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well......can't argue with you on that.
He, and the rest of the team, turned out to be pretty rotten. All a game to see if they could make themselves some dough, regardless of shareholder interest.
I have a feeling this will follow him for a very long time (meaning that I will make sure of it)
ok, so for what it's worth, I sent the following to the company via the website. Why not? Shouldn't we all, regardless of what we feel, continue to send the same request, over and over again, until we get a legitimate answer?
What is wrong with literally asking the same question, over and over again, until we demand an answer? It's our money, not theirs. Frankly, I think this team needs to answer up.
I can tell you one thing: This team isn't going to rip shareholders off. Period.
Here is the inquiry:
Does the company intend to commercialize its IP? Yes or No?
If not, please explain. This team has been in place for over 3 years. Please respond with a thoughtful answer.
Well, LocWolf, while we wait, it should at least be interesting to see what HDC does with filings and an annual meeting in the coming couple of months. We know that they deliberately haven't commercialized anything (contrary to what they initially told shareholders), since they've been at the helm for over 3 years and have only pursued legal issues (and granted themselves significant numbers of shares). It still boggles my mind how or why they wouldn't have made any efforts to commercialize something - perhaps they are inept (likely), or perhaps they thought they could settle something with Intel quickly (also likely although, if that was their thought, it backfired). Either way, they've deliberately failed to adequately represent shareholder interest, and the team should be ashamed of itself. As it relates to a potential annual meeting, I can't imagine one will happen this year because a) funds are running low, b) there are only legal issues to report, nothing else, and c) HDC made a mockery of the meeting last year and then rewarded themselves as their first order of business post-meeting for their 'ongoing contributions to the company'.
That said, we have to assume they will issue a 10-k, although I wouldn't put it past them to once again come up with a reason to request an extension. Time will tell. Once it is issued, I'm really interested in seeing how much cash is left. Further, since they haven't commercialized anything, they don't need to spend any time outlining the potential value of the IP, since the IP has proven worthless in their hands. They've just wasted the sole rights to SVM-RFE. On the other hand, what they need to outline in the 10-k is something substantive relative to the ongoing legal issues. Intel, of course, is the primary issue, but they also have an obligation to tell shareholders what is going on with Vennwest, Bear, and Moore. I guess these lawsuits are just draining the money, so here's a thought. I'd be interested in others' feedback:
Given the apparent likelihood that the Intel suit drags on, and given the shameful strategy in which HDC won't commercialize anything to generate revenue, reality says that the company's finances soon evaporate, resulting in bankruptcy. So....what happens under this scenario? Would the Intel suit still be pursued? If so, and if HDC in bankruptcy obtains a settlement or a favorable jury verdict, what happens then? Do those with preferred shares (ie, George and the other guy who loaned money and granted themselves significant equity) come before us? I'd be interested in what potentially happens here because, based on circumstances, I actually can't envision a scenario in which bankruptcy DOESN'T happen. Obviously, I hope to be proven wrong.
The team won't have the money to carry us through, assuming Intel continues the fight into 2022, and the current lawsuits are exhausting the money. Accordingly, is there a chance the current team gambled and lost, and now needs an 'out'? Perhaps they tell us (very soon) that they "would have been able to move the company forward, had it not been for the legal actions against them"? I wouldn't put it past them, and I believe the next couple of months may be very telling about HDC's success or last gasp.
It's unfortunate that the current team strategized in this manner, rather than focusing on running the company.
The more I think about this, the more I want to sell at multiples, since Cottonmather seems to have it nailed down. Well done.
In addition to my sell orders of 11 cents and 15 cents, I think it would be silly of me not to put in another sell order of 1 million shares (yes, I have them) at .18. That would essentially be a six-bagger, and I believe in the newbies, since they are very confident in their approach.
That means I put in sell orders totaling 1.9 million shares. Love it. Cottonmather, in addition to moderating several boards, you are very much appreciated for appearing on our board. You're the best. (or are you, punk?)
hey coolhandluke,
another thought. I saw your opening response to another post:
It is not volume alone it is many chart indicators
wow, you seem like a genius. thanks so much for the contribution. you've done a lot of research, and we sincerely appreciate it.
hey coolhandluke
don't get us wrong. nobody is negative, especially when you tell us that we can get that 5x return. After all, if you look at my prior posts, you will see that I banked on you guys and put in sell order at 11 and 15 cents.
Good for you guys. You're the best, since I fully expect a solid return based on your expertise.
However, it's not going to play out that way, is it? time will tell but, of course, you will move on to another board. Perhaps you guys can wax poetically somewhere else
Orders placed.
Sell order of 400,000 with limit of .11; and
Sell order of 500,000 with limit of .15
You guys are the best. Thanks for visiting the board out of the blue, and for informing us of what we've missed. I can't wait to get my investment back because of your incredible insight and, of course, for holding the rest of my shares for even more profit based on reality.
Good luck.
Since it appears that you have the magic wand that the rest of us don't have, I think I've been short-sighted. I posted previously that I put in a large sell order with a limit of .11, so I better put in another sell order with a limit of .15. 500,000 shares at .15.
Bring it on. After all, that's only a 5-bagger, and that should be no problem for folks like you who have the answers. Bring it.
LocWolf, put in a sell order. The newbies are, after all, the ones with the brains, so let's kick back and capitalize on their intellect.
Of course, timing is everything.
I put in a big sell order with a limit of 0.11. Bring it home. Hell, the current HDVY management team and board doesn't do anything, so if you want to push this up for a quick sell, I'd love to be in on it. Just don't sell too quickly on me.
Alan, yes
Motion to Dismiss. Here is Intel's leading summary:
Mathematical algorithms are categorically ineligible for patent protection. This was the law 40 years ago. This is the law today. HDC describes all four asserted patents as covering mathematical algorithms for recognizing patterns in data. Accordingly, it is clear from the face of the pleadings that all of the asserted claims are categorically ineligible for patent protection, under 35 U.S.C. § 101.
Hey, since I'm thinking about all this nonsense, a thought occurred to me. The recent 8-k by HDC referenced Quirk's decision to drop the Quirk/Bear complaint against HDC, although Cindy Bear didn't drop the complaint. Does anyone else find this interesting?
As we know, Bear owns about 1.3 million shares, and Quirk owns about 13 million (based on the initial complaint filing). Yet, Bear hasn't dropped the complaint. That's confusing, to say the least, since she doesn't have any where NEAR the opportunity that Quirk has with a positive outcome on the complaint.
Further, I saw that Ms Bear sent a note to select shareholders that she was essentially 'busy with other things and won't be easily reached', but would otherwise stay focused on the issues at hand.
Are you kidding me?
Think about it. Quirk is tied with Vennwest who is tied to Kowbel and they are tied with Bear. Once the Vennwest suit was filed, Quirk bailed on the personal complaint (since he didn't need it anymore) but Bear sat idle. The problem here is that if Quirk truly left Bear out to dry, Bear could sue the 'you know what' out of Quirk if things were to go bad.
In other words, this is an interesting scheme to keep the pressure on HDC, while diluting funds. I really don't think they've left Bear out to dry, does anyone else? It's a well thought out approach.
As I've personally informed HDC leadership, they did this to themselves.
What a disaster all around.
Hey Hitoneout,
I applaud your positive attitude since, after all, that’s all HDC shareholders have left. Let’s take a step back and analyze this entire scenario.
From 2013-2017, under the astute leadership of Quirk and Kowbel (among others), not a single thing was accomplished. No licensing deals, no commercialized products. Further, in 2016 and 2017, Neogenomics made our leadership look like fools, and left HDC penniless. Thus, in 2017, they stepped down and McGovern took over.
Now let’s look at the current team. McGovern et al took control, and we witnessed some success, such as the arbitration win against Neo (although most went to lawyers), and the 5-year patent term extension for SVM-RFE. Yet, since then, we’ve only witnessed brutal dilution, lack of communication, and clearly a deliberate strategy to gain internal control and equity, while hoping to bank on a singular effort: the Intel suit. It appears that the strategy was to hope for success with the lawsuit, since insiders would win handsomely, and the rest of us presumably go away quietly feeling as though we didn’t lose everything (and might even get a modest gain, regardless of the absurd dilution).
Then, along came the old regime, who couldn’t let it go, and tried to deplete the coffers. Quirk pounded his chest with three ridiculous emails to select HDC shareholders on the heels of the Vennwest suit to convey that ‘they didn’t see this coming’. That’s terrific, except that if it wasn’t for him and his compadres, we wouldn’t be here in the first place.
So, back to the current team. McGovern and his ‘friends and family’ haven’t licensed a single thing or commercialized a single thing in three years. If they had appropriately represented shareholders, they would have commercialized something (anything), and our share price would be sitting at a more reasonable level, which might then position shareholders for some level of success if the Intel suit results in something.
I don’t think any shareholders could have written this ridiculous script.
King Oil, I'm not sure if we could provide a straightforward answer to your question. Having read the complaint, I saw that it includes provisions such as this:
The McGovern-Dengler Loans and stock conversions should,
therefore, be rescinded and restitution should be made, with all sums paid under such
contracts returned to the Company, and all such executory contracts cancelled and
declared void ab initio.
The complaint includes twelve claims for relief, and consistently calls for punitive damages as well (plus attorneys' costs, etc).
It should be interesting to see how this plays out and, if the plaintiff prevails, it's anyone's guess at this time as to what restitution will be ordered.
Thanks for the thoughts, LocWolf. If this was an 'isolated' situation, I'd feel a heck of a lot better about it being an innocent oversight. Yet, there appears to be a theme here that is disconcerting. For example, in addition to this filing on a retroactive basis, we've seen a) failure to disclose the hiring of the company's public accounting firm until April, and it appears that the 8-k was only filed after I emailed the company to inquire; b) on April 26 2019 HDC filed two separate 8-ks, one announcing the favorable verdict in the Neo arbitration proceeding, and the other announcing a deal between HDC and the Note Holders which presumably happened only days before. It included the following reference:
Additionally, on April 22, 2019, the Company agreed to an advancement of $62,000 from the Note Holders to provide additional funding for the Company’s ongoing arbitration between the Company and NeoGenomics. In consideration for the Note Holder’s additional funding, the Company will repay the $62,000 plus up to $310,000 of the potential recovery from the legal action against NeoGenomics on or before July 31, 2019. This advancement was made between the Note Holders and the Company without the knowledge or assurance of any recovery from the arbitration proceeding.
c) as part of the complaint initiated by Quirk and Bear, McGovern provided an affidavit under oath and twice referenced the importance of providing shareholders with adequate notice prior to the shareholder meeting; ultimately, he violated his own arguments by failing to provide anywhere near the advance notice that he referenced in the affidavit; d) literally the first order of business for HDC after the shareholder meeting, the team awarded to its directors more options, stating that they were based, in part, on their 'ongoing contributions to the company.'
In other words, when you look at this entire picture, you don't get a feeling of comfort that the current team is being forthright. How many more of these 'mishaps' need to happen?
Separately, I keep coming back to the issue of HDC's failure to communicate appropriately. If they are conducting themselves with the best interests of shareholders in mind, why wouldn't they defend themselves? I'm not sure what they think can possibly be gained by failing to provide shareholders with an update, particularly since there appears to be an excellent chance that this derivative suit significantly exhausts the remaining resources that the company has on hand. And, of course, that presents a very disturbing scenario for shareholders, who have held out hope that the company would get something meaningful from the Intel suit.
With out luck, the previous team will be 'getting the band back together', and we'll start all this over again. And, of course, it's anyone's guess what they will do with the Intel suit, since they didn't have a track record of success after they ran HDC into the ground between 2013 and 2017.
It's nothing but an absolute mess on all fronts.
Since the Vennwest Derivative Complaint was filed on August 14th, and we're now over a month later, I think shareholders have a legitimate beef regarding the lack of communication from the company. If leadership has been above board on all of its actions, doesn't it stand to reason that it would desire to provide shareholders with a well-thought-out communication to explain things? After all, if someone has wrongly accused me of something, I wouldn't hesitate to ensure that the truth is exposed. Seems pretty logical to me, especially because I view disclosure as not just an opportunity for the company, but an obligation.
Yet, since we haven't heard a thing from HDC, I'm wondering if they believe any form of communication could make matters worse for the team. This might depend, of course, on whether or not a February filing with the GA Secretary of State was just a formality that had previously been over-looked, or if it was an action step that was not above board.
For those of you who might not have paid attention to the actual details of the derivative suit, allow me to summarize one of the issues which is highlighted in the complaint under the heading "The February 2020 Events". On February 7, 2020, the company filed a Certificate of ReStated Articles with the GA Secretary of State. This document specified that the Articles of Incorporation were amended to insert a new section referencing Series D Preferred Stock, and the number of shares would be 21,158,953. Additionally, as it relates to Voting Rights, each share of this Series D Preferred Stock would have a number of votes equal to ten votes for the same number of shares of Common Stock. The document stipulates that the Amended and Restated Articles of Amendment were adopted by the Board on August 1, 2018. In other words, although the document was filed in Feb 2020, it was back-dated to Aug 2018.
If you recall, HDC filed an 8-k on Jan 7, 2020 signifying the following:
On December 31, 2019, the Note Holders notified the Company of their election to convert both the Promissory Note and Additional Promissory Note into Common Stock and Preferred Stock, respectfully. As a result, the Note Holders received 86,927,397 shares of Common Stock and 21,158,953 shares of Preferred Stock.
As you can see, when HDC disclosed in its Jan 2020 8-k that the Note Holders (McGovern and Dengler) made a decision on Dec 31 2019 to convert their promissory notes to stock, there had been nothing officially filed regarding Board-approved Series D Preferred Shares.
Based on this set of circumstances, whereby the HDC team filed the amended articles 'after the fact', with a date retroactive to Aug 2018, doesn't it stand to reason that the directors would be almost 'eager' to set the record straight (assuming that the filing of amended articles was just an over-looked formality that should have been done in Aug 2018, but was otherwise legit)? I guess time will tell as this derivative suit unfolds, because it has become rather obvious that the HDC team, once again, desires not to appropriately communicate. Perhaps there is a reason for that, but we can only surmise for now.
Here is Quirk's third email over the span of a few days late last week, pounding his chest because he believes he's outmaneuvered George, and once again pretending that he's not the mastermind of the derivative suit.
Dear HDC Shareholders,
Someone asked me if I felt this recent (Vennwest) Federal lawsuit against the HDC Board could impede any possible deal with Intel. Some speculative thoughts ...
1) It might, but Intel’s interest is solely with the substance of their own purposeful infringement, not based on any connection with McGovern. But I think it’s a bit too early for this to be anything other than a theoretical issue.
2) This lawsuit asks principally for “disgorgement” of the stock and cash the defendants have received, that is, to be returned to the Company. Absent disgorgement, defendants have, according to my calculations, about 45% of all fully diluted shares and 55% of the voting power. I also estimate that, as a group, their cost per fully diluted share for 260 million shares may be around 1.5¢ per share. Therefore, with absolute control of the Company, the defendants can proceed with any deal they like that requires shareholder approval. So, theoretically, if Intel made an offer of, say, 2¢ per share to buy HDC, the defendants could conceivably agree and make money even at that very low price.
3) In my view, absent disgorgement, the Board must push for some sort of major deal sooner rather than later because in defending against the Vennwest suit, cash will be depleted more rapidly than earlier estimates. With some 260 million fully diluted shares, they would take an eternity to sell in the market regardless of price. Therefore, only some sort of major corporate event such as an acquisition makes sense for this Board to try, and while the highest possible buyout price is clearly desirable, something as low as 2¢ a share is conceivable. But in such an instance, were this Federal suit still pending, I'd expect Vennwest to request a temporary restraining order which I think would be promptly granted.
4) In my view, with disgorgement, I believe there would be no reason why the current directors would wish to remain on the Board and new directors would take a different approach. With disgorgement, for any given deal, all other shareholders, that is, all of us, would receive a value or price that is 70% higher.
5) FWIW, I don’t think the Board expected this.
Bill
It's fascinating that the guy who was responsible for running HDC into the ground in the first place, along with his buddy Kowbel, is the guy who has gained shareholder confidence by intervening at a time when shareholders may finally be on the brink of getting some form of return on investment via the Intel suit. Quirk is basking in his glory as the lawsuits drain the company of its remaining money. Shareholders, of course, continue to pay the price.
Don't get me wrong. Putting aside the fact that Quirk has been after McGovern from the time he resigned as a director, but couldn't live with the fact that he wasn't 'the guy' who was getting things accomplished and was actually a failure to shareholders, it's actually very hard to argue with the merits of the suit. The circumstances paint a very clear picture of what has transpired. McGovern clearly had a plan to a) remain as quiet as possible and give shareholders the bare minimum in terms of company info, b) strategically amass a very considerable stake in the company at shareholder expense, c) subtly stick it to Quirk along the way (as evidenced by the brutal performance at the shareholder meeting, which McGovern clearly didn't want to hold, only to award himself and his fellow directors immediately after the meeting and diluting the hell out of everyone), d) have a singular strategy to get a windfall from an Intel settlement, and e) exit quietly out the back door.
If you look at item number 3 in Quirk's email, you can sum it all up by understanding what Quirk's concern is. McGovern and team have so many shares now, they could unload it for a very low number and still make money, while the rest of us get hosed. Hard to argue with the logic, since it's conceivable. And, if McGovern had approached this by appropriately communicating with shareholders (even though he pretends he has), and by taking steps to license the IP and/or developing products (which I view as his obligation, but he failed us), we wouldn't be sitting here with the share price less than 4 cents, and now wondering if the remaining cash will be burned even before we can resolve the Intel dispute.
It's amazing to me the audacity of both Quirk and McGovern, both feeling and acting as though HDC is their personal playground, while screwing the hell out of the rest of us.
It definitely appears that the company is now circling the drain, and the two camps (the McGovern camp and the Quirk camp) will simply fight it out til the end until it's bone dry. The rest of us can only sit and watch.
The ink wasn't even dry on the complaint documents, yet Quirk has already been pumping his chest by sending out emails to select shareholders. Here is the first of his emails, which he sent this past Thursday:
A Federal lawsuit was filed August 14. I found out last week. There has been no 8-k disclosure.
It's amazing to me that he chooses to deceive shareholders into believing that he had nothing to do with this suit by stating "I found out last week." If you read the complaint document in the derivative suit, you can see that the law firm representing Vennwest is the same firm that represented he and Cindy Bear. Further, a number of provisions in that document are essentially cut and pasted from the Quirk/Bear complaint. In other words, he not only knew all about the suit, he was actually the mastermind behind the entire thing.
It only gets better from there. Here is the email he sent Friday:
My late brother Bobby was a Police Officer in Philadelphia for 20 years. His wife Lori, an HDC shareholder and a nurse, just emailed me about the Vennwest Complaint. She said, “It reads like a warrant as Bob would say … he was noted for writing the best warrants!” I’ve never read a warrant so I have absolutely no idea what she’s talking about ...
I can only assume that this bizarre email is intended to convey that Quirk believes he has McGovern by the short hairs. Yet, what Quirk hasn't provided to shareholders is any sort of history about Mr. Venning. Accordingly, I believe shareholders should get a glimpse of the individual(s) that Quirk has aligned with, and who want to take control of HDC. Happy reading:
https://ca.news.yahoo.com/amphtml/dentons-alleges-former-clients-lawsuit-130000445.html
I sent this email to HDC tonight and copied the complaint document from the Vennwest derivative lawsuit filed against HDC in August. Doubt I'll get any meaningful response, but I will share it if I do:
You don’t think the attached is worthy of shareholder communication? Even on top of Moore’s complaint and Quirk and Bear? How many more are coming?
You have had an opportunity to communicate, and you haven’t. That is completely counter to common sense, and obviously isn’t by accident.
Care to explain not only why you are dealing with 3 active complaints represented by legitimate law firms but, more importantly, how it is possible that the company hasn’t entered into a single licensing agreement or developed a single product or service based on HDC’s IP? I’m sure you recall a) the Dec 2019 shareholder letter in which you stated that your collaboration with a medical and bioinformatics institution looked promising, and b) your 8-k in April signifying that Mr. Delmonte’s promotion was based, in part, on ‘other partnering initiatives’. Perhaps you forgot what looked so promising, or perhaps you weren’t really forthright with shareholders? Which is it?
Looks like other companies move forward, but HDC just sits idle and gets sued. Interesting how this company is marketing this test. At what point do HDC directors step aside, realizing that shareholders have caught on to their act?
miR Scientific’s Sentinel™ Test is the only standalone, non-invasive liquid biopsy urine test that accurately detects, classifies and monitors prostate cancer at the molecular level with 95% Sensitivity and Specificity.
Well, if we were hoping for a licensing deal or development of a product or service using our IP, I guess we can essentially rule it out. The team is instead quite busy these days, since it is sitting on three active complaints against it. Logic would suggest that the team should actively communicate something to shareholders but, of course, the silence is deafening.
Bear and Quirk: case moved to business division in Fulton County court;
Mark Moore: complaint was filed in DeKalb County court;
Vennwest: Derivative suit filed in August in GA Northern District Court, Atlanta Division
This latter case seems to sum up a few things. It certainly does appear that the team has been chasing one path: stay quiet, keep shareholders in the dark as much as possible, enrich themselves along the way, and hope for a massive payday via the Intel suit.
If my assumption is off base, how else does one explain not only the lack of appropriate communication but, more importantly, the lack of a single deal that would benefit shareholders. Shameful.
Well, the Intel infringement suit obviously gives us something to hope for, since there really isn't anything else. We will obviously either sink or swim based on the outcome. In the meantime, while the lawyers are handling things, what is the team doing?
I can't help but look back at that 2010 shareholder letter and see the following:
On May 11, 2010, Health Discovery Corporation was awarded the prestigious MICO Award for our intellectual property portfolio. The word “mico” is Latin for “to shine.” Unbeknownst to the Company, San Francisco, Calif.-based MDB Capital Group, LLC, spent millions of dollars and hours creating PatentVest, a proprietary intellectual property analytical tool. MDB Capital rigorously analyzed the intellectual property portfolios of 1,600 publicly-traded, small cap companies to determine which ones had the most valuable and disruptive technology. Health Discovery Corporation was honored to be chosen by MDB Capital as the recipient of their MICO award.
It's amazing to me that HDC has the 'disruptive technology' and, based on the USPTO decision in early 2019, is the sole owner of SVM-RFE world-wide. Yet, we can easily see the enormous degree to which companies are using it to their advantage, generating revenues, and laughing in our faces, but there is one company that for some strange reason isn't using it. Guess what company that is? HDC, of course.
How is it even remotely possible that HDC hasn't lined up even a single arrangement whereby we get royalties, or capitalize on products that we supposedly already largely developed (ie, the prostate test)? How can this development not be a significant priority for the company? Perhaps because shareholder value is not part of the equation. It appears that the team has positioned itself for significant personal reward, and has a goal of a one-time windfall before exiting quietly out the back door.
To say it's a disappointment is an understatement.
Wow, if only we could go back in time to 2010. If ever there was a 'seemingly promising' outlook, it was in this shareholder letter. How could the company have possibly missed on literally every single thing?
Health Discovery Corporation 2010 Shareholder Letter
August 26, 2010 10:12 AM Eastern Daylight Time
SAVANNAH, Ga.--(BUSINESS WIRE)--Dear Fellow Shareholders:
Since I wrote you this past November 2009, the global economy continues to be deeply shaken, the financial markets are in turmoil, significant unemployment continues and the Gulf has absorbed a massive oil spill. Major health care legislation became U.S. law and will formally incorporate tens of millions of new patients into the health care insurance market. This past year has been historic for these and many other reasons.
For Health Discovery Corporation (the “Company”) (OTCBB:HDVY), this has been a time of significant achievement and real progress. We believe the Company overall has never been in a better position for achieving success now and in the future. We continue to be a company on the move and I would like to provide you with a summary of our recent activities.
People
We have added a number of new people to assist in the growth our business. To our management team we have added Tom Gallagher, a Wall Street securities lawyer and former Vice President of Goldman, Sachs & Co. (NYSE: GS), as Executive Vice President; John Norris, a former Deputy Commissioner of the FDA has joined the Company as COO; and Maher Albitar, M.D., a world-class scientist, inventor and author of more than 250 peer-reviewed medical publications has joined our team as Chief Medical Officer.
Dr. Albitar is a globally respected cancer researcher with a combination of both academic and commercial experience having held high-level appointments at Quest Diagnostics, Incorporated (NYSE: DGX), the largest commercial clinical laboratory in the world and MD Anderson Cancer Center, one of the leading cancer centers in the U.S.
This past spring we added Paul Graham of Graham Capital Partners to our Board of Directors and have benefited from his 25 years in national and international investment banking, mergers and acquisitions, and finance.
Our Science Advisory Board expanded by the addition of Nitesh Chawla, Ph.D., a professor in the Department of Computer Science and Engineering and co-director of the Interdisciplinary Center for Network Science and Applications at the University of Notre Dame, South Bend, Indiana. Dr. Chawla is an expert in machine learning.
We are delighted that these professionals have joined the talented team already assembled at Health Discovery Corporation.
Whenever an opportunity presents itself to retain world-class talent, we will do whatever we can to bring such people on to our team.
Molecular Diagnostic Product Update
We continue to be very pleased with the progress of the clinical trial results related to our 4-gene urine test for "clinically significant" prostate cancer in development with our commercialization partners, Quest Diagnostics, Incorporated (NYSE: DGX) and Abbott Laboratories (NYSE: ABT). We are under confidentiality agreements which prevent me from sharing specific details about the validation studies. Once this test is commercialized, HDC will be paid a royalty on each test performed by both Quest and Abbott.
We believe that our 4-gene urine test for prostate cancer will enter the prostate cancer screening market in which there are currently 25 million PSA tests performed annually in the U.S. and an additional 25 million PSA tests performed outside of the U.S.
The need for a new prostate cancer test to replace PSA is well documented.
In March 2009, the New England Journal of Medicine published the findings of two major studies on prostate cancer screening with PSA and Digital Rectal Exam, one study in the U.S. involving approximately 75,000 men followed for 7 years and the other in Europe involving approximately 180,000 men followed for 9 years. The U.S. study reported “no mortality benefit from combined screening with PSA testing and digital rectal examination during a median follow-up of 11 years.” (See N. Engl. J. Med. 2009; 360:1310-1319, March 26, 2009).
The European study concluded that "the rate of over-diagnosis of prostate cancer (defined as the diagnosis in men who would not have clinical symptoms during their lifetime) has been estimated to be as high as 50% in the PSA screening group” (See N. Engl. J. Med. 2009; 360:1320-1328, March 26, 2009)
As a result of this study, the American Cancer Society is now warning men and their doctors about the risks of using the PSA test for routine prostate cancer screening.
In a New York Times article by Tara Parker-Pope (March 23, 2009), she writes:
"Last week, two major studies from the United States and Europe found that PSA testing — the annual blood test used to screen men for prostate cancer — saves few if any lives, while exposing patients to aggressive and unnecessary treatments that can leave them impotent and incontinent."
Ms. Pope continues:
“…PSA testing increases a man’s risk of being treated for a cancer that would never have harmed him in the first place. The European study found that for every man who was helped by PSA screening, at least 48 received unnecessary treatment that increased risk for impotency and incontinence. Dr. Otis Brawley, chief medical officer of the American Cancer Society, summed up the European data this way: ‘The test is about 50 times more likely to ruin your life than it is to save your life.’”
In a Wall Street Journal article titled, “The Man, The Gland, The Dilemmas,” by Melinda Beck (March 31, 2009) she writes:
"You've been getting annual blood tests to check for prostate cancer. But two big studies in the New England Journal of Medicine just found that screening for PSA -- prostate specific antigen -- doesn't save many lives."
‘We've got potentially game-changing biomarkers that could get us out of the dilemma we are in with PSA,” says oncologist Jonathan Simons, President of the Prostate Cancer Foundation.
Health Discovery Corporation’s new, 4-gene biomarker test for prostate cancer which has been shown to have a 90% Sensitivity (for finding clinically significant, grade 3 or higher prostate cancer cells) and a 97% Specificity (for finding non-cancerous cells) was published in the peer-reviewed publication UroToday International, August 2009.
Health Discovery Corporation also licensed the 4-gene urine test for prostate cancer to Abbott on a world-wide co-exclusive basis with Quest. As part of our License Agreement with Abbott, the Company will receive from Abbott, upon completion of both Phases 1 and 2 described in the FDA Submission Plan, a one-time Phase 1 and 2 Completion Milestone Fee of Two-Hundred-Fifty-Thousand U.S. Dollars ($250,000.00). This milestone payment is non-refundable and non-creditable towards royalties. The Company expects to be eligible for the milestone payment by year-end. Once the test kits are FDA-approved and commercialized by Abbott, Health Discovery Corporation will receive royalties from Abbott on a per test basis.
For each Licensed Product (as defined in the License Agreement) that is sold by Abbott, Abbott shall pay HDC a running royalty equal to: (a) For Licensed Products with medical utility claims solely for use on prostate tissue samples, ten percent (10%) of Abbott’s Net Sales of such Licensed Product; and (b) For Licensed Products with medical utility claims solely for use on urine samples, five percent (5%) of Abbott’s Net Sales of such Licensed Product. Abbott will pay sales milestone payments as well.
In March 2010, we joined Smart Personalized Medicine, LLC and entered into a breast cancer therapeutic test development agreement with Quest Diagnostics. This agreement represents the second major contract with Quest Diagnostics. We were paid $500,000 upfront in licensing fees in addition to receiving $375,000 in equal installments over nine consecutive months for development costs. Once this test is commercialized, HDC will be paid a royalty on each test performed by Quest.
We are delighted that Quest had the confidence in us to once again partner with our Company to license, develop and commercialize another new molecular diagnostic test - this time for breast cancer.
Our partnership with The Pancreas and Biliary Center based primarily in New York and with satellite centers in New Jersey and Florida will allow us to develop a new molecular diagnostic test for cancer of the pancreas. Since treatment outcomes for pancreatic cancer are so poor, the identification of “at risk” patients or early malignancies by molecular or genetic markers represents hope for improving the lifespan of patients with this devastating disease.
We are currently in discussions with national clinical laboratories to become our development and commercialization partner in this effort. We expect to choose our partner for the development and commercialization of this new molecular diagnostic test for pancreatic cancer in the very near future. The Company owns the exclusive intellectual property and commercialization rights to the valuable specimen bank being used to develop this new molecular diagnostic test for pancreatic cancer
Our collaborators in this are Avram Cooperman, M.D., an experienced pancreatic surgeon and well-recognized clinical investigator; Michael Wayne, D.O., who continues the surgical effort; and Robert Ollar, Ph.D., a distinguished scientist and genetic investigator.
In addition to our pancreatic cancer partnership, we also entered an agreement with The Pancreas and Biliary Center which believe, will allow us to complete the final validation of our molecular diagnostic test for cancer of the colon which has shown a sensitivity of 93% and a specificity of 93% in our prior validation study. We are currently in discussions with both national clinical laboratories and in-vitro diagnostic companies to become our development and commercialization partner in this effort. We expect to choose our partner/partners for the development and commercialization of this new molecular diagnostic test for colon cancer in the very near future.
We are very pleased with the development progress of our iPhone app for melanoma risk assessment. A beta version of the melanoma app has been completed and is currently being field tested in advance of commercial full release. A more advanced version of the app with features and a user interface optimized for consumer use is currently in development. The melanoma app will recommend certain physicians to "at risk" customers based on their geographic location as identified by the cell phone GPS system.
The Company is currently in partnership discussions with international and U.S. clinical and dermatopathology laboratories who wish to have their current physician clients who perform skin biopsies become the referral centers for patients identified as "at risk" by the melanoma app, thereby potentially significantly increasing their revenue from the number of skin biopsies sent to these laboratories. In addition to the revenues generated directly from the iPhone app, the Company intends to share in the revenues being generated by the increased number of skin biopsies performed by our clinical laboratory partners.
We have continued to advance the development of the PAP Smear interpretation product. The test performance has now advanced to the point where we are ready to partner with a national clinical laboratory to complete development and proceed to commercialization. We believe that the image analysis techniques developed for the PAP Smear interpretation will allow the Company to move quickly into developing products for the interpretation of other anatomic pathology and cytology specimens such as biopsies and surgical tissues.
We have completed the initial development of the flow cytometry interpretation product. We believe that the demonstrated success of this new technique is now ready to be partnered with a national clinical laboratory for final development and commercialization.
The U.S. Food and Drug Administration (FDA)
The FDA held important meetings in the Washington, DC, area on July 19-20, 2010, for the purpose of discussing the current and possible regulatory framework around lab developed tests (LDTs). Health Discovery Corporation was represented by several people at the meetings. Both John Norris and I attended.
It is clear that recent DNA-related, direct-to-consumer LDTs are raising concerns for the regulators. For the vast majority of LDTs, the current regulations are currently unchanged. Nonetheless, Health Discovery Corporation has stayed close to our key partners, Abbott and Quest Diagnostics, on these issues. We are keeping a close eye on any potential changes related to LDTs.
The federal regulators also emphasized that whatever shape new regulations might take, there could be a “grandfather” clause included in order not to disrupt the current pipeline in the marketplace. Whatever route the FDA takes, we will be prepared to adjust as needed to the new regulatory environment. At this moment, it is too early to tell exactly how new regulations, if any, will impact our business.
Given the potential for regulatory changes in the future, we are working with alacrity to get our molecular diagnostic tests to completion and into the market. We continue to stay abreast of ongoing developments with our key partners on this topic.
Significant Opportunities Beyond Molecular Diagnostics
SVM Capital, LLC
We are excited about the risk-adjusted performance of SVM Capital, which uses our technology in creating an equity markets trading algorithm. We have a 45% ownership stake in SVM Capital.
Back tested pro forma results for 1951-2009:
Buy&Hold SVM K-1 SVM K-2
AVG 10.12% 13.28% 15.78%
RISK 23.12% 15.45% 14.49%
Our new research has added to total average return and further lowered risk (i.e., SVM K-2). SVM K-2 began live trading in March 2010.
On July 16, 2010, Bloomberg News ran a story titled, “Hedge Funds to Boost Use of Trading Algorithms for Stocks, Tabb Group Says.” This story reported: “Asset managers such as hedge funds will probably increase their use of computer programs known as algorithms to execute their stock trades in 2011, according to securities-industry research firm Tabb Group LLC.
The proportion of orders processed by algorithms will probably amount to 35 percent next year, up from 29 percent in 2010, according to a report from Tabb analyst Cheyenne Morgan and director of research Adam Sussman. Human traders at broker-dealers will execute 35 percent of orders in 2011, down from 39 percent this year, the report said.”
On July 26, 2010, the Wall Street Journal ran a story titled, “Global Currency Trading Grows Strongly,” that included this observation: “Automated--or algorithmic--trading continued to expand its share of total volume, as it has over the past year and half to two years, said Ed Brown, head of business development and research at ICAP Electronic Broking in Jersey City, N.J.”
Data Management and Data-mining Opportunities
I have long believed that our technology can be applied successfully in large datasets well beyond biomarker discovery. We see significant opportunities to apply our patented, pattern recognition technology in the area of data management and data-mining.
A recent story in The Economist stated: “Everywhere you look, the quantity of information in the world is soaring. According to one estimate, mankind created 150 exabytes (billion gigabytes) of data in 2005. This year, it will create 1,200 exabytes.” (See The Economist, “The Data Deluge,” February 25, 2010)
We are actively pursuing one or more key relationships in the fields of data management and data-mining. Health Discovery Corporation’s technology can play a pivotal role in electronic health records management, health care insurance, fraud detection (especially in the Medicaid/Medicare system), banking, customer data management, marketing, risk management and homeland security.
Our goal is to have this new vertical up and running soon and certainly before year-end 2010.
Independent Validation of HDC’s Intellectual Property
On May 11, 2010, Health Discovery Corporation was awarded the prestigious MICO Award for our intellectual property portfolio. The word “mico” is Latin for “to shine.” Unbeknownst to the Company, San Francisco, Calif.-based MDB Capital Group, LLC, spent millions of dollars and hours creating PatentVest, a proprietary intellectual property analytical tool. MDB Capital rigorously analyzed the intellectual property portfolios of 1,600 publicly-traded, small cap companies to determine which ones had the most valuable and disruptive technology. Health Discovery Corporation was honored to be chosen by MDB Capital as the recipient of their MICO award.
In a press release announcing the winner, Christopher Marlett, Chairman and CEO of MDB Capital, had this to say about Health Discovery Corporation:
"Among public companies in the healthcare industry, our IP metrics found that Health Discovery Corporation is a leading innovator of game-changing IP,” said Christopher Marlett, Co-Founder, Chairman & CEO, MDB Capital Group.
"Intellectual property is no longer an intangible asset class," said Marlett. "MDB Capital built PatentVest to help investors easily assign a tangible value to patents, and we've proven that market leading IP is predictive of superior business performance. Companies like Health Discovery Corporation typify the market leading IP presented at our Bright Lights Conference.”
I would like to share with you a few of the details from the PatentVest Report (April 27, 2010).
Highlights from the PatentVest Report include the following:
PV Tech Score of 3.59, a measurement of the impact of a company’s patents and its competitive position. A score of 1.0 reflects parity with its peers. In analyzing Apple (NasdaqGS: AAPL), for example, it had a PV Tech Score of 2.39, meaning its patents ranked 2x higher than its peers. HDC's score reflects a value more than 3x higher than its peers.
PV Tech Depth Score of 5.37, a measurement of depth of IP around a specific area of technology where a median score is 0.30, >1.0 is top quartile, and >3.0 is fortress. HDC's score is among the top scores achieved.
Average U.S. Patent Age. 3.72 years
Application Conversion Rate of 61.11%, a measurement that reflects how often a company’s patent applications convert into patent issuances. It is indicative of novelty, quality and validity of patents.
Trailing 3-year Application CAGR of 23.61%, is a measurement of year-of-year growth rate of applications filed during the past 3 years.
3-year Application CAGR Percentile Ranking of 84.36%.
In addition, the PatentVest report identifies other companies which have cited Health Discovery Corporation’s patents in their patent applications, including but not limited to, the following: Microsoft (NasdaqGS: MSFT), NEC Electronics Corporation, Eastman Kodak, IBM (NYSE: IBM), General Electric (NYSE: GE), Honeywell (NYSE: HON), Siemens, Intel (NasdaqGS: INTC), Correlogic Systems, Aureon Laboratories, Center for Disease Control and Prevention, Pathworks Diagnostics, Inc., Peason PLC ADS, and others.
As a technology company, we are delighted to have this independent validation of our intellectual property portfolio and commend MDB Capital Group, LLC for its foresight and investment in a pioneering analytical tool for patent valuation.
Intellectual Property Portfolio Update
Since late last year, our patent portfolio has gotten deeper and stronger.
In November 2009, the U.S. Patent and Trademark Office issued a patent based on the Company’s application covering an alternative method of feature selection that reduces the number of support vectors to create a sparse-SVM that can be used to generate a codebook for identifying patterns in data, including applications to signal compression.
In March 2010, the U.S. Patent and Trademark Office issued a patent based on the Company's method for analyzing spectral data obtained from a mass spectrometer for identification of the most important features in the data that can be used for classification of patient samples. This method is particularly suited for discovery of biomarkers using protein samples.
Also in March 2010, the U.S. Patent and Trademark Office issued a notice of allowance of the Company's application covering methods for analyzing data in a text document to identify matches between strings of characters. This technique for text recognition can be incorporated in a search engine.
In May 2010, the U.S. Patent and Trademark Office issued a notice of allowance of the Company’s application covering a system for providing data analysis services using a support vector machine for processing data received from a remote source.
The U.S. Patent and Trademark Office issued another notice of allowance in May 2010 for the Company's application covering a method of feature selection and feature ranking using a support vector machine. This method differs from the Company's patented RFE-SVM, thus expanding its coverage of a variety of feature selection methods, which have become essential for identifying the most important data in large datasets.
In June 2010, the Canadian Intellectual Property Office issued a notice of allowance of the Company’s application covering Pre-Processing and Post-Processing for Enhancing Knowledge Discovery Using Support Vector Machines. In addition to covering pre-processing and post-processing of data in conjunction with SVM analysis, the claims of this patent cover methods of providing data analysis services using a support vector machine for processing data received from a remote source.
In July 2010, the European Patent Office issued a notice of intent to grant a European patent covering the Company's RFE-SVM method. With the issuance of this patent, the Company will have 6 issued patents covering its RFE-SVM technique in the U.S., Australia, Europe and Japan. Additional patents covering the RFE-SVM method are pending.
With the issuance of these patents, the Company will hold the exclusive rights to 47 issued U.S. and foreign patents covering uses of SVM and FGM technology for discovery of knowledge from large and/or complex data sets.
The Company currently has 43 issued patents and 34 pending patents.
Patent Enforcement
In the first quarter of this year, Vermillion, Inc. (NasdaqGM: VRML) paid us the last installment of $150,000 of the $600,000 settlement for using Health Discovery Corporation’s Support Vector Machines patented technology in the development of OVA1 ovarian cancer triage test, which has been recently brought to market by Vermillion and Quest Diagnostics.
We remain vigilant and are waiting for the appropriate time to pursue possible infringement claims when products are commercialized and we can identify damages.
Support Vector Machines Technology Takes First Place in Global Challenge
Throughout the year, I am asked repeatedly about whether Support Vector Machines technology can work in fields beyond molecular diagnostics. The answer is an unequivocal “yes.” I am pleased to provide a recent example of SVMs succeeding in a global challenge.
In May 2010, we announced that Support Vector Machines technology was used to take first place in solving a complex marketing problem in the recent Active Learning Challenge. The results of the Active Learning Challenge were presented at the 13th International Conference on Artificial Intelligence and Statistics, in Sardinia, Italy.
The sponsors of the Active Learning Challenge included the European Network of Excellence, Pascal2, Orange, the French telecom company (Euronext: FTE, NYSE: FTE), Microsoft Corporation (NasdaqGS: MSFT), ETH Zurich, and the IEEE, the world’s largest professional association dedicated to advancing technological innovation and excellence for the benefit of humanity.
Teams from both industry and academia from all over the world participated in the challenge.
Each team could choose any hardware, software and algorithms to solve the challenge problems.
Some of the classifiers used in the Active Learning Challenge included linear classifiers, non-linear kernels, Naïve Bayes, Nearest Neighbors, Neural Networks, Bayesian Network, and Bayesian Neural Networks, Random Forests and Support Vector Machines.
The winners of the marketing challenge included two students from the National Taiwan University, Ming-Hen Tsai and Chia-Hua Ho from the group lead by Professor Chih-Jen Lin, who successfully applied Support Vector Machines to the complex business marketing problem.
Financial Condition and Capital Structure
Health Discovery Corporation is a company on the move. This necessarily makes a year-over-year comparison a challenge, as we are a better-positioned company today than a year ago. One gauge of how we are doing is our cash position. We have almost $4 million in cash and cash-equivalents and no long-term debt. Our significant cash position is a first in the Company’s history. As a result, we are not seeking outside capital at this time, unlike many emerging companies.
During the first quarter 2010, the Company, Smart Personalized Medicine, LLC and Quest Diagnostics Incorporated entered into a Development Agreement. The Company, SPM and Quest also entered into a related Licensing Agreement (the “Quest License”). In consideration for the license, Quest will separately make payments to the Company and SPM. Payments to the Company included a $500,000 up front fee and $375,000 in equal installments for development costs.
The $500,000 upfront Development License Fee was received by the Company in April 2010. With respect to the $375,000 Development Agreement, the Company has received five of the nine installment payments of $41,666 each.
Quest will also pay, upon the publication of a study performed for the Validation Work, an Initial Product License Fee of $125,000 for each of the first two Products, and Royalty Payments equal to 2.45% of the net sales of each Licensed Product.
An important accounting issue for an emerging company like ours is revenue recognition. In general, when we execute a new licensing and development agreement, we receive upfront fees and ongoing performance fees. Under existing accounting regulations, we recognize revenue as it is earned during the course of the agreement.
Deferred revenue represents the unearned portion of payments received in advance for licensing and development agreements. The Company had total unearned revenue of $1,002,915 as of June 30, 2010.
For the three months ended June 30, 2010, revenue was $153,506, compared with $16,215 for the three months ended June 30, 2009, and $54,178 for the three months ended March 31, 2010. As a result, revenue continues to trend positively on a quarterly and yearly basis.
In late July 2010, we settled the issues we had with the lead investor in our 2007 Private Placement. This settlement is further detailed in our recent 10-Q filings. The Company has recognized a charge of $1,877,647 related to the settlement, including $597,647 in non-cash charges related to the issuance of the new warrants. Each of the 6,875,000 warrants has an exercise price of $0.17 and expires on July 26, 2012. If the warrants are fully exercised, that will generate $1,168,750 in cash for the Company.
The negotiated settlement also caused a significant increase in legal fees and expenses as the Company vigorously denied the claims made by the lead purchaser. Legal fees totaled $249,315 during the three months ended June 30, 2010, compared to $79,832 during the same period in 2009. We are pleased to have this settlement behind us once and for all. As a result, the Company is making significant changes to better manage outside counsel legal fees.
In 2009, we raised additional capital in the amount of $1,490,015 through the issuance of Series B Preferred Stock and received proceeds from the exercise of previously issued warrants to purchase our common stock of $2,450,430.
In March 2010, we received an additional $3,039,522 from the exercise of previously issued warrants to acquire our common stock.
On September 7, 2010, the remaining outstanding $0.19 and $0.14 warrants issued in the 2007 private placement transaction will expire. If the warrants are fully exercised, the Company will receive additional capital upon their exercise of approximately $10 million. If the warrants are not exercised, the warrants will expire and the Company will significantly reduce shareholder dilution. We will have a definitive answer on September 7th, 2010, and we will report the results of the warrant exercise shortly thereafter.
We also expect to hold a shareholders meeting in the near future.
In summary, I am very pleased with the successes to date which, I believe, are unusual for a biotech company that has only been in business for seven years. These successes include, but are not limited to, the following:
1) a strong cash position,
2) no long-term debt,
3) an award-winning intellectual property portfolio with 43 issued & 34 pending patents,
4) two royalty-bearing license agreements with Quest Diagnostics,
5) one royalty-bearing license agreement with Abbott Molecular,
6) a pipeline of products advancing towards national laboratory partnerships for development and commercialization,
7) a strong management team,
8) a world-renowned science team,
9) two equity investments with Smart Personalized Medicine, LLC and SVM Capital, LLC, and,
10) two successful patent infringement lawsuits.
Since I joined and transitioned the Company from a wireless telecommunications company into a biotech molecular diagnostics company, our market cap has increased over 3,500%.
As the summer winds its way towards Labor Day 2010, I am very proud of the significant achievements of the entire Health Discovery Corporation team and I am grateful to our long-time investors for their steadfast loyalty. We look forward to continuing to execute our business strategy in molecular diagnostic test development. In addition, we expect new growth through strategic opportunities outside of molecular diagnostics, such as data management and data-mining.
In a macro environment of significant and constant change of things we cannot control, Health Discovery Corporation remains alert and facile in responding to such change, and in fact, capitalizing on such change. As a result, we remain a company on the move.
Stephen D. Barnhill, M.D.
Chairman & Chief Executive Officer
Excellent post, Alan. HDC shareholders, whether they've been historically positive or negative in terms of their outlook, obviously want the Intel suit to result in either a settlement or a favorable jury verdict but, as you have outlined, we shouldn't assume that the suit is a slam dunk.
This brings me back to my prior post about my ongoing concerns with the lack of partnerships on the part of HDC. If the company has put all its eggs in the infringement basket hoping for a big score, but come up either empty or with a very limited award, then leadership has let us down. I believe HDC needs to be aggressively identifying ways to monetize the IP to ensure that the company is viable.
As we know, HDC did an excellent job of obtaining the five year patent term extension on SVM-RFE last September, and this was a critical step. However, we have almost reach the point where a year has gone by without introducing any products or services utilizing the technology, and that is deeply concerning to me.
I will continue to keep my fingers crossed that the Intel suit has the result we are hoping for, but if I were running the company, I wouldn't rest on any assumptions. The team has an obligation to shareholders to move this company forward.
Alan, I believe you raise some excellent points. Most of us are certainly hopeful that the Intel suit is actually an open and shut case, but something may almost appear 'too good' about this opportunity, and HDC's strategy thus far concerns me.
The use of SVM-RFE appears to be widespread, and its use spans numerous companies, large and small. I took a look at Amazon's use of machine learning, and the company has apparently made it very practical (if not easy) for even the layperson to take advantage of it. In particular, I found information about Amazon's solutions for fraud detection, which companies can take advantage of, and it's straightforward. With this in mind, I'm troubled by the fact that over a year has gone by since the USPTO ruling, and HDC has not monetized a thing. Surely, given the ever-increasing focus on AI and the need to better analyze vast amounts of data, I can't understand why HDC hasn't established a consulting business through which it can provide enhanced support to companies to improve data analysis via use of the SVM-RFE technology. I can't imagine that this wouldn't drive revenues, and we've already lost a year holding exclusive rights to the patent.
Since they haven't monetized anything, let's hope that the team hasn't put all its eggs in the infringement basket because, if they either don't win, or this drags out, HDC leadership may have done us a very grave disservice by 'banking on' a big payout.
I remain hopeful about the infringement case, but I also want desperately to see some formal movement on development of products and services utilizing our IP. By the way, a number of our patents are expiring this year, and never translated into money for the company.
Thanks for the info on Quirk's shares, LocWolf. And, at the time he and Bear filed the complaint last year, his number of shares were down to a bit over 13 million. It's interesting history, particularly for a guy who was a director from 2013-2017 and the company never commercialized a single thing.
Yes, I'm not sure what she and Quirk are up to. Quirk, of course, is just lurking in the background, but we know he's up to something.
I assume he just can't stand the thought of knowing that he ran HDC into the ground, and now desperately wants back in to show that he wasn't a failure. Too late for that, though.
For those of you who have followed HDC for a considerable period of time, here is a note Cindy Bear just sent to shareholders. Quirk isn't mentioned but, as we know, he was one of the two plaintiffs in the complaint against HDC. Who knows what they are up to.
Dear fellow shareholders,
I continue to pursue our interests in Health Discovery Corporation with professional guidance. For a variety of reasons I am not free to share details, but at this time I am not seeking cash to pursue my claim. On a separate matter I've been kept busy with personal matters and you may not find me as available as I would like; but I am staying on top of this matter.
Another poster made a comment about whether or not the Intel lawsuit will create the opportunity for HDC to benefit from other infringing parties who might now be more inclined to come forward. Obviously, time will tell, and perhaps the results of the suit might dictate such a willingness.
Either way, these thoughts reminded me of some statements that our friends at Neogenomics made way back in 2012, and which were incorporated into that year's May 10-Q (see below). Certainly, I have no idea as to whether or not Neo actually advanced this, but their own words suggested that they, at the time, fully intended to use SVM-RFE. Perhaps we have finally reached a point where HDC and its shareholders start to realize some well-deserved and long-overdue rewards.
"We are also focused on innovation because we are committed to being a leader in oncology testing. With the recent advances in genomics, proteomics and digital pathology, frequently large amounts of data are generated and managing this data is difficult without the aid of computer-based algorithms and pattern recognition. We believe that the best system for pattern recognition and data analysis is a technology known as Support Vector Machine or “SVM”, especially when combined with a technology called Recursive Feature Elimination or “RFE”.
Health Discovery Corporation has an extensive array of pending and issued patents surrounding SVM and RFE technology. By licensing this technology and combining the expertise that already existed at Health Discovery Corp with our expertise in genomics, proteomics and digital imaging, we believe we are well-positioned to begin developing innovative and proprietary new products.
Our goal is to develop new assays to help our physicians better manage their patients and to enable them to practice evidence-based medicine tailored specifically for each of their patients. High priority will be given to the development of better tests for the diagnosis and prediction of clinical behavior in prostate cancer, pancreatic cancer, breast cancer and leukemia/lymphoma.
We intend to combine and analyze data from genomics, proteomics and digital imaging using SVM-RFE techniques to develop practical, cost-effective and reliable new assays. Using this technology, we believe we will be able to offer a whole line of advanced tests that will help physicians better manage the treatment options for cancer patients."
The complaint itself is 144 pages. then there are attachments.
Here is the opening paragraph of the actual complaint. Yes, they are seeking damages:
Plaintiff Health Discovery Corporation (“HDC”), files this Complaint for Patent Infringement and Damages against Defendant Intel Corporation (“Intel” or “Defendant”), and would respectfully show the Court as follows:
Last Updated: July 23, 2020, 3:29 p.m. CDT
Assigned To: Alan D. Albright
Date Filed: July 23, 2020
Cause: 35:271 Patent Infringement
Nature of Suit: 830 Patent
Jury Demand: Plaintiff
Jurisdiction Type: Federal Question
6:20-cv-00666
I get sickened when I continue to read about advancements of other companies which are developing and capitalizing on the use of AI. Below is a reference taken directly from the website of Genomic Testing Cooperative, which is Dr. Albitar's lab. As the rest of the world advances, HDC sits on its hands and delivers nothing.
AI is now part of our everyday nomenclature, but few companies truly embrace its capabilities. At GTC we have collaborated with the top minds in the field of AI to develop our genomic interpretation software and our customers reap the benefits.
Our AI helps us sort through and curate large sets of data so we can quickly make sense of genomic alterations and assess their impact on a patient’s diagnosis, prognosis, and help predict their response to therapy.
Every result is added to our database of genomic knowledge which helps us further refine our tests and better help our customers practice precision medicine. We use machine learning to review these alterations constantly and track their frequency allowing us to gain new insights about cancer.
LacWolf, that will take some time, but I'm going to participate. By the way, we can expect an HDC 8-k very shortly. With the stock price sub-penny, this is the perfect time for the insiders, in recognition of their ongoing contributions to the company, to dole out more options to themselves. After all, they did get the 10-Q completed.
Take a look at this LLC information for SVM Capital, LLC. To reiterate, this is the company which HDC signified in its 10-k that it hasn't been able to get information from since 2016. Notice the 'dissolved' date, and notice the name of the person listed as the Registered Agent name. Maybe, just maybe, HDC will explain itself to shareholders.
SVM CAPITAL, LLC Control Number: 07021131
Business Type: Domestic Limited Liability Company Business Status: Terminated
Business Purpose: NONE
Principal Office Address: 206 Walnut Trace Court, Simpsonville, SC, 29681, USA Date of Formation / Registration Date: 3/9/2007
State of Formation: Georgia Last Annual Registration Year: 2020
Dissolved Date: 05/04/2020
REGISTERED AGENT INFORMATION
Registered Agent Name: HONG ZHANG
Physical Address: 22 BLACK HAWK TRAIL, SAVANNAH, GA, 31411, USA
County: Chatham
LocWolf, good stuff. You had me laughing. That said, given the shares George and the team have rewarded themselves with, it appears that they can dump at very low prices and still make money. Must be nice.
I didn't hear back from him or Bill, so here is my follow up email tonight:
Bill and George,
I haven’t received a response from either of you relative to my request for a face to face meeting which I included in my email to you on Monday morning, July 6th. Your lack of a response is disappointing, so I am forwarding this note to each of you to again request that you respond. I certainly hope you will agree to meet, particularly in light of issues that are of very legitimate concern to shareholders.
George:
In my previous email, I referenced the statement in HDC’s 10-k that the company has not received updates from SVM Capital since 2016. While the conflicting information between this statement and the response from Mark Moore is troubling enough, I have been provided with information suggesting that there is a much more significant problem with HDC’s statement.
Based on a business search through the State of Georgia Corporations Division which was conducted by a fellow HDC shareholder, SVM Capital, LLC has been dissolved as of May 4, 2020. This is very troubling information for two primary reasons:
a) If HDC believed that it was important enough to reference the lack of information since 2016 in its 10-k, how is it that HDC didn’t believe it was important enough to issue an 8-k to inform shareholders of the asset being dissolved?
b) Inasmuch as HDC referenced in the 10-k its inability to receive data from SVM Capital, the business information indicates that it is Hong Zhang who is listed under the Registered Agent Name. Further, in looking back at a press release from Manifold Partners a number of years ago, I saw that both Mark Moore and Hong Zhang were referenced as part of the Manifold Vector team.
So let me get this straight, George. You stated that HDC was not provided with information from SVM Capital since 2016, yet the individual with his name listed as the Registered Agent for the LLC is none other than HDC’s Chief Science Officer. That’s right, the same individual that you introduced during the shareholder meeting, and the individual that you mentioned as something along the lines of a ‘great person’. Are you telling shareholders that Hong Zhang couldn’t have helped get the information you were looking for? Further, HDC had the audacity to allow for the asset, in which HDC has a significant stake, to be dissolved without informing shareholders? Perhaps your statement, George, had less to do with the business at hand, and more to do with sending a jab at Mark Moore or someone else? It goes without saying that HDC has some explaining to do so that shareholders are appropriately apprised as to what specifically has transpired.
As you are well aware, shareholders were not appropriately informed when HDC engaged Frazier & Deeter as its public accounting firm in January 2020. It wasn’t until Monday, April 6th that shareholders learned of the engagement, and this occurred on the very first business day after I forwarded an email to HDC on Saturday, April 4th asking the following: What is the name of the accounting firm used by HDC to audit its financials, and on what date did HDC engage this firm for said purposes?
George, as I’m sure you are aware, publicly traded companies have an obligation to report such information to shareholders in a timely fashion, which did not occur. And, since circumstances reveal that you and the HDC team do not even use the bathroom without legal guidance, perhaps you can explain why HDC failed in its responsibility to shareholders, particularly in light of the public complaint process initiated by Bill and Cindy Bear and the pressure to hold a shareholder meeting. Was it someone’s idea to keep us in the dark, perhaps because you thought you’d be a bit vengeful (there is a theme here, George), or did you and your legal team simply slip up relative to a very pertinent matter? Either way, it was unacceptable.
Last, in the affidavit you provided under oath, George, which was attached as Exhibit A to the Defendants’ Opposition to Bill and Cindy’s complaint, there were two specific provisions that, in retrospect, appear to be problematic. Number 24 in that affidavit references the following statement that you provided:
The timing of these events is not arbitrary. HDC’s professionals need until March 31, 2020 to finalize four years of audited financial statements and I0-Ks. The company then needs another 90 days in which to solicit sufficient proxies to ensure a quorum at the shareholder’s meeting. Further, the shareholders need time to review and digest four years’ worth of financial information and reports to be fully informed before the meeting.
And, number 31 references the following statement that you provided:
The benefits of providing HDC’s shareholders with an additional 90 days in which to review HDC’S financial statements and reports before conducting a shareholder’s meeting (the approximate difference between the 30-day deadline demanded by the plaintiffs and the June 30 deadline that HDC has already committed to) far outweighs any possible harm.
As I’m sure you will concur, George, HDC did not end up providing this time for shareholders when it issued the materials in advance of the meeting. Perhaps you can explain the disconnect? Or, if not, at least shareholders now have a reasonable understanding as to why you refused to answer shareholder questions during the meeting, and why your first order of business post-shareholder meeting was to reward the insiders. You were pressured into that meeting, weren’t you George, and this resulted not only in a contradiction with your very own arguments under oath in response to the complaint, but also in a vengeful response to shareholders.
Bill,
You forwarded to a number of shareholders the letter you and Cindy Bear received from HDC’s outside counsel on May 29, 2020, in which HDC accused you of abusive litigation, and provided you with thirty days to voluntarily dismiss all claims against the company. Perhaps the meeting that I requested will allow you to elaborate relative to the claims, since your own attorneys abandoned you. Further, I emailed Cindy Bear, but she hasn’t responded to me. It may be helpful to also understand if you simply took advantage of this woman because, inasmuch as you recently sent me a note indicating that there is ‘a lot you don’t know’, I’m quite comfortable in stating that I know quite a bit more about HDC and its history than your partner in the complaint knows. Wouldn’t you agree? After all, she didn’t know what Georgia county in which HDC is located.
After you initiated the complaint process, Bill, I asked for you to answer some very basic questions, such as a) who was funding it, b) were the Canadians (ie, Kowbel et al) behind it, and c) who was going to be on your slate of board candidates if you were successful in overthrowing the current team. As I’m sure you recall, you refused to answer these questions. You seem to conveniently forget, Bill, that from 2013-2017, while you and Kowbel were ‘at the helm’, the company commercialized not a single thing, Neogenomics completely took advantage of HDC, and the company was essentially penniless when you stepped down. Isn’t it ironic that you have now lead the charge on a complaint process that has drained the company of much-needed cash, yet we wouldn’t be in this predicament if you had lived up to your fiduciary responsibilities to shareholders. Perhaps we can chat face to face about it.
Last, Bill, I was informed by Mr. Delmonte that the supposed offer from Vennwest Global Technology to pay off the first McGovern-Dengler loan pursuant to a $2.4 million financing package was not even a ‘real proposal.’ Yet, you incorporated the reference to this proposal in your legal complaint against HDC. Obviously, HDC isn’t going to reveal the terms, given that the company will consider it proprietary, but you aren’t under the same restrictions. If you are forthright, perhaps you can provide a copy to shareholders, so that we can understand who is right, and who is wrong. This appears to be a pretty common problem for shareholders, doesn’t it? Perhaps you can also finally answer the initial questions I presented to you.
Gentlemen, given this information, I think shareholders deserve some answers, and I am once again requesting that you agree to the meeting I requested. I look forward to your response.
Here is my email to Quirk and McGovern today:
Bill and George,
As you are both acutely aware, the HDC 10-k signified that HDC has not received an update from SVM Capital since 2016. I reached out to Mark Moore relative to this, and he responded that this statement was not true, since SVM Capital provides a report to HDC each year. In response, HDC signified that the 10-k provision stands as written.
I view this issue as a microcosm of what continues to transpire with HDC, and why innocent shareholders, who have invested their personal money, are the ones who have been forced to agonize over a failed investment whereby even a simple truth appears to be impossible to obtain. As one of those shareholders, I am not interested in a ‘nuance’ around this issue. Clearly, one of the parties is not being forthright, and shareholders deserve the truth.
George: Since HDC owns approximately 50% of SVM Capital, it is your obligation to shareholders to identify where things stand, and to determine how HDC can effectively monetize it. The fact that HDC presumably hasn’t received an update since 2016 is not something shareholders should be reading in a 10-k, since you and your fellow board members are the ones who failed in your fiduciary obligations to shareholders relative to this asset, and this statement was clearly an attempt to take a jab at someone (I assume Mark Moore, particularly since I noticed that he gave Bill his share information as part of the complaint). Further, I don’t recall hearing anything about your inability to obtain reports from SVM Capital since 2016 until I read it in the 10-k, which to me is inexcusable. Let me put it to you bluntly – you have an obligation to chase this down expeditiously, and to provide shareholders with a rational explanation as to why you allowed it to languish.
Bill: As I mentioned, only one party can be telling the truth here, and since HDC is the party which incorporated this provision in the 10-k, it stands to reason that the current team has a lot more ‘at risk’ than Mark Moore if it deliberately lied in the 10-k. If Moore is the one being untruthful, there really isn’t a repercussion, is there? Either way, let me ask you a question, Bill – How is it that even if Moore was genuinely attempting to provide information, that a report only once per year is at all rational from a business standpoint? Doesn’t it stand to reason, Bill, that an active collaboration is necessary to ensure that an honest effort is put forth to allow this asset to flourish to the benefit of shareholders? Where have you been, Bill, while this issue was going nowhere? You obviously had no problem with adding Moore’s shares to your complaint process, but that, of course, was self-serving. Perhaps the only thing worse than adding his shares was your willingness to chase down the shares of Norris, whom you crucified years ago in an email to select shareholders.
It is extremely obvious to shareholders that the two of you are vengeful, and your ongoing actions continue to harm shareholders. George, when your first order of business post-shareholder meeting was to dole out additional rewards to the team, you lost credibility and you no longer reserve the right to inform shareholders that you are, first and foremost, representing us. Bill, your ongoing legal action, particularly after your own attorneys bailed, and whereby you refused to respond to very rational questions about your intentions, doesn’t sit well. Your actions, thus far, have only served to drain the company of critical resources, and you now don't even have legal representation. This isn’t going to be a de ja vu of 2010, when you orchestrated a personal settlement. Accordingly, I’m asking the two of you to stop the nonsense, and start identifying a way to collaborate and communicate appropriately. To that end, I’m publicly asking for a face to face meeting that will include only the two of you, along with me and two other shareholders, so that we can start sorting out the truth. This issue doesn’t require the attendance of an attorney. It simply needs an adult in the room. And, for what it’s worth, it now needs the attention of the SEC, although we can hold that issue for another day while that communication gets sorted out.
I, along with my fellow shareholders, will pay our own way to HDC’s offices to conduct such a meeting, since our goal is simply to flush out ongoing, irresponsible behavior and to discuss how HDC can be managed to the benefit of shareholders. I’d like a response from both of you relative to your willingness to accommodate this meeting request.
Something tells me we must might see a shareholder update very soon. I doubt it will be anything positive in terms of a deal or infringement protection. Rather, it will likely be a clarification regarding one or more statements made in the 10-k.
Just a gut feel
LocWolf, you can count me in. King's post was SPOT ON. I am more than happy to take some initiative to address this ongoing BS with HDC.
On top of it all, they are now just giving us the finger while they mess up 8-ks, take more and more money from the company, can't get a basic 10-Q done on time, fail to issue an 8-k when they engaged the public accounting firm, and state in the 10-k that they haven't received an update from SVM Capital since 2016. Who's fault is that? Were they ratting themselves out for being incompetent, or were they targeting someone with that statement?
How do they look themselves in the mirror? They believe these ongoing pathetic issues reveal their 'ongoing contributions to the company'? What kind of contributions are these?
Here is HDC's response to my inquiry relative to charging the cash and stock as an expense in Q3:
Thank you for your email.
That is actually a typo. The charge will be taken in 2nd Quarter 2020, on the date of vesting as has been the normal procedure for all options.
This will be corrected in upcoming filings.
Thank you and best regards,
Maybe they need to hire someone to check their work (or, for that matter, to get something done), since this isn't the first time an 8-k had issues.