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EX-31.2 - PARALLAX DIAGNOSTICS, INC.exhibit312-quarterlyreport00.htm
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EX-10.5 - PARALLAX DIAGNOSTICS, INC.exhibit105convertibnleprefpu.htm
EX-32.2 - PARALLAX DIAGNOSTICS, INC.exhibit322-quarterlyreport00.htm
EX-31.1 - PARALLAX DIAGNOSTICS, INC.exhibit311-quarterlyreport00.htm
EXCEL - IDEA: XBRL DOCUMENT - PARALLAX DIAGNOSTICS, INC.Financial_Report.xls

 

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

 

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2011

 

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______________ to ______________

 

Commission File Number: 000-54115

 

PARALLAX DIAGNOSTICS, INC.

 (Exact name of registrant as specified in its charter)

 

Nevada

 

27-2332860

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

2 Canal Park, 5th Floor

Cambridge, MA 02141


 

(Address of principal executive offices)

 

(617) 209-7999


 

(Registrant’s telephone number, including area code)


 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨ 

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes ¨  No ¨ 

 

Check whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large Accelerated Filer                    ¨ 

 

Accelerated Filer                    ¨ 

 

 

 

Non-accelerated Filer     ¨ 

 

Smaller Reporting Company

 

Check whether the issuer is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ¨    No  

 

As of November 14, 2011, there were 28,000,000 shares of common stock, par value $0.0001, issued and outstanding.

                                                                         


 

 

PARALLAX DIAGNOSTICS, INC.

FORM 10-Q

INDEX

 

 

 

 

 

  

Page

PART I – FINANCIAL INFORMATION

  

 

 

 

Item 1 Financial Statements

  

3

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations  

  

10

Item 3 Quantitative and Qualitative Disclosures About Market Risk

  

11

Item 4 Controls and Procedures

  

11

 

 

PART II – OTHER INFORMATION

  

 

 

 

Item 1 Legal Proceedings

  

12

Item 1A Risk Factors

  

12

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds

  

12

Item 3 Defaults Upon Senior Securities

  

12

Item 4 Removed and Reserved

  

12

Item 5 Other Information

  

13

Item 6 Exhibits

  

13

SIGNATURES

  

14

 

 

 

 

 

2

 


 

 

PART I---FINANCIAL INFORMATION

 

Item 1. Financial Statements.

PARALLAX DIAGNOSTICS, INC.

 

(A DEVELOPMENT STAGE COMPANY)

 

BALANCE SHEETS

 

           

 

 

September 30,

 

December 31,

 

2011

 

2010

 

ASSETS

(Unaudited)

 

(Audited)

 

Current Assets

         

 

Cash

$

142,012

 

$

3,600

 

Total Current Assets

 

142,012

   

3,600

 

           

 

Property, Plant & Equipment (net)

 

44,257

   

-

 

           

 

Other Assets

         

 

Intangible Assets, net of amortization

 

1,399,992

   

-

 

Total Other Assets

 

1,399,992

   

-

 

           

 

TOTAL ASSETS

$

1,586,261

 

$

3,600

 

           

 

           

 

LIABILITIES AND STOCKHOLDERS' (DEFICIT)

         

 

           

 

Current Liabilities

         

 

Accounts payable and accrued expenses

$

134,854

 

$

26,402

 

Total Current Liabilities

 

134,854

   

26,402

 

           

 

Related party loans

 

148,113

   

1,450

 

           

 

Deferred Revenue

 

1,500,000

   

-

 

           

 

Total Liabilities

 

1,782,967

   

27,852

 

           

 

Stockholders’(Deficit)

         

 

Preferred Stock, $0.0001 par value, 100,000,000 shares

         

 

authorized, 210,000 and none issued and outstanding

         

 

as of September 30, 2011 and December 31, 2010, respectively

 

21

   

0

 

Common stock, $0.0001 par value, 400,000,000 shares

         

 

authorized , 28,000,000 and 35,000,000 issued and outstanding

         

 

as of September 30, 2011 and December 31, 2010, respectively

 

2,800

   

3,500

 

Additional paid in capital-Preferred

 

299,979

   

-

 

Additional paid in capital-Common

 

227,439

   

-

 

Deferred Compensation

 

(66,325

)

 

-

 

Accumulated (Deficit)

 

(660,620

)

 

(27,752

)

           

 

Total Stockholders' (Deficit)

 

(196,706

)

 

(24,252

)

TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)

$

1,586,261

 

$

3,600

 

 

 

3

 


 

 

See Notes to Financial Statements

4

 


 

 

 

PARALLAX DIAGNOSTICS, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

   
                         

Cumulative

 
                         

From 04/12/2010

 
 

For the 3 months ended

 

For the 9 months ended

 

(Inception) to

 

 

09/30/2011

 

09/30/2010

 

09/30/2011

 

09/30/2010

 

09/30/2011

 

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

General and administrative expenses

$

161,635

 

$

(1,820

)

$

417,943

 

$

3,975

 

$

445,695

 
                               

Operating (loss)

 

(161,635

)

 

(1,820

)

 

(417,943

)

 

(3,975

)

 

(445,695

)

                               

Other Expenses

                             

Amortization of Stock Options

 

58,331

   

-

   

214,925

   

-

   

214,925

 

Total Other Expenses

 

58,331

   

-

   

214,925

   

-

   

214,925

 
                               

Provision for income taxes

 

-

   

-

   

-

   

-

   

-

 

 

     

 

         

 

         

Net (loss)

$

(219,966

)

$

(1,820

)

$

(632,868

)

$

(3,975

)

$

(660,620

)

 

 

 

 

 

 

   

 

 

 

 

 

 

 

 

Net (loss) per common share -

                             

basic and diluted

$

-

 

$

-

 

$

-

 

$

-

 

$

-

 
                               

Weighted average common shares

                             

outstanding - basic and diluted

 

28,000,000

 

 

-

 

 

28,000,000

 

 

-

 

 

28,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See Notes to Financial Statements

5

 


 

 

PARALLAX DIAGNOSTICS, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

           

Cumulative

 
             

From 04/12/2010

 
 

For the 9 months ended

 

(Inception) to

 

 

09/30/2011

 

09/30/2010

 

09/30/2011

 

Cash Flow from operations:

                 

Net loss

$

(632,868

)

$

3,975

 

$

(660,620

)

Adjustments to reconcile net (loss) to net cash

                 

(used in) operating activities:

 

 

   

 

   

 

 

Depreciation

 

4,917

   

-

   

4,917

 

Changes in operating assets and liabilities

                 

Increase in accounts payable and accrued expenses

 

101,391

   

2,625

   

127,793

 

Increase in accrued payroll - related party

 

99,369

   

-

   

99,369

 

Net cash (used in) operating activities

 

(427,191

)

 

(1,350

)

 

(428,541

)

                   

Cash Flow from investing activities:

                 

(Increase) in Property, Plant & Equipment

 

(49,174

)

 

-

   

(49,174

)

(Increase) in Intangible Assets

 

(1,399,992

)

 

-

   

(1,399,992

)

Net cash (used in) investing activities

 

(1,449,166

)

 

-

   

(1,449,166

)

                   

Cash Flow from financing activities:

                 

Proceeds from related party loans

 

54,355

   

1,450

   

55,805

 

Increase in Deferred Revenue

 

1,500,000

   

-

   

1,500,000

 

Issuance of Preferred Stock

 

21

   

-

   

21

 

Increase (Decrease) in Capital Stock

 

(700

)

 

3,500

   

2,800

 

Increase in Additional Paid In Capital

 

227,439

   

-

   

227,439

 

Increase in Additional Paid In Capital due to

 

299,979

   

-

   

299,979

 

issuance of Preferred Stock

       

       

(Increase) in Deferred Compensation

 

(66,325

)

 

-

   

(66,325

)

Net cash provided by financing activities

 

2,014,769

   

4,950

   

2,019,719

 

 

                 

Increase in cash

 

138,412

   

3,600

   

142,012

 

Cash - beginning of period

 

3,600

   

-

   

--

 

Cash - end of period

$

142,012

 

$

3,600

 

$

142,012

 
                   
                   

NONCASH ACTIVITIES

$

-

 

$

-

 

$

--

 
                   

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

             
                   

Interest Paid

$

-

 

$

-

 

$

-

 

Income Taxes Paid

$

-

 

$

-

 

$

-

 
                       

 

 

 

See Notes to Financial Statements

6

 


 

 

 

 

PARALLAX DIAGNOSTICS, INC.

(A Development Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

 

September 30, 2011

 

NOTE 1. OVERVIEW

 

Parallax Diagnostics, Inc.(the “Company”) was incorporated on April 12, 2010 in the state of Nevada.  The Company was formed to serve as a vehicle to effect an asset acquisition, merger, and exchange of capital stock or other business combination with a domestic or foreign business.

 

On January 11, 2011 (the “Closing Date”), the Company entered into and closed a share exchange agreement (the “Share Exchange Agreement”) with Amersey Investments, LLC (“Amersey”), Parallax Diagnostics, Inc., a Delaware corporation (“Parallax”) and its sole shareholder, Montecito Bio Sciences, Ltd. (“Montecito”). On the Closing Date, pursuant to the terms and conditions of the Share Exchange Agreement, (i) the Company acquired 100% of the issued and outstanding shares of common stock of Parallax in exchange for the issuance of 21,000,000 shares of our common stock, par value $0.0001 and (ii) Parallax merged with and into the Company whereupon the Company continued as the surviving entity and the corporate existence of Parallax ceased (the “Merger”). Additionally, as further consideration for the share exchange and Merger and in accordance with the Shares Exchange Agreement, Amersey cancelled to treasury 28,000,000 shares of the Company’s common stock.

 

As a result of the transactions effected by the Share Exchange Agreement, (i) the former business of Parallax is now the Company’s sole business and (ii) there is a change of control whereby the former shareholder of Parallax, Montecito, will now own a controlling 75% ownership interest in the Company.

 

As a further condition of the Share Exchange Agreement, the current officers and directors of the Company resigned and J. Michael Redmond was appointed to serve as a Director and also as the CEO and President of the Company. Additionally, Mr. Norman A. Kunin was appointed to serve as the Company’s CFO, Mr. Mike Contarino was appointed to serve as the Company’s Vice President and Dr. Roger Morris was appointed to serve as the Company’s Chief Science Officer. Mr. Edward W. Withrow III, Dr. Jorn Gorlach, Mr. Anand Kumar, Mr. David Engert and Mr. E. William Withrow Jr. were appointed to serve as Directors.

 

At September 30, 2011 the Company has not yet commenced any operations.  All activity from April 12, 2010 (date of inception) through September 30, 2011 relates to the Company’s formation, business plan and registration statement.

 

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

This summary of significant accounting policies is presented to assist in understanding the Company’s financial statements.  These accounting policies conform to accounting principles, generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements.

 

Development Stage Company

 

The Company is a development stage company as defined by ASC 915-10-05, “Development Stage Entity”.  The Company is still devoting substantially all of its efforts on establishing the business and its planned principal operations have not commenced.  All losses accumulated, since inception, have been considered as part of the Company’s development stage activities.

 

7

 


 

 

Use of Estimates

 

The preparation of financial statements, in conformity with generally accepted accounting principles in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from these estimates.

 

Fiscal Year End

 

The Company has a fiscal year ending on December 31.

 

Cash Equivalents

 

The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.

 

Property, Plant and Equipment


Property and equipment are carried at the cost of acquisition or construction and depreciated over the estimated useful lives of the assets. Costs associated with repairs and maintenance are expensed as incurred. Costs associated with improvements which extend the life, increase the capacity or improve the efficiency of our property and equipment are capitalized and depreciated over the remaining life of the related asset. Gains and losses on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are 5 to 7 years.

Fair Value of Financial Instruments

 

The carrying amounts reported in the balance sheet for cash, accounts payable and accrued expenses approximate fair value based on the short-term maturity of these instruments.

 

Income Taxes

 

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC 740-10, “Accounting for Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year; and, (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of available positive and negative evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

 

ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken or expected to be taken on a tax return. Under ASC 740-10, a tax benefit from an uncertain tax position taken or expected to be taken may be recognized only if it is “more likely than not” that the position is sustainable upon examination, based on its technical merits. The tax benefit of a qualifying position under ASC 740-10 would equal the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all the relevant information. A liability (including interest and penalties, if applicable) is established to the extent a current benefit has been recognized on a tax return for matters that are considered contingent upon the outcome of an uncertain tax position. Related interest and penalties, if any, are included as components of income tax expense and income taxes payable.

8

 


 

 

Earnings (Loss) per Share

 

Basic earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of common stock outstanding for the period.  Diluted earnings (loss) per share is computed by dividing net income, or loss, by the weighted average number of shares of both common and preferred stock outstanding for the period.

 

New Accounting Standards

 

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.

 

NOTE 3. PROPERTY, PLANT AND EQUIPMENT

 

Property, Plant and Equipment consists of the following: 

 

 

September 30,

 

  December 31,

 
 

2011

 

2010

 
             

Medical Devices & Instruments

$

49,174

 

$

-

 

Accumulated Deprecation

 

(4,917)

 

 

-

 

Property Plant & Equipment, Net

$

44,257

 

$

-

 

 

Depreciation expense totaled $4,917 and none for the nine months ended September 30, 2011 and the year ended December 31, 2010, respectively.

 

NOTE 4. INTANGIBLE ASSETS

 

Intangible assets in the amount of $1,500,000, less accumulated amortization of $100,008 consist of the assignment to the Company of Products and Processes valued at $750,000 and Trademarks and Patents valued at $750,000.

 

NOTE 5. RELATED PARTY LOANS

 

As at September 30, 2011, affiliates and related parties are due a total of $148,113 which is comprised of $141,308 of accrued compensation to officers of the Company and $6,805 due to related parties prior to the Share Exchange Agreement.

 

NOTE 6. DEFERRED REVENUE

 

On September 30, 2011, the Company entered into Modification Agreements with Montecito Bio Sciences, Ltd. (“Montecito”) regarding the Agreement of the Assignment of Intellectual Property (the “Assignment Agreement”) and the Assignment of the License of Intellectual Property (the “License Agreement”), both Agreements having been entered into on September 10, 2010.  The nature of the Modifications to the Assignment Agreement and the License Agreement were to increase the royalty amounts (“Royalties”) due to Montecito from Four Percent (4%) to Five Percent (5%) and from Three and One Half Percent (3 ½%) to Four and One Half Percent (4 1/2%), respectively.  The Assignment Agreement Royalties shall revert back to Four Percent (4%) after the Company has paid Montecito Seven Hundred Fifty Thousand Dollars ($750,000) of royalty revenue and the License Agreement Royalties shall revert back to Three and One Half Percent (3 ½%) after the Company has paid Montecito Seven Hundred Fifty Thousand Dollars ($750,000) of royalty revenue.

 

 

9

 


 

 

 

NOTE 7. COMMITMENTS AND CONTINGENCIES

 

On July 1, 2011 the Company entered into a Development and Supply Agreement with Corder Engineering, LLC.  The Statement of Work stipulates that Corder Engineering, LLC shall provide ten (10) Evaluation Units which replicate the functionality Target. Target 1000 firmware ver. 320 and add software for a C-reactive protein (CRP) quantitative assay.  The total payment under the Agreement stipulates $35,000 over a twelve week period.

 

On July 1, 2011 the Company entered into a Supply Agreement with Meyers Stevens Group, Inc. ("Meyers Stevens"). The Statement of Work stipulates that Meyers Stevens will manufacture assays and supply a Data Package for the Company and will yield approximately 100 to 200 fully functional assay test devices for internal investigational use.  Estimated delivery of the assays is eight (8) weeks from the date of the Agreement for a total cost of $10,194.

 

NOTE 8. STOCKHOLDER’S EQUITY    

 

The total number of authorized shares of preferred stock that may be issued by the Company is 100,000,000 with a par value of $0.0001 per share.

 

On June 17, 2011, the Company entered into a Convertible Preferred Purchase Agreement with Hamburg Investment Company, LLC ("HIC"), whereby 100,000 shares of Preferred Stock would be issued to HIC for a purchase price of $1.00 per share, or $100,000.00. In connection with the issuance of Preferred Stock, the Company issued a warrant to convert 100% of HIC's shares of Preferred Stock to shares of Common Stock at an exercise price of $1.00 per share. The number of shares of common stock underlying the warrant and the exercise price are subject to adjustment within six months if the Company has reached certain financing levels.

 

On June 17, 2011, the Company entered into a Convertible Preferred Purchase Agreement with Huntington Chase Financial Group ("HCFG"), whereby 100,000 shares of Preferred Stock would be issued to HCFG for a purchase price of $1.00 per share, or $100,000.00. In connection with the issuance of Preferred Stock, the Company issued a warrant to convert 100% of HCFG's shares of Preferred Stock to shares of Common Stock at an exercise price of $1.00 per share. The number of shares of common stock underlying the warrant and the exercise price are subject to adjustment within six months if the Company has reached certain financing levels.

 

On September 30, 2011, the Company entered into a Convertible Preferred Purchase Agreement with Huntington Chase Financial Group ("HCFG"), whereby 10,000 shares of Preferred Stock would be issued to HCFG for a purchase price of $10.00 per share, or $100,000.00. In connection with the issuance of Preferred Stock, the Company issued 200,000 warrants to purchase Common Stock of the Company, with a strike price of $1.50 per share for 24 months, and a warrant to convert 100% of HCFG's shares of Preferred Stock to shares of Common Stock at an exercise price of $10.00 per share. The number of shares of common stock underlying the warrant and the exercise price are subject to adjustment within six months if the Company has reached certain financing levels.

 

As at September 30, 2011, 210,000 shares of preferred stock are issued and outstanding.

 

The total number of authorized shares of common stock that may be issued by the Company is 400,000,000 with a par value of $0.0001 per share.

 

On January 11, 2011, pursuant to the Share Exchange Agreement, Amersey Investments, LLC cancelled to treasury 28,000,000 shares of the Company's common stock.

 

As at September 30, 2011 the Company has 28,000,000 common shares issued and outstanding.

 

10

 


 

 

NOTE 9.  EQUITY COMPENSATION PLAN

 

On October 1, 2010, the board of directors adopted the Company's Stock Option Plan. The Company has reserved 3,000,000 shares of common stock for issuance upon exercise of options granted from time to time under the stock option plan. The stock option plan is intended to assist the Company in securing and retaining key employees, directors and consultants by allowing them to participate in the Company's ownership and growth through the grant of incentive and non-qualified options. Under the stock option plan, the Company may grant incentive stock options only to key employees and employee directors, or the Company may grant non-qualified options to employees, officers, directors and consultants. The stock option plan is currently administered by the Company's board of directors. Subject to the provisions of the stock option plan, the board will determine who shall receive options, the number of shares of common stock that may be purchased under the options. As at September 30, 2011, the Company has granted options to purchase 1,950,000 shares.

 

NOTE 10. INCOME TAX

 

 

At September 30, 2011, deferred tax assets consists of:
Net operating loss carry forward $ (660,620)
Start-up costs capitalized for tax purposes $ -0-
Gross deferred tax assets $ 660,620
Valuation allowance $ (660,620)
Net deferred tax assets $-0-

 

Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and net operating loss carry forwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a full valuation allowance. The Company’s valuation allowance increased by $ 9,713 during 2010.

 

The difference between the statutory tax rate of 35% and the effective tax rate of 0% is due to the valuation allowance for deferred income tax assets.

 

NOTE 11.  SUBSEQUENT EVENTS

 

In 2009, the FASB ASC Topic 865 (formerly FASB 165, Subsequent Events) , which defines the period after the balance sheet date that subsequent events should be evaluated and provides guidance in determining if the event should be reflected in the current financial statements.  This ASC Topic also requires disclosure regarding the date through which subsequent events have been evaluated.

 

The Company has evaluated subsequent events through the time the September 30, 2011 financial statements were available for issuance.  With the exception of the following events, no events have occurred subsequent to September 30, 2011 that require disclosure or recognition in these financial statements.

 

During the period October 1, 2011 through November 14, 2011 the Company increased its loans from related parties by $8,000, from a total of $148,113 at September 30, 2011 to $156,113 at November 14, 2011. The increase represents accrued compensation owed to related parties in the amount of $8,000.

 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operation.

Forward Looking Statements

11

 


 

 

            Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  These forward-looking statements generally are identified by the words “believes”, “project”, “expects”, “anticipates”, “estimates”, “intends”, “strategy”, “plan”, “may”, “will”, “would”, “will be”, “will continue”, “will likely result”, and similar expressions.  We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements.  Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.  Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles.  These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.  We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.  Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

With respect to this discussion, the terms “we” “us” “our” and the “Company” refer to Parallax Diagnostics, Inc., a Nevada corporation.

 

History and Background

 

We were incorporated in the State of Nevada on April 12, 2010.  Prior to the acquisition transaction described below, our business purpose was to seek the acquisition of or merger with, an existing private company.  Accordingly, we were engaged in organizational efforts in order to put us in a position where we could seek to target and eventually acquire an existing private company.

On January 11, 2011 (the “Closing Date”), we entered into and closed a share exchange agreement (the “Share Exchange Agreement”) with Amersey Investments, LLC (“Amersey”), Parallax Diagnostics, Inc., a Delaware corporation (“Parallax”) and its sole shareholder, Montecito Bio Sciences, Ltd. (“Montecito”). On the Closing Date, pursuant to the terms and conditions of the Share Exchange Agreement, (i) we acquired 100% of the issued and outstanding shares of common stock of Parallax in exchange for the issuance of 21,000,000 shares of our common stock, par value $0.0001 and (ii) Parallax merged with and into the Company whereupon the Company continued as the surviving entity and the corporate existence of Parallax ceased (the “Merger”).  Additionally, as further consideration for the share exchange and Merger and in accordance with the Shares Exchange Agreement, Amersey cancelled to treasury 28,000,000 shares of our common stock.

As a result of the transactions effected by the Share Exchange Agreement, (i) the former business of Parallax is now our sole business and (ii) there is a change of control whereby the former shareholder of Parallax, Montecito, will now own a controlling 75% ownership interest in the Company. 

As a further condition of the Share Exchange Agreement, the current officers and directors of the Company resigned and J. Michael Redmond was appointed to serve as a Director and also as the CEO and President of the Company.  Additionally, Mr. Norman A. Kunin was appointed to serve as the Company’s CFO, Mr. Mike Contarino was appointed to serve as the Company’s Vice President and Dr. Roger Morris was appointed to serve as the Company’s Chief Science Officer.  Mr. Edward W. Withrow III, Dr. Jorn Gorlach, Mr. Anand Kumar, Mr. David Engert and Mr. E. William Withrow Jr. were appointed to serve as Directors.

 

Parallax was incorporated in the State of Delaware on December 30, 2008 under the name Roth Kline, Inc. Roth Kline, Inc. was renamed Parallax Diagnostics, Inc. on December 29, 2010.  Parallax is a development stage company whose principal line of business is in the bio-medical sector.  More specifically, Parallax is focused on the exploitation of a proprietary diagnostic and monitoring platform and processes in the area of infectious disease.

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Liquidity and Capital Resources

 

We are a development stage company focused on developing our business in the bio-medical sector.  Our principal business objective for the next twelve (12) months will be to continue to develop our business plan in the bio-medical field. We have not earned any revenue.

As of November 14, 2011, we had cash on hand of $112,429 and current liabilities of $125,432.  We do not have sufficient capital to operate our business and will require additional funding to sustain operations through December 2011.  There is no assurance that we will be able to achieve revenues sufficient to become profitable.

We anticipate that we will require a minimum of $1,500,000 to fund our continued operations for the next twelve months.  

We have incurred losses since inception and our ability to continue as a going‑concern depends upon our ability to develop profitable operations and to continue to raise adequate financing.  We are actively targeting sources of additional financing to provide continuation of our operations. In order for us to meet our liabilities as they come due and to continue our operations, we are solely dependent upon our ability to generate such financing.

 

            There can be no assurance that the Company will be able to continue to raise funds, in which case we may be unable to meet our obligations and we may cease operations.

 

Results of Operations

 

As we are a development stage company, we have not commenced material operations; therefore, we do not have results of operations to report at this time. Our focus has been on the development of our business plan.

 

Inflation

            At this time, we do not believe that inflation and changes in price will have a material effect on operations.

Off-Balance Sheet Arrangements

            We have no off-balance sheet arrangements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

            As we are a smaller reporting company, we are not required to provide the information required by this item.

 

Item 4.  Controls and Procedures.

 

Evaluation of disclosure controls and procedures

             

We maintain disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) that are designed to assure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.  As required by Exchange Act Rule 13a-15(b), as of the end of the period covered by this report, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of that date.

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Changes in internal control over financial reporting

            There were no changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

 

PART II---OTHER INFORMATION

 

Item 1.  Legal Proceedings.

 

            There are no legal proceedings that have occurred within the past five years concerning our directors or control persons which involved a criminal conviction, a criminal proceeding, an administrative or civil proceeding limiting one’s participation in the securities or banking industries, or a finding of securities or commodities law violations.

 

Item 1A.  Risk Factors.

 

            As we are a smaller reporting company, we are not required to provide the information required by this item.

 

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

 

(a)        Unregistered Sales of Equity Securities

 

On January 11, 2011, we acquired 100% of the issued and outstanding shares of common stock of Parallax in exchange for the issuance of 21,000,000 shares of our common stock, par value $0.0001.

 

On June 17, 2011, the Company entered into a Convertible Preferred Purchase Agreement with Hamburg Investment Company, LLC (“HIC”) whereby 100,000 shares of Preferred Stock would be issued to HIC for a purchase price of $1.00 per share, or $100,000.00.  In connection with the issuance of Preferred Stock, the Company issued a warrant to convert 100% of HIC’s shares of Preferred Stock to shares of Common Stock at an exercise price of $1.00 per share.  The number of shares of common stock underlying the warrant and the exercise price are subject to adjustment within six months if the Company has reached certain financing levels.

 

On June 17, 2011, the Company entered into a Convertible Preferred Purchase Agreement with Huntington Chase Financial Group (“HCFG”) whereby 100,000 shares of Preferred Stock would be issued to HCFG for a purchase price of $1.00 per share, or $100,000.00.  In connection with the issuance of Preferred Stock, the Company issued a warrant to convert 100% of HCFG’s shares of Preferred Stock to shares of Common Stock at an exercise price of $1.00 per share.  The number of shares of common stock underlying the warrant and the exercise price are subject to adjustment within six months if the Company has reached certain financing levels.

 

On September 30, 2011, the Company entered into a Convertible Preferred Purchase Agreement with Huntington Chase Financial Group ("HCFG"), whereby 10,000 shares of Preferred Stock would be issued to HCFG for a purchase price of $10.00 per share, or $100,000.00.  In connection with the issuance of Preferred Stock, the Company issued 200,000 warrants to purchase Common Stock of the Company, with a strike price of $1.50 per share for 24 months, and a warrant to convert 100% of HCFG's shares of Preferred Stock to shares of Common Stock at an exercise price of $10.00 per share.  The number of shares of common stock underlying the warrant and the exercise price are subject to adjustment within six months if the Company has reached certain financing levels.

 

The above transactions are exempt from registration under Section 4(2) of the Securities Act.

 

No securities have been issued for services. The Company has not nor has any person acting on its behalf offered or sold the securities by means of any form of general solicitation or general advertising. No services were performed by any purchaser as consideration for the shares issued.

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For all securities issued above, a legend was placed on the stock certificate stating that the securities have not been registered under the Securities Act and cannot be sold or otherwise transferred without an effective registration or an exemption therefrom, but may not be sold pursuant to the exemptions provided by Section 4(1) of the Securities Act or Rule 144 under the Securities Act, in accordance with the letter from Richard K. Wulff, Chief of the Office of Small Business Policy of the Securities and Exchange Commission’s Division of Corporation Finance, to Ken Worm of NASD Regulation, Inc., dated January 21, 2000. 

 

(b)        Use of Proceeds

 

            Not applicable.

 

(c)        Affiliated Purchases of Common Stock

 

            None.  

 

Item 3.  Defaults Upon Senior Securities.

 

            None.

 

Item 4.  (Removed and Reserved).

 

Item 5.  Other Information.

 

            On July 1, 2011, the Company entered into a Development and Supply Agreement with Corder Engineering, LLC. The Statement of Work stipulates that Corder Engineering, LLC shall provide ten (10) Evaluation Units which replicate the functionality Target. Target 1000 firmware ver. 320 and add software for a C-reactive protein (CRP) quantitative assay.  The total payment under the Agreement stipulates $35,000 over a twelve week period.

 

            On July 1, 2011, the Company entered into a Supply Agreement with Meyers Stevens Group, Inc. (“Meyers Stevens”). The Statement of Work stipulates that Meyers Stevens will manufacture assays and supply a Data Package for the Company and will yield approximately 100 to 200 fully functional assay test devices for internal investigational use.  Estimated delivery of the assays is eight (8) weeks from the date of the Agreement for a total cost of $10,194.

 

Item 6. Exhibits.

                                   

                                                            INDEX TO EXHIBITS

 

Exhibit

 

Description

 

 

 

2.1*

 

Share Exchange Agreement, by and among, ABC Acquisition Corp 1502, Amersey Investments, LLC, Parallax Diagnostics, Inc., and its shareholders, entered into on January 11, 2011

 

 

 

2.2*

 

Articles of Merger

 

 

 

 

3.1*

 

3.2*

 

10.1*

 

Articles of Incorporation

 

Amended and Restated Bylaws

 

Convertible Preferred Purchase Agreement, by and between Hamburg Investment Company, LLC and Parallax Diagnostics, Inc., entered into on June 17, 2011

 

10.2*

 

Convertible Preferred Purchase Agreement, by and between Huntington Chase Financial Group and Parallax Diagnostics, Inc., entered into on June 17, 2011

 

 

 

10.3*

 

Development and Supply Agreement, by and between Corder Engineering, LLC and Parallax Diagnostics, Inc., entered into on July 1, 2011

 

 

 

10.4*

 

 

 

Supply Agreement, by and between Meyers Stevens Group, Inc. and Parallax Diagnostics, Inc., entered into on July 1, 2011

 

10.5

 

Convertible Preferred Purchase Agreement, by and between Huntington Chase Financial Group and Parallax Diagnostics, Inc., entered into on September 30, 2011

 

 

 

 

 

 

31.1

 

 

31.2

 

 

32.1

 

Certification of our Chief Executive Officer pursuant to Rule 13(a)-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended

 

Certification of our Chief Financial Officer pursuant to Rule 13(a)-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended

 

Certification of our Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002

 

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32.2            Certification of our Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to           Section 906 of the Sarbanes Oxley Act of 2002

 

*

Included in previously filed reporting documents.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

Parallax Diagnostics, Inc.

 

 

 

Dated: November 14, 2011

By:

/s/ J. Michael Redmond

 

 

J. Michael Redmond

 

 

CEO, President, and Director

 

 

 

 

 

Parallax Diagnostics, Inc.

 

 

 

Dated: November 14, 2011

By:

/s/ Norman A. Kunin

 

 

Norman A. Kunin

 

 

Chief Financial Officer