DNAprint Genomics (DNAG)

[mingwan0]

As an example, I refer to spook's original question #2 from his post on RB. I have provided some answers, some clarification, and some suggested rewording (in italics). Spook's original wording is first in bold and my contributions are below in normal text. Spook might wish to review the suggestions and agree to withdraw or amend the question accordingly.

2) According to the filing, Dr. Frudakis received 30,000,000 free shares as a "performance bonus". Considering the above mentioned net loss (-7,789,905) how was this justified? What "milestones" were met?

The "net loss" is IMO not directly relevant to the subject matter of the question which is the justification of the stock award in terms of "milestones". Some background - from the last 10K we can see the basis for the award:

http://www.sec.gov/Archives/edgar/data/1127354/000095014404003262/g88133e10ksb.htm

"...we previously had an agreement to award 30,000,000 shares of our common stock to our Chief Science Officer when certain performance measures were met. At December 31, 2002 and March 31, 2003, it was not probable that the shares would ever be issued and accordingly no stock based compensation was recorded through such date. During the second quarter of 2003, the Board of Directors approved the immediate vesting of these shares as the criteria the Board of Directors had set had been met..."

So what were the previously agreed criteria? These were described in an agreement that was an attachment to the 10K filed in April 2002:

http://www.sec.gov/Archives/edgar/data/1127354/000107087602000030/stockagmt.htm

There was a "performance condition" specified ("Grantee" is Tony Frudakis):

"It shall be a condition to the vesting of the Performance Shares that the Company, through the efforts of the Grantee, secures a co-commercialization and or co-development partner for the Company's first genomics - based patient classification test. Upon completion of such condition, all performance legends shall be removed from grantee's stock."

There was also an "administration" clause:

"The Board of Directors shall have the power to interpret this Agreement and to adopt such rules for administration, interpretation and application of the Agreement as are consistent with the Plan and to interpret such rules. All actions taken and all interpretations and determinations made by the Board of Directors in good faith shall be final and binding upon the Grantee, the Company and all interested persons. No member of the Board of Directors shall be personally liable for any action, determination or interpretation made in good faith with respect to this Agreement or any similar agreement to which the Company is a party."

And, incidentally, a potential bar on disposition:

"Upon receipt of any of the Performance Shares as a result of the satisfaction of all conditions to the Grant, the Grantee shall, if requested by the Company, hold such Performance Shares for investment and not with the view toward resale or distribution to the public and, if so requested by the Company, shall deliver to the Company a written statement signed by the Grantee and satisfactory to the Company to that effect."

So, assuming that there was no relevant "interpretation" by the Board, and going back to the performance condition, what happened during the second quarter of 2003 that might be a relevant event? This is about the time period when the relevant NYU committee agreed to proceed with the transplant classifier after dithering for a year. In any case the original question is to my mind partly answered, and a suitable replacement might be:

The securing of which co-commercialization and or co-development partner for the Company's first genomics - based patient classification test triggered the "performance condition" in the Performance Stock Agreement between the company and Tony Frudakis, that resulted in the vesting of 30,000,000 shares as per the terms of that agreement?

An obvious secondary question is why the Ovanome work with Miami didn’t satisfy the performance condition?

Comments welcomed. I did try to post this on RB so that Spook could see it there but RB is down again.