RECENT DEVELOPMENTS
In May 2004, we began to test a possible antidote against the viruses often mentioned as weapons of bioterrorism. These include SARS, bird flu, Hantavirus, respiratory syncytial virus (RSV), monkeypox, Ebola virus, West Nile virus, St. Louis encephalitis, Eastern Equine encephalitis virus, smallpox, Dengue, Crimean-Congo Hemorrhagic Fever, and polio. We do not know whether the antidote will be effective against any of these diseases.
In June 2004, we sent 22,000 SNPs to Genome Quebec to begin a large-scale genotyping project to find genes which we believe may cause common cancers. We hope to find genes which could be used as an early warning system to enable early, cost-effective screening of patients at high risk of cancer. The cost of this project to us will be approximately $1,000,000. We do not know whether we will be able to isolate any such genes or whether any effective tests or beneficial therapies can be developed as a result.
In July 2004, we signed a five-year lease for 1,903 square feet of new office space in St. Louis, Missouri at an initial annual rental rate of $26,642, escalating to $32,351 in year five. We are having the lab space on the premises renovated so we can perform sample processing in-house.
During the second quarter of 2004, we amended our February 5, 2004 letter agreement with Pierpoint Investissements SA, a British Virgin Islands investment company. The amended agreement provides as follows:
Pierpoint is interested in purchasing a minimum of $500,000 up to a maximum of $2 million in restricted common stock each year for a period of 10 years at the 30 trading day average market price for our stock (mid-price of bid and asked), less a discount of 25%, for the right to receive a total of 40 million common stock purchase warrants with a strike price equal to the 30 trading day market average price, less a discount of 40%.
1. For the first year only, Pierpoint will purchase $225,000 in common stock at a price of $.045 per share and an additional $275,000 in common stock at the 30 trading day market average price, less a discount of 25%, by no later than February 18, 2005. Completion of those purchases will entitle Pierpoint to be eligible for 5 million warrants with a strike price equal to the 30 trading day market average price, with a discount of 40%.
2. Pierpoint would require that the 5 million warrants be issued against the first $225,000 investment and would be exercisable at a strike price equal to the 30 trading day market average, less a discount of 50%. The warrants would be exercisable during a two-year term. These 5 million warrants will count against the 40 million warrants referred to above.
3. Upon our receipt of the first $225,000 investment, Mr. Nikolas Piers Gilding, a director of Pierpoint, will be eligible to purchase $250,000 in common stock at the price of $.045 per share, and would receive 5,555,556 warrants with a strike price equal to the 30 trading day market average price, less a discount of 50%, exercisable for a two-year period. Mr. Gilding will have the right to purchase the $250,000 in shares within 30 working days after Pierpoint's first $225,000 transaction has been completed.
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