 2006 and has more than
19 years’ experience in the life sciences industry. From 2005 to 2006,
Mr. Lundh served as a client partner with Korn/Ferry, an international
executive search firm. From 2003 to 2004, Mr. Lundh was executive vice
president of commercial operations for Sentigen Holding Corp. Earlier,
Mr. Lundh worked in industry for several life sciences companies in
operating roles spanning corporate strategy, business development, sales and
marketing, and commercial operations. Mr. Lundh’s extensive
experience in the biotechnology field and life sciences industry makes him
uniquely qualified to serve on our Board of Directors.
Dean R.
Gresk
has been our director since October 2009. Mr. Gresk is
currently a real estate broker with Aspen Signature Properties, a position he
has held since March 2007. Prior to joining Aspen Signature
Properties, Mr. Gresk worked for Sentigen Holding Corp., the Company’s former
holding company, as a manager reporting directly to Joseph K. Pagano, Sentigen’s
Chief Executive Officer and the Company’s Chief Executive
Officer. Mr. Gresk’s management experience with Sentigen, our former
parent company, and its operations, as well as his familiarity with our
technology, makes him uniquely qualified to serve on our Board of
Directors.
Section 16(a)
Beneficial Ownership Reporting Compliance
Based
solely on a review of Forms 3, 4 and 5 and amendments thereto furnished to us
with respect to our most recent fiscal year, we believe that all required
reports by our officers, directors and 10% or greater stockholders were filed on
a timely basis.
Code
of Ethics
We have
not yet adopted a formal code of ethics governing our executive officer and
directors. We have not adopted a code of ethics because we have minimal
operations. Our Board of Directors will address this issue in the future when
determined to be appropriate. In the meantime, our management intends to promote
honest and ethical conduct, full and fair disclosure in our reports to the SEC,
and compliance with applicable governmental laws and regulations.
Committees
We do not
and, for at least the near future, will not have an audit, nominating or
compensation committee because we believe that our Board of Directors is capable
of performing the respective functions of the foregoing committees as a result
of our size. The Board of Directors has determined that Frederick R. Adler
qualifies as an “audit committee financial expert” under SEC regulations and has
accounting or related financial management expertise and that Mr. Adler is
an “independent” director, as defined under the standards of independence set
forth in the Marketplace Rules of the NASDAQ Stock Market, although these
independent director standards do not apply to us because we do not have any
securities that are listed on NASDAQ.
We have
not adopted any procedures by which our stockholders may recommend nominees to
our Board of Directors.
ITEM
11.
EXECUTIVE
COMPENSATION.
Executive
Officer Compensation.
Mr.
Pagano, our only executive officer, is not compensated for the services he
provides other than with respect to reimbursement of out of pocket expenses
actually incurred. In the future, if and when our operations so dictate, we may
approve payment of salaries for our executive officer and directors, but
currently, no such plans have been approved.
Other than our
health insurance plan, in which Mr. Pagano participates, we do not have any
benefits, such as life insurance or any other benefits. We have no
equity compensation plans and we have not granted any options or other
stock-based awards to our executive officer. In addition, our
executive officer is not a party to any employment agreements.
Director
Compensation.
The
following table sets forth a summary of the compensation we paid to our
directors during fiscal year 2009.
Name
|
|
Option awards (1)
|
|
|
Total
|
|
|
|
($)
|
|
|
($)
|
|
Joseph
K. Pagano
|
|
|
—
|
|
|
|
—
|
|
Frederick
R. Adler
|
|
|
—
|
|
|
|
—
|
|
Erik
R. Lundh
|
|
|
—
|
|
|
|
—
|
|
Dean
R. Gresk (2)
|
|
$
|
634
|
|
|
$
|
634
|
|
(1) The
amounts in this column represent the dollar amount recognized in accordance with
FASB ASC Topic 718 for financial statement reporting purposes with respect to
the 2009 fiscal year for the fair value of stock options granted in 2009.
Assumptions used in the calculation of these amounts for the 2009 fiscal year
are included in Note 6 to our audited financial statements for the 2009 fiscal
year included elsewhere herein.
(2) On
October 20, 2009, we granted 100,000 ten-year options at $0.05 per share to Dean
R. Gresk. The options vested immediately and were granted at an
exercise price greater than the closing price on the date of grant.
Typically,
our directors are not compensated for the services they provide other than with
respect to reimbursement of out of pocket expenses actually incurred. Mr. Gresk,
however, in addition to serving as a director, will also provide certain
non-Board related services to us for which he will be paid $500 per day, in
addition to reimbursement for his travel expenses. Mr. Gresk received
no such payments in 2009. In the future, if and when our operations
so dictate, we may approve payment of retainers for our directors, but
currently, no such plans have been approved. Other than the option grants to
Messrs. Adler, Lundh and Gresk discussed above, there have been no equity
grants to directors to date.
ITEM
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
|
The
following table provides information with respect to the beneficial ownership of
our common stock as of March 23, 2010 by (1) each of our stockholders who
is known to us to be a beneficial owner of more than 5% of our outstanding
common stock, (2) each of our current directors, (3) our executive
officer, and (4) our executive officer and all of our directors as a group.
Except as otherwise specified, the named beneficial owner has sole voting and
investment power over the shares listed.
The
shares “beneficially owned” by a person are determined in accordance with the
definition of “beneficial ownership” set forth in the regulations of the SEC
and, accordingly, shares of our common stock subject to options, warrants or
other convertible securities that are exercisable or convertible within 60 days
as of March 23, 2010 are deemed to be beneficially owned by the person holding
such securities and to be outstanding for purposes of determining such holder's
percentage ownership. The same securities may be beneficially owned by more than
one person. Shares of common stock subject to options, warrants, restricted
stock units, restricted stock awards or convertible securities that are not
exercisable or do not vest within 60 days from March 23, 2010 are not included
in the table below as shares “beneficially owned”.
Percentage
ownership of our common stock is based on the 12,747,844 shares of common stock
outstanding as of March 23, 2010.
Name and Address of Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership
|
|
|
Percentage of
Common Stock
|
|
|
|
|
|
|
|
|
Joseph
K. Pagano
|
|
|
1,195,265
|
(1)
|
|
|
9.4
|
%
|
1217
South Flagler Drive, 3
rd
Floor
West
Palm Beach, Florida 33401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frederick
R. Adler
|
|
|
1,611,941
|
(2)
|
|
|
12.5
|
%
|
1520 S. Ocean
Boulevard
Palm
Beach, Florida 33480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Erik
R. Lundh
|
|
|
55,000
|
(3)
|
|
|
*
|
|
c/o Heidrick
& Struggles
One
California Street, Ste. 2400
San Francisco,
CA 94111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Samuel
A. Rozzi
|
|
|
1,628,777
|
(4)
|
|
|
12.8
|
%
|
c/o Corporate
National Realty Inc.
135
Crossways Park Drive, Suite 104
Woodbury,
New York 11797
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Joseph A. Pagano, Jr. 2007 Trust
|
|
|
1,128,157
|
|
|
|
8.8
|
%
|
1217
South Flagler Drive, 3
rd
Floor
West
Palm Beach, Florida 33401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Longview
Partners, L.P.
|
|
|
1,260,458
|
(5)
|
|
|
9.9
|
%
|
c/o Adler
& Co.
400
Madison Ave. Suite 7C
New
York, NY 10017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Susan
Chapman
|
|
|
1,287,525
|
(6)
|
|
|
10.1
|
%
|
c/o Adler
& Co.
400
Madison Ave., Suite 7C
New
York, NY 10017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dean
R. Gresk
|
|
|
100,000
|
(7)
|
|
|
*
|
|
c/o
Aspen Signature Properties
215
S. Monarch
Suite
201
Aspen,
CO 81611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
officer and all directors as a group (4 persons)
|
|
|
2,962,206
|
(1)(2)
|
|
|
23.2
|
%
|
|
*
|
Represents
less than 1%.
|
|
(1)
|
Includes
25,000 shares of Common Stock held of record by the Joseph Pagano,
Jr. Trust. Mr. Pagano disclaims beneficial ownership of all shares
other than those held in his name. Does not include the shares of Common
Stock held of record by The Joseph A. Pagano Jr. 2007 Trust, a trust
for which Mr. Pagano has no investment control, right to revoke, or
voting rights.
|
|
|
|
|
(2)
|
Includes
100,000 shares issuable upon the exercise of stock options to
purchase share of our Common Stock that are exercisable within
60 days of March 23,
2010
|
|
(3)
|
Includes
2,500 shares held of record by each of Mr. Lundh’s son and
daughter. Mr. Lundh disclaims beneficial ownership of these shares.
Includes 50,000 shares issuable upon the exercise of stock options to
purchase shares of our Common Stock that are exercisable within
60 days of March 23, 2010.
|
|
(4)
|
Includes
150,000 shares held by Scarsdale Limited Partnership, of which
Mr. Rozzi is general partner. Mr. Rozzi’s daughter and The
Samuel A. Rozzi Grantor Retained Annuity Trust, of which Mr. Rozzi’s
daughter is trustee, are the sole limited partners of Scarsdale Limited
Partnership. Mr. Rozzi disclaims beneficial ownership of all shares
other than those held in his name.
|
|
(5)
|
Susan
Chapman is the general partner of Longview Partners, L.P., which is the
registered holder of these shares. Mrs. Chapman is an adult daughter
of Frederick R. Adler.
|
|
(6)
|
Includes
the shares held of record by Longview Partners, L.P. (of which
Mrs. Chapman is the general partner), 300 shares held in trusts
for the benefit of Mrs. Chapman’s children and 26,767 shares
held of record by Mrs. Chapman’s
spouse.
|
|
(7)
|
Represents
100,000 shares issuable upon the exercise of stock options to purchase
shares of our Common Stock that are exercisable within 60 days of March
23, 2010.
|
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
|
Certain
Relationships and Related Transactions
On June
21, 2007, we issued a demand promissory note in favor of each of Mr. Frederick
R. Adler, Mr. Joseph K. Pagano, D.H. Blair Investment Banking Corp. and Mr.
Samuel A. Rozzi (together, the “Lenders”), evidencing loans extended to us in
the principal amount of $50,000, $50,000, $50,000 and $30,000, respectively, by
the Lenders, for an aggregate amount of $180,000. The promissory notes accrue
interest at Citibank N.A.’s reported prime rate plus 3%, which is due and
payable at the time the principal amount of each respective promissory note
becomes due. The promissory notes had a maturity date of June 22, 2009, except
that each Lender may demand the payment of all of the outstanding principal and
interest of his or its respective promissory note at any time prior to the
maturity date. At the time of the loan transaction, each of the Lenders was the
beneficial owner of 5% or more of the outstanding shares of our Common Stock. In
addition, Mr. Pagano is our Chief Executive Officer and the Chairman of our
Board of Directors, and Mr. Adler is a member of our Board of Directors.
On May 9, 2008, in connection with the financing discussed below, (i)
$24,675 of the outstanding amount of Mr. Pagano’s promissory note was applied to
the subscriptions made by Mr. Pagano and a trust for the benefit of his son; and
(ii) $54,425, the entire outstanding amount of D.H. Blair Investment Banking
Corp.’s promissory note, including principal and accrued interest, was applied
to the subscriptions made by three affiliates of D.H. Blair Investment Banking
Corp. On May 16, 2008, Mr. Pagano made a demand for repayment of the remaining
outstanding principal and interest of his promissory note. On June
20, 2008, in connection with the second tranche of the financing discussed above
(i) $30,000 of the outstanding principal amount of Mr. Rozzi’s promissory note
was applied to the subscription made by Mr. Rozzi and he received a payment for
$2,961 in accrued interest on July 10, 2008 and (ii) $53,740 of the outstanding
amount of principal and accrued interest of Mr. Adler’s promissory note was
applied to the subscription made by Mr. Adler and he received a payment for the
remaining $1,195 in accrued interest. All of the promissory notes
have been cancelled and there are no amounts outstanding.
As of
March 10, 2008, we entered into a Revolving Credit Note with Mr. Joseph K.
Pagano, our Chief Executive Officer and the Chairman of our Board of Directors,
which provides for interest-free loans to the Company. Under the Revolving
Credit Note, during March and April of 2008, Mr. Pagano made loans to the
Company in the aggregate amount of $106,914, which were used to finance our
operating activities. The Revolving Credit Note matures on March 10, 2009 and
Mr. Pagano may demand the payment of all of the outstanding principal amount of
all borrowings under the Revolving Credit Note at any time prior to the maturity
date. Upon the occurrence of certain specified events, the entire outstanding
balance of the borrowings under the Revolving Credit Note automatically becomes
immediately due and payable. The total aggregate amount of $106,914 was applied
to Mr. Pagano’s subscription in the Company’s financing that is discussed below.
As of the date hereof, there are no borrowings outstanding under the Revolving
Credit Note.
On May 9,
2008, we closed on a $750,000 financing, consisting of cash in the amount of
$563,986 and the conversion of $186,013 of indebtedness. Participants in the
financing entered into Subscription Agreements for an aggregate of 3,947,368
shares of common stock, based on the closing price of $0.19 per share of our
common stock on the closing date. Issuance of the shares is subject to
stockholder approval of the amendment to our Certificate of Incorporation to
increase the number of shares of our authorized Common Stock, which was approved
by the stockholders at our 2008 Annual Meeting which took place on June 24,
2008.
Ten of
our largest stockholders (each holding 50,000 or more shares of our common
stock) subscribed in the May 2008 financing, of which the following are holders
of 5% or more of our common stock: Joseph K. Pagano, Frederick R. Adler,
Longview Partners L.P., The Joseph A. Pagano Jr. 2007 Trust and Samuel A. Rozzi,
who subscribed for $122,325, $109,350, $112,125, $100,350 and $95,775,
respectively. Also, Mr. Pagano serves as our Chairman and Chief Executive
Officer, and Mr. Adler is a member of our Board of Directors. The general
partner of Longview Partners L.P. is Susan Chapman, an adult daughter of Mr.
Adler.
Certain
of the investors utilized the amounts outstanding under the June 2007 loans
described above toward the payment for their subscription. All other amounts due
to the Lenders may be repaid from the proceeds of the May 2008 financing to the
extent that the loans are not applied our anticipated additional capital
raise.
On June
20, 2008, we closed on the second tranche of
our previously announced capital raising financing of up to $950,000.
The second tranche was for up to $200,000 of which $145,980 was subscribed for,
consisting of cash in the amount of $62,168 and the conversion of $83,740 of
indebtedness. Participants in this second tranche of the financing entered into
subscription agreements to purchase an aggregate of 767,936 shares of common
stock, based on the closing price of $0.19 per share of the Company’s common
stock on the closing date. The second tranche of financing closed on terms that
are substantially similar in all material respects to the terms of the May 9,
2008 financing.
Six of
our largest stockholders (each holding 50,000 or more shares of the Company's
common stock) purchased shares in the second tranche of the financing, of which
Messrs. Adler and Rozzi are holders of 5% or more of our common stock. Mr. Adler
is also a director of the Company.
On July
9, 2008, we raised $54,020 of additional funds from the unsubscribed portion of
the second tranche of the financing from two investors who participated in the
June 20, 2008 closing and desired to exercise their over-allotment
option. We issued an aggregate of 337,424 shares of our common stock
in connection with the over-allotment exercise, based on the closing price of
$0.18 per share of our common stock on July 9, 2008 to Messrs. Rozzi and
Serure.
On
October 26, 2009, we issued to each of four individuals who qualify as
“accredited investors”, $50,000 principal amount of our subordinated convertible
promissory notes (the “Notes”) (a total of $200,000 principal amount of Notes).
The investors include our Chief Executive Officer and a member of our Board of
Directors, a beneficial owner of more than 10% of our common stock
and another accredited investor. The $50,000 principal amount of
Notes issued to our Chief Executive Officer represented $25,000 of new funds
received by us and a rollover of a $25,000 loan made by him to us
in September 10, 2009. Principal and accrued
interest on the Notes are payable upon demand of the holders. The
Notes bear interest at the rate of 4% per annum. The holders may
convert the outstanding principal amount of the Notes and accrued and unpaid
interest thereon into shares of our common stock at any time at the
conversion price then in effect on the conversion date. We may prepay
the Notes on 20 days prior written notice to the holders. We have
agreed to include the shares of common stock issuable upon conversion of the
Notes in any applicable registration statement filed by us with the SEC covering
our equity securities.
Review,
Approval or Ratification of Transactions with Interested Persons
All
transactions with related persons covered by Item 404(a) of Regulation S-K are
reviewed by the full Board of Directors. We do not have a written
policy in respect of such review.
Director
Independence
Our
common stock trades on the OTCBB, which currently does not have director
independence requirements. Messrs. Adler and Lundh have been deemed by our
Board of Directors to be “independent” directors, as defined under the standards
of independence set forth in the Marketplace Rules of the NASDAQ Stock Market,
although these independent director standards do not directly apply to us
because we do not have any securities that are listed on NASDAQ. As discussed
above, Mr. Gresk is entitled to receive $500 per day for non-Board related
services to the Company, in addition to reimbursement of his travel
expenses. Mr. Gresk may not be considered independent if he received
in excess of $120,000 in a year from the Company. For the year ended
December 31, 2009, Mr. Gresk received no such payments. In
determining independence, the Board of Directors has determined, among other
items, whether the directors have any relationship that would interfere with the
exercise of independent judgment. We do not expect to have an audit,
nominating or compensation committee because we believe that our Board of
Directors is capable of performing the respective functions of the foregoing
committees as a result of our size.
ITEM
14. PRINCIPAL
ACCOUNTING FEES AND SERVICES.
The
following table sets forth fees billed to us by our auditors during the fiscal
years ended December 31, 2009 and 2008 for: (i) services rendered for
the audit of our annual financial statements, (ii) services by our auditor
that are reasonably related to the performance of the audit or review of our
financial statements and that are not reported as audit fees,
(iii) services rendered in connection with tax compliance, tax advice and
tax planning, and (iv) all other fees for services rendered.
|
|
December 31, 2008
|
|
|
December 31, 2009
|
|
(i) Audit
Fees
|
|
$
|
40,000
|
|
|
$
|
35,000
|
|
(ii) Audit
Related Fees
|
|
|
-
|
|
|
|
-
|
|
(iii) Tax
Fees
|
|
|
-
|
|
|
|
-
|
|
(iv) All
Other Fees
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total
Fees
|
|
$
|
40,000
|
|
|
$
|
35,000
|
|
Audit
Fees
Audit
fees consist of fees billed for professional services rendered for the audit of
our financial statements and services that are normally provided by Raich Ende
Malter & Co. LLP in connection with statutory and regulatory filings or
engagements.
Policy
on Pre-Approval of Audit and Permissible Non-Audit Services of Independent
Auditors
We
currently do not have a designated audit committee, and accordingly, our Board
of Directors’ policy is to pre-approve all audit and permissible non-audit
services provided by the independent auditors. The independent auditors are
required to periodically report to our Board of Directors regarding the extent
of services provided by the independent auditors in accordance with this
pre-approval, and the fees for the services performed to date. During 2009, all
of the audit fees were pre-approved by our Board of Directors.
PART IV
ITEM
14.
EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES
Exhibit
|
|
Description
|
3.1
|
|
Certificate
of Incorporation of SentiSearch, Inc.(1)
|
|
|
|
3.1.1
|
|
Certificate
of Amendment to Certificate of Incorporation of SentiSearch, Inc. dated
June 24, 2008, incorporated by reference to Exhibit 3.1 on
SentiSearch’s Form 8-K filed on June 26, 2008.
|
|
|
|
3.2
|
|
Bylaws
of SentiSearch, Inc.(1)
|
|
|
|
4.1
|
|
Specimen
Common Stock Certificate of SentiSearch, Inc.(2)
|
|
|
|
10.1
|
|
Exclusive
License Agreement dated April 10, 2000 between Sentigen Biosciences, Inc.
(formerly known as Sentigen Corp.), and The Trustees of Columbia
University in the City of New York.(1)
|
|
|
|
10.2
|
|
Consent
to the Assignment to SentiSearch, Inc. of the Exclusive License Agreement
dated April 10, 2000 between Sentigen Biosciences, Inc. (formerly
known as Sentigen Corp.), and The Trustees of Columbia University in
the City of New York: (1) Letter dated September 25, 2006 by Sentigen
Biosciences, Inc. requesting consent to assignment of the Exclusive
License Agreement, and (2) Letter dated October 17, 2006 by Columbia
University granting consent to the assignment of the Exclusive License
Agreement.(1)
|
|
|
|
10.3
|
|
Separation
and Distribution Agreement, dated as of October 10, 2006, between Sentigen
Holding Corp. and SentiSearch, Inc.(1)
|
|
|
|
10.4
|
|
Contribution
Agreement, dated as of October 10, 2006, between Sentigen Holding Corp.
and SentiSearch, Inc.(1)
|
|
|
|
10.5
|
|
Patent
Assignment, dated October 10, 2006, by Sentigen Holding Corp. to
SentiSearch, Inc.(1)
|
|
|
|
10.6
|
|
Form
of Indemnification Agreement.(1)
|
|
|
|
10.7
|
|
Option
Agreement dated May 16, 2007 by and between Erik R. Lundh and SentiSearch,
Inc., incorporated by reference to Exhibit 10.1 to SentiSearch’s Form
8-K filed on May 18, 2007.
|
|
|
|
10.8
|
|
Form
of Demand Promissory Note, incorporated by reference to Exhibit 10.1 to
SentiSearch’s Form 8-K filed on June 22, 2007.
|
|
|
|
10.9
|
|
Revolving
Credit Note, dated as of March 10, 2008, incorporated by reference to
Exhibit 10.1 to SentiSearch’s on Form 10-Q filed for the Quarter
Ending March 31, 2008.
|
|
|
|
10.10
|
|
Form
of Subscription Agreement, incorporated by reference to Exhibit 10.1
to SentiSearch’s Form 8-K filed on May 15,
2008.
|
|
|
|
10.11
|
|
Revolving
Credit Note dated as of March 10, 2008, incorporated by reference to
SentiSearch’s Exhibit 10.1 on Form 8-K filed on May 15,
2008.
|
|
|
|
10.12
|
|
Form
of Subscription Agreement, incorporated by reference to Exhibit 10.1 to
SentiSearch’s Form 8-K filed on June 26,
2008.
|
10.13
|
|
Sublease
dated as of June 16, 2009 between SentiSearch and Muriel Siebert &
Co., Inc., incorporated by reference to Exhibit 10.1, to SentiSearch’s
Quarterly Report Form 10-Q for the Quarter Ended September 30,
2009.
|
|
|
|
10.14
|
|
Subordinated
Convertible Promissory Note made by SentiSearch in favor of Samuel
Rozzi.*
|
|
|
|
10.15
|
|
Subordinated
Convertible Promissory Note made by SentiSearch in favor
of Frederick R. Adler.*
|
|
|
|
10.16
|
|
Subordinated
Convertible Promissory Note made by SentiSearch in favor
of Joseph K. Pagano.*
|
|
|
|
10.17
|
|
Subordinated
Convertible Promissory Note made by Sentisearch in favor
of Rosalind Davidowitz.*
|
|
|
|
10.18
|
|
Stock
Option Agreement between SentiSearch and Dean R. Gresk dated as of October
20, 2009.*
|
|
|
|
31
|
|
Certification
of Chief Executive and Financial Officer pursuant to Rule 13a-14 and Rule
15d-14(a), promulgated under the Securities and Exchange Act of 1934,
as amended.*
|
|
|
|
32
|
|
Certification
of Chief Executive and Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.*
|
(1)
|
Incorporated
by reference to SentiSearch’s Registration Statement on Form 10-SB filed
with the SEC on November 15, 2006. File
No. 000-52320.
|
(2)
|
Incorporated
by reference to SentiSearch’s Registration Statement on Amendment
No. 1 to Form 10-SB filed with the SEC on November 29, 2006.
File No. 000-52320.
|
* Filed
herewith.
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
SENTISEARCH,
INC.
|
|
|
|
Date:
March 31, 2010
|
By:
|
/s/ Joseph K. Pagano
|
|
|
Joseph
K. Pagano,
Chief
Executive Officer
(Principal
Executive Officer)
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated:
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
/s
/ Joseph K. Pagano
|
|
|
|
|
Joseph
K. Pagano
|
|
Chief
Executive Officer, Secretary and Treasurer
Chairman
of the Board, Principal Executive
Officer
and Principal Financial and Accounting
Officer
|
|
March
31, 2010
|
|
|
|
|
|
/s/ Frederick R. Adler
|
|
|
|
|
Frederick
R. Adler
|
|
Director
|
|
March
31, 2010
|
|
|
|
|
|
/s/ Dean R. Gresk
|
|
|
|
|
Dean
R. Gresk
|
|
Director
|
|
March
31, 2010
|
|
|
|
|
|
/s/ Erik R. Lundh
|
|
|
|
|
Erik
R. Lundh
|
|
Director
|
|
March
31, 2010
|
EXHIBIT
INDEX
Exhibit
|
|
Description
|
3.1
|
|
Certificate
of Incorporation of SentiSearch, Inc.(1)
|
|
|
|
3.1.1
|
|
Certificate
of Amendment to Certificate of Incorporation of SentiSearch, Inc. dated
June 24, 2008, incorporated by reference to Exhibit 3.1 on
SentiSearch’s Form 8-K filed on June 26, 2008.
|
|
|
|
3.2
|
|
Bylaws
of SentiSearch, Inc.(1)
|
|
|
|
4.1
|
|
Specimen
Common Stock Certificate of SentiSearch, Inc.(2)
|
|
|
|
10.1
|
|
Exclusive
License Agreement dated April 10, 2000 between Sentigen Biosciences, Inc.
(formerly known as Sentigen Corp.), and The Trustees of Columbia
University in the City of New York.(1)
|
|
|
|
10.2
|
|
Consent
to the Assignment to SentiSearch, Inc. of the Exclusive License Agreement
dated April 10, 2000 between Sentigen Biosciences, Inc. (formerly
known as Sentigen Corp.), and The Trustees of Columbia University in
the City of New York: (1) Letter dated September 25, 2006 by Sentigen
Biosciences, Inc. requesting consent to assignment of the Exclusive
License Agreement, and (2) Letter dated October 17, 2006 by Columbia
University granting consent to the assignment of the Exclusive License
Agreement.(1)
|
|
|
|
10.3
|
|
Separation
and Distribution Agreement, dated as of October 10, 2006, between Sentigen
Holding Corp. and SentiSearch, Inc.(1)
|
|
|
|
10.4
|
|
Contribution
Agreement, dated as of October 10, 2006, between Sentigen Holding Corp.
and SentiSearch, Inc.(1)
|
|
|
|
10.5
|
|
Patent
Assignment, dated October 10, 2006, by Sentigen Holding Corp. to
SentiSearch, Inc.(1)
|
|
|
|
10.6
|
|
Form
of Indemnification Agreement.(1)
|
|
|
|
10.7
|
|
Option
Agreement dated May 16, 2007 by and between Erik R. Lundh and SentiSearch,
Inc., incorporated by reference to Exhibit 10.1 to SentiSearch’s Form
8-K filed on May 18, 2007.
|
|
|
|
10.8
|
|
Form
of Demand Promissory Note, incorporated by reference to Exhibit 10.1 to
SentiSearch’s Form 8-K filed on June 22, 2007.
|
|
|
|
10.9
|
|
Revolving
Credit Note, dated as of March 10, 2008, incorporated by reference to
Exhibit 10.1 to SentiSearch’s on Form 10-Q filed for the Quarter
Ending March 31, 2008.
|
|
|
|
10.10
|
|
Form
of Subscription Agreement, incorporated by reference to Exhibit 10.1
to SentiSearch’s Form 8-K filed on May 15,
2008.
|
|
|
|
10.11
|
|
Revolving
Credit Note dated as of March 10, 2008, incorporated by reference to
SentiSearch’s Exhibit 10.1 on Form 8-K filed on May 15,
2008.
|
|
|
|
10.12
|
|
Form
of Subscription Agreement, incorporated by reference to Exhibit 10.1 to
SentiSearch’s Form 8-K filed on June 26, 2008.
|
|
|
|
10.13
|
|
Sublease
dated as of June 16, 2009 between SentiSearch and Muriel Siebert &
Co., Inc., incorporated by reference to Exhibit 10.1, to SentiSearch’s
Quarterly Report Form 10-Q for the Quarter Ended September 30,
2009.
|
|
|
|
10.14
|
|
Subordinated
Convertible Promissory Note made by SentiSearch in favor of Samuel
Rozzi.*
|
10.15
|
|
Subordinated
Convertible Promissory Note made by SentiSearch in favor
of Frederick R. Adler.*
|
|
|
|
10.16
|
|
Subordinated
Convertible Promissory Note made by SentiSearch in favor
of Joseph K. Pagano.*
|
|
|
|
10.17
|
|
Subordinated
Convertible Promissory Note made by Sentisearch in favor
of Rosalind Davidowitz.*
|
|
|
|
10.18
|
|
Stock
Option Agreement between SentiSearch and Dean R. Gresk dated as of October
20, 2009.*
|
|
|
|
31
|
|
Certification
of Chief Executive and Financial Officer pursuant to Rule 13a-14 and Rule
15d-14(a), promulgated under the Securities and Exchange Act of 1934, as
amended.*
|
|
|
|
32
|
|
Certification
of Chief Executive and Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.*
|
(1)
|
Incorporated
by reference to SentiSearch’s Registration Statement on Form 10-SB filed
with the SEC on November 15, 2006. File
No. 000-52320.
|
(2)
|
Incorporated
by reference to SentiSearch’s Registration Statement on Amendment
No. 1 to Form 10-SB filed with the SEC on November 29, 2006.
File No. 000-52320.
|
* Filed
herewith.