I am not doing a lot. I am retired. Doing a bit of share trading and own a bit of real estate.
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Yep. Sounded that way to me. They simply washed their hands of CDEX and wished them well in the future.
Their first obection a couple-three months ago made more sense.
If they ever thought that CDEX would pay of the loan..they would have offered a few more bucks to the cause..Their first loan back in 08 was designed to be impossible to retire.
But they got permission to do as they pleased with the shares and pull every trick to make a buck offa what was even then a dead but not buried carcass. THAT WAS THE BUSINESS THEY WERE IN...
A loan of well over a million discounted down to 20 K LESS than a million with 12 percent interest on the whole thing..payments deferred six months but interst accumulated from the start.
No..they did not EVER expect that CDEX would repay the loan.
But they had full permission to pull every trick with the shares..
Naked shorting FTD and all the derivitive stuff..and they play in iNTERNATIONAL markets with different rules..NOT all the trades they made by a long shot were even visible to the ordinary shareholders.
AGAIN...that is the game they are in. they are now by far the biggest shareholder..If they want to, they can force a shareholders meeting and take over control..but why would they want to?? They are not in the business of owning and controlling SCAMS..They are in the business of EXPLOITING them to make money,,
MP knows that any shares he gets in lieu as paymnet are worthless, or will be totally worthless in short order..as soon as it is apparent that CDEX cannot sell the IG4.
A tax loss is far more valuable than the shares will EVER be.
Yep..we now know the name of the third dissenter..DANIEL GROFF..
I am widju on the count..only 11 listed voters. Did the rest abstain? Did not want to bother or sumpin?? Do they get counted as no votes??
JB appears to be unhappy with WOLF and MP...Does not want their vote counted.
He claims that anything he gets ahold of money etc wise is his if he gets it after the after the date of the CHAP 7 filing.
Which may explain the strange date on that share certificate
signed by MP for him.
But for various reasons..I do not think he can get that by the Cal court. He hocked his shares to a lender long before the filing date.
VERY FINE ANALYSIS. AMANITA..!! I agree witchoo on all points!!
Appears that MALC wants to claim a large tax loss. Cannot do that if he is compensated with shares. Which is likely his reason for rejection of the plan.
May be the same for GROFF and RYLES..
But if the JUDGE OKs the plan anyway..can MP still refuse the shares and take the TAX loss...that one requires a REAL TAX LAWYER to answer.
BRUMFIELD HIDING STUPH FROM MS. WOLF?? Crikey! Whom can one trust these sad days?? YEP hiding stuff to keep from losing it in a BK is bad form. Usually puts the FBI to knocking on ones door if the BK is in FED COURT..which the CAL CHAP 7 is. It is much frowned upon in JUDGY CIRCLES. One can schedule visits only if close kin or the LAWYERs.
Ain't had a chance to look deeply at the LIST..you mentioned...
Will come back nae doot with a comment praising your faultless perception!!
MALC SPEAKS....LOL!!
Objections to the Plan of Reorganization of CDE*#,
(Case No. 4:12-bk-02402-JMM)
4LIG
2 1 2012
From: Malcolm Philips (representing himself and IAM Investment Group, LP) lot &A
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To: Erick Slocum Sparks, PC 44-TR/cr Coli"@.r
ARI,,ONA
August 16, 2012
The following objections are made to the subject Plan, and pursuant to instructions from Mr. Sparks are
being sent to him at the address noted in his letter dated July 27, 2012.
1. First, the Class 4 Noteholders should be separated into two classes. To explain, Class 4 is made
up of Noteholders who are making an additional substantial investment in the company (which
sounds like Class 12, but is unexplained as to the workings of Class 12) and Noteholders who are
not making a substantial reinvestment into the company. The first group, those who are making
a substantial reinvestment, benefit greatly from the Plan based on their reinvestment (it even
sounds like their Class 4 Notes benefit as Class 12 Notes, though this is not explained). Their
interests seem to be best served by reducing other Class 4 distribution. In short, their interests
are not aligned with true Class 4 Noteholders. To rectify this issue, Class 4 should be divided
into two classes along the lines noted above or the distribution of stock for Class 4 Noteholders
should be more in line with the original Notes.
2. Class 6 consists of Unsecured Deferred Compensation Claims. This class has a history that
should be understood. There were a number of employees who had deferred compensation
claims against the company. The company encouraged all to convert those claims to Notes. To
help the company, some did convert. Shortly thereafter, the Company filed for bankruptcy.
Now, in the Plan, those that tried to help the company by following the urging of the company
and converting their deferred compensation claims to Notes are placed in Class 4 which has
substantially less benefits than those that did not try to help the company by converting and
are in Class 6. This is wrong in general and should be corrected by putting the deferred
compensation claim Notes into Class 6. As to the deferred compensation claim Note of Malcolm
Philips, there is a second reason for putting it into Class 6. The Note itself states that the Note
will be null and void with the underlying claim under deferred compensation being reinstated if
certain questions should arise as to tax treatment. This bankruptcy raises such questions.
Accordingly, the Note to Malcolm Philips must be placed in Class 6.
Malcolm Philips
Case 4:12-bk-02402-JMM Doc 117 Filed 08/21/12 Entered 08/21/12 16:40:29 Desc
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ACCEPTANCE OR REJECTIONS OF THE PLAN
2
3 The undersigned, a creditor or interest holder of the above-named Debtors, in Class with
the unpaid principal amount of 9
4
5 (Check One Box only)
6
7 Accepts the Plan P(Rejects the Plan
8
/ /"/ -Z
DATED
9
or type name:
10
1912 e7-
Signed:
11
appropriate) By:
12
As:
1 3
TOHAV
YOURVOTECOUNT,YOUMUSTCOWLETEANDRETURNTIESBALLOTONOR
14 BEF 5 DAYS PRIOR TO THE HEARING TO:
1 5
77
0 dginal to:
1 6 Eric Slocum Sparks
1 1 0 South Church Avenue,
1 7 #2270
Tucson, Arizona 85701
8
9 Th :)Ian referred to in s ballot can be confirmed by 9
on of two unt a
20
two-thirds
7ent the r uisite acc s e not ob May
21 co
and eq
it.
22
-3,-
Ize-
23
24
25 CDEX 4:12-bk-02402-JMM
26
27
28
Case 4:12-bk-02402-JMM Doc 117 Filed 08/21/12 Entered 08/21/12 16:40:29 Desc
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IS WHAT is now going on STAGED..with assigned parts like in a play in a NOO YAWK or N'AWLINS play house?? I still tend to think so...but now it is getting down to the NUT CUTTIN time.
Time to grab what one can..and if necessary, point fingers and the authorities at somebody else.
GEMINI apparently decided that MP is a threat to them, and have acted to try to cut him off at the pass. POINTED FINGER but giving a truly LUKEWARM performance ...no OSCARS for them!!
BUT still just picking at the BONES of what a fine SCAM it once was...fine for INONITS, that is. CDEX is a GONER..just awaiting the UNDERTAKER to take charge...Question is, which one is the UNDERTAKER??
FOR a long time, some of the people trading on CEXI could be counted upon to TOUT the company in hope of runnig the SP up.
AND do battle with the few "BasHerS".. PEOPLE that did not buy into the BS and spent some time saying so.
NOW THEN, though..the CEXI traders are silent for the most part. Mainly just a Mountain Preacher giving a daily BIBLE verse. They are rightfully not pleased with the result of their investment..
So there you have it..Pard..a highly condensed story of CDEX/CEXI...
It is sort of a tragi-comedy cb. When it was LOCH, with most of the present players already here, and a PASSELL GONE ON, IT WAS NOT TOTALLY Safe. In fact, a bit dangerous. Heap more FAST money in it, back then. Enough to attract some very dangerous people.
THREATS were made and that kinda sheet.
Not enough in it now, especially short term, to attract the more dangerous elements. LONG TERM, IT WAS, BUT NOT NOW, A SLOW AND EASY BUT STILL quite LUCRATIVE enterprise. They sold shares in private placements and borrowed money on the shares. Low cost.. shares can be authorized in Nevada for peanuts. Just contact the office of the Sec of State and tell them how many, and they will tell you how much they cost. Not very much, at all, really.
Got on the OTCBB, a pseudo respectable market, claim some attractive products which will "SAVE LIVES AND CATCH CROOKS SELLING DOPE TO TEENS, ETC, tell a lot of whoppers about how wonderful it all is, generate some PRs, attract a well known distributer or three, hire some BIRDDOGS to sell shares from Insurance offices that cater to wealthy but not very bright citizens.. and tread a tight-wire so as not to attract too much unwanted attention from the authorities..
Hired a Lawyer and west Point Grad to run it.
Slowly gathered in the wealth for a favored few insiders and stiffed the ordinary shareholders...who are really no more than a nuisance. They trade oN CEXI..shares already outstanding, and sell and buy back and forth from that pool of shares. Nothing in for for the COMPANY..they get money from selling TREASURY shares.
Over time, the lies wore thin, and PP shares quit selling well.
And to make a longish story shorter, that brings us to the present. Some people trying to pick up some bones and take it back to the good ole days when Private placement shares were selling good and people were lending the COMPANY MONEY on the shares as collateral.That is the COMEDY part.
The tragic part is in the THOUSANDS of people that dreamed of the wealth promised by the aforementioned LYING SUNSABICHES..and would up losing their money.
JUST WHEN was that VOTE TAKEN?? AND WHO HELPED COUNT?? ALL WE Have is the word of a notorious liar as to all that.
The real voting has not finished.
EXACTLY!! GEMINI did not just fall off the turnip wagon. They have been in this rodeo since June of 08. If they have not figgered it out by now, they aee really dum dums. But I am not sorry for them a damn bit. They have manipulated the CEXI market
and I believe more than made their money back plus at least a pack of crackers.
REMEMBER..they are MASTERS AT THE MARKET MANIULATION GAME.
ANYBODY SEEN THE FAT LADY LATELY??
Or is she awaiting for someone to compose the ARIA?? However the voting goes, and however the JUDGE rules...CDEX is a goner..and so is whatever the symbol to be selected to baptise the new shares
with. As always, eventually inevitable..time still uncertain..but getting much more near.
SNIFF SNIFF..a heart rending appeal, PENNSTREET..
Any idea how Robert Stewart is gonna vote?? OH, heck I forgot. He went and converted the money he donated to the cancer thingy to SHARES...him and his fellow SIGNATORIES!! AND curse the luck...shareholders ain't got a vote.
But if the shareholders had a vote..gee whiz..they would hammer the court with a veritable THUNDERSTORM AND TEXAS TORNADO
OF NOT only NO but HELL NOs.
THEY are pist..in case you have not noticed.
LOL!! I have noticed no lifetime loyality amongst the INONITS here except to themselves.
It could come down to a free for all with a heap more finger-pointing and fallings outs. Wade a GOAT but hiding out in his FLP..JOHN whatever. RYLES seemingly ready to kick over a big barrel of "secrets"..the SEC looking on with some measure of fascination..The Cal TRUSTEE wanting whatever JAYBEE gets so she can distribute to the CHAP 7 suckers. MPs LLC IAM ready to make a wave or twa...Could become every person looking out for him/herself.. and let the deevvil take the hindmost.
Picking up bones!!! putting up a very wobbly skeleton...
AND LOOK OVER THERE!! WHO IS THAT SINISTER LOOKIN APPARITION with the cape and a grim visage?? Could it be the DOJ?? Dang, it sure is!! LOL!!
MAYBE...But they took care to say that they are not gonna feed that baby bird CDEX any more..gape-ed open mouth or not.
And dealing with SCAMSTERS..one never knows what is real and what is faked.
With nothing further to lose...a yes vote really meaning what the hell...might as well..but don't ask me to shell.. out any more..
The GEMINI vote is not more than lukewarm approval.
I really expected that GEMINI and MP would throw in together and look to buy or steal the shell somehow. But if that fresh hostility is real..I guess not.
I had not relly noticed that, DIDDSTER..I will take a look.
They did sell one largish order of MYTH guns once. Somebody had some left over grant money and bought some. And that PIZZA PARLOR feller may have sold a few.
But really never enough to run the COMPANY more than ONE MONTH..
VALIMED never sold any at all..they put out some here and there so they could charge per use and sell cuvettes. And gifted a few prototypes. One used to show INET that they could test TAMIFLU capsules/tablets. INET yelled at me that he was not blind or stupid..he saw it with his own eyes!!!!!!! ( I wanna check on INET when I drive to FL. onea these days. I got right fond of him with all the arguing we did..I always felt tht he was sincere in what he bleeved..)
That was in the MARYLAND Shareholders skinner meeting, I think.
TAMIFLU was big back then, for awhile.
some buying going on..and a litle selling. Looks as if some are betting on approval..now that GEMINI has approved...but declared they won't put in any more money...mixed signals to be sure.
I see that GEMINI has approved the "PLAN"..But then said it all by declaring that they ain't agonna put in anymore money.
But in a LONGISH declaration of why they so vote...they jump on pore ole MP!!!!
I never knew that GEMINI and MP had a falling out. But they shore did.
That old paid basher thing huh??that one was laid to rest years ago. you are getting a bit outa things to say..are you not?? LOL..
FIFTY MILLION..HUH?? You wantsa revise your last post??
MAYBE go back and read some of your own posts??
UP TO YOU..and Goodnight to all fools staying up to read all this!!!
AS EVEN NON LAWYERS KNOW..settlements seldom carry any confession of guilt. The malfeasor takes the path of least resistance..knowing they will lose if it goes on to trial.
They save what they hope is a modicum of the assumption of innocense. And details are seldom released.
I am not a LAWYER but I know that much!! LOL!!
I will make one more post..of what I guess is the final CDEX proposal just got today. I volunteer again..which removes ny doubt..I ain't got no sense.. (A DOUBLE NEGATIVE)..LOL!!
Eric Slocum Sparks
Arizona State Bar No. 11726
LAW OFFICES OF ERIC SLOCUM SPARKS, P.C.
110 South Church Avenue, #2270
Tucson, Arizona 85701
Telephone (520) 623-8330
Facsimile (520) 623- 9157
law@ericslocumsparkspc.com
Attorney for Debtor
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ARIZONA
In re: ))
CDEX INC., ) Case No. 4:12-bk-02402-JMM
))
(Chapter 11)
))
NON-MATERIAL AND
) NON-ADVERSE MODIFICATIONS
) DATED AUGUST 17, 2012 to
Debtor. ) DEBTOR’S SECOND AMENDED
) PLAN OF REORGANIZATION DATED
) JULY 27, 2012
)
___________________________________)
The Debtor, CDEX Inc., (hereinafter “the Debtor”), debtor-in-possession in the abovecaptioned
Chapter 11 case, hereby proposes the following Non-Material and Non-Adverse
Modifications dated August 17, 2012 to Debtor’s Second Amended Plan of Reorganization pursuant
to the provisions of Chapter 11 of the Bankruptcy Code. All creditors and other parties in interest
are encouraged to consult the Disclosure Statement prepared by the Debtor, as approved by the
Bankruptcy Court, before voting to accept or reject this Plan of Reorganization. The Disclosure
Statement contains a discussion of the Debtor, its business operations and the disclosure of all other
information material to the approval of this Plan of Reorganization. No solicitation materials, other
than the Disclosure Statement and related materials transmitted therewith as approved by the
Bankruptcy Court, have been authorized by the Bankruptcy Court for use in soliciting acceptances
or rejections of this Plan of Reorganization.
Case 4:12-bk-02402-JMM Doc 113 Filed 08/17/12 Entered 08/17/12 13:49:04 Desc
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ARTICLE I
Definitions
For purposes of this Plan, except as expressly provided otherwise or unless the context
otherwise required, all of the following defined terms will have the following meanings. The terms
defined below will be equally applicable to both singular and plural forms, and to the masculine,
feminine, and neuter forms, of such defined terms.
1.1 “Administrative Claim” will refer to and mean every cost or expense of
administration of the reorganization case allowed under Bankruptcy Code §503(b) and referred to
in Bankruptcy Code §507(a)(1), including without limitation: (a) any actual and necessary expense
of preserving the estate as approved the Bankruptcy Court; (b) all allowances, including professional
fees and costs approved by the Bankruptcy Court; © any actual and necessary expenses incurred in
the operation of the Debtor's business; and (d) all fees and charges assessed against the Debtor's
estate under Chapter 123 of Title 28, United Stated Code.
1.2 “Allowed Claim” shall mean (a) a claim of a person which has been scheduled by the
Debtor as undisputed, and as to which claim no objection has been made by any other person within
the time allowed for the making of objections; (b) a claim allowed by a final order; © a claim as to
which a timely and proper proof of claim or application for payment has been filed, and as to which
proof of claim or application for payment, no objection has been made within the time allowed for
the making of objections; or (d) a claim allowed under the Plan, notwithstanding any objection filed
thereto by an person. Interest accrued after the filing date of the Debtor’s reorganization case shall
not be a part of any allowed claim against such Debtor, except as required or permitted by law.
1.3 “Affiliate” shall mean any affiliate that is defined in Section 101(2) of the Bankruptcy
Code.
1.4 “Allowed Amount” shall mean with respect to any allowed claim in a particular class
under the Plan, the amount of such claims in such class.
1.5 “Allowed Interest” or “Allowed Equity Interest” shall mean (a) an equity interest in
the Debtor held by a person as of the Effective Date, and as to which interest no objection has been
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made by any other person within the time allowed for the making of objections; (b) an interest
allowed by a final order; (c) an interest as to which a timely and proper proof of claim or application
for payment no objection has been made within the time allowed for the making of objections or (d)
an interest allowed under the Plan, notwithstanding any objection filed thereto by any person.
1.6 “Assets” shall mean, with respect to the Debtor, all rights, causes of action, all of the
right, title and interest in and to property (real or personal, tangible or intangible) or whatsoever type
or nature, owned by such Debtor as of the Effective Date, together with assets subsequently acquired
by such Debtor, and including, but not limited to, property as defined in Section 541 of the
Bankruptcy Code (each identified item of property being herein sometimes referred to as an asset).
1.7 “Ballot” will refer to and mean the ballot for accepting or rejecting the Plan which
will be distributed to holders of claims and classes that are impaired under this Plan are entitled to
vote on this Plan.
1.8 “Bankruptcy Code” will refer to and mean Title 11 of the United States Code 11
U.S.C. §101, et seq., as the same may be amended from time to time.
1.9 “Bankruptcy Court or Court” will refer to and mean the United States Bankruptcy
Court for the District of Arizona, or such other court that exercises jurisdiction over all or part of the
reorganization case, including the United States District Court for the District of Arizona, to the
extent the reference of all or part of this reorganization case is withdrawn.
1.10 “Bankruptcy Rules” will refer to and mean the Federal Rules of Bankruptcy
Procedure, as amended, promulgated under 28 U.S.C. §2075 and the local rules of the Court, as
applicable from time to time during the reorganization case.
1.11 “Business Day” will refer to and mean any day other than a Saturday, Sunday, or
federal holiday recognized by the Federal Courts for the District of Arizona, and Arizona State
holidays recognized by the Federal Courts for the District of Arizona.
1.12 “Case” shall mean the Chapter 11 case commenced by the filing with the Court of a
voluntary petition for relief under Chapter 11 of the Code by the Debtor.
1.13 “Cash” will refer to and mean cash, cash equivalents, bank deposits, and negotiable
instruments.
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1.14 “Chapter 11" shall mean Chapter 11 of the Code, 11 U.S.C. Section 1101-46.
1.15 “Claim” will refer to and mean every right and remedy encompassed within the
statutory definition set forth in Bankruptcy Code §101(4), 11 U.S.C. §101(4), whether or not such
claim is asserted.
1.16 “Class” will refer to and mean each of the categories of claims and interests described
in Article III of this Plan.
1.17 “Confirmation Date” will refer to and mean the date on which the Bankruptcy Court
enters the Confirmation Order confirming this Plan.
1.18 “Confirmation Hearing” will refer to and mean the hearing regarding the confirmation
of this Plan conducted pursuant to Bankruptcy Code §1128, as adjourned or continued to from time
to time.
1.19 “Confirmation Order” will refer to and mean the order confirming this Plan pursuant
to Bankruptcy Code §1129.
1.20 “Court” shall mean the United States Bankruptcy Court for the District of Arizona,
Tucson Division.
1.21 “Creditor” will refer to and mean every holder of a claim whether or not such claim
is an allowed claim, encompassed within the statutory definition set forth in Bankruptcy Code
§101(9), 11 U.S.C. §101(9).
1.22 “Debtor” will refer to and mean CDEX, Inc. in the capacity as the Debtor and Debtor-
In-Possession in the Chapter 11 reorganization case with the status and rights conferred by U.S.C.
Section 1107.
1.23 “Deficiency Claim” shall mean an allowed claim of a creditor, if any, equal to the
amount by which the aggregate allowed claims of such creditor exceed the sum of (a) any setoff
rights of the creditor permitted under Section 553 of the Bankruptcy Code rights of the creditor
permitted under Section 553 of the Bankruptcy Code plus (b) the secured claim of such creditor;
provided however, that if the holder of a secured claim of the class of which such claim is a member
makes the election provided in Section 1111(b)(2) of the Bankruptcy Code, there shall be no
deficiency claim in respect of such claim.
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1.24 “Disclosure Statement” will refer to and mean the written statement describing this
Plan which is prepared by the Debtor and distributed in accordance with Bankruptcy Code §§1125,
1126(b), and 1145 and Bankruptcy Rule 3018, as amended, in its present form or as the same may
be altered, amended, or modified by the Debtor.
1.25 “Disputed Claim or Disputed Interests” will refer to and mean every claim; (a) that
is scheduled by the Debtor as disputed, contingent or unliquidated; or (b) proof of which has been
filed with the Bankruptcy Court and an objection to the allowance thereof, in whole or in part, has
been interposed prior to the final date provided under this Plan for the filing of such objections or
such other time as provided by the Bankruptcy Court and which objection has not been withdrawn,
settled or determined by the final order.
1.26 “Effective Date” shall mean the later of (a) the first business day following the 30th
day after entry of the Court of an order confirming this Plan, or (b) the first business day after such
order has become final and unappealable; provided however, no appeal of said order is pending;
provided further, the Debtor may waive the condition that no appeal of the order of confirmation be
pending by a writing duly executed by the Debtor and filed with the Court on or before the date
which but for the pendency of appeal would become the effective date of the Plan, and in the event
that said condition is timely waived by the Debtor, the Plan shall become effective as provided herein
notwithstanding the pendency on said date of an appeal or appeals; in the event that said condition
is not timely waived, the Plan shall become effective on the first business day after an appeal is no
longer pending.
1.27 “Equity Contribution” means that money from an equity holder which needs to be
contributed so as to allow them to retain their interest in the Debtor.
1.28 “Estate” will refer to and mean the bankruptcy estate of the Debtor created in the
reorganization case under the Bankruptcy Code.
1.29 “Final Order” shall mean an order of judgment of the Bankruptcy Court which (a)
shall not have been reversed, stayed, modified or amended and the time to appeal from, or to seek
review or rehearing of, shall have expired and as to which no appeal or petition for review, or
rehearing or certiorari is pending; or (b) if appealed from, shall have been affirmed and no further
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hearing, appeal or petition for certiorari can be taken or granted, or as to which no stay has been
entered to affect the operative provisions of such order of judgment.
1.30 “Insider” shall refer to and mean all persons who qualify as an "insider" pursuant to
11 U.S.C. §101(31).
1.31 “Interest” shall mean any equity interest in the Debtor as of the petition date.
1.33 “Interest Holder(s)” shall mean any person or persons owning an equity interest in
the Debtor as of the Effective Date.
1.34 “Member” shall mean a person or entity who holds an equity interest in the Debtor.
1.35 “Minimum New Capital Contribution” refers to that sum of money that may be paid
in cash into the escrow account prior to confirmation in order to proceed with confirmation of the
Plan, if necessary. The amounts necessary to be funded by such Effective Date are detailed in the
Disclosure Statement.
1.36 “Participating Investors” shall mean those investors selected by the Debtor to make
capital contributions to the Reorganized Debtor in exchange for an interest in the Debtor.
1.37 “Person” will refer to and mean any individual, corporation, limited or general
partnership, joint venture, association, joint stock company, trust, unincorporated organization, or
government or any agency or political subdivision thereof.
1.38 “Petition Date” shall mean the date that the Debtor filed the voluntary petition under
Chapter 11 of the Bankruptcy Code with this Court.
1.39 “Plan” shall mean this Plan of Reorganization as set forth herein, in its entirety, and
all addenda, exhibits, schedules, releases, and other attachments thereto as may be amended or
supplemented from time to time.
1.40 “Preference Recovery Amounts” shall mean all sums collected as preferences under
§547 of the Code and as set-offs under §553 of the Code.
1.41 “Professional Persons” means persons retained or to be compensated pursuant to
§§327, 328, 330 and 503(b) of the Code.
1.42 “The Property” shall mean the property owned by the Debtor which consists of
personal property.
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1.43 “Proponent” shall mean the Debtor.
1.44 “Secured Claim” shall mean (a) a claim secured by a lien on property of the Debtor,
which lien is valid, perfected and enforceable under applicable law and is not subject to avoidance
under the Bankruptcy Code or other applicable non-bankruptcy law, and which is duly established
in such Debtor’s reorganization case, but only to the extent that such claim does not exceed the value
of such Debtor’s assets which the Bankruptcy Court finds are valid security for such claim (except,
if the class of which such claim is a part makes the election provided in Section 1111(b)(2) of the
Bankruptcy Code, the entire amount of the claim shall be a secured claim and (b) a claim allowed
under the Plan as a secured claim.
1.45 “Secured Creditors” means persons holding allowed secured claims within the
meaning of Section 506 of the Code.
1.46 “Tax Claims” shall mean the claims of any person for the payment of taxes (a)
accorded a priority pursuant to Section 507(a)(1) and (8) of the Bankruptcy Code, but excluding all
claims for post-petition interest and pre-petition and post-petition penalties, all of which interest and
penalties shall be deemed disallowed and discharged on the Effective Date.
1.47 “Taxing Authorities” shall mean any legal entity with authority to levy and collect
taxes pursuant to federal, state or local statutes or ordinances.
1.48 “Unsecured Claims” shall mean all claims held by creditors of the Debtor, including
deficiency claims, dissolution claims and claims arising out of the rejection of executory contracts,
other than secured claims, administrative claims and tax claims.
1.49 “Unsecured Creditors” shall mean persons holding allowed unsecured claims against
the Debtor for which there are no assets of the Debtor serving as security (excluding undersecured
mortgage deficiency creditors), but not including priority claims.
All terms not specifically defined by this Plan shall have the meaning designated in the
Bankruptcy Code, or if not defined therein, their ordinary meanings.
ARTICLE II
General Terms and Conditions
2.1 Class of Claims and Payment: Various classes of claims and interests are defined in
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this Plan. This Plan is intended to deal with all claims against the Debtor of whatever character,
whether or not contingent or liquidated, and whether or not allowed by the Court pursuant to Section
502(h) of the Code. However, only those claims allowed pursuant to Section 502(a) of the Code will
receive payment under this Plan.
2.2 Preserved Liens: To the extent required under Section 1124(2) of the Code, to
preserve the rights of a creditor having a secured claim addressed pursuant to that Section, the lien
or encumbrance of that creditor shall, to the extent valid, be preserved.
2.3 Time for Filing of Claims: The list of creditors filed in these proceedings by the
Debtor shall constitute the filing of a claim by each creditor which is not listed as disputed,
contingent or unliquidated as to amount. The Debtor reserves the right to object to any such claim
where it appears that the amount scheduled by the Debtor is improper or where there is some dispute
with regard to that claim. All other creditors, or creditors who disagree with the amounts as
scheduled by the Debtor must file prior to the date set for the hearing on the Disclosure Statement,
a proof of claim or proof of interest. Failure to timely file a proof of claim or file a proof of interest,
if not listed on the Debtor’s schedules as non-contingent, liquidated and undisputed, will result in
a disallowance of the proof of claim or proof of interest.
ARTICLE III
Classification and Treatment of Claims and Interests
1. Claim Amounts: Because certain claims against the Debtor may be unknown or of
undetermined amounts, the amounts of claims specified in this Disclosure Statement reflect only the
Debtor’s best estimate at this time of the amount due. In addition, the amounts of the claims
specified in this Disclosure Statement do not include, for example, claims arising from the rejection
of certain executory contracts and other contingent or unliquidated claims arising against the debtor.
2. Effective Date of the Plan: The “Effective Date” of the Plan is important in
determining when performance of many of the Debtor’s obligations under the Plan is due. The
Effective Date is defined in the Plan as the first business day following the later of the following day;
(i) the date on which the Order confirming the Plan (the “Confirmation Order”)
becomes final and non-appealable with no appeal then pending; or
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(ii) 60 days after the date of the Confirmation Order for unsecured claims; and
(iii) 30 days after the date of the Confirmation Order for secured claims, if any.
3. Classification: The Plan divides claims against the Debtor into multiple separate
classes that the Debtor asserts are in accordance with the Bankruptcy Code. Unless otherwise
expressly stated in the Plan, distributions to holders of allowed claims are in full satisfaction of their
allowed claims. All claims against the Debtor arising prior to confirmation will be discharged by
performance of the Plan on the Effective Date to the extent that such claims are dischargeable under
the Bankruptcy Code Section 1141(d). For the purposes of the Plan, claims are classified and treated
as follows:
3.1 Class One - Administrative Claims.
A. Classification: Class One consists of all claims for the cost of administration
of the Debtor’s bankruptcy estate. Included in this class are all claims for administrative expenses
entitled to priority under Bankruptcy Code §507(A)(1), such as professional fees and costs, as
approved by the Bankruptcy Court of the attorneys, accountants, and other professional persons
employed by the Debtor, and all actual and necessary expenses of operating the Debtor’s business
pursuant to Bankruptcy Code §503(b), including without limitation, all fees charged against the
Debtor’s business pursuant to Chapter 123 of Title 28, United States Code. Debtor believes claims
in this class may exceed $150,000.00.
B. Impairment: Not impaired.
C. Treatment: The Plan provides for the payment in cash, in full, of all allowed
Administrative Claims on the later of the Effective Date or the date upon which such Claims become
Allowed Claims, or as otherwise ordered by the Bankruptcy Court. Class One claims will be paid
from assets of the estate. The Debtor currently estimates that the Class One claims will total
approximately $150,000.00 and may include post-petition administrative expenses not paid by
Debtor.
3.2 Class Two - Claims of Governmental Units
A. Classification: Class Two claims consist of all allowed claims of the United
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States Internal Revenue Service (“IRS”) and/or State of Arizona, Department of Revenue (“DOR”)
and/or the Department of Economic Security (“DES”), City of Tucson or other government agency
which are entitled to priority pursuant to Section 507(a)(8) of the Bankruptcy Code except ad
valorem taxes. Debtor is aware of a proof of claim filed by Internal Revenue in this class in the
amount of $594.72.
B. Impairment: Class Two is impaired.
C. Treatment: Each holder of a Class Two allowed claim shall retain its lien or
claim, in accordance with Section 1129 of the Bankruptcy Code. The claim shall bear simple
interest at a fixed rate equal to that rate which would be required to be paid as of the Effective Date
under Section 6621 and/or 6622 of the Internal Revenue Code, or such other interest rate as the
Bankruptcy Court determines is sufficient to confer upon the tax claim a value as of the Effective
Date equal to the principal amount of such claim. The allowed claim shall be payable in two equal
monthly installments of principal, along with accrued interest. The first payment shall commence
on the first day of the month immediately following the month of the Effective Date. The claim is
subject to prepayment at any time without penalty or premium and shall have such other terms as
required by law.
3.3 Class Three - Employee Priority Claims
A. Classification: Class Three consists of allowed claims arising under
Bankruptcy Code Section 507(a)(3) and (4) including claims for accrued vacation, sick days,
holidays and wages earned by employees of the Debtor within 90 days before the filing of the
bankruptcy petition. Debtor estimates claims in this class at $22,907.31
B. Impairment: Impaired.
C. Treatment: The Plan provides that each and every holder of a Class Three
Allowed Claim shall receive shares of stock on account of its claim. Each allowed claim will be
divided by .05 in order to obtain a share value exchange of its claim and the claimant will receive
that amount of shares of stock plus an equal number of warrants for future purchase at an exercise
price of $0 .10 effective for five years after the date of issuance. Any liens held by the Class Three
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creditors shall be null and void and removed as of the Effective Date.
3.4 Class Four - Unsecured Claims of Senior 10% Noteholders
A. Classification: Class Four consists of allowed unsecured claims of the holders
of 10% Senior Convertible Notes. Debtor estimates claims in this class at $2,772,629.47.
B. Impairment: Class Four is impaired.
C. Treatment: The Plan provides that each and every holder of a Class Four
Allowed Claim shall receive shares of stock on account of its claim. Each allowed claim will be
divided by .15 in order to obtain a share value exchange of the claim and the claimant will receive
that amount of shares of stock plus an equal number of warrants for future purchase at an exercise
price of $0.30 effective for five years after the date of issuance. Any liens held by the Class Four
creditors shall be null and void and removed as of the Effective Date.
3.5 Class Five - Unsecured Claims of Non-Interest Noteholders
A. Classification: Class Five consists of allowed unsecured claims of the holders
of Non-Interest Notes. Debtor estimates claims in this class at $14,651.00.
B. Impairment: Class Five is impaired.
C. Treatment: The Plan provides that each and every holder of a Class Five
Allowed Claim shall receive shares of stock on account of its claim. Each allowed claim will be
divided by .25 in order to obtain a share value exchange of the claim. Any liens held by the Class
Five creditors shall be null and void and removed as of the Effective Date.
3.6 Class Six - Unsecured Deferred Compensation Claims
A. Classification: Class Six consists of allowed unsecured deferred
compensation claims. Debtor estimates claims in this class at $258,371.71.
B. Impairment: Class Six is impaired.
C. Treatment: The Plan provides that each and every holder of a Class Six
Allowed Claim shall receive shares of stock on account of its claim. Each allowed claim will be
divided by .05 in order to obtain a share value exchange of the claim and the claimant will receive
that amount of shares of stock plus an equal number of warrants for future purchase at an exercise
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price of $0.10 effective for five years after the date of issuance. Any liens held by the Class Six
creditors shall be null and void and removed as of the Effective Date.
3.7 Class Seven - Unsecured Claims of George Cohen
A. Classification: Class Seven consists of the allowed unsecured claims of
George Cohen for past due convertible notes. Debtor estimates claims in this class at $45,994.25.
B. Impairment: Class Seven is impaired.
C. Treatment: The Plan provides that each and every holder of a Class Seven
Allowed Claim shall receive shares on account of its claim. Each allowed claim will be divided by
.15 in order to obtain a share value exchange of the claim and the claimant will receive that amount
of shares of stock plus an equal number of warrants for future purchase at an exercise price of $0.30
effective for five years after the date of issuance. Any liens held by the Class Seven creditor shall
be null and void and removed as of the Effective Date.
3.8 Class Eight - Unsecured Trade Claims
A. Classification: Class Eight consists of the allowed unsecured claims of trade
creditors. Debtor estimates claims in this class at $200,000.00.
B. Impairment: Class Eight is impaired.
C. Treatment: The Plan provides that each and every holder of a Class Eight
Allowed Claim shall receive shares on account of their claim. Each allowed claim will be divided
by .25 in order to obtain a share value exchange of the claim. Any liens held by the Class Eight
creditors shall be null and void and removed as of the Effective Date.
3.9 Class Nine - Client Deposits
A. Classification: Class Nine consists of the allowed unsecured claims of
Dr. Jason Terrell and Governor Juan F. Louis Hospital & Medical Center for deposits for the
purchase of company products. Debtor estimates claims in this class at $57,000.00.
B. Impairment: Class Nine is impaired.
C. Treatment: The Plan provides that each and every holder of a Class Nine
Allowed Claim shall receive shares on account of its claim. Each allowed claim will be divided by
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.05 in order to obtain a share value exchange of the claim and the claimant will receive that amount
of shares of stock plus an equal number of warrants for future purchase at an exercise price of $0.10
effective for five years after the date of issuance. Any liens held by the Class Nine creditor shall be
null and void and removed as of the Effective Date.
3.10 Class Ten - Contingent, Unliquidated and Disputed Claims.
A. Classification: Class Ten consists of all contingent, unliquidated and
disputed claims.
B. Impairment: Class Ten is impaired.
C. Treatment: Class Ten creditors shall receive no distribution under the Plan.
3.11 Class Eleven - Interest of Equity Holders.
A. Classification: Class Eleven consists of the equity interest holders of the
debtor.
B. Impairment: Class Eleven is not impaired.
C. Treatment: The equity holders in Debtor shall be allowed to retain their
current percentage of interest or a percentage thereof subject to the Reverse Stock Split as set forth
in the Plan.
3.12 Class Twelve - Claims of Participating Investors.
A. Classification: Class Twelve consists of the claims of participating investors.
B. Impairment: Class Twelve is impaired.
C. Treatment: Unless participating investors contribute substantial capital
required to fund this Plan they will receive no percentage of the equity interest of the debtor and no
distribution under the Plan. Participating investors will receive common stock at the rate of one
share for every $0.05 invested and one warrant for every share of stock purchased. Each warrant will
have a $0.10 exercise price and be effective for five years after the date of issuance.
ARTICLE IV
General Provisions
4.1. Notwithstanding any other provision of this Plan, each claim shall be paid only after
it has been allowed in accordance with the Code.
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4.2 At the option of the Debtor, this Plan may be withdrawn at any time prior to the
Effective Date of the Plan. Such option shall be exercised by the filing in the case of a notice of
withdrawal and mailing a copy of such notice to all creditors, equity security holders and persons
specially requesting all notices in this case. If such option is timely and properly exercised, the case
shall continue and be administered as if the Plan has been withdrawn prior to the confirmation.
4.3 Pursuant to Section 1123(b)(3)(B) of the Code, the Debtor shall retain each and every
claim, demand or cause of action whatsoever, which the Debtor had or had power to assert
immediately prior to confirmation of the Plan, including without limitation, actions for the avoidance
and recovery pursuant to Section 550 of the Code or transfers avoidable by reason of Sections 544,
545, 548, 549 or 553(b) of the Code, and may commence or continue in any appropriate court or
tribunal and suit or other proceeding for the enforcement of same.
ARTICLE V
Means for Execution of the Plan
5.1 Continuation of the Debtor’s Business: The Debtor, as reorganized, will retain all
property of the estate, excepting property which is to be sold or otherwise disposed of as provided
for herein (if applicable), executory contracts which are rejected pursuant to this Plan, and property
transferred to creditors of the Debtor pursuant to the express terms hereof. The retained property
shall be used and employed by the Debtor in the continuance of its business. (Further details
concerning the nature and scope of the Debtor’s future business operations may be found in the
Disclosure Statement which accompanies the Plan.)
5.2 Raising Additional Capital: The Plan may be implemented by current management
and/or new Participating Investors making capital contributions in the Reorganized Debtor if
required.
5.3 Implementation on the Effective Date: The Plan shall be implemented on the
Effective Date. The funds necessary to implement the Plan shall derive from the Debtor’s Cash and
the proceeds of Financing.
5.4 Post-Effective Business of Reorganized Debtor: Following the Effective Date,
Reorganized Debtor will engage in any business appropriate under its organizational documents.
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5.5 Reverse Stock Split: At the time of filing, outstanding shares in the Debtor total
approximately 110,000,000. Current outstanding shares in the Debtor will undergo a 1 for 10
Reverse Stock Split, which will bring the amount of outstanding shares to approximately 11,000,000.
As part of the Plan, CDEX will implement the 1 for 10 Reverse Stock Split of the Old CDEX
Common Stock, such that each 10 shares shall, following the Reverse Stock Split (and subject to
adjustment for fractional entitlements), be consolidated into one (1) share of New Common Stock.
The aggregate fractional share interests of each holder of Old CDEX Common Stock shall be
rounded up to the nearest whole number. On the Effective Date or as soon as practicable thereafter,
the Reorganized Debtor expects to apply to have the New Common Stock listed on the Over the
Counter Stock Exchange (“OTC”) or, if Reorganized Debtor is unable to have the New Common
Stock listed on the OTC, other national securities exchange. All existing warrants to purchase shares
of Old CDEX Common Stock will be extinguished upon consummation of the Plan. This action will
allow Debtor to raise new capital to complete product development and consummate sales to
hospitals and other interested prospective clients.
5.6 Cancellation of Existing Securities and Agreements: On the Effective Date, (I) all
10% Convertible Notes, and any other notes, bonds, indentures or other instruments or documents
evidencing or creating any indebtedness or obligations of the Debtor shall be cancelled, and (ii) the
obligations of the Debtor under any agreements, indentures, or certificates of designation governing
the Old Common Stock and the 10% Convertible Notes, and any other notes, bonds, indentures or
other instruments or documents evidencing or creating any indebtedness or obligations of, or Old
Common Stock in, the Debtors, shall be discharged. This provision does not apply to any notes or
other instruments evidencing indebtedness or obligations of the Debtor that are unimpaired,
reinstated, or amended and restated under this Plan.
5.7 Issuance of New Common Stock: On or as soon as reasonably practicable after the
Effective Date, the Reorganized Debtor will issue and deliver, in accordance with the provisions
hereof, approximately 51,000,000 shares of New Common Stock to those Entities entitled to receive
it under this Plan. The Debtor believes it is an integral and essential element of the Plan that the
issuance of the New Common Stock pursuant to the Plan shall be exempt from registration under
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the Securities Act, pursuant to Section 4(2) as it is not in connection with a public offering. The
Order will include a finding and conclusion, binding all parties to the Case, the Debtor, and the
Reorganized Debtor, but expressly excluding the Securities and Exchange Commission and all
federal, state, and local regulatory agencies, to the effect that such offer and issuance fall within the
exemption(s) from registration under the Securities Act and any state or local law pursuant to said
section. To date, the DIP Lenders and Pre-Petition Lenders have not entered into any agreements
or reached any understandings with any party other than the Agent, DIP Lender and/or Pre-Petition
Lender with regard to the transfer or other disposition of the New Common Stock that they will
receive under this Plan.
5.8 Authorized Share Capital: Upon consummation of the Plan, Debtor shall, without the
need for any further corporate act or other action under any applicable law, regulation, order or rule,
have 300,000,000 shares of authorized New Common Stock, of which approximately 11,000,000
shall be issued on or as soon as reasonably practicable after the Effective Date. Debtor reserves the
right to increase or amend the foregoing post-Effective Date.
5.9 Issuance of New Warrants: On or as soon as reasonably practicable after the Effective
Date, the Reorganized Debtor will issue and deliver, in accordance with the provisions hereof,
approximately 40,000,000 New Warrants and other agreements and instruments contemplated
thereby.
5.10 Applicability of Section 4(2) to Certain Creditors: Some smaller trade creditors,
employees, and shareholders not contributing additional monies may not be covered by Section 4(2)
of the Securities Act, but may be covered by 11 U.S.C. §1145. Those creditors should contact their
own legal counsel on the transferability of their shares.
ARTICLE VI
Provisions for the Assumption or Rejection of
Executory Contracts and Unexpired Leases
The Debtor assumes all executory contracts or unexpired leases to which it is a party, except
any specifically provided for prior to the hearing on the Disclosure Statement.
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ARTICLE VII
Retention of Jurisdiction
The Bankruptcy Court will retain jurisdiction over this case for purposes of determining the
allowance of claims or interests or obligations thereto and for any other purpose which is
contemplated in the Plan or which will otherwise assist in the consummation of the Plan. The Court
also will retain jurisdiction for purposes of determining the allowance of any payment of any other
claims or administrative expenses. The Court shall retain jurisdiction for purposes of determining
any dispute arising from the interpretation, implementation or consummation of the Plan. In
addition, the Court shall retain jurisdiction for the following purposes:
a) the classification of any claim or interest, the determination of such objections
as may be filed to claims, or interest, and the re-examination of the allowance of any claim or
interest;
b) the correction of any defect, the curing of any omission, or the reconciliation
of any inconsistency in the Plan or the order of confirmation as may be necessary to carry out the
purposes and intent of this Plan;
c) to enforce and interpret the terms and conditions of this Plan;
d) entry of any order, including injunctions, necessary to enforce the title, rights
and powers of the Debtor and to impose such limitations and terms of such title, rights and powers
as the Court may deem necessary;
e) determination of any claims asserted by the Debtor against any other person
or entity, including but not limited to any right of the Debtor to recover assets pursuant to the
provisions of Title 11, if such claim is pursued in the Court prior to the closing of the case;
f) determination of all questions and disputes concerning the sale, lease,
encumbering or other transfer of the property of the Debtor; and
g) entry of a final decree closing this case.
Notwithstanding anything to the contrary contained herein, the Debtor shall not be bound by
estoppel, the principal of res judicata or collateral estoppel with respect to any term or provisions
contained herein in the event the plan is not confirmed as set forth herein.
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ARTICLE VIII
Modification of the Plan
This Plan may be modified in accordance with the provisions of the Bankruptcy Code and
Chapter 11. In this regard:
a) in accordance with Section 1127(a) of the Bankruptcy Code and Chapter 11,
11 U.S.C. Section 1127(a), modification(s) of the Plan may be proposed in writing by the Debtor at
any time before its confirmation, provided that the Plan, as thus modified meets the requirements
of Sections 1122 and 1123 of the Bankruptcy Code and Chapter 11, 11 U.S.C. Section 1122 and
1123; and provided further that the circumstances then existing justify such modification(s), and the
Bankruptcy Court confirms the Plan as thus modified, under Section 1129 of the Bankruptcy Code
and Chapter 11, 11 U.S.C. Section 1129;
b) any holder(s) of a claim or equity interest(s) that has accepted or rejected the
Plan will be deemed to have accepted or rejected, as the case may be, the Plan as modified unless,
within the time fixed by the Bankruptcy Court for doing so, such holder(s) changes its previous
acceptance or rejection; and
c) every modification of the Plan will supersede the previous version(s) of the
Plan as and whenever each such modification is effective provided in this Article. When superseded,
the previous version(s) of the Plans will be in the nature of a withdrawn or rejected settlement
proposal(s), and will be null, void and unusable by the Debtor or any other party for any purpose(s)
whatsoever with respect to any of the contents of such version(s) of the Plan.
ARTICLE IX
Miscellaneous Provisions
9.1 Securities Law: Any satisfaction or exchange provided to any creditor pursuant to this
Plan which may be deemed to be a security is exempt from registration under certain state and
federal securities laws pursuant to Section 4(2) of the Securities Act. Absent registration or another
exemption from the requirements of registration pursuant to the Securities Act of 1933, as amended,
and any applicable state securities laws, the subsequent transfer of any such securities is not so
exempt.
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9.2 Title to Property: Upon confirmation, all assets of the Debtor will be reinvested in
the Debtor.
9.3 Curing of Defaults: The confirmation of a Plan shall result in the curing of any default
to the holder of a claim or interest according to the terms and conditions of the Plan.
9.4 Discharge of the Debtor and of Claims and Termination of the Equity Interests:
Upon the Effective Date and in consideration of the rights afforded in the Plan and the payments and
distributions to be made hereunder, except as otherwise provided herein or in the Confirmation
Order, each holder, or any affiliate or representative of such holder, of a Claim or Interest, will be
deemed to have forever waived, released, and discharged the Debtor, to the fullest extent permitted
by 11 U.S.C. §1141, of and from any and all rights and liabilities that arose prior to the Effective
Date of any kind, nature, or description whatsoever. Each such holder of a Claim or Interest, and
any affiliate or representative of such holder, will be deemed to have granted, and will grant to the
Debtor the waiver, release and discharge described in this Section. Except as otherwise provided
herein, upon the Effective Date, all such holders of Claims and Interests and their affiliates or
representatives, will be forever precluded and enjoined, pursuant to 11 U.S.C. §§105, 524 & 1141,
from prosecuting or asserting any such discharged Claim against, or terminated Interest in, the
Debtor or the Reorganized Debtor, or against any of its assets or properties, any other or further
Claim or Interest based upon any act or omission, transaction, or other activity of any kind or nature
that occurred prior to the Effective Date, whether or not such holder has filed a Proof of Claim.
9.5 Injunction Against Interference with Plan: Upon the entry of the Confirmation
Order, all holders of Claims and the Equity Interests and other parties in interest, along with their
respective present or former affiliates, employees, agents, officers, directors, or principals, will be
enjoined from taking any actions to interfere with the implementation or consummation of the Plan.
9.6 Plan Consummation: Plan consummation will not occur absent full funding by those
participating investors who have agreed to provide financing post-confirmation.
ARTICLE X
Disputed Claims
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Debtor reserves the right to verify and object to any proof of claim. Payment of disputed
claims shall be made only after agreement has been reached between the Debtor and the Creditor or
upon the order of the Court. Any and all objections to proofs of claim will be filed within sixty (60)
days of the Effective Date of this Plan or will be waived.
ARTICLE XI
Quarterly Fees and Reports
Debtor shall continue to pay quarterly fees to the U.S. Trustee System until such time as a
Final Decree has been entered in this matter by the Court, closing this Chapter 11 proceeding.
Debtor shall continue to file monthly operating reports until such time as the Court enters an Order
confirming this Chapter 11 Plan of Reorganization and/or the end of the calendar quarter in which
the Plan was confirmed. At such time, Debtor shall cease filing monthly operating reports and shall
begin filing quarterly post confirmation reports. These quarterly reports shall be filed until such time
as a Final Decree has been entered in this matter by the Court, closing this Chapter 11 proceeding.
ARTICLE XII
Closing of the Case
At such time as the case has been fully administered, that is, when all things requiring action
by the Court have been done, and the Plan has been substantially consummated, this case shall be
closed. To close the case the Debtor shall file an application for final decree showing that the case
has been fully administered and that he Plan has been substantially consummated. The Court shall
conduct a hearing (or as otherwise allowed by the Court) upon the application after notice to all
creditors, equity security holders and persons specially requesting notice, after which an order
approving the Debtor’s report and closing the case (final decree) may be entered.
In the period after confirmation but before closing of the case, the Debtor may continue to
avail itself of the services of professional persons whose employment was approved at or prior to
confirmation in completing administration of the case and in the consummation and performance
of the Plan, and, if necessary, with approval of the Court employ additional professional persons to
render services in and in connection with this case. With respect to services rendered and expenses
incurred in or in connection with the case by any professional person during such period, the
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professional person may render periodic billings therefore to the Debtor which shall promptly pay
the same, but each such payment shall be subject to review and approval by the Court as to
reasonableness thereof, as set forth herein below.
In its application for final decree, the Debtor shall detail all amounts paid during such period
to professional persons as compensation for services rendered or reimbursement of expenses
incurred, and with respect to which no prior allowance thereof has been made by the Court. At the
hearing on the Debtor’s application for final decree the Court shall consider and determine whether
or not such payments shall be approved as reasonable.
Confirmation of this Plan shall constitute a discharge of any debt that arose prior to
confirmation and any debt of any kind specified in Bankruptcy Code Section 502(g), (h) and (I),
other than those liabilities expressly to be assumed hereby by the Reorganized Debtor.
CONCLUSION
The materials provided in the Disclosure Statement and Plan are intended to assist you in
voting on the Plan in an informed fashion. If the Plan is confirmed, you will be bound by its terms;
therefore, you are urged to review this material and to make such informed vote on the Plan.
DATED August 17, 2012.
LAW OFFICES OF
ERIC SLOCUM SPARKS, P.C.
/s/ Sparks AZBAR #11726
Eric Slocum Sparks
Attorney for Debtor
Copies of the foregoing
mailed/faxed/delivered August 17, 2012 to:
United States Trustee
230 N. First Ave. #204
Phoenix, AZ 85003
Elizabeth C. Amorosi, Esq.
Asst. U. S. Trustee
United States Trustee
230 N. First Ave. #204
Phoenix, AZ 85003
Elizabeth.C.Amorosi@usdoj.gov
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Robert M. Charles, Jr., Esq.
Lewis and Roca, LLP
One South Church Ave., Suite 700
Tucson, AZ 85701
Attorney for Gemini Master Fund, Ltd.
Rcharles@LRLaw.com
Brian A. Laird, Esq.
Heurlin Sherlock Laird
1636 N. Swan Rd. Suite 200
Tucson, AZ 85712
Attorney for James Ryles
blaird@HSLazlaw.com
U.S. Securities and Exchange Commission
Attn: Sarah D. Moyed
5670 Wilshire Boulevard, Suite 1100
Los Angeles, CA 90036-3648
moyeds@sec.gov
U.S. Securities and Exchange Commission
Attn: Sandra W. Lavigna
5670 Wilshire Boulevard, Suite 1100
Los Angeles, CA 90036-3648
lavignas@sec.gov
U.S. Securities and Exchange Commission
Attn: Michael A. Berman
Station Place
100 F Street, N.E.
Washington, DC 20549
Nevada Secretary of State
Securities Division
555 East Washington Ave., Suite 5200
Las Vegas, NV 89101
Nevada Secretary of State
Commercial Recordings Division
202 N. Carson Street
Carson City, NV 89701
Catherine Cortez Masto
Attorney General, State of Nevada
110 N. Carson Street
Carson City, NV 89701-4717
U.S. Department of Justice
Office of the Attorney General
Eric H. Holder, Jr.
950 Pennsylvania Avenue, N.W.
Washington, DC 20530-0001
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Financial Industry Regulatory Authority
OTC Compliance Unit
9509 Key West Avenue
Rockville, MD 20850
OFFICIAL COMMITTEE OF
UNSECURED CREDITORS
Cynthia Samson - Sampson.Cynthia@gmail.com
P. O. Box 5729
Scottsdale, AZ 85261
Daniel Groff - ggroff55@cox.net
8002 E. Rosewood St.
Tucson, AZ 85710
IAM Investment Group, LP - MK4316@gmail.com
Attn: Malcolm Philips
20221 Middletown Rd.
Cornelius, NC 28031
Lucas Baer - Lucas.baer@gmail.com
9050 N. Shadow Rock Dr.
Tucson, AZ 85743
/s/ L. Anderson
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HEY RIGHT!! Never thought of that!! WHY SURE AS RAIN..CDEX FELT SORRY FOR LITTLE OLE ASD AND DECIDED TO HELP THEM OUT BY GIVING THEM SOME MONEY!! Very little money as it turned out..because CDEX could not sell much. BUT HEY, it is the THOUGHT THAT COUNTS..RIGHT??? LOL!!
BOY HOWDY..MY BAD! Thaks SOOOOO MUCH for straightening THAT OUT!! LOL!!
Unless WADE is using John 3:16 FLP.. Right smart of him if he is..
Since he has been set up as the GOAT by JB...he can escape some liability and enjoy some deniability by pointing at his FLP...
Executory (NOT COMPLETED) contracts. It was said tht WADE and STARZINGER were indepndent contractors working on the IG4..WADES name apears to be missing.
ASD is listed. CDEX owes them a bit because of a settlement of a beef about a patent that CDEX swiped offa ASD...
In re ,
Debtor
CDEX INC. Case No. 4:12-bk-02402-JMM
B6G (Official Form 6G) (12/07)
Describe all executory contracts of any nature and all unexpired leases of real or personal property. Include any timeshare interests. State nature
of debtor's interest in contract, i.e., "Purchaser", "Agent", etc. State whether debtor is the lessor or lessee of a lease. Provide the names and
complete mailing addresses of all other parties to each lease or contract described. If a minor child is a party to one of the leases or contracts,
state the child's initials and the name and address of the child's parent or guardian, such as "A.B., a minor child, by John Doe, guardian." Do not
disclose the child's name. See, 11 U.S.C. §112 and Fed. R. Bankr. P. 1007(m).
Check this box if debtor has no executory contracts or unexpired leases.
Name and Mailing Address, Including Zip Code,
of Other Parties to Lease or Contract
Description of Contract or Lease and Nature of Debtor's Interest.
State whether lease is for nonresidential real property.
State contract number of any government contract.
continuation sheets attached to Schedule of Executory Contracts and Unexpired Leases
SCHEDULE G - EXECUTORY CONTRACTS AND UNEXPIRED LEASES - AMENDED
Software Copyright (c) 1996-2012 - CCH INCORPORATED - www.bestcase.com Best Case Bankruptcy
1
ANALYTICAL SPECTRAL DEVICES, INC.
2555 55TH ST, SUITE 100
Boulder, CO 80301
SETTLEMENT AND PATENT LICENSE
AGREEMENT
CAREY STARZINGER
622 N MESCAL RD
Benson, AZ 85602
CONTRACTOR
CHUBB THE FEDERAL INSURANCE COMPANY
20 S KING STREET
Leesburg, VA 20175
INSURACE
COMPUPAY
5151 E BROADWAY BLVD #200
Tucson, AZ 85711
MONTHLY PAYROLL SERVICE
FIRST INSURANCE FUNDING GROUP
PO BOX 66468
Chicago, IL 60666
INSURANCE
HEALTH EQUITY
1276 SOUTH 820 E SUITE 201
American Fork, UT 84003
MONTHLY SERVICE EMPLOYEE SAVINGS
HEALTH NET OF ARIZONA INC
1230 WEST WASHINGTON ST
Tempe, AZ 85281
HEALTH INSURANCE
INTERNET MEGAMEETING LLC
14900 VENTURA BLVD STE 310
Sherman Oaks, CA 91403
CALL SERVICE
IPFS CORPORATION
24722 NETWORK PLACE
Chicago, IL 60673
INSURANCE
J 3:16 INVESTMENT GROUP FLP
PO BOX 780
Vail, AZ 85641
CONTRACTOR
MARKETWIRE, INC.
100 N SEPULVEDA BLVD STE 325
El Segundo, CA 90245
PRESS RELEASE PUBLICATIONS
MONITOR LIABILITY MANAGERS, LLC
2850 W GOLF RD STE 800
Rolling Meadows, IL 60008-4039
INSURANCE
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Name and Mailing Address, Including Zip Code,
of Other Parties to Lease or Contract
Description of Contract or Lease and Nature of Debtor's Interest.
State whether lease is for nonresidential real property.
State contract number of any government contract.
Sheet of continuation sheets attached to the Schedule of Executory Contracts and Unexpired Leases
SCHEDULE G - EXECUTORY CONTRACTS AND UNEXPIRED LEASES - AMENDED
(Continuation Sheet)
Software Copyright (c) 1996-2012 - CCH INCORPORATED - www.bestcase.com Best Case Bankruptcy
In re ,
Debtor
CDEX INC. Case No. 4:12-bk-02402-JMM
NEVADA AGENCY AND TRANSFER CO
50 W LIBERTY STE 880
Reno, NV 89501
STOCK TRANSFER AGENCY
PRESSON EQUITY PARTNERS LLP
2122 HIGHLAND AVE STE 400
Phoenix, AZ 85016
LEASE
VICTORY ALARM
14901 E COLOSSAL CAVE RD
Vail, AZ 85641
SECURITY
ZOHO CORP
4900 HOPYARD RD SUITE 310
Pleasanton, CA 94588
RECORD MANAGEMENT
1 1
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three new filings today..
One with the restated settlement agreement and one with the objections of TRUSTEE WOLFE of the Californioa Chap 7..which say that JB has not accounted for some stuph..
And a list of contracts not completed and paid for...Which has STARZINGERS name BUT NOT WADES...
Not aware that the vote has been taken..yet. Why don't you ask the three alleged dissenters?
Could it be that they have undisclosed plans?? Plans that do not include turning the company over to the "lend to own" group from LUBBOCK??
IF ANYONE wants further verbatim converted transcripts of the BK court proceedings, ask. I am damn tired of messing with it. Not likely to volunteer any more of them.
Don't forget to say THANKS to ARLOCO for providing the PDFs.
That would be a condition precedent to me doing any more.
And do not forget that magic word..."PLEASE" !!
Reckon how long that 700k outa LUBBOCK will last?? Just salaries + perks will eat up a bunch of it!! Then the expenses of contracting for manufacturing the IG4..(If any of that is actually tried)..and attendant sales costs, (If ANY)..etc..
HOW LONG?? NOT LONG!! TM MLK, jr.
NOTE that the "honest" CDEX CEO tried to pull a sneaky slicky on the CHAP 7 BK court. Not allowed!! ILLEGAL!! So what else is news???
Had to give up all of his shares in CDEX..after an adversary procedure..Tried to hold onto them..but that dang TRUSTEE..bless her bones..may she get infested with warts..wrested them away from him.
But what the heck?? If the CHAP 11 is approved he can award hmself a big pile as a bonus..if he wants tham..in addition to his 10K a month plus perks that he would get. And his sons salary plus perks. Might as well give him a pile too..consultation fee..expert in inventory..LOL!!
CHAP 7 california TRUSTEE...."HEY, wait a minute"..
Dean T. Kirby, Jr. (SBN 090114)
James F. Lewin (SBN 140268)
KIRBY & McGUINN, A P.C.
707 Broadway, Suite 1750
San Diego, California 92101
Telephone: (619) 398-3365
Facsimile: (619) 398-3374
e-mail: jlewin@kirbymac.com
Attorneys for Nancy L. Wolf, Trustee of the Bankruptcy Estate
of Jeffrey K. Brumfield and Kathryn B. Brumfield
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ARIZONA
In re
CDEX, INC.,
Debtor.
Case No. 4:12-bk-02402-JMM
Chapter 11
OBJECTION TO DISCLOSURE
STATEMENT
Date: July 16, 2012
Time: 10:45 a.m.
TO THE HONORABLE JAMES M. MARLAR, UNITED STATES BANKRUPTCY JUDGE:
Nancy L. Wolf, Trustee of the Bankruptcy Estate of Jeffrey K. Brumfield and Kathryn B.
Brumfield (“Trustee”) hereby objects to approval of the Disclosure Statement dated May 25,
2012(“DS”) filed by Debtor CDEX, Inc. (“Debtor”) as follows:
I. INTRODUCTION
Jeffrey K. Brumfield (“Brumfield”) is the Chairman and Chief Executive of the Debtor. Mr.
Brumfield also holds 4,988,426 common shares of the Debtor. See, Notice of Filing List of Equity
Security Holders filed February 10, 2012 as PACER Docket No. 3.
On or about December 29, 2010, Mr. Brumfield and his spouse Kathryn B. Brumfield filed a
voluntary petition for relief pursuant to the provisions of Chapter 7 of Title 11, United States
Bankruptcy Code, as case no. 10-22667-LA7 in the United States Bankruptcy Court for the Southern
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District of California (the “Brumfield Bankruptcy Case”). On or about that same date, the Trustee
was duly appointed as the acting Trustee of the Brumfield bankruptcy estate.
The Trustee discovered that on or after January 26, 2011, Brumfield transferred possession
of CDEX, Inc. Stock Certificate, Number 3566, dated August 13, 2010 which represents Four
Million Eight Hundred Fourteen Thousand One Hundred Thirty Three Shares of CDEX, Inc.
Common “A” Stock (the “CDEX Stock Certificate”) to a Creditor without the authorization,
knowledge, permission or consent of the Trustee. On or about February 9, 2011, the Trustee
demanded that Mr. Brumfield and/or the transferee creditor turnover possession of the CDEX, Inc.
Stock Certificate to the Trustee.
As a result of a settlement concluded after an adversary proceeding was filed in the
Brumfield Bankruptcy Case, the Trustee is in possession of the following CDEX, Inc. certificates
titled in the name of Jeffrey K. Brumfield for administration on behalf of the unsecured creditors of
the Brumfield bankruptcy estate.
Certificate No. `Date Number of Shares
3471 March 12, 2009 61,099
3565 August 13, 2010 4,814,133
3613 May 26, 2011 113,194
Mr. Brumfield scheduled unsecured nonpriorty claims in the amount of $5,430,803.22 in the
Brumfield Bankruptcy Case.
To the extent Mr. Brumfield’s percentage equity interest in CDEX appreciates in value after
the proposed Reverse Stock Split, the Trustee intends to liquidate Mr. Brumfield’s interest in the
New Common Stock for the benefit of the unsecured creditors of the estate.
II. THE LEGAL STANDARDS FOR APPROVAL OF THE DS
Complete and fully accurate disclosure of all material information is critical for approval of a
disclosure statement. Section 1125 of the Bankruptcy Code outlines the minimum information
requirements - a disclosure statement must contain information sufficient to enable the reasonable
hypothetical investor to make an informed judgment about the proposed plan. See 11 U.S.C. §
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1125(a)(1); see also In re Diversified Investors Fund XVII, 91 B.R. 559, 561 (Bankr. C.D. Cal.
1988) (primary purpose of disclosure statement to provide creditors necessary information to decide
whether to accept plan). A disclosure statement that omits material facts cannot be approved. See In
re Unichem Corp., 72 B.R. 95, 97-100 (Bankr N.D. Ill. 1987), aff'd, 80 B.R. 448 (N.D. Ill. 1987).
For a creditor to fairly evaluate the result of a proposed plan, the court must insure that a
disclosure statement sets forth “all those factors presently known to the plan proponent to bear upon
the success of failure or the proposals contained in the plan.” In re Jeppson, 66 B.R. 269, 292
(Bankr. D. Utah 1986) (quoting In re The Stanley Hotel, Inc., 13 B.R. 926, 929 (Bankr. D. Co.
1981)); see also In re Diversified Investors Fund, 91 B.R. at 561 (primary purpose of disclosure
statement is to provide creditors necessary information to decide whether to accept plan). Adequate
disclosure requires “sufficient financial and operating information to enable each participant to make
an ‘informed judgment’ whether to approve or reject the proposed plan.” In re Northwest
Recreational Activities, Inc., 8 B.R. 10, 11 (Bankr. N.D. Ga. 1980). “In short, a proper disclosure
statement must clearly and succinctly inform the average unsecured creditor what it is going to get,
when it is going to get it, and what contingencies there are to getting their [sic] distribution.” In re
Ferretti, 128 B.R. 16, 19 (Bankr. D. N.H. 1981).
Approval of a disclosure statement containing the necessary information is within the sound
discretion of the bankruptcy court. See In re Monroe Well Services, Inc., 80 B.R. 324, 331 (Bankr.
E.D. Penn. 1987). In exercising that discretion, courts will reject a disclosure statement if it contains
material misstatements and omissions or if the plan proposed thereby obviously cannot be
confirmed. See In re Unichem Corp., 72 B.R. at 97-100.
A. The DS Does Not Adequately Disclose Mr. Brumfield’s Percentage Interest in the
Debtor Or Whether Mr. Brumfield’s Percentage of New Common Stock Will Be Issued
In The Name of Nancy L. Wolf, Trustee of the Bankruptcy Estate of Jeffrey K.
Brumfield and Kathryn Brumfield
Paragraph 5.11 of the DS which is paragraph 3.11 of the proposed Plan states:
Class Eleven – Interest of Equity Holders
A. Classification: Class Eleven consists of the equity interest holders of the debtor.
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B. Impairment: Class Eleven is not impaired.
C. Treatment: The equity holders in the Debtor shall be allowed to retain their current
percentage of interest or a percentage thereof subject to the Reverse Stock Split as set forth in the
Plan.
Paragraph 5.8 of the proposed Plan States:
Authorized Share Capital: Upon consummation of the Plan, Debtor shall, without the need
for any further corporate act or other action under any applicable law, regulation, order or rule, have
300,000,000 shares of authorized New Common Stock, of which approximately 11,000,000 shall be
issued on or as soon as reasonably practicable after the Effective Date. Debtor reserves the right to
increase or amend the foregoing post-effective Date.
The DS fails to identify the equity holders, their percentage interests in CDEX and how their
percentage interests in CDEX will be affected by the Reverse Stock Split. Additionally, Mr.
Brumfield’s equity interest in CDEX is held by the Trustee. Therefore, all New Common Stock in
which Mr. Brumfield had an interest as of the date of filing of his personal bankruptcy petition is
required to be issued in the name of the Trustee.
III. THE DS REVEALS A PLAN WHICH IS NOT FEASIBLE
Title 11 U.S.C. §1129(a)(11) requires as a condition of confirmation that the court make a
finding that confirmation "is not likely to be followed by the liquidation, or the need for further
financial reorganization, of the debtor or any successor to the debtor under the plan, unless such
liquidation or reorganization is proposed in the plan." In determining whether a Plan meets the
requirements of Section 1129(a)(11 ), "the bankruptcy court has an obligation to scrutinize the plan
carefully to determine whether it offers a reasonable prospect of success and is workable." In re
Pizza of Hawaii, Inc., 761 F.2d 1374, 1382 (9th Cir. 1985). To establish feasibility, the plan
proponent must demonstrate concrete evidence of a sufficient cash flow to fund and maintain both
its operations and obligations under the Plan. S&P. Inc. v. Pfeifer, 189 B.R. 173, 183 (N.D.
1995)(quoting In re SM 104 Ltd., 160 B.R. 202, 234 (Bankr. S.D. Fla 1993)).
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In the present case, the Debtor has disclosed insufficient financial information for creditors to
determine whether the proposed Chapter 11 Plan is feasible. For example, in Exhibit “D”, Debtor
forecasts the ability to raise $700,000 in September of 2012 but fails to support this claim with any
evidence. As it not possible for Creditors to realistically assess the feasibility of this speculative
Plan, the Disclosure Statement should not be approved.
IV. CONCLUSION
For the foregoing reasons, the Trustee respectfully requests that approval of the DS be denied
and for such other and further relief as is just and proper.
Dated: July , 2012 Respectfully submitted,
KIRBY & McGUINN, A P.C.
By: /s/James F. Lewin
James F. Lewin
Attorneys for Nancy L. Wolf, Trustee
Case 4:12-bk-02402-JMM Doc 90 Filed 07/09/12 Entered 07/09/12 17:49:50 Desc
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NOTE that DOCTOR WADE was set up as the GOAT in case the IG4 fails..which of course is inevitable if the plan is approved..
JAYBEE took care to mention that he relied upon WADE to declare that the VALIMED inadequacies could be cured.
THE PLAN.. A LARGE POST INCLUDES STUPH THAT YOU HAVE SEEN BEFORE IN Q and ANNUAL SEC FILINGS...INCLUDING CUSTOMARY DISCLAIMERS...I highlighted some parts and edited out some of the vertical strings of numbers resulting from coversion of PDF to a form that an be posted here. But my fingers got too tired to complete that task.
Eric Slocum Sparks
Arizona State Bar No. 11726
LAW OFFICES OF ERIC SLOCUM SPARKS, P.C.
110 South Church Avenue #2270
Tucson, Arizona 85701
Telephone (520) 623-8330
Facsimile (520) 623-9157
law@ericslocumsparkspc.com
Attorney for Debtors
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ARIZONA
In re: ))
CDEX INC, ) Case No. 4:12-bk-02402-JMM
))
Chapter 11
Debtor. ))
NOTICE OF SUBMISSION OF
) DEBTOR’S FIRST DISCLOSURE
) STATEMENT DATED May 25, 2012 FOR ITS
) FIRST PLAN OF REORGANIZATION
) DATED May 25, 2012
___________________________________ )
CDEX, Inc., (hereinafter “the Debtor”), by and through its counsel undersigned, submits this
proposed First Disclosure Statement attached hereto and by reference incorporated herein (hereinafter
“the Disclosure Statement”) in connection with the “Debtor’s First Plan of Reorganization” attached as
Exhibit “A” hereto dated May 25, 2012 (hereinafter “the Plan”). The Disclosure Statement is submitted
in compliance with 11 U.S.C. Section 1125 and Bankruptcy Rule 3017. It has not been approved by the
Bankruptcy Court and is filed solely to enable the Court and parties in interest to evaluate the adequacy
of the information contained herein as required by the Bankruptcy Code. Moreover, the Disclosure
Statement refers to information contained herein as required by the Bankruptcy Code. The Disclosure
Statement refers to information and facts that the Debtor anticipates will be accurate or will occur on
or prior to the date of the hearing to consider the Disclosure Statement. Therefore, certain information
and facts contained in the Disclosure Statement may not be completely accurate as of the date hereof.
The Debtor believes that a form of Disclosure Statement in substantially the form as that which
is attached hereto contains information of a kind, and in sufficient detail, as far as is reasonably practical
in light of the nature and history of the Debtor, that would enable a reasonable investor, typical of the
Case 4:12-bk-02402-JMM Doc 70 Filed 05/25/12 Entered 05/25/12 12:16:11 Desc
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holders of claims and interests in each class of claims and interest in the Plan, to make an informed
judgment about the Plan. Nevertheless, all readers are cautioned that the Debtor may file further
modifications of the Plan and of the Disclosure Statement prior to the hearing to consider the Disclosure
Statement.
THE FILING AND ANY DISSEMINATION OF THE DISCLOSURE STATEMENT
IS NOT A SOLICITATION OF VOTES ACCEPTING OR REJECTING
THE PLAN DESCRIBED THEREIN. ACCEPTANCES OR REJECTIONS MAY NOT BE
SOLICITED UNTIL A DISCLOSURE STATEMENT HAS BEEN APPROVED BY THE
BANKRUPTCY COURT. THIS DISCLOSURE STATEMENT IS BEING SUBMITTED FOR
APPROVAL BUT HAS NOT BEEN APPROVED BY THE COURT.
DATED: May 25, 2012.
LAW OFFICES OF
ERIC SLOCUM SPARKS, P.C.
/s/ Sparks #11726
Eric Slocum Sparks
Attorney for Debtor
Case 4:12-bk-02402-JMM Doc 70 Filed 05/25/12 Entered 05/25/12 12:16:11 Desc
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TABLE OF CONTENTS
FOR
DISCLOSURE STATEMENT DATED
May 25, 2012
SECTION I INTRODUCTION 1
1.1 Purpose of This Disclosure Statement 1
1.2 Confirmation Hearing and Voting Instructions 3
1.3 Voting 4
SECTION II HISTORY OF DEBTOR AND FACTORS LEADING TO THE
FILING OF THE CHAPTER 11
10
2.1 Description of Debtor and Major Assets 10
2.2 Current Management 10
2.3 History of the Debtor and Significant Events Prior to the
commencement of the Debtor’s Reorganization
10
2.4 Causes of Action 15
2.5 New Plan of Reorganization 15
2.6 Obligations as of Date of Filing 15
SECTION III INCOME PROJECTIONS OF THE BUSINESS 15
SECTION IV SUMMARY OF PLAN OF REORGANIZATION 15
4.1 Summary of Plan 15
4.2 Reverse Stock Split 16
4.3 Conversion of Debt to Equity 16
4.4 New Warrants 16
4.5 New Financing 16
4.6 Segregation of Classes 16
4.7 Value of Secured Claims 17
4.8 Cash Collateral Litigation 17
4.9 Description of Assets - Values 17
4.10 Anticipated Future of Debtor 17
4.11 Source of Information 17
4.12 Condition and Performance of the Debtor in Chapter 11 17
4.13 Information Regarding Claims Against the Estate 18
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4.14 Liquidation Analysis 18
4.15 Future Management of Debtor 18
4.16 Non-Bankruptcy Litigation 18
4.17 Avoidable Transfers 18
4.18 Accounts Receivable 18
4.19 Baxa Corporation Monies 18
SECTION V CLASSIFICATION AND TREATMENT OF CLAIMS AND
INTERESTS
19
5.1 Class 1 - Administrative Claims 20
5.2 Class 2 - Claims of Governmental Units 20
5.3 Class 3 - Employee Priority Claims 21
5.4 Class 4 - Unsecured Claims of Senior 10% Noteholders 22
5.5 Class 5 - Unsecured Claims of Non-Interest Noteholders 22
5.6 Class 6 - Unsecured Deferred Compensation Claims 22
5.7 Class 7 - Unsecured Claims of George Cohen 22
5.8 Class 8 - Unsecured Trade Claims 23
5.9 Class 9 - Client Deposits 23
5.10 Class 10 - Contingent, Unliquidated and Disputed 23
5.11 Class 11 - Interest of Equity Holders 24
5.12 Class 12 - Claims of Participating Investors 24
SECTION VI POST-CONFIRMATION MANAGEMENT 24
SECTION VII INCOME TAX CONSEQUENCES OF REORGANIZATION 24
7.1 Disclaimer 25
7.2 Consummation 25
SECTION VIII FEASIBILITY 25
SECTION IX LIQUIDATION ANALYSIS 26
SECTION X ACCEPTANCE AND CONFIRMATION 27
10.1 What is Necessary for Court Approval of a Plan 26
10.2 Alternatives to the Plan 28
10.3 Specific Consideration in Voting 29
10.4 Risk Factors 29
10.5 Disclosure Required by the Code 29
SECTION XI OTHER PROVISIONS OF THE PLAN 30
11.1 Retention of Jurisdiction 30
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11.2 Retention of Causes of Action 30
11.3 Retention or Rejection of Executory Contracts and Leases 31
11.4 Amendments to Plan 31
11.5 Offer, Issuance and Resale of Plan Securities 31
11.6 Provisions for Filing Reports and Payments of Fees to US Trustee 31
SECTION XII EFFECT OF CONFIRMATION 32
12.1 Binding Effect 32
12.2 Vesting of Assets 32
12.3 Discharge of the Debtor and of Claims and Termination of the
Equity Interests
32
12.4 Liability of Guarantors and Cosigners of Debt Obligations 33
12.5 Injunction Against Interference with Plan 33
12.6 Exculpation and Limitation of Liability 33
12.7 Injunction Related to Releases and Exculpation 34
12.8 Termination of Subordination Rights and Settlement of Related
Claims
34
12.9 Release of Liens 35
12.10 Retention of Causes of Action/Reservation of Rights 35
SECTION XIII RECOMMENDATION OF THE DEBTOR 36
CONCLUSION 37
LIST OF EXHIBITS
EXHIBIT A First Plan of Reorganization Dated May 25, 2012 and filed as a separate
document
EXHIBIT B Ballot
EXHIBIT C Liquidation Analysis
EXHIBIT D Anticipated Income and Expense/Sources and Uses of Cash
EXHIBIT E ValiMed Products
EXHIBIT F Stock Warrant
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Eric Slocum Sparks
Arizona State Bar No. 11726
LAW OFFICES OF ERIC SLOCUM SPARKS, P.C.
110 South Church Avenue #2270
Tucson, Arizona 85701-3031
Telephone (520) 623-8330
Facsimile (520) 623-9157
law@ericslocumsparkspc.com
Attorney for Debtor
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ARIZONA
In re: ))
CDEX INC, ) Case No. 4:12-bk-02402-JMM
)))
(Chapter 11)
Debtor. ))
DEBTOR’S FIRST DISCLOSURE
) STATEMENT DATED May 25, 2012
) FOR ITS FIRST PLAN OF
) REORGANIZATION
) DATED May 25, 2012
CDEX, Inc., (hereinafter “the Debtor”), through its undersigned attorney, hereby submits its First
Disclosure Statement dated May 25, 2012 for its First Plan of Reorganization dated May 25, 2012.
SECTION I
Introduction
1.1. Purpose of this Disclosure Statement: the Debtor commenced reorganization proceedings
with the filing of a Voluntary Petition on February 10, 2012 under Chapter 11 of the United States
Bankruptcy Code, as amended (the “Bankruptcy Code”).
A DISCLOSURE STATEMENT FOR THE PLAN OF REORGANIZATION FOR THE
DEBTOR WAS FILED BY THE DEBTOR, WHICH DESCRIBES THE TERMS AND PROVISIONS
OF THE PLAN OF REORGANIZATION OF THE DEBTOR DATED May 25, 2012.
[After notice and hearing, the Disclosure Statement was approved by the Bankruptcy Court as
containing adequate information and sufficient detail to enable the holders of claims against or interest
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in the debtor to make an informed judgment about the merits of approving the Plan.]
The purpose of this Disclosure Statement is to provide holders of claims against or interest in
the Debtor with sufficient information about the Debtor and the Plan to enable holders of claims against
or interest in the Debtor to make an informed judgment on the merits of the Plan and a decision whether
to approve or reject the Plan.
Certain materials contained in this Disclosure Statement are taken directly from other readily
accessible instruments or are digests of other instruments. While the Debtor has made every effort to
retain the meaning of such other instruments or the portions transposed, you are urged that any reliance
on the contents of such other instruments should be predicated on a thorough review of the instruments
themselves.
THE PLAN ACCOMPANIES THIS DISCLOSURE STATEMENT AS “EXHIBIT A”. THE
DEFINITIONS CONTAINED IN THE PLAN APPLY TO THIS DISCLOSURE STATEMENT AND
EACH RECIPIENT THEREOF IS URGED TO REVIEW THE PROVISIONS OF THE PLAN FULLY
PRIOR TO REVIEWING THIS STATEMENT.
The Debtor believes the contents of this Disclosure Statement satisfies the requirements adopted
by this Court In re A.C. Williams Co., 25 B.R. 173 (Bankr N.D. Ohio, 1982), In re Cardinal Congregate
I, 121 B.R. 760 (Bankr S.D. Ohio, 1982). Those elements are as follows:
1. The circumstances that gave rise to the filing of the bankruptcy petition;
2. A complete description of the available assets and their value;
3. The anticipated future of the Debtor;
4. The source of the information provided in the Disclosure Statement;
5. A disclaimer, which typically indicates that no statements or information concerning the
debtor or its assets or securities are authorized, other than those set for the in the disclosure statement;
6. The condition and performance of the debtor while in Chapter 11;
7. Information regarding claims against the estate;
8. A liquidation analysis setting forth the estimated return that creditors would receive under
Chapter 7;
9. The accounting and valuation methods used to produce the financial information in the
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disclosure statement;
10. Information regarding the future management of the debtor, including the amount of
compensation to be paid to any insiders, directors, and/or officers of the debtor;
11. A summary of the plan of reorganization;
12. An estimate of all administrative expenses, including attorneys fees and accountant’s fees;
13. The collectibility of any accounts receivable;
14. Any financial information, valuations or pro forma projections that would be relevant to
creditors’ determinations of whether to accept or reject the plan;
15. Information relevant to the risks being taken by the creditors and interest holders;
16. The actual or projected value that can be obtained from avoidable transfers;
17. The existence , likelihood and possible success of non-bankruptcy litigation;
18. The tax consequences of the plan; and
19. The relationship of the debtor with affiliates.
1.2 Confirmation Hearing and Voting Instructions: The Bankruptcy Court will set/has
set____________________, 2012, at ____________ __.m. for a hearing on the confirmation of the
Plan. Claimants and interest holders may vote on the Plan by filling out and mailing the accompanying
Ballot for Accepting or Rejecting the Plan to:
Clerk of the United States Bankruptcy Court
38 South Scott Avenue
Tucson, Arizona 85701
with a copy to:
Eric Slocum Sparks, Esq.
ERIC SLOCUM SPARKS, P.C.
110 South Church Avenue, #2270
Tucson, Arizona 85701.
The Bankruptcy Court may confirm only one plan in this case. The plan confirmed in the
Bankruptcy Court must meet the requirements contained in the Bankruptcy Code.
Only the Debtor or the Debtor’s representatives may solicit your vote. The cost of any
solicitation by the Debtor will be borne by the Debtor. No other additional compensation shall be
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received by any party for any solicitation other than as disclosed to the Bankruptcy Court.
1.3 Voting. If you are in one of the classes of creditors or investors whose interests
are affected by the Plan (see “Summary of the Plan” below), it is important that you vote. If you fail to
do so, your rights may be jeopardized.
To vote to accept or reject the Plan, creditors and investors of the Reorganized Debtor in any of
the impaired classes (see the “Summary of the Plan” contained herein and the copy of the Plan attached
hereto) should indicated their acceptance or rejection on the appropriate Ballot. A sample ballot is
attached as Exhibit “B”. Any creditors or investors holding claims in more than one impaired class
must file one Ballot for each such class. Additional Ballots may be obtained by proper written request
to:
Eric Slocum Sparks, Esq.
ERIC SLOCUM SPARKS, P.C.
110 South Church Avenue, #2270
Tucson, Arizona 85701
(520) 623-8330
Fax: (520) 623-9157
email: law@ericslocumsparkspc.com
attorney for the Debtor.
You are, therefore, urged to fill in, date, sign and promptly mail the enclosed Ballot furnished
to you. PLEASE BE SURE TO PROPERLY COMPLETE THE FORM AND LEGIBLY IDENTIFY
THE NAME OF THE CLAIMANT OR INTEREST HOLDER.
EXECUTED BALLOTS MUST BE RECEIVED ON OR BEFORE THE RETURN DATE SET
FORTH IN THE BALLOT.
SINCE MAIL DELAYS MAY OCCUR, IT IS IMPORTANT THAT THE BALLOT OR
BALLOTS BE MAILED OR DELIVERED WELL IN ADVANCE OF THE DATE SPECIFIED. ANY
BALLOTS RECEIVED AFTER THAT DATE MAY NOT BE INCLUDED IN ANY CALCULATION
TO DETERMINE WHETHER THE CREDITORS AND INTEREST HOLDERS HAVE VOTED TO
ACCEPT OR REJECT THE PLAN.
THIS IS A SOLICITATION BY THE DEBTOR ONLY AND IS NOT A SOLICITATION BY
THE ATTORNEYS OR ACCOUNTANTS FOR THE DEBTOR, AND THE REPRESENTATIONS
MADE HEREIN ARE THOSE OF THE DEBTOR AND NOT OF SUCH ATTORNEYS OR
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ACCOUNTANTS, EXCEPT AS MAY BE OTHERWISE INDICATED.
As a claimant or interest holder, your vote is important. The Bankruptcy Court cannot consider
Confirmation of the Plan until acceptance thereof has been obtained pursuant to the affirmative vote of
impaired claimants by classes who hold at least two-thirds (2/3) in amount and more than one-half (½)
in number of the allowed claims by class voting on the Plan. If an impaired claimant or interest holder
who is entitled to vote does not, such failure to vote will bear upon the outcome.
Whether a creditor or interest holder votes on the Plan or not, or whether the creditor or interest
holder votes at all, such party will be bound by the terms and treatment set forth in the Plan if the Plan
is accepted by the requisite majorities of creditors and interest holders and is confirmed by the
Bankruptcy Court. Allowance of a claim or interest for voting purposes does not necessarily mean that
all or a portion of the claim or interest will be allowed or disallowed for distribution purposes.
Following acceptance, the Bankruptcy Court will hold a hearing on the confirmation of the Plan
and will enter an order of confirmation with respect to the Plan if it finds that, among other things, all
payments to be made by the Debtor in connection with the case or Plan have been disclosed to the
Bankruptcy Court, the identity and affiliation of post-confirmation management of the Reorganized
Debtor has been fully disclosed, each class of claimants and interest holders has accepted the Plan or is
not impaired by the provisions thereof, and that confirmation is not likely to be followed by the
liquidation or need for further financial reorganization of the Reorganized Debtor.
In the event that the requisite acceptance of impaired classes of claims and interests are not
obtained, pursuant to Section 1129 (b)(1) of the Bankruptcy Code, the Bankruptcy Court may
nevertheless confirm the Plan upon the request of the proponent of the Plan if the Bankruptcy Court
finds that the Plan does not discriminate unfairly and accords fair and equitable treatment to the class
rejecting it.
At the hearing on confirmation of the Plan, the Bankruptcy Court will hear any timely filed
objections from a claimant or interest holder to confirmation of the Plan.
THE ONLY REPRESENTATIONS THAT ARE AUTHORIZED OR WHICH MAY BE MADE
CONCERNING THE DEBTOR, THE VALUE OF ITS ASSETS, OR THE REORGANIZED DEBTOR
ARE THE REPRESENTATIONS CONTAINED IN THIS DISCLOSURE STATEMENT. EXCEPT
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AS NOTED, THE FINANCIAL INFORMATION CONTAINED IN THIS DISCLOSURE
STATEMENT HAS NOT BEEN SUBJECTED TO AN AUDIT BY AN INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANT. ALL FINANCIAL RECORDS OF THE DEBTOR ARE MAINTAINED
ON AN ACCRUAL BASIS. ALL EXPENSES AND INCOME ARE ON AN ACCRUAL BASIS.
SOME OF THE ACCOUNTING/FINANCIAL WORK FOR THE DEBTOR MAY BE PERFORMED
BY AN ACCOUNTANT OF THE DEBTOR. FOR THAT REASON, THE DEBTOR IS NOT ABLE
TO WARRANT OR REPRESENT THAT THE INFORMATION CONTAINED IN THIS
DISCLOSURE STATEMENT IS WITHOUT INACCURACY. HOWEVER MANAGEMENT OF
DEBTOR HAS MADE GREAT EFFORT TO ENSURE THAT ALL SUCH INFORMATION IS
FAIRLY PRESENTED. NO REPRESENTATIONS OR ASSURANCES CONCERNING THE
DEBTOR (INCLUDING, WITHOUT LIMITATION, ITS FUTURE BUSINESS OPERATIONS) OR
THE PLAN ARE AUTHORIZED BY THE DEBTOR OTHER THAN AS SET FORTH IN THIS
DISCLOSURE STATEMENT. ANY REPRESENTATIONS OR INDUCEMENTS MADE BY ANY
PERSON TO SECURE YOUR VOTE WHICH ARE OTHER THAN HEREIN CONTAINED
SHOULD NOT BE RELIED UPON BY YOU IN ARRIVING AT YOUR DECISION, AND SUCH
ADDITIONAL REPRESENTATIONS OR INDUCEMENTS SHOULD BE REPORTED TO
COUNSEL FOR THE DEBTOR, WHO, IN TURN, SHALL DELIVER SUCH INFORMATION TO
THE BANKRUPTCY COURT FOR SUCH ACTION AS MAY BE DEEMED APPROPRIATE.
THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE AS
OF THE DATE HEREOF, UNLESS ANOTHER TIME IS SPECIFIED HEREIN. NEITHER
DELIVERY OF THIS DISCLOSURE STATEMENT NOR ANY EXCHANGE OF RIGHTS MADE
IN CONNECTION WITH THIS DISCLOSURE STATEMENT SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE FACTS SET FORTH HEREIN SINCE THE DATE THIS DISCLOSURE STATEMENT AND
THE MATERIALS RELIED UPON IN PREPARATION OF THIS DISCLOSURE STATEMENT
WERE COMPILED. THIS DISCLOSURE STATEMENT MAY NOT BE RELIED ON FOR ANY
PURPOSE OTHER THAN TO DETERMINE HOW TO VOTE ON THE PLAN, AND NOTHING
CONTAINED IN IT SHALL CONSTITUTE, OR BE DEEMED CONCLUSIVE ADVICE ON, THE
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AX OR OTHER LEGAL EFFECTS OF ANY REORGANIZATION ON HOLDERS OF CLAIMS OR
INTERESTS IN CONNECTION WITH SUCH REORGANIZATION.
THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH SECTION
1125 OF THE BANKRUPTCY CODE AND RULE 3016 OF THE FEDERAL RULES OF
BANKRUPTCY PROCEDURE. THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED
OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
(THE “SEC”), NOR HAS THE SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE
STATEMENTS CONTAINED HEREIN. PERSONS OR ENTITIES TRADING IN OR OTHERWISE
PURCHASING, SELLING OR TRANSFERRING SECURITIES OF THE DEBTOR SHOULD
EVALUATE THIS DISCLOSURE STATEMENT AND THE PLAN IN LIGHT OF THE PURPOSES
FOR WHICH THEY WERE PREPARED.
THIS DISCLOSURE STATEMENT CONTAINS CERTAIN PROJECTED FINANCIAL
INFORMATION RELATING TO THE REORGANIZED DEBTOR PROVIDED BY CURRENT
MANAGEMENT, AS WELL AS CERTAIN OTHER STATEMENTS THAT CONSTITUTE
“FORWARD-LOOKING STATEMENTS’ WITHIN THE MEANING OF THE FEDERAL PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. SUCH PROJECTIONS AND STATEMENTS
ARE BASED ON CERTAIN ESTIMATES AND ASSUMPTIONS MADE BY, AND ON
INFORMATION AVAILABLE TO, THE DEBTOR. WHEN USED IN THIS DOCUMENT, THE
WORDS “ANTICIPATE,” “BELIEVE,” “ESTIMATE,” “EXPECT, “INTENT,” “PLAN,” “PROJECT,”
“FORECAST,” “MAY,” “PREDICT,” “TARGET,” “POTENTIAL,” “PROPOSED,”
“CONTEMPLATED,” “WILL,” “SHOULD,” “COULD,” “WOULD” AND SIMILAR EXPRESSIONS,
AS THEY RELATE TO THE DEBTOR, THE REORGANIZED DEBTOR AND ITS
MANAGEMENT, ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THE
DEBTOR INTENDS FOR SUCH FORWARD-LOOKING STATEMENTS TO BE COVERED BY
THE SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS CONTAINED IN
THE FEDERAL PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, AND THE
DEBTOR SET FORTH THIS STATEMENT AND THE RISK FACTORS CONTAINED HEREIN AS
WELL AS SECTION 1145 OF THE BANKRUPTCY CODE, EXEMPTIONS FROM SECURITIES
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LAW, IN ORDER TO COMPLY WITH SUCH SAFE HARBOR PROVISIONS. SUCH PROJECTED
FINANCIAL INFORMATION AND OTHER FORWARD-LOOKING STATEMENTS REFLECT THE
CURRENT VIEWS OF THE DEBTOR AND ARE SUBJECT TO CERTAIN RISKS,
UNCERTAINTIES AND ASSUMPTIONS. MANY FACTORS COULD CAUSE THE ACTUAL
RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE DEBTOR AND THE REORGANIZED
DEBTOR TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE
OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY SUCH PROJECTED
FINANCIAL INFORMATION AND FORWARD-LOOKING STATEMENTS, INCLUDING, BUT
NOT LIMITED TO, THE RISKS DISCUSSED HEREIN AND RISKS, UNCERTAINTIES AND
OTHER FACTORS DISCUSSED FROM TIME TO TIME IN FILINGS MADE BY THE DEBTOR
WITH THE SEC AND/OR OTHER REGULATORY AUTHORITIES. SHOULD ONE OR MORE OF
THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD ASSUMPTIONS
UNDERLYING THE PROJECTED FINANCIAL INFORMATION OR OTHER FORWARDLOOKING
STATEMENTS PROVE INCORRECT, ACTUAL RESULTS MAY VARY
MATERIALLY FROM THOSE DESCRIBED HEREIN AS ANTICIPATED, BELIEVED,
ESTIMATED OR EXPECTED. THE DEBTORS DO NOT INTEND, AND DO NOT ASSUME ANY
DUTY OR OBLIGATION, TO UPDATE OR REVISE THESE FORWARD-LOOKING
STATEMENTS, WHETHER AS THE RESULT OF NEW INFORMATION, FUTURE EVENTS OR
OTHERWISE, EXCEPT AS OTHERWISE REQUIRED BY LAW.
THE INFORMATION IN THIS DISCLOSURE STATEMENT IS BEING PROVIDED
SOLELY FOR PURPOSES OF VOTING TO ACCEPT OR REJECT THE PLAN. NO PERSON OR
ENTITY MAY USE ANYTHING IN THIS DISCLOSURE STATEMENT FOR ANY OTHER
PURPOSE. THE FACTUAL INFORMATION CONTAINED HEREIN, INCLUDING THE
DESCRIPTION OF THE DEBTOR, ITS BUSINESS, AND EVENTS LEADING UP TO THE
COMMENCEMENT OF THE CHAPTER 11 CASE HAS BEEN OBTAINED FROM VARIOUS
DOCUMENTS, AGREEMENTS AND OTHER WRITINGS RELATING TO THE DEBTOR AND
FROM DISCUSSIONS WITH AND VARIOUS WRITINGS PREPARED BY THE DEBTOR, THE
OFFICERS AND DIRECTOR OF DEBTOR, AND FINANCIAL ADVISORS, IF RETAINED BY
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DEBTOR.
THE TERMS OF THE PLAN GOVERN IN THE EVENT OF ANY INCONSISTENCY WITH
THE SUMMARIES CONTAINED HEREIN. ALL EXHIBITS HERETO AND TO THE PLAN ARE
INCORPORATED INTO, AND ARE A PART OF, THIS DISCLOSURE STATEMENT AS IF SET
FORTH IN FULL HEREIN.
AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS AND OTHER ACTIONS
OR THREATENED ACTIONS, THIS DISCLOSURE STATEMENT SHALL NOT CONSTITUTE OR
BE CONSTRUED AS AN ADMISSION OF ANY FACT, LIABILITY, STIPULATION OR WAIVER
BUT RATHER AS A STATEMENT MADE WITHOUT PREJUDICE SOLELY FOR SETTLEMENT
PURPOSES, WITH FULL RESERVATION OF RIGHTS. THIS DISCLOSURE STATEMENT
SHALL NOT BE USED FOR ANY LITIGATION PURPOSE WHATSOEVER, AND SHALL NOT
BE ADMISSIBLE IN ANY PROCEEDING INVOLVING THE DEBTOR OR THE REORGANIZED
DEBTOR AN ANY OTHER PARTY-IN-INTEREST, NOR SHALL IT BE CONSTRUED TO BE
CONCLUSIVE ADVISE ON THE TAX, SECURITIES LAW OR OTHER LEGAL EFFECTS OF THE
PLAN AS TO HOLDERS OF CLAIMS AGAINST, OR INTERESTS IN, THE DEBTOR.
THIS DISCLOSURE STATEMENT HAS BEEN APPROVED BY ORDER OF THE
BANKRUPTCY COURT, DATED , 2012, AS CONTAINING
INFORMATION OF A KIND AND IN SUFFICIENT DETAIL TO ENABLE A REASONABLE,
HYPOTHETICAL INVESTOR TO MAKE AN INFORMED JUDGMENT CONCERNING THE
PLAN. THE BANKRUPTCY COURT’S APPROVAL OF THIS DISCLOSURE STATEMENT,
HOWEVER, DOES NOT CONSTITUTE A RECOMMENDATION BY THE BANKRUPTCY COURT
EITHER FOR OR AGAINST THE PLAN.
IN ORDER TO BE CONSIDERED FOR PURPOSES OF SATISFYING THE BANKRUPTCY
CODE REQUIREMENTS, YOUR BALLOT MUST BE RECEIVED AT THE ADDRESS INDICATED
ON THE BALLOT NO LATER THAN 5:00 P.M. ON THE DAY OF , 2012.
A BALLOT ACCOMPANIES THIS DISCLOSURE STATEMENT FOR USE IN VOTING OF
THE PLAN.
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SECTION II
History of Debtor and Factors Leading
to the Filing of the Chapter 11
2.1 Description of Debtor and Major Assets.
CDEX, Inc. is a technology company located in Tucson, Arizona with its bases
focusing on chemical detection in products used in various industries. CDEX develops,
manufactures and distributes products for the healthcare and security markets. Its patented and
patent pending technology is currently used in, or has applications for, the pharmaceutical industry,
hospitals, law enforcement, homeland security, border patrol, customs, port authorities, military,
brand protection, supply chain verification, urine and blood analysis for employers, housing
authorities, prisons, and home inspectors. Currently it focuses on the health care market with its
fourth generation ValiMed System. This system is an end of line machine that provides the hospitals
pharmacist with a detailed analysis of the compounded admixture that has been prepared by the
technician in the clean room of the inpatient pharmacy, by seeing through the IV bag, syringe, or
vial. The machine provides the pharmacist the detail such as the drug, diluent, the dose by
concentration or percentage, and the volume by weight. The machine is also used for the detection
of narcotics diversion by hospital clinicians. The Debtor’s security market includes the ID2 Meth
Scanner product line, which provides real time detection of specified illegal drugs in a portable
handheld device. See attached Exhibit “E”.
2.2 Current Management.
The Debtor is currently managed by Jeffrey Brumfield, Chairman and Chief
Executive Officer, and Stephen McCommon, Chief Financial Officer.
2.3 History of the Debtor and Significant Events Prior to the Commencement of the
Debtor’s Reorganization.
CDEX Inc., incorporated under the laws of the State of Nevada on July 6, 2001, began
operations in July of 2001 by acquiring the assets along with chemical detection technology,
nanometrology, technical processes and intellectual property rights from Loch Harris, Inc. In
exchange for 13,865,000 shares of CDEX’s Class A common stock.
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Malcolm Philips served as CEO of the Debtor from its inception in July 2001 until January 1,
2006 and then again from June 11, 2007 to April 19, 2010. The early goal of the Debtor was to
develop explosive detection capabilities using the acquired technologies as well as x-ray technology.
Over the years, this developed into what was thought to be a more sustainable business model of
pharmacy chemical validation. Throughout this time CDEX did not earn a profit and relied on
private placement investment and loans to fund continuing operations. Moreover, the management
team had alienated key employees who left the Company and subsequently brought an arbitration
claim against it for unpaid wages and other issues. In June of 2010, the former employees prevailed
in the arbitration and obtained a judgment in excess of $300,000.00.
New Direction
In July of 2010, Jeffrey K. Brumfield was approached by the recently appointed interim CEO
and board member Don Strickland to help facilitate a settlement with the former employees who had
won their arbitration claim against the company for actions undertaken by the previous management
team. Mr. Brumfield was contacted by Mr.Strickland due to his knowledge of Mr. Brumfield’s good
relationship with the former employees. Additionally, Mr. Brumfield had previously provided a
proposal to the board of directors to bring in new capital and management. Mr. Strickland was also
aware that Mr. Brumfield was at that time the largest shareholder in the Company, and had on
several occasions provided private placement dollars to the company totaling approximately two
million dollars. Mr. Brumfield had established a good working relationship with and gained the trust
of the debtor’s largest creditor, Gemini Strategies, as well as many of the larger shareholders and
investors in the Company.
In late August 2010, the board members resigned, Mr. Brumfield was appointed as Chief
Executive Officer and Chairman, and a new board of directors was selected. The former employees
reached a settlement with the new management and the key employees agreed to return to work for
the company for greatly reduced wages. The company also received $480,000.00 in new funds in
exchange for the marketing rights to a new product. Mr. Brumfield began managing the Company
with a commitment to work three days per week in Tucson, while continuing to run his businesses in
San Diego. After a few weeks, it became apparent that in this early stage of the Company’s
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development, more of Mr. Brumfield’s time was required in Tucson. Consequently, he began
working full time in Tucson at no additional expense to the company.
Prior to accepting the position of Chairman and CEO, Mr. Brumfield engaged in substantial
due diligence was to assess the markets that the Company was attempting to serve. He spoke with
several of the Company’s existing clients, and paid for himself and Greg Firmbach, the Company’s
President and the manager of all sales activities, to attend a reverse trade show in Florida. Mr.
Brumfield also provided the money necessary for Mr. Firmbach and himself to travel to Boston to
demonstrate the latest ValiMed CCT technology to a client.
As a result of his due diligence, Mr. Brumfield concluded that the Company was not fully
addressing the needs of the pharmaceutical community. If the Company were to be successful it
would need to go back to the lab and develop a product that did address those needs. Mr. Brumfield
then met with Dr. Wade Poteet (the previous Senior Scientist of the Company and one of the former
employees who filed the arbitration claim against the Company) on several occasions, and Dr. Poteet
assured him that the Company could produce a device that met the needs of its clientele.
When Mr. Brumfield accepted the position of CEO the first order of business was to begin
research and development for the fourth generation of the ValiMed medication validation unit. For
the first time the company had the potential to develop a product that was designed with the end
user’s needs in mind. However, the development of this new product did not come without risk.
Instead of selling the current bu soon to be outdated ValiMed CCT system, the company decided to
put all efforts into the development of the fourth generation product. Management knew that this
would be a difficult transition, but with significant cost cutting measures in daily operations, it was
determined that the reward outweighed the risk. With careful consideration, management agreed that
the company could get to the finish line - develop and produce the new product - before resources
were exhausted.
Reduction in Operating Costs - New Money
In late August of 2010, when the new board of directors was put in place and $480,000.00 in
new investor money was received by the Company, Mr. Brumfield examined the entire organization
to determine where to allocate the limited resources available. Mr. Brumfield met with all
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employees and department heads to determine where overhead could be reduced. Within a week or
so, it was determined that a significant reduction of employees was necessary, and management
began making these reductions. An overall reduction to six employees was effected, with Stephen
McCommon, the Chief Financial Officer, being the sole remaining employee from the previous staff.
Mr. McCommon agreed to a 32% reduction in wages. Management brought back Dr. Wade Poteet,
Senior Scientist, and Carey Starzinger, Senior Developer, as independent contractors working for
40% of their previous compensation. One additional staff employee was maintained to handle
shipping, receiving, information technology, inventory control, purchase orders and purchases of
inventory. CEO Brumfield took over the duties of Chief Operating Officer, president of sales, public
relations, and product design. These changes reduced the overall staff expense by roughly
$30,000.00 monthly. The new investors who contributed $480,000.00 for the opportunity to convert
to equity once the Company was able to conduct a Shareholders’ meeting and increase the number of
authorized shares.
When the new management was installed, they discovered that previous management had
over-committed the treasury stock and needed to obtain shareholder approval to increase the
authorized shares available. The Company neglected their duty to conduct an annual shareholders
meeting for over two years. The Company continued to raise money through private placement
equity offerings and debt instruments such as the convertible note that it entered into with Gemini
Strategies. This was done with the understanding that the shares would be provided once th
Company was able to get the shareholders approval in the annual meeting. Unfortunately, the
previous management never held the meeting. The new management took their duties and
responsibilities of timely reporting of the 10-K’s and 10- Q’s very seriously, and prioritized the
necessary time and resources to make sure all reports were filed timely. Since the installation of the
new management, the Company has not missed a single SEC filing deadline. An annual meeting was
held in July of 2011, and the shareholders authorized the necessary increase of in shares of the
Company stock. The immediate benefits from this increase in authorized shares were the reduction
of over $1 million in debt that was converted to equity, and the conversion of the $480,000.00 from
new investors who exchanged their marketing rights for common stock. The interest savings on this
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debt reduction was substantial.
In January of 2012, Mr. Brumfield solicited a new set of investors to provide the Company
with the funds necessary to successfully develop and market its new product. These investors
responded positively to Mr. Brumfield’s presentation and expressed their desire to provide funding.
Unfortunately, three of the note holders did not agree to modify their notes in a manner that
would allow the new funds to be invested. Faced with its default on the senior unsecured notes, the
inability to raise new capital with the notes in default, and with little money in its accounts, the
Company determined that is only real option for survival was to file for Chapter 11 protection and
reorganize.
Convertible Notes - Equity Subscriptions
Throughout its history, CDEX has relied on investor monies generated from loans,
convertible notes or equity subscriptions to fund its development of chemical detection products for
a number of markets including police, military, hospitals and pharmacies. Most significantly, in
June of 2008, Gemini Master Fund Ltd. (“Gemini”) loaned the debtor $980,000.00, with monthly
repayments to commence December 2008 and the final payment due in June 2010. This note was
subsequently amended a number of times, ultimately extending the maturity date to February 1,
2010. In February and March 2010, the majority of existing note holders with principal balances
totaling approximately $646,000.00, Gemini in the amount of $1,111,000.00, a number of accrued
and trade payables $283,000.00, and in August and September 2010 former and then-existing
employees holding deferred compensation balances in the amount of $459,000.00 all converted their
balances into a 10% Senior Convertible Note due in February of 2012. In April 2011, Gemini added
another investment of $100,000.00 to its development loan to the debtor.
New Financing Sought
Late in 2011, the debtor was arranging for a new level of financing to complete a number of
its detection products when the new investors asked for certain concessions from the existing
noteholders before they would invest new monies in the company. Of the twenty existing
noteholders, seventeen agreed to the requested concessions. Accordingly, the new investors would
not approve the release of funds to the debtor to complete product development. With little cash
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available to the debtor, it was determined that it would be most beneficial for the Company to
reorganize under Chapter 11 and pursue a global solution to fund final product development and
sales to waiting markets.
2.4 Causes of Action. The debtor is unaware of any pending or contemplated causes of
action.
2.5 New Plan of Reorganization. The Debtor has filed a Plan which will allow it to
remain in business and provide the creditors more value than the creditors would receive from a
liquidation of the business. See liquidation analysis attached hereto as Exhibit “C”.
2.6. Obligations as of Date of Filing. The Debtor estimates unsecured priority and nonpriority
claims as of the date of the Petition at $2,855,441. Debtor is unaware of any secured claims
against the estate.
SECTION III
Income Projections of the Business
A proforma statement of the Anticipated Income and Expenses and Schedule of Sources
and Uses of Cash relating to payments to creditors under the plan are attached hereto, as Exhibit
“D”. The Debtor has derived this information from the history of the operations of the Property, as
compiled by the management of the Debtor.
SECTION IV
Summary of Plan of Reorganization
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN PROVISIONS OF THE PLAN
AND SHOULD NOT BE RELIED ON FOR VOTING PURPOSES. THE SUMMARY DOES NOT
PURPORT TO BE COMPLETE. CREDITORS AND INTEREST HOLDERS ARE URGED TO
READ THE PLAN ATTACHED HERETO AS EXHIBIT “A”. CREDITORS AND INTEREST
HOLDERS ARE FURTHER URGED TO CONSULT WITH COUNSEL, OR WITH EACH
OTHER, IN ORDER TO UNDERSTAND THE PLAN MORE FULLY.
4.1 Summary of Plan: The Plan contemplates a recapitalization of the Debtor’s capital
structure and a restructuring of the Debtor’s debt obligations. The Plan contemplates a restructuring
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of the Debtor’s debt obligations and a recapitalization of the Debtor’s capital structure. As
summarized below, the Plan includes, among other things:
• A Reverse Stock Split whereby 10 shares of Old Common Stock will be consolidated
into one share of New Common Stock on the Effective Date.
• An exchange of the Senior 10% Notes, Non-Interest Notes and other existing debt for
New Common Stock and New Warrants and/or Cash.
4.2 Reverse Stock Split: At the time of filing, outstanding shares in the Debtor total
approximately 110,000,000. Current outstanding shares in the Debtor will undergo a 1 for 10
Reverse Stock Split, which will bring the amount of outstanding shares to approximately 11,000,000.
As part of the Plan, CDEX will implement the 1 for 10 Reverse Stock Split of the Old CDEX
Common Stock, such that each 10 shares shall, following the Reverse Stock Split (and subject to
adjustment for fractional entitlements), be consolidated into one (1) share of New Common Stock.
The aggregate fractional share interests of each holder of Old CDEX Common Stock shall be
rounded up to the nearest whole number. On the Effective Date or as soon as practicable thereafter,
the Reorganized Debtor expects to apply to have the New Common Stock listed on the Over the
Counter Stock Exchange (“OTC”) or, if Reorganized Debtor is unable to have the New Common
Stock listed on the OTC, other national securities exchange. All existing warrants to purchase shares
of Old CDEX Common Stock will be extinguished upon consummation of the Plan. This action will
allow Debtor to raise new capital to complete product development and consummate sales to
hospitals and other interested prospective clients.
4.3 Conversion of Debt to Equity: Subsequent to the Reverse Stock Split, the holders of
allowed claims will receive shares of stock on account of their claims.
4.4 New Warrants: Claimants in Classes 3, 4, 6 and 7 will receive warrants for the future
purchase of New Common Stock. See Exhibit “F”.
4.5 New Financing: The Debtor proposes to seek new financing capped at $700,000.00 via a
new stock offering. This offering will provide twenty new shares for every dollar invested and an
equal number of warrants with an exercise price of $0.10 per share with five years to exercise the
warrant.
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4.6 Segregation of Classes: The Plan further proposes to segregate the creditors and interest
holders of the Debtor into separate classes. Of these classes, allowed administrative and priority
claimants including priority tax claimants, but exclusive of those referenced in 11 U.S.C. Section
507(a)(8) will receive payments of 100% of their respective claims, in cash over time, with a market
rate of interest, as set forth in the Plan.
Generally, all Administrative Claims will be paid in full in cash as stated in the Plan. The
Debtor shall retain the property and the creditors shall be paid in accordance with modifications of
their applicable loan and security documents as set forth herein and in the Plan of Reorganization.
4.7 Value of Secured Claims: Under the Plan, the Debtor proposes to allow the secured
creditors, if any, to retain their liens in the amount equal to the lesser of the value of the property or
the full amount of their claim on the Petition Date. The Debtor shall continue to make payments to
all secured creditors, if any, 30 days after the Effective Date, or earlier if the Debtor and creditors
have so provided in a stipulation approved by the Court.
ANY STIPULATION ENTERED INTO BETWEEN THE SECURED CREDITORS AND
THE DEBTOR SHALL SUPERSEDE ANY TREATMENT OF CREDITORS THAT MAY BE
SET FORTH IN THE DEBTOR’S PLAN.
4.8 Cash Collateral Litigation: No cash collateral litigation is pending or anticipated.
4.9 Description of Assets - Values: The major assets of the debtor are its inventory, office
and manufacturing equipment, patents and trademarks. Debtor believes the current value of the
assets is approximately $373,824.00. Debtor has products in various states of completion with
interested prospective purchasers of finished products which will, in the opinion of management of
the debtor, allow the debtor to become profitable and increase the value of Debtor’s stock.
4.10 Anticipated Future of Debtor: The debtor has filed a Plan which will allow it to operate
its business profitably, maximizing the return to creditors.
4.11 Source of Information: The source of the information presented is the Chief Executive
Officer, Jeffrey Brumfield, and Chief Financial Officer, Stephen McCommon.
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4.12 Condition and Performance of the Debtor in Chapter 11: Debtor is currently maintaining
the assets necessary to continue operations of the Debtor. Debtor is currently paying ongoing tax
obligations in a timely manner. Debtor continues to prepare its products for final testing prior to sale
in the market.
4.13 Information Regarding Claims Against Estate: The major creditors, Gemini Master
Fund Ltd., Baxa Corporation and others, hold unsecured nonpriority claims. These claims are
estimated as of petition date to exceed $2,709,000.00. A bar date of April 23, 2012 was established
for creditors to file claims.
4.14 Liquidation Analysis: A liquidation analysis valuing assets of the debtor in a Chapter 7
is attached as Exhibit “C”. This liquidation analysis will include any uncollected accounts
receivable.
4.15 Future Management of the Debtor: The Debtor expects that the current management
will continue to manage the business post confirmation. Compensation to be paid as follows: Chief
Executive Officer $10,000.00 per month plus housing allowance and normal company benefits and
Chief Financial Officer $6,200.00 per month plus normal company benefits.
4.16 Non-Bankruptcy Litigation: Debtor anticipates no non-bankruptcy litigation will occur
after confirmation of the Plan of Reorganization as all allowed claims will be paid according to the
Plan.
4.17 Avoidable Transfers: Debtor is unaware of any transfers of property of this estate
which would allow an avoidable transfer action.
4.18 Accounts Receivable: Debtor estimates accounts receivable at $19,729.00. Debtor
believes accounts receivable are fully collectable.
4.19 Baxa Corporation Monies: Prior to the bankruptcy filing, Baxa Corporation (“Baxa”)
intended to fun $200,000 into Debtor’s business as an investment in the equity offering under the
Term Sheet and pursuant to the Escrow Agreement, which was intended to be returned to the
investor if the first closing never occurred, which it did not. Baxa transferred these funds into an
escrow account established for the proceeds of the equity offering by attorney Mary O’Hara of
Madama Griffitts O’Hara LLP in New York to collect all funds invested in the offering until a
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minimum offering amount was achieved and certain other conditions were met, upon which it was
intended that the funds would be remitted to the Debtor in the first closing of the offering. It was the
Debtor’s intention and the investors’ understanding that if the first closing did not occur, the funds
would be returned upon request. This understanding predated any discussions regarding the Debtor’s
Chapter 11 petition.. After Debtor initiated its Chapter 11 reorganization, the first closing did not
occur, so in accordance with the Term Sheet and the Escrow Agreement, Baxa requested the
escrowed monies be returned. Debtor’s counsel filed a motion with this Court to have the Baxa
monies returned to Baxa from the escrow account. This Court denied such requested relief and
continued that hearing to a later date. Debtor intends to urge the return of these funds and
distinguishes this case from In re. North American Coin & Currency, Ltd., 774 F.2d 1390 (9th Cir.
1985). In this case, the Debtor did not create a new account in its name for monies to be deposited,
the Baxa funds were maintained in an escrow account as noted, and the funds were never in the
custody of the Debtor. Moreover, the escrow arrangement in this case was not a “constructive trust”
as in the referenced case but an actual escrow of funds that were never intended to be used by the
Debtor unless the first closing occurred, regardless of whether the Debtor ever entered Chapter 11.
SECTION V
Classification and Treatment of Claims and Interests
1. Claim Amounts: Because certain claims against the Debtor may be unknown or of
undetermined amounts, the amounts of claims specified in this Disclosure Statement reflect only the
Debtor’s best estimate at this time of the amount due. In addition, the amounts of the claims
specified in this Disclosure Statement do not include, for example, claims arising from the rejection
of certain executory contracts and other contingent or unliquidated claims arising against the debtor.
2. Effective Date of the Plan: The “Effective Date” of the Plan is important in
determining when performance of many of the Debtor’s obligations under the Plan is due. The
Effective Date is defined in the Plan as the first business day following the later of the following day;
(I) the date on which the Order confirming the Plan (the “Confirmation Order”)
becomes final and non-appealable with no appeal then pending; or
(ii) 60 days after the date of the Confirmation Order for unsecured claims; and
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(iii) 30 days after the date of the Confirmation Order for secured claims, if any.
3. Classification: The Plan divides claims against the Debtor into multiple separate
classes that the Debtor asserts are in accordance with the Bankruptcy Code. Unless otherwise
expressly stated in the Plan, distributions to holders of allowed claims are in full satisfaction of their
allowed claims. All claims against the Debtor arising prior to confirmation will be discharged by
performance of the Plan on the Effective Date to the extent that such claims are dischargeable under
the Bankruptcy Code Section 1141(d). For the purposes of the Plan, claims are classified and treated
as follows:
5.1 Class One - Administrative Claims.
A. Classification: Class One consists of all claims for the cost of administration
of the Debtor’s bankruptcy estate. Included in this class are all claims for administrative expenses
entitled to priority under Bankruptcy Code §507(A)(1), such as professional fees and costs, as
approved by the Bankruptcy Court of the attorneys, accountants, and other professional persons
employed by the Debtor, and all actual and necessary expenses of operating the Debtor’s business
pursuant to Bankruptcy Code §503(b), including without limitation, all fees charged against the
Debtor’s business pursuant to Chapter 123 of Title 28, United States Code. Debtor believes claims in
this class may exceed $150,000.00.
B. Impairment: Not impaired.
C. Treatment: The Plan provides for the payment in cash, in full, of all allowed
Administrative Claims on the later of the Effective Date or the date upon which such Claims become
Allowed Claims, or as otherwise ordered by the Bankruptcy Court. Class One claims will be paid
from assets of the estate. The Debtor currently estimates that the Class One claims will total
approximately $150,000.00 and may include post-petition administrative expenses not paid by
Debtor.
5.2 Class Two - Claims of Governmental Units
A. Classification: Class Two claims consist of all allowed claims of the United
States Internal Revenue Service (“IRS”) and/or State of Arizona, Department of Revenue (“DOR”)
and/or the Department of Economic Security (“DES”), City of Tucson or other government agency
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which are entitled to priority pursuant to Section 507(a)(8) of the Bankruptcy Code except ad
valorem taxes. Debtor is aware of a proof of claim filed by Internal Revenue in this class in the
amount of $594.72.
B. Impairment: Class Two is impaired.
C. Treatment: Each holder of a Class Two allowed claim shall retain its lien or
claim, in accordance with Section 1129 of the Bankruptcy Code. The claim shall bear simple
interest at a fixed rate equal to that rate which would be required to be paid as of the Effective Date
under Section 6621 and/or 6622 of the Internal Revenue Code, or such other interest rate as the
Bankruptcy Court determines is sufficient to confer upon the tax claim a value as of the Effective
Date equal to the principal amount of such claim. The allowed claim shall be payable in two equal
monthly installments of principal, along with accrued interest. The first payment shall commence
on the first day of the month immediately following the month of the Effective Date. The claim is
subject to prepayment at any time without penalty or premium and shall have such other terms as
required by law.
5.3 Class Three - Employee Priority Claims
A. Classification: Class Three consists of allowed claims arising under
Bankruptcy Code Section 507(a)(3) and (4) including claims for accrued vacation, sick days,
holidays and wages earned by employees of the Debtor within 90 days before the filing of the
bankruptcy petition. Debtor estimates claims in this class at $22,907.31
B. Impairment: Impaired.
C. Treatment: The Plan provides that each and every holder of a Class Three
Allowed Claim shall receive shares of stock on account of its claim. Each allowed claim will be
divided by .05 in order to obtain a share value exchange of its claim and the claimant will receive
that amount of shares of stock plus an equal number of warrants for future purchase at an exercise
price of $0 .10 effective for five years after the date of issuance. Any liens held by the Class Three
creditors shall be null and void and removed as of the Effective Date.
5.4 Class Four - Unsecured Claims of Senior 10% Noteholders
A. Classification: Class Four consists of allowed unsecured claims of the holders
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of 10% Senior Convertible Notes. Debtor estimates claims in this class at $2,772,629.47.
B. Impairment: Class Four is impaired.
C. Treatment: The Plan provides that each and every holder of a Class Four
Allowed Claim shall receive shares of stock on account of its claim. Each allowed claim will be
divided by .15 in order to obtain a share value exchange of the claim and the claimant will receive
that amount of shares of stock plus an equal number of warrants for future purchase at an exercise
price of $0 .30 effective for four years after the date of issuance. Any liens held by the Class Four
creditors shall be null and void and removed as of the Effective Date.
5.5 Class Five - Unsecured Claims of Non-Interest Noteholders
A. Classification: Class Five consists of allowed unsecured claims of the holders
of Non-Interest Notes. Debtor estimates claims in this class at $14,651.00.
B. Impairment: Class Five is impaired.
C. Treatment: The Plan provides that each and every holder of a Class Five
Allowed Claim shall receive shares of stock on account of its claim. Each allowed claim will be
divided by .25 in order to obtain a share value exchange of the claim. Any liens held by the Class
Five creditors shall be null and void and removed as of the Effective Date.
5.6 Class Six - Unsecured Deferred Compensation Claims
A. Classification: Class Six consists of allowed unsecured deferred
compensation claims. Debtor estimates claims in this class at $258,371.71.
B. Impairment: Class Six is impaired.
C. Treatment: The Plan provides that each and every holder of a Class Six
Allowed Claim shall receive shares of stock on account of its claim. Each allowed claim will be
divided by .05 in order to obtain a share value exchange of the claim and the claimant will receive
that amount of shares of stock plus an equal number of warrants for future purchase at an exercise
price of $0.10 effective for five years after the date of issuance. Any liens held by the Class Six
creditors shall be null and void and removed as of the Effective Date.
5.7 Class Seven - Unsecured Claims of George Cohen
A. Classification: Class Seven consists of the allowed unsecured claims of
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George Cohen for past due convertible notes. Debtor estimates claims in this class at $45,994.25.
B. Impairment: Class Seven is impaired.
C. Treatment: The Plan provides that each and every holder of a Class Seven
Allowed Claim shall receive shares on account of its claim. Each allowed claim will be divided by
.15 in order to obtain a share value exchange of the claim and the claimant will receive that amount
of shares of stock plus an equal number of warrants for future purchase at an exercise price of $0.30
effective for five years after the date of issuance. Any liens held by the Class Seven creditor shall be
null and void and removed as of the Effective Date.
5.8 Class Eight - Unsecured Trade Claims
A. Classification: Class Eight consists of the allowed unsecured claims of trade
creditors. Debtor estimates claims in this class at $200,000.00.
B. Impairment: Class Eight is impaired.
C. Treatment: The Plan provides that each and every holder of a Class Eight
Allowed Claim shall receive shares on account of their claim. Each allowed claim will be divided
by .25 in order to obtain a share value exchange of the claim. Any liens held by the Class Eight
creditors shall be null and void and removed as of the Effective Date.
5.9 Class Nine - Client Deposits
A. Classification: Class Nine consists of the allowed unsecured claims of
Dr. Jason Terrell and Governor Juan F. Louis Hospital & Medical Center for deposits for the
purchase of company products. Debtor estimates claims in this class at $57,000.00.
B. Impairment: Class Nine is impaired.
C. Treatment: The Plan provides that each and every holder of a Class Nine
Allowed Claim shall receive shares on account of its claim. Each allowed claim will be divided by
.05 in order to obtain a share value exchange of the claim and the claimant will receive that amount
of shares of stock plus an equal number of warrants for future purchase at an exercise price of $0.10
effective for five years after the date of issuance. Any liens held by the Class Nine creditor shall be
null and void and removed as of the Effective Date.
5.10 Class Ten - Contingent, Unliquidated and Disputed Claims.
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A. Classification: Class Ten consists of all contingent, unliquidated and
disputed claims.
B. Impairment: Class Ten is impaired.
C. Treatment: Class Ten creditors shall receive no distribution under the Plan.
5.11 Class Eleven - Interest of Equity Holders.
A. Classification: Class Eleven consists of the equity interest holders of the
debtor.
B. Impairment: Class Eleven is not impaired.
C. Treatment: The equity holders in Debtor shall be allowed to retain their
current percentage of interest or a percentage thereof subject to the Reverse Stock Split as set forth in
the Plan.
5.12 Class Twelve - Claims of Participating Investors.
A. Classification: Class Twelve consists of the claims of participating investors.
B. Impairment: Class Twelve is impaired.
C. Treatment: Unless participating investors contribute substantial capital
required to fund this Plan they will receive no percentage of the equity interest of the debtor and no
distribution under the Plan. Participating investors will receive common stock at the rate of one
share for every $0.05 invested and one warrant for every share of stock purchased. Each warrant will
have a $0.10 exercise price and be effective for five years after the date of issuance.
SECTION VI
Post-Confirmation Management
The current management of the debtor shall continue to manage the debtor postconfirmation.
SECTION VII
Income Tax Consequences of Reorganization
The Debtor has been advised by Eric Slocum Sparks, Esq. to obtain independent tax advice
to determine the consequences of going forward under the Plan and retaining the Property hereunder.
The Debtor has advised Eric Slocum Sparks, Esq. that outside tax counsel has been/or will be
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retained and/or consulted to assist in drafting, amending or revising the Plan as proposed. The
debtor and Eric Slocum Sparks, P.C. have been advised that the debtor can retain the property
without significant adverse tax consequences.
7.1 Disclaimer: The income tax consequences of the reorganization of the Debtor
pursuant to this Plan will be different and will depend upon the Debtor’s tax situation. Eric Slocum
Sparks, P.C. is not advising the Debtor regarding the tax consequences of the reorganization of the
Debtor and the Debtor will consult with its own tax advisor regarding the tax consequences of the
reorganization of the Debtor according to the Plan.
ANY POTENTIAL PARTICIPATING INVESTORS ARE URGED TO CONSULT THEIR
OWN ADVISORS AS TO THE OVERALL TAX IMPLICATIONS OF PARTICIPATION OR NONPARTICIPATION
UNDER THE PLAN.
7.2 Consummation: For purposes of Local Bankruptcy Rule 2015, and consistent with
Bankruptcy Code Section 1001(2), consummation of the Plan shall occur upon the Î funding of the
contributions due from participating investors hereunder; and Ï commencement of disbursements to
Class One through Class Seven as provided in the Plan.
SECTION VIII
Feasibility
As a condition to confirmation of a plan of reorganization, Section 1129(a)(11) of the
Bankruptcy Code requires that the confirmation is not likely to be followed by a liquidation or the
need for further financial reorganization, except as proposed in such plan.
The debtor sets out as Exhibit D its Anticipated Income and Expense and the Schedule of
Sources and Uses of Cash.
THE FINANCIAL PROJECTIONS SET FORTH IN THIS DISCLOSURE STATEMENT
REPRESENT A PREDICTION OF FUTURE EVENTS BASED ON CERTAIN ASSUMPTIONS
OF THE DEBTOR. ANTICIPATED FUTURE EVENTS MAY OR MAY NOT OCCUR AND
THE PROJECTIONS MAY NOT BE RELIED UPON AS A GUARANTY OR OTHER
ASSURANCE OF THE ACTUAL RESULTS WHICH WILL OCCUR. BECAUSE OF THE
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UNCERTAINTIES INHERENT IN PREDICTIONS OF FUTURE EVENTS, THE ACTUAL
RESULTS OF OPERATIONS MAY WELL BE DIFFERENT FROM THOSE PREDICTED AND
SUCH DIFFERENCES MAY BE MATERIAL AND ADVERSE.
THE FINANCIAL PROJECTIONS ARE INTENDED TO ASSESS THE FUTURE
ASSETS, LIABILITIES, INCOME AND CASH FLOW AVAILABLE FOR DEBT SERVICING
AND ARE NOT DESIGNED OR INTENDED TO BE USED FOR PURPOSES OF PROJECTING
THE FUTURE VALUE OF THE DEBTOR’S INTERESTS OR DEBENTURES ISSUED BY OR
ON BEHALF OF THE REORGANIZED DEBTOR.
The Debtor has made a variety of assumptions which have been the basis of its Plan of
Reorganization. Those assumptions include (1) that the debtor can finalize development of its
products; (2) market its product to the target industries in a unique way to increase sales; and (3) that
by reducing expenses the debtor can become profitable. These assumptions will be available to
make debt service payments as proposed under the Plan. Based on the cash flow projections
prepared by the debtor, the debtor believes that the Plan satisfies the feasibility requirements of the
Bankruptcy Code.
SECTION IX
Liquidation Analysis
The major assets of the debtor are its inventory, office and manufacturing equipment, patents
and trademarks. The business is subject to and encumbered by the asserted liens and security
interests held by the major unsecured creditors of the debtor.
In the event this case were converted to a case under Chapter 7 and the assets of the estate
liquidated, these creditors would proceed to close out their interest in the property. A conversion to
Chapter 7 would eliminate any prospect of any payment to remaining unsecured and any priority
creditors. As a result, it is the debtor’s opinion that all claimants are best served through
implementation and effectuation of the Plan which provides for a significant, albeit limited, dividend
on its claims. If the Plan of Reorganization is consummated, the unsecured trade creditors and
unsecured deficiency claims will be paid a substantial sum of monies, on a pro rata basis as set forth
in the Plan. Creditors and other interested parties are urged to review the debtor’s schedules and
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statement of affairs as filed with the United States Bankruptcy Clerk’s Office (and as amended from
time to time) for purposes of confirming the debtor’s conclusions contained in this liquidation
analysis, attached hereto as Exhibit “C”.
SECTION X
Acceptance and Confirmation
10.1 What is Necessary for Court Approval of a Plan: Chapter 11 of the Bankruptcy
Code permits the readjustment of secured debt, unsecured debt and equity interests. A Chapter 11
plan may provide less than full satisfaction of senior indebtedness and payment of junior
indebtedness, and may even provide some return to equity owners absent full satisfaction of
indebtedness, so long as no impaired class votes against the plan (except as provided below).
Even if an impaired class votes against the plan, implementation of the plan is still possible
so long as the plan is fair and equitable and that class is afforded certain treatment defined by the
Code. That certain treatment may be very broadly defined as giving a claimant the full value of his
claim or interest. Such value is determined by the Court and balanced against the treatment afforded
the dissenting class of creditors. If the latter is equal to or greater than the former, the Plan may be
confirmed over the dissent of that class, depending upon the treatment of junior claims and interests.
In particular, senior claims must be satisfied in full prior to payment of junior claims or interests,
unless the holders of senior claims agree to different treatment. This principle, commonly known as
the "absolute priority rule", applies only in cases when a class of unsecured claims or equity interests
is impaired and does not accept the plan. In that event, the absolute priority rule does not apply to all
classes of unsecured claims and equity interests, but only to the dissenting class and classes junior to
the dissenting class.
The exception to the absolute priority rule is that an existing Debtor can contribute money or
property which is (1) new (fresh); (2) substantial; (3) necessary, and (4) not readily available from
other sources.
In the event a class is unimpaired, it is automatically deemed to have accepted the plan. In
this proposed Plan, Classes 2, 3, 4, 5 and 7 will be impaired, as defined in §1124 of the Code, as the
result of the Plan. All other classes will be unimpaired.
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The Code states that if there is no dissenting class, the test for approval by the Court of a
Chapter 11 plan (i.e., confirmation) is whether the plan is feasible and in the best interests of
creditors and interest holders. In simple terms, a plan is in the best interests of creditors and interest
holders if the plan will provide a better recovery to the creditors and interest holders than they would
obtain if the Debtor were liquidated and the proceeds distributed in accordance with bankruptcy
liquidation priorities. The Court, in considering this factor, need not consider any other alternative to
the plan but liquidation.
In considering "feasibility", as mentioned earlier, the Bankruptcy Court is only required to
determine whether the plan has a reasonable prospect of being accomplished. This entails
determining the availability of cash for payments required at the effective date, and any other factor
which might make it impossible for the reorganized Debtor to accomplish that which it proposes to
accomplish in he plan.
In addition, in order to confirm a plan, the Court must find that the plan was proposed in
good faith and that the plan and the Debtor are in compliance with the applicable provisions of
Chapter 11. Finally, similar to the requirement that the Court find the plan to be feasible, the Court
must find that liquidation or further reorganization of the reorganized Debtor is not likely to occur
after implementation of the plan.
The determination by the Court that a plan is fair, equitable and feasible occurs at the
confirmation hearing after a plan has been accepted. The Court's judgment on these matter does not
constitute an expression of the Court's opinion as to whether the plan is a good one, nor does it
constitute an opinion by the Court regarding any debt or equity interest or securities issued to
creditors under the plan.
10.2 Alternatives to the Plan: Although this Disclosure Statement is intended to provide
information to assist in the formation of a judgment as to whether to vote for or against this proposed
Plan, and although creditors are not being offered through that vote an opportunity to express an
opinion concerning alternatives to the Plan, a brief reminder of the alternative to the Plan is in order.
This alternative includes the probable liquidation of the Debtor through conversion of the case to one
under Chapter 7. The Debtor believes the Plan to be in the best interests of the creditors and the
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interest holders. In arriving at this conclusion, the Debtor emphasizes that the debtor has liabilities
in excess of the liquidated value of its assets (refer to debtor’s schedules). Moreover, the principal
assets of the debtor are fully encumbered and the debts which are secured by the debtor’s assets
exceed the value of those assets. Consequently, the unsecured creditors of the debtor would likely
receive smaller distributions under a Chapter 7 liquidation. THE DEBTOR HAS ATTEMPTED TO
SET FORTH THE LIKELY LIQUIDATION ALTERNATIVE TO ITS PROPOSED PLAN. THE
DEBTOR MUST CAUTION CREDITORS HOWEVER, THAT A VOTE MUST BE FOR OR
AGAINST THE PLAN. THE VOTE ON THE PLAN DOES NOT INCLUDE A VOTE ON THE
LIKELY LIQUIDATION ALTERNATIVE TO THE PLAN. THERE IS NO ASSURANCE THAT
THE LIKELY LIQUIDATION ALTERNATIVE WILL, IN FACT, FOLLOW IF THE PLAN FAILS
ACCEPTANCE. IF YOU BELIEVE THE LIQUIDATION ALTERNATIVE IS PREFERABLE TO
THE PLAN AND YOU WISH TO URGE IT UPON THE COURT, YOU SHOULD CONSULT
COUNSEL.
10.3 Specific Consideration in Voting: All of the foregoing gives rise to the following
implications and risks concerning the Plan.
While the Plan provides for certain payments, such payments will apply only to allowed
claims and certain interests. Under the Bankruptcy Code, a claim may not be paid until it is
"allowed". A claim will be allowed in the absence of an objection. A claim to which an objection
has been filed will be heard by the Court at a regular evidentiary hearing and will be allowed in full,
in part, or disallowed. While the Debtor will bear the principal responsibility for claim objections,
any interested party may file claim objections. Accordingly, payment on all claims may be delayed
until objections to such claims are ultimately settled.
10.4 Risk Factors. For classes of claims which do not receive cash on the Effective Date,
there are certain risks inherent in accepting the Plan, including the absence of absolute certainty of
ultimate payment.
10.5 Disclosure Required by the Code: The Code requires disclosure of certain facts as
follows:
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1) there are no payments or promises made of the kind specified in Section
1129(a)(4)(A) of the Code which have not previously been disclosed to the Court;
2) the ownership of the Reorganized Debtor will not be affected by the Plan.
Management of the Reorganized Debtor will remain with Debtor’s principal upon confirmation of
the Plan.
SECTION XI
Other Provisions of the Plan
11.1 Retention of Jurisdiction: The Bankruptcy Court shall retain exclusive jurisdiction
over this case to supervise the Plan, to hear, if applicable law provides, and to determine, among
other things, the following matters:
1) any and all objections to the allowance of claims or interests except as
provided in the Plan;
2) any and all applications for payment for fees from the Debtor made by
attorneys and other professional pursuant to Sections 330 or 503 of the Bankruptcy Code, or for
payment of any other fees or expenses authorized to be paid by the Debtor under Section 327 of the
Bankruptcy Code, and any objections thereto;
3) any and all pending applications for rejection, the assumption, or assignment
as the case may be of unexpired leases and executory contracts;
4) any and all motions, applications, adversary proceedings and contested or
litigated matters properly before the Bankruptcy Court;
5) modifications of this Plan;
6) all matters relating to the implementation or consummation of this Plan;
7) any and all suits or actions brought for collection or recoupment of debts or
other obligations owed by defaulted partners to the Debtor.
11.2 Retention of Causes of Action: The Debtor shall retain all claims or causes of action
which it has as of the Confirmation Date, the powers of the debtor-in-possession for purposes of
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prosecuting claims and causes of action arising under the Bankruptcy Code, and full authority to
pursue, compromise, and resolve all such claims and causes of action unless the Court has granted
any such right to a creditor of this estate.
11.3 Retention or Rejection of Executory Contracts and Leases: The Plan provides that
pursuant to Section 365 of the Bankruptcy Code, the Debtor assumes all executory contracts and
unexpired leases to which they are a party, including leases specifically provided for prior to the
hearing on the Disclosure Statement, if any.
11.4 Amendments to Plan: The Plan may be altered, amended, or modified by the
proponents before the Confirmation Date, in the manner provided for by Section 1127 of the
Bankruptcy Code or otherwise provided for by law. The Plan may also be altered, amended, or
modified by the proponents after the Effective Date in accordance with the Bankruptcy Code and
applicable law. A holder of a claim or interest that has accepted or rejected the Plan shall be deemed
to have accepted or rejected as the case may be the Plan as modified unless the modification
detrimentally effects the holder of such claim or interest without the prior consent thereof.
11.5 Offer, Issuance and Resale of Plan Securities: The offer and issuance of Plan
Securities by any Debtor which constitutes securities under the Securities Act of 1933, as amended
(the "1933 Act") or applicable state securities laws have not been registered under the 1933 Act or
such state securities laws, pursuant to the exemption therefrom provided by Section 1145 of the
Bankruptcy Code.
The Plan Securities will bear the following legend:
"The offer and sale of this Plan Security has not been registered under
the Securities Act of 1933, as amended, or qualified under applicable
state securities laws, and this Plan Security may not be offered, sold or
transferred in the absence of such registration or an exemption
therefrom under such laws."
Resale or other transfer of a Plan Security by a creditor who has acquired it pursuant to the
Plan, may or may not be exempt from the registration requirements of Section 5 of the Securities Act
of 1933 and any applicable state securities laws or Blue Sky Laws.
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BY ITS RECEIPT OF A PLAN SECURITY, EACH RECIPIENT SHALL BE DEEMED TO
ACKNOWLEDGE THAT IT IS RESPONSIBLE FOR ITS COMPLIANCE WITH ALL
APPLICABLE SECURITIES LAWS. EACH CREDITOR SHOULD CONSULT HIS OR HER
OWN ATTORNEY AS TO WHETHER ANY RESALE OF A PLAN SECURITY REQUIRES
REGISTRATION OF SUCH SECURITY UNDER THE SECURITIES ACT OF 1933 OR AN
APPLICABLE STATE SECURITIES LAW.
11.6 Provision for Filing Reports and Payments of Fees to the Office of the United States
Trustee: The Debtor shall timely file all quarterly reports and post-confirmation reports and shall pay
all fees to the United States Trustee as required by law and will incorporate such language into the
order confirming the Debtor’s Plan of Reorganization.
SECTION XII
Effect of Confirmation
12.1 Binding Effect. From and after the Confirmation Date, the Plan will be binding and
inure to the benefit of the Debtor, all present and former holders of Claims, and their respective
assigns, including the Reorganized Debtor.
12.2 Vesting of Assets. Upon the Effective Date, pursuant to Bankruptcy Code §§ 1141(b)
and ©, except to the extent such property is not to be retained by the Debtor, all property of the
Estate will vest in the Reorganized Debtor free and clear of all claims, liens, encumbrances, charges,
and other interests, except as otherwise provided in the Plan (including, without limitation, as
provided under Class 5) or in the Confirmation Order. From and after the Effective Date, the
Reorganized Debtor may operate its businesses and may use, acquire, and dispose of property free of
any restrictions of the Bankruptcy Code or the Bankruptcy Rules and in all respects as if there were
no pending case under any chapter or provision of the Bankruptcy Code, except as provided herein.
Without limiting the foregoing, pursuant to Bankruptcy Code §1123(b)(3), except for any Causes of
Action expressly waived by the Debtor pursuant to the terms of the Plan, the Reorganized Debtor or
Estate Representative as applicable, will retain and will have the exclusive right, in its discretion, to
enforce against any and all Causes of Action of the Debtor.
12.3 Discharge of the Debtor and of Claims and Termination of the Equity Interests. Upon
the Effective Date and in consideration of the rights afforded in the Plan and the payments and
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distributions to be made hereunder, except as otherwise provided herein or in the Confirmation
Order, each holder (as well as any trustees and agents on behalf of each holder) of a Claim or the
Equity Interests and any affiliate of such holder will be deemed to have forever waived, released, and
discharged the Debtor, to the fullest extent permitted by Bankruptcy Code §1141, of and from any
and all Claims, the Equity Interests, rights, and liabilities that arose prior to the Effective Date of any
kind, nature, or description whatsoever, including any accrued interest who, in exchange for the
treatment afforded to such Claims or Equity Interests under the Plan, and each such holder (as well
as any trustees and agents on behalf of each such holder) of a Claim or the Equity Interests and any
affiliate of such holder will be deemed to have granted, and will grant to the Debtor the waiver,
release, and discharge described in this Section. Except as otherwise provided herein, upon the
Effective Date, all such holders of Claims and the Equity Interests and their affiliates will be forever
precluded and enjoined, pursuant to Bankruptcy Code §§ 105, 524, and 1141, from prosecuting or
asserting any such discharged Claim against or terminated Equity Interests in the Debtor or the
Reorganized Debtor, or against any of their assets or properties, any other or further Claim or Equity
Interests based upon any act or omission, transaction, or other activity of any kind or nature that
occurred prior to the Effective Date, whether or not such holder has filed a Proof of Claim or
Interest.
12.4 Liability of Guarantors and Cosigners of Debt Obligations. Pursuant to 11
U.S.C. §524(e), discharge of a debt of the Debtor does not affect the liability of any other entity for
such debt
12.5 Injunction Against Interference with Plan. Upon the entry of the Confirmation Order,
all holders of Claims and the Equity Interests and other parties in interest, along with their respective
present or former affiliates, employees, agents, officers, directors, or principals, will be enjoined
from taking any actions to interfere with the implementation or consummation of the Plan.
12.6 Exculpation and Limitation of Liability. None of the Debtor, the Reorganized Debtor,
or the Investor(s), or any of their respective current or former members, partners, officers, directors,
employees, managers, advisors, professionals, affiliates, or agents of any of the foregoing (including
any attorneys, financial advisors, investment bankers and other professionals retained by such
persons, but solely in their capacities as such) will have or incur any liability to any holder of any
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Claim for any act or omission in connection with, related to, or arising out of, without limitation, the
Reorganization case, the negotiation and execution of the Plan, the Disclosure Statement, the
solicitation of votes for and the pursuit of confirmation of the Plan, the consummation of the Plan, or
the administration of the Plan or the property to be distributed under the Plan, including, without
limitation, the Plan Documents and any other documents ancillary thereto, all decisions, actions,
inactions and alleged negligence or misconduct relating thereto and all prepetition activities leading
to the promulgation and confirmation of the Plan, except willful misconduct, fraud, knowing
misrepresentation or gross negligence as determined by a Final Order of the Bankruptcy Court. The
foregoing parties will be entitled to rely upon the advice of counsel with respect to their duties and
responsibilities under the Plan. Nothing in this Section will (I) be construed as a release of any
entity’s fraud, knowing misrepresentation, gross negligence or willful misconduct with respect to
matters set forth in this Section or (ii) limit the liability of attorneys for the Debtor or the
Reorganized Debtor, to their respective clients pursuant to any applicable Code of Professional
Responsibility.
12.7 Injunction Related to Releases and Exculpation. The Confirmation Order will
permanently enjoin the commencement or prosecution by any Person or entity, whether directly,
derivatively or otherwise, of any Claims, obligations, suits, judgments, damages, demands, debts,
rights, Causes of Action or liabilities released pursuant to the Plan.
12.8 Termination of Subordination Rights and Settlement of Related Claims.
(A) Except as provided in the Plan, the classification and manner of satisfying all Claims
and the Equity Interests and the respective distributions and treatments under the Plan, take into
account or conform to the relative priority and rights of the Claims and the Equity Interests in each
Class in connection with any contractual, legal and equitable subordination rights relating thereto,
whether arising under general principles of equitable subordination, Bankruptcy Code §510(b) or
otherwise, and any and all such rights are settled, compromised and released pursuant to the Plan.
The Confirmation Order will permanently enjoin, effective as of the Effective Date, all Personas
from enforcing or attempting to enforce any such contractual, legal and equitable rights satisfied,
compromised and settled pursuant to the Plan.
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(B) Pursuant to Bankruptcy Rule 9019 and in consideration of the distributions and other
benefits provided under the Plan, the provisions of the Plan will constitute a good faith compromise
and settlement of all Claims or controversies relating to the subordination rights that a holder of a
Claim or the Equity Interest may have or any distribution to be made pursuant to the Plan on account
of such Claim. Entry of the Confirmation Order will constitute the Bankruptcy Court’s approval, as
of the Effective Date, of the compromise or settlement of all such Claims or controversies and the
Bankruptcy Court’s finding that such compromise or settlement is in the best interests of the Debtor,
the Reorganized Debtor, their respective properties, and holders of Claims, and is fair, equitable and
reasonable.
12.9 Release of Liens. Except as otherwise specifically provided in or contemplated by the
Plan, or in any contract, instrument or other agreement or document created in connection with the
Plan, (a) each holder of: (I) any Secured Tax Claim; (ii) any Claim that is purportedly secured; and/or
(iii) any judgment, personal property or ad valorem tax, mechanics’ or similar lien Claim, in each
case regardless of whether such Claim is an Allowed Claim, will, on or immediately before the
Effective Date and regardless of whether such Claim has been scheduled or a Proof of Claim with
respect to such Claim has been filed; (x) turn over and release to the Estate or the Reorganized
Debtor, as the case may be, any and all property of the Debtor or the Estate that secures or
purportedly secures such Claim, or such lien and/or Claim will automatically, and without further
action by the Debtor, the Estate, or the Reorganized Debtor, be deemed released; and (y) execute
such documents and instruments as the Reorganized Debtor requires to evidence such Claim holder’s
release of such property or lien, and if such holder refuses to execute appropriate documents or
instruments, the Debtor, the Estate, or the Reorganized Debtor (as applicable) may, in its discretion,
file a copy of the Confirmation Order in the appropriate recording office, which will serve to release
any Claim holder’s rights in such property; and (b) on the Effective Date, all right, title and interest
in such property will revert or be transferred to the Reorganized Debtor free and clear of all Claims
and interests, including, without limitation liens, escrows, charges, pledges, encumbrances, and/or,
security interests of any kind.
12.10 Retention of Causes of Action/Reservation of Rights.
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(A) Except as specifically provided in the Plan, nothing contained in the Plan or the
Confirmation Order will be deemed to be a waiver or the relinquishment of any rights, Claims or
Causes of Action that the Debtor may have or which the Reorganized Debtor may acquire pursuant
to the Plan or applicable law and choose to assert on behalf of the Estate or itself, in accordance with
any provision of the Bankruptcy Code or any applicable nonbankruptcy law, including, without
limitation, (I) any and all Claims against any Person, to the extent such Person asserts a crossclaim,
counterclaim, and/or Claim for setoff which seeks affirmative relief against the Debtor, the
Reorganized Debtor, or any of their officers, directors, members, agents or representatives; (ii) the
avoidance of any transfer by or obligation of the Estate or the Debtor or the recovery of the value of
such transfer; and/or (iii) the turnover of any property of the Estate.
(B) Nothing contained in the Plan or the Confirmation Order will be deemed to be a
waiver or relinquishment of any Claim, Cause of Action, right of setoff, or other legal or equitable
defense that the Debtor had immediately prior to the Petition Date, against or with respect to any
Claim left unimpaired by the Plan. Except as provided in Section 4.13 concerning an Estate
Representative, the Reorganized Debtor will have, retain, reserve, and be entitled to assert all such
Claims, Causes of Action, rights of setoff, or other legal or equitable defenses which the Debtor had
immediately prior to the Petition Date as fully as if the Reorganization Case had not been
commenced, and all of the Reorganized Debtor’s legal and/or equitable rights respecting any Claim
left unimpaired by the Plan may be asserted after the Confirmation Date to the same extent as if the
Reorganization Case had not been commenced.
SECTION XIII
Recommendation of Debtor
The Debtor recommends that the Plan of Reorganization be approved in light of the
alternative that only one creditor is likely to be paid a significant portion of their claim. The Debtor
is of the opinion that the Plan approval is in the best interest of all creditors.
///
///
///
///
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CONCLUSION
The materials provided in this Disclosure Statement are intended to assist you in voting on
the Plan in an informed fashion. If the Plan is confirmed, you will be bound by its terms. Therefore,
you are urged to review this material in order to make an informed vote on the Plan.
Dated: May 25, 2012.
LAW OFFICES OF
ERIC SLOCUM SPARKS, P.C.
/s/ Sparks AZBAR #11726
Eric Slocum Sparks
Attorney for Debtor
Copies of the foregoing
mailed/faxed/delivered May 25, 2012 to:
United States Trustee
230 N. First Ave. #204
Phoenix, AZ 85003
Elizabeth C. Amorosi, Esq.
Asst. U. S. Trustee
United States Trustee
230 N. First Ave. #204
Phoenix, AZ 85003
Elizabeth.C.Amorosi@usdoj.gov
Robert M. Charles, Jr., Esq.
Lewis and Roca, LLP
One South Church Ave., Suite 700
Tucson, AZ 85701
Attorney for Gemini Master Fund, Ltd.
RCharles@LRLaw.com
Brian A. Laird, Esq.
Heurlin Sherlock Laird
1636 N. Swan Rd. Suite 200
Tucson, AZ 85712
Attorney for James Ryles
blaird@HSLazlaw.com
U.S. Securities and Exchange Commission
Attn: Sarah D. Moyed
5670 Wilshire Boulevard, Suite 1100
Los Angeles, CA 90036-3648
moyeds@sec.gov
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U.S. Securities and Exchange Commission
Attn: Sandra W. Lavigna
5670 Wilshire Boulevard, Suite 1100
Los Angeles, CA 90036-3648
lavignas@sec.gov
U.S. Securities and Exchange Commission
Attn: Michael A. Berman
Station Place
100 F Street, N.E.
Washington, DC 20549
Nevada Secretary of State
Securities Division
555 East Washington Ave., Suite 5200
Las Vegas, NV 89101
Nevada Secretary of State
Commercial Recordings Division
202 N. Carson Street
Carson City, NV 89701
Catherine Cortez Masto
Attorney General, State of Nevada
110 N. Carson Street
Carson City, NV 89701-4717
U.S. Department of Justice
Office of the Attorney General
Eric H. Holder, Jr.
950 Pennsylvania Avenue, N.W.
Washington, DC 20530-0001
Financial Industry Regulatory Authority
OTC Compliance Unit
9509 Key West Avenue
Rockville, MD 20850
OFFICIAL COMMITTEE OF
UNSECURED CREDITORS
Cynthia Samson - Sampson.Cynthia@gmail.com
P. O. Box 5729
Scottsdale, AZ 85261
Daniel Groff - ggroff55@cox.net
8002 E. Rosewood St.
Tucson, AZ 85710
IAM Investment Group, LP - MK4316@gmail.com
Attn: Malcolm Philips
20221 Middletown Rd.
Cornelius, NC 28031
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Lucas Baer - Lucas.baer@gmail.com
9050 N. Shadow Rock Dr.
Tucson, AZ 85743
/s/ L. Anderson
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PENN, I suggest that you re-read what the CDEX Lawyer has filed.
You keep contradicting what they say..or trying to ascribe what they say that does not talley with what you WISH they had said, to BASHERS.
Nobody here gives the slightest damn whether JR gets his money. Or not. CDEX management did a lousy job managing JR..gave him this and that title, using whatever skills he has to further the BOOLSHEET stories along, and help manufacture junk that has not sold. Then tried to shaft him out of his pay..expecting that he would smile and keep quiet, after all isn't he culpable and involved as an OFFICER of the company?? An INONIT??
He looks around. There is all the other INONITs with pockets stuffed with the proceeds of the PP sales and covertible loans... MP living in Luxury in gated golfing community back east..etc..
and him being stiffed for the pay that he had coming which CDEX had agreed to pay him. So he spills a few beans on a forum as PLUMBER until the Arbitrator decides to award him his wages times three. Spills just enough so that CDEX will not dare try to win the arbitration case, for fear that WADE and JR will spill too much..
One would think that CDEX management would have sense enough to stay at arms length from him..knowing that his loyality is to himself..but here comes JB and re-hires him.Then Lo and Behold..is trying to stiff him AGAIN!!
He knows way too much..he was the main man on so called products for awhile and damn well knows that the IG4 is not going to sell..therefore he DOES NOT BUY INTO THE IDEA THAT CDEX WILL GET PROFITABLE AND MAKE ALL HAPPY EVER AFTER..so he does NOT want any damn shares, thank you. HE WANTS HIS DAMN MONEY!!
SAME SUBJECT..leaving the same Question..what does CDEX management wish to hide re JAMES RYAL???
Eric Slocum Sparks
Arizona State Bar No. 11726
LAW OFFICES OF ERIC SLOCUM SPARKS, P.C.
110 South Church Avenue, #2270
Tucson, Arizona 85701
Telephone (520) 623-8330
Facsimile (520) 623-9157
law@ericslocumsparkspc.com
Attorney for Debtor
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ARIZONA
In re: ))
CDEX INC, ) Case No. 4:12-bk-02402-JMM
))
Chapter 11
)
Debtor. ) MOTION FOR EMERGENCY HEARING ON
) DEBTOR’S MOTION FOR ORDER
) VACATING ORDER
) COMPELLING APPEARANCE FOR RULE
) 2004 EXAMINATION AND RULE 9016
) PRODUCTION OF DOCUMENTS
____________________________________)
COMES NOW, Debtor, Debtor-in-possession, CDEX, Inc., by and through its counsel
undersigned and moves this Honorable Court for an Order setting an Emergency Hearing on the
Debtor’s Motion for Order Vacating Order Compelling Appearance for Rule 2004 Examination and Rule
9016 Production of Documents. In support thereof Debtor alleges as follows:
1. Creditor James Ryles (“Ryles”), through counsel Brian Laird of Heurlin Sherlock Laird,
moved this Court for an Order Pursuant to Rule 2004 and Rule 9016, Federal Rules of
Bankruptcy Procedure compelling the appearance of Debtor’s Chief Executive Officer
Jeffrey K. Brumfield (“Brumfield”) and the production of certain records.
2. Pursuant to the Motion, this Court entered an Order Compelling Appearance for Rule
2004 Examination and Rule 9016 Production of Documents (“Order”) at Docket Entry
#69, directing Brumfield to appear and submit to examination under oath and submit
certain records at the law offices of Heurlin Sherlock Laird on June 4, 2012, beginning
at 10 a.m.
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3. Upon information and belief, counsel Brian Laird intends to withdraw from
representation of Ryles. To date no Notice of Withdrawal nor Motion to Vacate the
Order has been filed.
4. Debtor, through counsel, has filed a Motion for Order Vacating Order Compelling
Appearance for Rule 2004 Examination and Rule 9016 Production of Documents.
5. Debtor seeks an emergency hearing on its Motion to Vacate to avoid unnecessary
expense and waste of resources in preparing for the Rule 2004 exam and Rule 9016
production of documents.
WHEREFORE Debtor moves this Honorable Court for an Order setting an emergency hearing
on this matter.
RESPECTFULLY SUBMITTED: May 31, 2012.
LAW OFFICES OF
ERIC SLOCUM SPARKS, P.C.
/s/ Sparks AZBAR #11726
Eric Slocum Sparks
Attorney for Debtor
COPIES of the foregoing
mailed/delivered/faxed
May 31, 2012 to:
Elizabeth C. Amorosi, Esq.
Asst. U. S. Trustee
United States Trustee
230 N. First Ave. #204
Phoenix, AZ 85003
Brian A. Laird, Esq.
Heurlin Sherlock Laird
1636 N. Swan Rd. Suite 200
Tucson, AZ 85712
Attorney for James Ryles
blaird@HSLazlaw.com
/s/ L. Anderson
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Here is the pleading for the vacating of that orer...RYLES LAWYER QUIT..
Eric Slocum Sparks
Arizona State Bar No. 11726
LAW OFFICES OF ERIC SLOCUM SPARKS, P.C.
110 South Church Avenue #2270
Tucson, Arizona 85701
Telephone (520) 623-8330
Facsimile (520) 623-9157
eric@ericslocumsparkspc.com
Attorney for Debtors
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ARIZONA
In re: ))
CDEX INC, ) Case No. 4:12-bk-02402-JMM
))
Chapter 11
))
MOTION FOR ORDER VACATING
Debtor. ) ORDER COMPELLING APPEARANCE FOR
) RULE 2004 EXAMINATION AND RULE
) 9016 PRODUCTION OF DOCUMENTS
)
Comes now CDEX, Inc., a Nevada Corporation, Debtor, Debtor-in-possession and hereby
moves this honorable Court to issue an Order vacating the Order Compelling Appearance for Rule 2004
Examination and Rule 9016 Production of Documents entered by this Court at Docket #69. In support
thereof the Debtor alleges as follows:
1. Debtor filed its voluntary Chapter 11 bankruptcy on February 10, 2012.
2. On May 17, 2012, Creditor James Ryles, through his attorney Brian Andrew Laird of
Heurlin Sherlock Laird, filed his Motion to Compel Rule 2004 Examination and Rule
9016 Production of Documents.
3. On May 21, 2012, this Court entered an Order Compelling Appearance for Rule 2004
Examination and Rule 9016 Production of Documents.
4. Upon information and belief, counsel for Creditor James Ryles intends to withdraw from
representing Mr. Ryles.
///
///
///
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Wherefore, Debtor respectfully requests that this Honorable Court enter an Order vacating the
Order Compelling Appearance for Rule 2004 Examination and Rule 9016 Production of Documents
entered by this Court at Docket #69 and for such other and further relief as the Court deems just and
proper.
DATED: May 25, 2012.
LAW OFFICES OF
ERIC SLOCUM SPARKS, P.C.
/s/ Sparks AZBAR # 11726
Eric Slocum Sparks
Attorney for Debtor
COPIES of the foregoing
faxed/mailed/delivered
May 25, 2012 to:
Elizabeth C. Amorosi, Esq.
Asst. U. S. Trustee
United States Trustee
230 N. First Ave. #204
Phoenix, AZ 85003
Brian A. Laird, Esq.
Heurlin Sherlock Laird
1636 N. Swan Rd. Suite 200
Tucson, AZ 85712
Attorney for James Ryles
/s/ L. Anderson
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But the JUDGE and all them OFFICERS OF THE COURT GOT GREAT HINTS about where to kick open the doors and search the closets..
Ain't nobody off the hook..not yet. Not by a dang sight.