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Also from their SB2, there are of course some risk factors but one that bothers me is a possibility for significant dilution due to warrants and the debt they owe. Any opinion on further dilution?
RISK FACTORS
Before deciding to invest in us or to maintain or increase your investment, you
should carefully consider the risks described below, in addition to other
available information. Each of the following risks could harm our business,
financial condition and results of operations. These risks could cause the
trading price of our common stock to decline and you could lose all or part of
your investment.
RISKS RELATED TO OUR FINANCIAL CONDITION AND BUSINESS
IT IS A STRONG POSSIBILITY THAT OUR SHARE PRICE WILL DECREASE AS SHARES ARE
ISSUED TO DUTCHESS.
During 2006, we issued 188,860,259 shares of our common stock to Dutchess.
Dutchess does not currently own any of these shares. We are registering
82,500,000 shares that we may issue pursuant to the equity line; however
depending on our stock price, this may not be enough shares to access the full
$10 million equity line which will require us to file another registration
statement that would need to be declared effective by the Securities and
Exchange Commission. On April 5, 2007, the closing price of our common stock
was $0.01. Assuming we issue puts only at $0.01, we would need to register an
additional 917,500,000 shares of our common stock to access the full equity
line pursuant to the Investment Agreement. We also have several convertible
debentures with Dutchess that allows them to convert a total of $2.1 million of
convertible debentures into 229,998,656 shares of our common stock at March 31,
2007. If our stock price decreases, then our existing stockholders would
experience greater dilution. As a result, this may make it difficult or
impossible for you to sell our common stock.
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DUTCHESS HAS A SECURITY INTEREST IN SUBSTANTIALLY ALL OF OUR ASSETS AND WE ARE
CURRENTLY IN DEFAULT OF THE DUTCHESS NOTES THAT ARE OUTSTANDING.
We are currently in default of all of our Dutchess notes which total $5,345,963
at March 31, 2007. Dutchess has a security interest in substantially all of
our assets. Since we are in default of the notes and cannot currently pay them
as scheduled, Dutchess could get substantially all of our assets to service
their debt outstanding. On July 20, 2007, we entered into an agreement with
Dutchess. In this agreement, at the time the Pharmaceuticals common stock
either becomes subject to the reporting requirements of Section 12 of the
Securities Exchange At of 1934 or becomes listed or eligible for trading on any
exchange or other trading system, Dutchess agreed to release all the
pharmaceutical, diagnostic and associated assets in exchange for the shares of
Pharmaceuticals' common stock.
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DNAPRINT GENOMICS INC Filing Date: 08/02/07
WE WILL USE A SUBSTANTIAL PART OF THE PROCEEDS FROM THE SHARES WE ARE
REGISTERING FOR DUTCHESS TO SERVICE THE OUTSTANDING DEBT WITH DUTCHESS.
We are required to use a substantial part of the proceeds from the shares we
are registering for Dutchess to service the outstanding debt with Dutchess. As
a result, these proceeds will not be available for operating capital or to grow
our business and we will need to get operating capital from other sources.
IT IS A STRONG POSSIBILITY THAT OUR SHARE PRICE WILL DECREASE AS SHARES ARE
ISSUED TO LA JOLLA COVE, INC.
During 2006, we issued 10,182,249 shares of our common stock to La Jolla. La
Jolla does not currently own any of these shares. At March 31, 2007, La Jolla
has the right to convert the remaining $201,250 of their convertible debenture
into common stock and exercise the related 3,018,755 warrants at a $1 exercise
price. We have the right to reject a conversion if the stock price is below
$0.50 per share. If we exercise this right, we then are obligated to pay the
portion of the debenture the conversion notice was for, plus applicable unpaid
accrued interest and a premium equal to 10% of those amounts. We may need to
accept these conversions to help fund our operations. As a result of these
conversions our stock price could decrease. .If our stock price decreases,
then our existing stockholders would experience greater dilution. As a result,
this may make it difficult or impossible for you to sell our common stock.
REGULATORY OVERSIGHT OF OUR PRODUCTS AND SERVICES MAY INCREASE OUR COSTS TO
MARKET OUR PRODUCTS AND SERVICES AND ADVERSELY AFFECT OUR ABILITY TO MARKET OUR
PRODUCTS AND SERVICES.
Currently, there is limited Food and Drug Administration, or FDA, regulation of
genetic tests. Within the field of personalized health and medicine,
governmental and other entities may enact patient privacy and healthcare laws
and regulations that may limit the generation and use of genomic variation
data. "Genomic variation data" is the information obtained when scientists
search the gene for differences across the entire human genome for changes and
variations. To the extent that FDA laws and regulations limit the use of our
products and services or impose additional costs on our customers, we may be
unable to market effectively our products and services, and we may not generate
sufficient revenue to sustain our operations. Furthermore, we may be directly
subject to regulations as a provider of diagnostic information. A diagnosis is
the evaluation of a patient or a sample to determine what the status of the
patient might be. The information that results from this evaluation is called
"diagnostic information" and would include such information as height, weight,
sex, age, blood pressure, sugar levels and many other pieces of data. The
Secretary's Advisory Committee on Genetic Testing, an advisory panel to the
Secretary of the U.S. Department of Health and Human Services, has recommended
that the FDA expand its regulation of genetic testing to require FDA approval
for all new genetic tests and labeling of genetic tests. If the FDA adopts this
recommendation, it may require us, or our customers, to apply for FDA approval
as a prerequisite to marketing genetic tests that incorporate our intellectual
property. If the FDA were to deny any application of this kind, it could
adversely affect our business, and we may be unable to generate sufficient
revenue to sustain our operations.
To the extent that government regulations restrict the sale of our products and
services or impose other costs, we may be unable to provide our products and
services to our customers on terms sufficient to recover our expenses.
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OUR SUCCESS WILL DEPEND, IN PART, ON HOW RAPIDLY THE PHARMACEUTICAL AND
BIOTECHNOLOGY INDUSTRY IMPLEMENTS GUIDANCE FROM THE U.S. DEPARTMENT OF HEALTH
AND THE FDA REGARDING A POTENTIAL EXPANSION OF REGULATION OF OUR INDUSTRY.
WITHOUT THIS IMPLEMENTATION BY THE PHARMACEUTICAL AND BIOTECHNOLOGY INDUSTRY,
WE MAY BE UNABLE TO MARKET EFFECTIVELY OUR TESTS AND SERVICES, AND WE MAY NOT
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DNAPRINT GENOMICS INC Filing Date: 08/02/07
GENERATE SUFFICIENT REVENUE TO SUSTAIN OUR OPERATIONS.
On November 3, 2003, the FDA issued draft guidance which is currently not
mandatory but may eventually become mandatory that encouraged drug and biologic
developers to conduct pharmacogenomic tests during drug development and
clarified how the FDA will evaluate the resulting data. "Pharmacogenomic tests"
are clinical laboratory tests of all kinds to determine whether a drug is
working or not working on a patient that is experiencing a particular illness
or expressing a disease. It has only been recently that genetic scientists have
been able to link genetic testing to the performance of a drug. The term is
often used within the pharmaceutical industry to describe the testing of
individuals for their genetic influences on the effectiveness of a drug, or
more precisely, whether there is something in a person's genes that would
either enhance or prevent the treatment of that individual's disease with a
particular drug.
The FDA guidance provides specific criteria and recommendations on the
submission of pharmacogenomic data in connection with Investigational New Drug
Applications, New Drug Applications and Biological License Applications. Before
any company or individual can treat a single human patient with a new chemical
entity, often referred to as a NCE, or a new biological entity, referred to as
a NBE, scientists must first prove that the potential drug is safe within
existing treatment regimes. For example, new chemical entities used to treat
cancer might be allowed to be much more toxic to other cells in the body than
would a treatment for other less lethal diseases. Scientists file for
permission to the FDA to treat human patients and package all the information
into an application with the FDA called the `Investigational New Drug
Application' or IND. The draft FDA guidance includes information on the type of
data needed and how the FDA will or will not use such data in regulatory
decisions. The FDA asked for voluntary submissions of research information in
order to gain experience as the field of pharmacogenomics evolves. In addition,
the FDA held a workshop in November 2003 to discuss its draft guidance and
stated that the agency plans in the near future to issue final guidance on the
co-development of a pharmacogenomic test and drug. Our success will depend, in
part, on how rapidly the pharmaceutical and biotechnology industry implements
the guidance and, accordingly, the validity of our test and services as a basis
for identifying genomic variation and for correlating drug response with
genomic variation. Without this implementation by the pharmaceutical and
biotechnology industry, we may be unable to market effectively any of our
pharmacogenomics tests we may have as well as any of our pharmacogenomics
services, and we may not generate sufficient revenue to sustain our operations.
PUBLIC OPINION ON ETHICAL ISSUES RELATED TO THE CONFIDENTIALITY AND APPROPRIATE
USE OF GENETIC TESTING COULD REDUCE THE POTENTIAL MARKETS FOR OUR PRODUCTS AND
SERVICES, WHICH COULD PREVENT US FROM GENERATING SUFFICIENT REVENUE TO SUSTAIN
OUR OPERATIONS.
Public opinion on ethical issues related to the confidentiality and appropriate
use of genetic testing results may influence governmental authorities to call
for limits on, or regulation of the use of, genetic testing. In addition,
governmental authorities or other entities may call for limits on, or
regulation of the use of genetic testing or prohibit testing for genetic
predisposition to certain conditions, particularly for those that have no known
cure. The occurrence of any of these events could reduce the potential markets
for our products and services, which could prevent us from generating
sufficient revenue to sustain our operations.
For example, the FDA has approved a medication for use in African Americans
called BilDil that was developed by a pharmaceutical company called NitroMed.
Recently, articles have appeared accusing the FDA and NitroMed of `racial
discrimination' and claiming that no drugs should be developed using genetic
testing that might separate out individuals by `race, color or creed' without
regard to the benefit which might be caused for the African American patient.
According to such critics, the potential harm in the form of increased
discrimination far outweighs the benefits. Several noteworthy genetic
scientists have also voiced their opinions that our technology and technologies
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DNAPRINT GENOMICS INC Filing Date: 08/02/07
similar to those developed by NitroMed and others are discriminating and should
not be developed or approved by the Federal, State or local governments.
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IF WE DO NOT SUCCESSFULLY DISTINGUISH AND COMMERCIALIZE OUR PRODUCTS AND
SERVICES, WE WILL NOT ATTRACT A SUFFICIENT NUMBER OF CUSTOMERS. ACCORDINGLY, WE
MAY BE UNABLE TO COMPETE SUCCESSFULLY WITH OUR COMPETITORS OR GENERATE REVENUE
SIGNIFICANT ENOUGH TO SUSTAIN OUR OPERATIONS.
Numerous entities are attempting to identify genomic variation predictive of
specific diseases and drug response and to develop products and services based
on these discoveries. We face competition in these areas from pharmaceutical,
biotechnology and diagnostic companies, academic and research institutions and
government and other publicly-funded agencies, both in the United States and
abroad, most of which have substantially greater capital resources, research
and development staffs, facilities, manufacturing and marketing experience,
distribution channels and human resources than do we. Also, large
pharmaceutical companies have their own internal research and development
efforts that could surpass or eliminate our technology from the market. One of
our key competitors is PPGx, Inc., a leading international developer and
supplier of research-based pharmacogenomics services and products which
launched its GeneTrialsTM Bioinformatics Platform.
Our competitors may discover, characterize or develop important technologies
applying genomics that are more effective than those technologies which we
develop. Additionally, these competitors may obtain regulatory approvals for
their drugs and diagnostics more rapidly than we do, which could limit our
ability to market effectively our products and services. If our patent
applications are not awarded or if our competitors in the field of genetic
research develop and receive approval of patents that supersede our
applications, we could be forced to cease the development of our products,
services and technologies.
Some companies and governments are marketing or developing a number of
databases and informatics tools to assist participants in the healthcare
industry and academic researchers in the management and analysis of genomic
data. "Informatics tools" is a term used by scientists to describe software,
computer programs or mathematical programs that analyze data sets or collected
information that is stored in data files. Such computer programs can take an
apparently meaningless block of numbers that are recorded from a laboratory
experiment and evaluate trends, look for statistical relationships and group or
segregate the numbers according to their levels of importance to the scientist.
We believe our competitors have developed or plan to develop databases
containing gene sequence, genomic variation or other genomic information and
are marketing or plan to market their data to pharmaceutical and biotechnology
companies or plan to make freely available their databases.
WE ALSO FACE SERIOUS COMPETITION FROM COMPETITORS IN THE FORENSIC DNA TESTING
MARKET, CONSUMER DNA PRODUCTS MARKET AND THE GENOTYPING MARKET AND IF WE ARE
UNABLE TO COMPETE IN THESE MARKETS, WE WILL NOT GENERATE REVENUES SIGNIFICANT
ENOUGH TO SUSTAIN OUR OPERATIONS.
There are several competitors in our consumer, forensic and genotyping markets
who are larger companies and have more operating capital to promote their
products. If we are unable to compete in these markets, we will not generate
revenues significant enough to sustain our operations.
DEMAND FOR OUR CONSUMER PRODUCTS COULD DECREASE DUE TO REDUCED DEMAND FROM
CONSUMERS.
We remain skeptical that the consumer market for our products, which is mainly
supported by genealogy enthusiasts, will remain strong enough to justify
significant expenditures to develop new products. It is possible that the
application of genetic testing to genealogy is a passing fad and that public
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DNAPRINT GENOMICS INC Filing Date: 08/02/07
interest in genetic genealogy testing will substantially decrease. If public
interest decreases, our revenues generated from our products sold to the
consumer market will likely decrease.
ALTHOUGH MANY OF OUR COMPETITORS USE SIMILAR TECHNOLOGIES, THEIR APPROACH TO
DATA ANALYSIS MIGHT BE COMPLETELY DIFFERENT AND MORE EFFICIENT THAN OURS. THIS
MAY CAUSE CONSUMERS TO CHOOSE OUR COMPETITOR'S PRODUCTS AND SERVICES OVER OURS
AND FORCE US TO CHANGE OUR PRODUCTS AND SERVICES TO THE MORE EFFICIENT FORM OF
DATA ANALYSIS OF OUR COMPETITORS.
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We evaluate the mixture of genetic inheritance within individuals and relate
that information to biological information. Another approach to finding similar
information is to evaluate large groups of individuals in `pools' of DNA and
look for differences or similarities amongst the data. Our approach may prove
to be too cumbersome for the industry to adopt, and the industry may not want
to accept it because it is `too personal', meaning that overall `generic'
descriptors might be more immediately valuable to the industry than knowing
whether or not a single individual will respond favorably to a medication
treatment. The `pooled' approach is more often the approach that many
pharmaceutical companies and our competitors practice. Additionally, our
technology depends upon looking at individuals within a population pool and
therefore projecting the results of many individual samples upon a general
population that may not be clearly identified. Our competitors rely upon
self-reporting descriptors such as `African American', `Caucasian' or
`Hispanic' to pool their DNA samples. We do not presuppose the reported
identity of an individual but rather look at their inherited genetic markers
that tell us what group to associate them with. This approach may not be
accepted by the industry, and a pooled method, although not as accurate, may
become the standard. This would significantly impact our ability to promote,
sell, license or further develop our products, services or technologies within
any of our current markets.
WE HAVE HAD LOSSES SINCE OUR INCEPTION WHICH MAY NEGATIVELY IMPACT OUR ABILITY
TO ACHIEVE OUR BUSINESS OBJECTIVES. WE MAY NEVER BE ABLE TO REDUCE THESE
LOSSES, WHICH WILL REQUIRE US TO SEEK ADDITIONAL DEBT OR EQUITY FINANCING THAT
MAY NOT BE AVAILABLE TO US.
We incorporated under the laws of the State of Utah on January 3, 1983 as
Lexington Energy, Inc. We have incurred losses and experienced negative
operating cash flow since our formation. For the year ended December 31, 2006,
we had a net loss of $12,348,364. At December 31, 2006, we had an accumulated
deficit of $38,102,527 and a working capital deficit of $4,991,305. We expect
to continue to incur significant expenses. Our operating expenses have been and
are expected to continue to outpace revenues and result in significant losses
in the near term. We may never be able to reduce these losses, which will
require us to seek additional debt or equity financing. If such financing is
available, you may experience significant dilution.
WE CONTINUE TO BE A DEVELOPMENTAL STAGE ENTERPRISE COMPANY AND WE DO NOT KNOW
WHEN OUR PHARMACOGENOMICS PRODUCTS WILL FINISH THEIR DEVELOPMENT.
We continue to devote substantially all of our efforts to establishing our
business products, and our principal operations have not commenced yet. We are
still in the research and development phase of our pharmacogenomics product and
services. The development phase can take three to seven years or more to
develop a product or service as well as the potential costs to develop a
project prior to bringing it to the market takes a significant investment by
us. It will be a few years prior to any of our pharmacogenomics products or
services being developed. Our pharmacogenomics projects may never materialize
into a commercialized product.
OUR INDEPENDENT AUDITORS HAVE EXPRESSED DOUBT ABOUT OUR ABILITY TO CONTINUE AS
A GOING CONCERN, WHICH MAY HINDER OUR ABILITY TO OBTAIN FUTURE FINANCING.
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DNAPRINT GENOMICS INC Filing Date: 08/02/07
In their report dated March 8, 2007, our independent registered public
accounting firm has expressed doubt about our ability to continue as a going
concern in our financial statements for the years ended December 31, 2006 and
2005. The auditors raised concerns about our ability to continue as a going
concern as a result of recurring losses from operations, a working capital
deficit, and our need for a significant amount of capital financing to proceed
with our business plan. Our ability to continue as a going concern is subject
to our ability to generate a profit and/or obtain necessary funding from
outside sources, including obtaining additional funding from the sale of our
securities, increasing sales or obtaining loans and grants from various
financial institutions where possible.
WE NEED IMMEDIATE FUNDS AND MAY NOT BE ABLE TO OBTAIN ANY ADDITIONAL FINANCING
IN THE AMOUNTS OR AT THE TIMES THAT WE MAY REQUIRE THE FINANCING. ADDITIONALLY
IF WE OBTAIN FINANCING, IT MAY NOT BE ON ACCEPTABLE TERMS. WE WILL HAVE TO
CURTAIL OUR BUSINESS IF WE CANNOT FIND ADEQUATE FUNDING.
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We may need immediate funds and may not be able to obtain any additional
financing in the amounts or at the times that we may require the financing or,
if we do obtain any financing, that it would be on acceptable terms because of
the following:
.
we have limited assets to pledge as security for the loan;
.
we are in poor financial condition; and
.
we may be viewed as a high market risk.
We have a convertible debenture with non-detachable warrants with La Jolla Cove
Investors, Inc. ("La Jolla"). At March 31, 2007, we had $201,250 principal
outstanding and $283 accrued interest. The number of common stock shares into
which this debenture may be converted is equal to the dollar amount of the
debenture being converted multiplied by sixteen, minus the product of the
conversion price multiplied by fifteen times the dollar amount of the debenture
being converted, and the entire foregoing result shall be divided by the
conversion price. The conversion price is equal to the lesser of (i) $0.20 or
(ii) 80% of the average of the five lowest daily value weighted average price
of our common stock during the twenty trading days prior to La Jolla's election
to convert. We have the right to reject a conversion if the stock price is
below $0.50 per share. If we exercise this right, we then are obligated to pay
the portion of the debenture the conversion notice was for plus applicable
unpaid accrued interest and a premium equal to 10% of those amounts. At March
31, 2007, the convertible debt converts into 4,359,777 shares of our common
stock assuming a $0.50 per share price. If La Jolla converted their debt at
May 31, 2007 and we didn't invoke the floor of $0.50 per share, they would
receive 582,435,818 shares. The non-detachable warrants must be exercised
concurrently with the conversion of debt to common stock by La Jolla. La Jolla
has the right to exercise warrants equaling fifteen times the dollar amount of
the debenture being converted at an exercise price of $1.00. At March 31,
2007, there were 3,018,750 warrants outstanding that could be converted into
common stock. If La Jolla were to sell the stock we put to them, it will
likely have a depressive effect on the market price of our common stock. This
decrease in our market price may hinder our ability to obtain necessary funding
from certain sources, including obtaining additional funding from the sale of
our securities or obtaining loans and grants from various financial
institutions where possible.
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DNAPRINT GENOMICS INC Filing Date: 08/02/07
In addition, we have entered into an Investment Agreement with Dutchess.
Dutchess has committed to purchase our common stock on a monthly basis up to an
aggregate purchase price of $10 million over a five-year period, which expires
March 30, 2012. The Dutchess Agreement requires us to put stock to Dutchess
each time we raise funds. If Dutchess were to sell the stock we put to them, it
will likely have a depressive effect on the market price of our common stock.
This decrease in our market price may hinder our ability to obtain necessary
funding from certain sources, including obtaining additional funding from the
sale of our securities or obtaining loans and grants from various financial
institutions where possible. During 2006, we executed 49 puts with Dutchess
and issued 188,860,259 shares of our common stock, which Dutchess does not
currently own.
The proceeds from the shares issued to Dutchess will mainly be used to service
the Dutchess notes. We expect to receive 500,000 euros per month from April
2007 through September 2007 with the remaining 443,240 euros paid during
October 2007 from the sale of an investment. Subsequent to October, we will
need additional funding. Our failure to obtain sufficient additional financing
could result in the delay or abandonment of some or all of our development,
expansion and expenditures, which could harm our business and the value of our
common stock.
WE MAY NOT HAVE ADEQUATE PATENT PROTECTION AND CONFIDENTIALITY AGREEMENTS FOR
OUR PROPRIETARY TECHNOLOGY. IF WE DO NOT PROTECT OUR INTELLECTUAL PROPERTY
RIGHTS, THERE IS A RISK THAT THEY WILL BE INFRINGED UPON OR THAT OUR TECHNOLOGY
INFRINGES UPON ONE OF OUR COMPETITOR'S PATENTS. AS A RESULT, WE MAY EXPERIENCE
A LOSS OF REVENUE AND OUR OPERATIONS MAY BE MATERIALLY HARMED.
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To the extent possible, we anticipate filing patent applications for protection
on future products that we develop. We currently have patents in the United
States for:
.
Efficient Methods and Apparatus for High-Throughput Processing of Gene Sequence
Data (used with our consumer ancestry products),
.
Methods for the Identification of Genetic Features for Complex Genetics
Classifiers (used with our consumer ancestry products),
.
Methods, Products and Treatments for Diabetes (used with our CD-59 project),
.
Recombinant Human Erythropoietin with Altered Biological Activity (used with
our PT-401 project),
.
Modified Polypeptides with Increased Biological Activity (used with our PT-401
project),
.
Integrated disease information system (computational modeling),
.
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DNAPRINT GENOMICS INC Filing Date: 08/02/07
Hierarchical Biological Modeling System (computational modeling ) and
.
Production and Use of Recombinant Protein Multimers with Increased Biological
Activity (used with our PT-401 project).
It is possible that patents we apply for may not be issued and that any current
or future patents will not afford us commercially significant protection of our
products, or that we will not have adequate resources to enforce our patents.
Inasmuch as we intend to sell our products in foreign markets, we also intend
to seek foreign patent protection for our products and technologies. The patent
laws of other countries may differ from those of the United States as to
patentability of our products and technologies, and the degree of protection
afforded. We are currently not aware of any infringement by a third party.
Also, we are not aware of any instances of our products infringing on the
patents of others; however, they may, and we may not have the financial or
other resources necessary to successfully defend a claim of violation of
proprietary rights. We currently have one employee who potentially had some
confidential data regarding our consumer products on his computer when he left
and we are trying to determine if he has used that information improperly. We
rely on confidentiality and nondisclosure arrangements with our employees and
entities we do business with; however, these agreements may not provide us with
meaningful protection.
IF WE ARE UNABLE TO RETAIN THE SERVICES OF MESSRS. RICHARD GABRIEL, TONY
FRUDAKIS AND HECTOR GOMEZ, WE MAY NOT BE ABLE TO CONTINUE OPERATIONS.
Our success depends to a significant extent upon the continued service of Mr.
Richard Gabriel, our President and Chief Executive Officer, Dr. Tony Frudakis,
our Founder and Chief Scientific Officer, and Dr. Hector Gomez, our Chairman of
the Board and Chief Medical Officer. We currently have employment agreements
with each individual. We do not maintain key-man insurance on the lives of
Messrs. Gabriel, Frudakis, and Gomez. If Messrs. Gabriel, Frudakis, and Gomez
were to resign, the loss could result in loss of sales, delays in new product
development and diversion of management resources, and we could face high costs
and substantial difficulty in hiring qualified successors and could experience
a loss in productivity while any such successor obtains the necessary training
and experience. In addition, in order to successfully implement and manage our
business plan, we are dependent upon, among other things, successfully
recruiting qualified personnel who are familiar with the specific issues facing
the deciphering of complex genetic traits. In particular, we must hire and
retain experienced management personnel to help us continue to grow and manage
our business, and skilled genetic technicians to further our research and
development efforts. Competition for qualified personnel is intense. If we do
not succeed in attracting new personnel or in retaining and motivating our
current personnel, our business could be harmed.
WE HAVE NOT PAID OUR DUTCHESS NOTE PRINCIPAL PAYMENTS IN ACCORDANCE WITH THE
TERMS OF THE NOTES AND WE MAY INCUR PENALTIES AND FEES RELATED TO THESE LATE
PAYMENTS.
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We have issued to Dutchess Convertible Notes and Convertible Debentures. We
have made payments on the Convertible Notes, however our payments have not been
sufficient to meet all payment requirements for all of the Notes and we are in
default. As a result, Dutchess has the right to convert the residual amount of
the Notes to a convertible debenture which can convert into our common stock at
the lesser of (i) 50% of the lowest closing bid price during the fifteen
trading days immediately preceding the maturity date or (ii) 100% of the lowest
bid price for the twenty trading days immediately preceding the conversion
date. At March 31, 2007, the Dutchess March Note was not paid when due. It is
also unlikely that we will be unable to pay our remaining Dutchess notes by
their maturity dates and Dutchess has the right to switch the residual amount
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DNAPRINT GENOMICS INC Filing Date: 08/02/07
of on any unpaid notes to a three-year convertible debenture.
We are in default $5,345,963 of Dutchess Notes payable at March 31, 2007 due to
not making the minimum principal payments. Dutchess has the right to switch
the residual amount of $1,080,963 on the Dutchess March 2006 Note to a
three-year convertible debenture which would convert into 296,154,247 shares of
common stock at March 31, 2007; however, they had not exercised this right at
March 31, 2007 nor at the time this report was issued. The Dutchess documents
purport to give Dutchess the right to charge us liquidated damages of up to 30%
of the face amount of these notes. Dutchess has not exercised this right at
March 31, 2007 nor at the time this report was issued. We have accrued $1.7
million at March 31, 2007 for any such penalties and fees.
I got this from their SB2A. There is some competition out there:
- Genaissance Pharmaceuticals: a provider of pharmacogenomic support services,
including high-throughput sequencing, this company was recently acquired by
another company called Clinical Data, Inc.
- Evolutionary Bioinformatics: Bioinformatics and genomics consulting,
specializing in comparative genomics, functional genomics and model organisms.
- deCODE Genetics: Advanced bioinformatics and high-throughput genotyping
facility.
- Celera Genomics: Drug discovery systems and services.
- Cellular Genomics: A biotechnology company focused on the discovery and
validation of novel drug targets.
- Correlogic Systems: Developing tools and processes for proteomic and
genomic-based clinical diagnostic systems and new drug discovery.
- Epoch Biosciences: Technologies useful in genetic research, diagnostics, drug
development, infectious disease detection, prenatal testing and population
screening to assess risk of disease or to predict response to drugs.
- Eragen Biosciences: Designs, develops, and markets functional genomic and
drug/diagnostic discovery platform products, and technologies to the
pharmaceutical, biotechnology and agro-biology industries.
In addition, numerous pharmaceutical and biotechnology companies, either alone
or in collaboration with our competitors, are developing genomic research
programs that involve the use of information that can be found in these
databases.
stockhlder, I heard 12-18 months to get CD59 to the hospital.
stockhlder, why can't you tell us who said richard went to europe? why is it a secret?
Gandolf, you brought up some good points. I too would like some more details with whats going on.
Tony will be speaking at this conference. I like the fact that DNAG is part of this.
What is the currently O/S?
Why wasnt the orchid agreement mentioned?
stockboy, why do you think dnag won't come through? can you list some facts. thanks.
Have anyone heard the interview yet? Is it not live?
stockholder101me
how is the epo infringment going to affect dnag? is the epo "dimer" dnag is using going to be an issue?
do we know how much of the pharma the parent company will own?
stockhlder,
did you post this on the yahoo merck board by in Mar07? so you confirmed with dnag that they are involved to m2gen?
3 branches of gov't were voting on M2GEN funding..
State 15 mil APPROVED
County 28 mil APPROVED
city vote today 2mil-- last piece of funding.. vote expected today. City votes at 9am but should be done by 12
and that's it.. M2GEN comes to life.
DNAPrint is partnering with M2GEN
PER DNAPRINT PR DEPT
!"until it clears all the hurdles, we have no further comment."
DNAPrint shareholder relations:RE Merck/MOFFIT DNAG..
> From: "dnap" <dnap@dnaprint.com>
> Date: 2007/02/27 Tue AM 11:10:24 EST
> To: XXXX
> Subject: Moffitt question
>
> Hello XXXX, thank you for contacting DNAPrint Genomics. Per your voicemail, here is some information on the Moffitt question. We have been working with the Moffitt on developing new technologies using genetic markers and have announced several programs over the years. The recent Moffitt/Merck relationship is currently awaiting State, local and probably some federal funding and won't kick off until the political solutions and approvals have been granted. We have, as the article stipulates been invited to participate in this new entity at the Moffitt but until it clears all the hurdles, we have no further comment.
>
stockhlder, i think its very important for long term growth for the current shareholders that the parent company owns a major portion of the pharma. if and when the pt-401 gets approved, if part of that revenue gets recognized as royalty or some sort of payment to the parent then the value of the parent company will be greater.
stockhlder, do we know how much of a position DNAG will hold for the spin-offs?
I guess a lot will depend on their next move for financing. If you look at FRPT, when it was trading as an OB it had a reverse merger but two years later it went from .5 to a high of 30 and is now on the NASDAQ. Starting companies usually eat up a lot of capital from the start. If DNAG can get some financing and start selling the CD59, we should be ok. I base all my assumptions on my DD via the 10q and other financial filings.
stockhlder, i thought the company said they aren't going to dilute any more shares. i also read in their 07 annual shareholder meeting slides which said they plan to buy back shares, so issuing more shares for money contradicts their plan to buy back shares no?
Quick question for the DNAG experts on this board:
What sets DNAG apart from all the Bio companies out there? What does DNAG have that others don't have and why is it better then their products? I guess this is a key question most investors ask too. Why should they invest their money in DNAG's technology rather than other Bio companies technology. There are many DNA companies out there. Thanks.
DonLeopoldo,
What is your opinion on DNAG.OB? Either for long term or short term. Thanks.
Hi. What do you guys here think of DNAG.OB?
That is my concern too. Is that why they are doing the spin-off? With the spin off Orchid won't have access to those intelletual property right?
There was also saying that the options agreement was transfer to another company. I haven't been able to find anything though to verify this.
stockhlder, thanks. i heard the valuerich one already. i was hoping to find some audio to help me understand the shareholder meeting. its like 50 something slides. thanks anyway.
thanks, but i found the slides. is there one with audio from the actual meeting or did they not record it? thanks.
stockhlder, i found the powerpoint slide, but is there an audio on the website?
i agree with you. i don't think dutchess will release the equipment, if they didn't think they can get their investment money back. if they did, they would of sold the equipment and tried to get some money back.
stockhlder, how big is the market for CD-59? Do we know if they're close to producing and market this?
a questions i've always had is why didn't dnag trade on the nasdaq from the getgo like so many bio companies. its bigger exposure and probably more investors.
stockhlder, did Richard say when he plans to make an update to investors on the financing issue and possible progress with Moffitt?
Here is a more recent article on M2GEN:
http://www.tbo.com/news/opinion/commentary/MGBP8ZX7X4F.html
I agree with what you said. Stockhlder says that we should hear something this month so I'm going to stick around and see how this goes. Tony's book is getting published this month. The Orchid agreement is suppose to end this month, so maybe this is the month. We shall see. All we're all doing is speculating among ourselves, no one really knows what's going on. The company took 7 years to make its progress. Thought they under delivered, they did deliver some results. HOpefully once the financing is out of the way, they can fulfill on their committments.
DonLeopoldo, when do you expect the run up? Why would it run anyway? Revenues are light and the company has a lot of debt. Is this run based on technicals?
I do believe that the company has not updated sharesholders but I do not think its a scam. Several points can prove it is not a scam:
-Dutchess is a real company and would not invest in DNAG if it was not a real company with real potential.
-The Moffit Cancer website states DNAG's involvement with them
-Orchid is a NASDAQ traded company and they were in an agreement together.
-They are generating revenue via their AncestryDNA products.
So I wouldn't say its a scam. I would say that progress is slow and they definitely need some financing. I don't think pumping the company and say everything is good works and I don't think saying that its a scam works either. The truth is that this company is real and has real potential. The company is also in a financial crunch at the moment. If they can get financing, they probably can realize their potential, if not then they're going to strugle a bit longer.
Post #13539 claims that the Orchid agreement was transferred. Has it? If it has that means DNAG can partner with anyone then right?
Also how come DNAG didn't just list on the Nasdaq like other bio companys such as DCGN but instead list in the ob?
I found this regarding the Orchid agreement. It expires on Sep 19,2007. What does this part mean though:
8 Option Exercise
8.1 Orchid may exercise its Option as to any SNP Intellectual Property,
including Rejected Property (hereafter defined) not previously sold,
licensed or partnered, at any time during the term of this Agreement and
during the period of twenty five (25) years thereafter, upon written notice
to DNAPrint.
http://www.secinfo.com/d1zWxj.41p.9.htm
onebigbang, what is the orchid option?
stockhlder, Based on their quarter statement, it says that they should have enough funding til the end of the year. Why do you think that we'll hear something this month? Is this based on communication you had from the company? Thanks.
stockhlder are you a trader or investor now?
stockhlder101, have you been a long term investor or a trader in dnag?
I found this article on the M2GEN:
Both Gomez and DNAPrint Genomics will also be part of a massive research initiative announced last month by the H. Lee Moffitt Cancer Center & Research Institute of Tampa. The center said it would partner with an affiliate of Merck & Co., Inc. pharmaceutical company to expand biotechnology research with the goal of developing personalized medicine.
Merck and Moffitt will form a for-profit company, called M2GEN, that will develop personalized cancer treatments using a patient's genetic profile.
http://www.apria.com/resources/1,2725,494-583900,00.html