UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

 

August 31, 2016

Date of Report

(Date of earliest event reported)

 

BINGHAM CANYON CORPORATION

(Exact name of registrant as specified in its charter)

 

Nevada (State or other jurisdiction of incorporation or organization)	90-0578516 (I.R.S. Employer Identification No.)
10457 W. 84th Terrace, Lenexa, Kansas (Address of principal executive offices)	66214 (Zip Code)

 

Registrant’s telephone number, including area code: (913) 353-4560

 

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

TABLE OF CONTENTS

 

Section 1 – Registrant’s Business and Operations
Item 1.01  Entry into a Material Definitive Agreement	3
Section 2 – Financial Information
Item 2.01  Completion of Acquisition or Disposition of Assets	4
Paradigm’s Business
Paradigm’s Properties
Risk Factors
Management’s Discussions and Analysis of Financial Condition and Result of Operations
Executive Compensation
Certain Relationships and Related Transactions
Legal Proceedings
Section 3 – Securities and Trading Markets
Item 3.02  Unregistered Sales of Equity Securities	20
Description of Bingham Securities
Bingham Market Price and Dividends on Common Equity and Related Stockholder Matters
Security Ownership of Certain Beneficial Owners and Management
Section 4 – Matters Related to Accountants and Financial Statements
Item 4.01  Changes in Registrant’s Certifying Accountants	22
Section 5 – Corporate Governance and Management
Item 5.06  Change in Shell Company Status	23
Corporate Governance
Indemnification of Officers and Directors
Section 9 – Financial Statements and Exhibits
Item 9.01  Financial Statements and Exhibits	25

 

SPECIAL NOTE ABOUT FORWARD LOOKING STATEMENTS

 

This Current Report on Form 8-K (“Current Report”) filed by Bingham Canyon Corporation (the “Company”) with the Securities and Exchange Commission (the “SEC”) contains or may contain forward looking statements and information that are based upon beliefs of, and information currently available to, management; as well as estimates and assumptions made by management. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan” or the negative of these terms and similar expressions as they relate to the Company or management, identify forward looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions and other factors (including the risks contained in the section of this report entitled “Risk Factors “) relating to the Company’s industry, operations and results of operations and any businesses that may be acquired by the Company. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

 

Although the Company believes that the expectations reflected in the forward looking statements are reasonable; the Company cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward looking statements to conform these statements to actual results. The following discussion should be read in conjunction with the financial statements and the related notes that are filed herein.

 

 

SECTION 1 – REGISTRANT’S BUSINESS AND OPERATIONS

 

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

 

On August 10, 2016, Bingham Canyon Corporation, a Nevada corporation (“Bingham” or “the Company”) entered into a Securities Exchange Agreement (the “Exchange Agreement”) with Paradigm Convergence Technologies Corporation, a Nevada corporation (“Paradigm”) to effect the acquisition of Paradigm pursuant to the terms of the Exchange Agreement. The parties signed the Exchange Agreement on August 10, 2016, but agreed to delay the share exchange until August 31, 2016 (the “Closing Date”). The Exchange Agreement was filed as an exhibit to Bingham’s Form 10-Q, filed on August 15, 2016, and the information therein is hereby incorporated by reference into this Section 1.01.

 

Pursuant to the terms of the Exchange Agreement, Bingham issued 16,790,625 shares of common stock to the stockholders of Paradigm for all of their 22,387,500 shares of Paradigm common stock (the “Share Exchange”). Accordingly, Bingham has 35,940,625 shares outstanding with the Paradigm stockholders holding approximately 47% of the Company on a fully-diluted basis and the Company stockholders retaining approximately 53% of the Company on a fully-diluted basis. The Exchange Agreement may be terminated by either company upon a material breach of any representation, warranty, covenant or agreement by the other company.

 

The issuance of our outstanding stock under the Exchange Agreement is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) pursuant to Section 4(2) thereof. The 16,790,625 shares issued in the Share Exchange will not be registered under the Securities Act and the shares may not be offered or sold absent registration or an applicable exemption from registration.

 

The Share Exchange is intended to be a tax free reorganization within the meaning of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended, with the result that stockholders of Paradigm will not incur any income tax liability as a result of the Share Exchange.

 

Except for the Exchange Agreement and the transactions contemplated thereby, neither Paradigm, nor any of its officers or directors serving before the Share Exchange had any material relationship with Bingham or Bingham’s affiliates.

 

SECTION 2 – FINANCIAL INFORMATION

 

ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS

 

After the completion of the Share Exchange, Paradigm will be a wholly-owned subsidiary of Bingham and Paradigm’s business operations will be the primary operations of Bingham.

 

 

PARADIGM’S BUSINESS

 

Historical Development

 

Paradigm Convergence Technologies Corp. was incorporated in the state of Nevada in June 2012 as Eur-Eca, Ltd. Eur-Eca, Ltd. has been involved in launching its operations since incorporation and changed its name to Paradigm Convergence Technologies Corporation on September 11, 2015 in order to more closely reflect its business model.

 

Business Strategy

 

Paradigm is a technology development and licensing company specializing in environmentally safe solutions for global sustainability. The company holds patent, intellectual property and/or distribution rights to innovative products and technologies. Paradigm’s overall strategy is to market new products and technologies through the use of equipment leasing, joint ventures, licensing, distributor agreements and partnerships. Generally, it is not Paradigm’s intent to be the primary producer and distributor of the technology products: but rather to license the underlying technology while developing new opportunities and applications for the products and promoting the brands. Paradigm will also continue its constant pursuit of new technologies (through acquisition or invention) upon which it can build and expand its joint venture and licensing core business.

 

Launch: Paradigm’s business activities are and will be focused on leveraging the opportunities presented by two commercially-ready product technologies one patented and one patent-pending:

 

• Hydrolyte™, a highly effective disinfectant/sterilent biocide that is non-toxic to humans and animals; and,
• BioPlax® a rapidly biodegradable plastic.

Both products have been market tested with commercial customers and are ready for full scale commercial launch. The initial focus of effort and resources will be on the launch of Hydrolyte™, scheduled for August of this year. The company, through its Hydrolyte™ operations alone, is projected to achieve profitability and positive cash flow by the end of the 2017 second quarter.

 

Revenues: Paradigm’s revenue stream will be primarily derived from three sources: Joint ventures and partnerships, licensing fees and royalties, and equipment leasing. The company expects also to engage in direct sales, but only in circumstances where it is strategically advantageous to do so. Paradigm intends to develop strategic operating relationships with firms that are leaders in production, manufacturing, distributions, and sales within the various industries where the markets for our technologies exist. Management intends to scrutinize each potential business combination for strategic fit, successful and profitable operations, established business relationships, management capability, market position, and financial stability. Properly executed, this strategy will allow for the most rapid possible rollout of the products and capture of market share.

 

Principal Technologies

 

Hydrolyte™ & Catholyte FREE^tm

 

Paradigm makes two products in this category: Hydrolyte™ and Catholyte FREE^tm are outputs of a single production process. The primary product is Hydrolyte™ and Catholyte is a useful by-product for which parallel markets exist and can be developed. They are produced using a process of electrochemical activation of the input ingredients derived from naturally-occurring salt minerals and water. They have been tested, proven and are in the process of being registered by the United States Environmental Protection Agency (“EPA”) for disinfection, approved by the Food and Drug Administration (“FDA”) for sanitizing applications and with the United States Department of Agriculture (“USDA”) for use in food processing.

 

Hydrolyte™ is a metastable, aqueous solution of hypochlorous acid, obtained through the electrochemical process. It has a high redox potential (900 millivolts) and a greater biocidal effect than chlorine and other toxic chemicals. Hydrolyte™ is 99.95% water + salt, rendering it safe and non-toxic to humans, yet it is instantly deadly on contact to every known fungus, bacteria or virus, including anthrax and e coli. Using non-toxic Hydrolyte™ in decontamination and sterilization processes generally eliminates the need for the use of other highly toxic chemical biocides (such as ammonia, chlorine bleach and gluteraldehyde) which are commonly used in decontamination.

 

Although it has been well known for many years that an aqueous solution of hypochlorous acid (HOCL), commonly known as “anolyte”, is capable of delivering extremely effective decontamination and sterilization results, previous problems in anolyte production technology has rendered its use economically infeasible in most applications. The two primary drawbacks with previous anolyte production technology were the inability to be produced in high enough concentrations (Parts Per Million – PPM) of the active ingredient, HOCL, and the relatively short time that the product maintained its maximum decontaminative efficacy.

 

Paradigm’s new proprietary production and distribution technologies have solved these problems. Its production equipment allows the Hydrolyte™ solution to be produced with any desired concentration of HOCL within the range (150 to 500 PPM) that may be desirable for any given application; and, to solve the “shelf life” problem, has perfected production equipment which is small enough to be located on the customer’s facility under lease, allowing for production-on-demand rather than maintaining stored product inventory. For customers who will not use enough product to justify the on-site equipment, the company will engage industry-specific distribution and commercial services companies to provide the products to end-user customers on a regular delivery schedule. Both of these solutions will assure end-users will always be supplied with fresh, full strength product.

 

Production: Hydrolyte™ is produced with the company’s proprietary equipment. The production technology for Hydrolyte™ produces a product with predetermined PPM properties, i.e., the equipment can be set to deliver any desired PPM level; and, we believe is superior to any other known production process or equipment available in the market today. The Hydrolyte™ production systems technology will largely be housed in portable and mobile units, which can be readily moved within a building or from site to site, although more permanent installations will be made in situations where such installation may be appropriate or required.

 

Markets: The primary markets for the Hydrolyte™ technology are in cleaning, disinfecting and sterilization in a variety of settings, including:

 

• institutional facilities, such as hospitals, nursing homes, hotels and schools;
• the agriculture industry for disinfection of crops, sanitization in food processing, and certain applications in animal husbandry;
• the oil and gas industry where Hydrolyte™ can provide a process to disinfect water used in hydraulic fracking processes (“frac water”) and to kill sulfite-producing microbes in “sour” oil and gas wells; and
• other market opportunities include disinfecting and sanitization of water in public and private water systems and industrial waste-water systems.

Management has determined that the most direct paths to rapid revenue and earnings growth are in the institutional facilities and agriculture markets. The preponderance of business development and marketing resources will be devoted to these two markets while management will also work to maintain the company’s position and expertise in the oil and gas industry to assure that current customer relationships are maintained, business opportunities at hand are pursued and that the company is properly positioned for a roll-out as, and when, drilling activity increases as anticipated.

 

Institutional Facilities: Hospitals, Health Care Facilities & Schools

 

Paradigm’s management believes that it has developed the state-of-the-art delivery and management systems for its applications in the institutional facilities market; most particularly for hospitals, nursing homes and other health care facilities – to include urgent care centers, medical, dental and veterinary offices – and schools. A complete turn-key cleaning, disinfection and sterilization program solution can be provided to the facility. At the core of this solution is Paradigm’s on-site Annihilyzer® production equipment. Annihilyzer® is Paradigm’s branded product for these applications and markets. The Catholyte FREE^tm that is produced by the same machine is a non-toxic mild detergent and degreaser that is easily applied using mop buckets, sprayers and floor cleaning machines for basic janitorial cleaning purposes.

 

Paradigm’s production equipment is housed in a kiosk which also contains a managed disbursement and bottling system which tracks inventory production, containerization and use. Spray bottles and other containers are labeled when filled or refilled with product identification and date of production using printed labels and radio-frequency identification (“RFID”) tags. Reading these labels and tags before use assures that the correct and “fresh” product is always being used. Each room is given an RFID tag. By reading the tags with a mobile app in a smartphone, the system tracks what is cleaned and disinfected, when and with what product (also by whom). The kiosk is Wi-Fi connected to smartphones so it is able to receive and store all of the data collected. The data can be used to generate a complete record of all cleaning, disinfecting and sanitizing activity, including personnel information on hours and activity – a cost saving convenience to management.

 

Paradigm will lease its production equipment, charging a monthly lease fee and may also charge a price per gallon of product used. The equipment will be placed and maintained through Paradigm-licensed commercial services companies that provide the on-site support as required. Any functional problems that may occur with any of the kiosk’s components will be resolved by a “rapid replacement” program. If problems are not easily and quickly resolved by the service licensee, Paradigm will overnight ship a replacement kiosk and have the defective unit returned for repair.

 

Agricultural Antimicrobial Pesticide

 

In the agricultural sector our microbiocide will be branded as Go Greenlyte Free^tm. It will provide a pre-harvest solution to numerous field crops that are affected by various bacterial and fungal pathogens. Through USDA grants and multiple studies by universities around the world, hypochlorous acid solutions have been tested and proven effective against yield-reducing crop pathogens in post-harvest applications to include sanitizing at point of harvest, point of packing, and points of sale. Paradigm’s initial major objective is to address pre-harvest pathogen issues, of which little testing has been done.

 

Paradigm is currently:

 

• pursuing the completion of EPA registration that is necessary for full commercial introduction of the product to the agricultural sector; and
• undertaking a testing and field trial program with an independent agricultural pesticide research firm to determine the feasibility of pre-harvest use of Go Greenlyte Free^tm to defeat various microbial infestations in as many different crops as possible.

The agricultural research is intended to support an aggressive rollout of scientifically tested and certified applications for the treatment and prevention of numerous specific microbial infestations of a wide variety of crops. This research activity will also be targeted at capturing the test data that would be required for regulatory approvals for the specific uses and crops.

 

While company management and technical staff and consultants are certain of the ability of Go Greenlyte Free^tm to kill virtually any microbe; substantial testing is required to determine proper application concentrations, volumes, and frequency, as well as optimal delivery techniques (which could be any or all of: root drenching, foliar spray or injection) needed to produce the most effective and least costly solutions. It must also be demonstrated and certified by independent third party testing that the treatment does no harm to the plants or the product to be harvested.

 

Management anticipates positive results from independent testing leading to the creation of multiple business opportunity targets on which to build a solid consistent, long-term revenue stream with solid growth potential for the foreseeable future.

 

Oil & Gas Industry

 

World market prices for oil have decreased during the past several years in response to additional product capacity coming on line simultaneously with a softening of the growth in demand. The oil and gas industry in the U.S. and elsewhere has experienced unprecedented expansion and prosperity due to an influx of technological advances enabling the discovery and accurate location and identification of significant domestic oil and gas reserves. Advances in drilling, fracturing equipment and chemical methodology greatly enhanced recovery rates and revenue growth. This growth surge reduced the United States’ dependency on foreign oil, contributed to lowering the U.S. trade deficit, reduced unemployment rates in oil producing areas, reduced heating and cooling cost resulting from increased supply, and provided lucrative investment opportunities. However, during the past two years an increasing supply of oil on a global scale has led to reduced prices and decreased drilling activity in the U.S. From a June 20, 2014 price of $115 per barrel, the price dropped to historic lows below $30 in February 2016 and approached $50, but may level off in the $40 range. This price decline has resulted in a great reduction in drilling activity and a corresponding reduction in our current opportunities for expanding business in the near to mid-term future. Management believes that our technologies continue to be desirable for, and continue to be used in, hydraulic fracturing drilling activities worldwide.

 

Paradigm is developing a large scale system utilizing Hydrolyte™ to help decontaminate “frac” water for reuse in the fracking process. Initial testing by Environmental Resource Technologies concluded that Hydrolyte™ is not only an effective biocide, but also has shown that Hydrolyte™ does not cause corrosive damage to gas and oil recovery equipment, nor does it cause any loss of efficacy to the other chemicals, additives, and propellants currently used in the fracking process. Hydrolyte™ also addresses another problem in the oil and gas industry. It can reduce the hydrogen sulfide created during the fracking process, thus improving the quality of the oil produced.

 

Hydrolyte™ reduces the costs of transport of contaminated water from the wellbore to a treatment facility and back, as well as eliminating the need for construction of water processing plants, providing an enormous expense reduction in the costs of drilling and enabling a sustainable competitive advantage. The company will maintain an active marketing program; however, revenue growth from the frac drilling application will be difficult to achieve during this period in the oil and gas industry.

 

BioPlax®

 

Paradigm holds the U.S. patent for BioPlax®; a biodegradable and bioaccessible plastic material. We intend to utilize BioPlax® in the second phase of our growth strategy. Unlike other biodegradable plastics, BioPlax® becomes bioaccessible (able to come in contact with an organism and be absorbed by it) and is completely returned back to the environment in the form of the original natural raw materials that were used to make the product, resulting in no residual or unintended impact on the environment. BioPlax® can be fabricated into innumerable products and can be engineered to biodegrade based on time and temperature specifications, from as little as a few minutes to as long as a year.

 

BioPlax® clearly has significant benefits relative to other plastics, which can take many years to biodegrade (and never become bioaccessible) and are the major source of pollution in landfills. BioPlax® can be used to manufacture existing plastic or foam products, with little or no change required to the production equipment. Sample applications include:

 

• Oil and Gas Uses: A BioPlax® product is currently being used in the oil and gas industry to deliver an “anti-scalant” required to keep wells operating efficiently. Utilizing nanotechnology, anti-scalant is encapsulated in a ball made from BioPlax® in various formulations for different dissolution intervals.

• Packaging: BioPlax® can be used for many forms of packaging; from single layer sheet to rigid molded packaging applications. BioPlax® can be used to make everything from foam cups to plastic packaging wraps.

Marketing & Distribution of the Technologies & Products

 

Paradigm intends to use its headquarters located in Lenexa, Kansas to display the products and technologies of the company. To enhance marketing and licensing of our technologies, management intends to install working models and simulations to allow first-hand interaction and live demonstrations. The showroom will serve as a meeting place for interested parties. On-site visits to existing installations and technology partner’s headquarters will be sponsored by the company. Currently, sales activities have been minimal while the company has focused on the final stage of systems and product development.

 

Customer relationships will be established through existing contacts, continued group presentations to interested parties, participation in industry trade shows, internet marketing, and word of mouth referrals. A sales function may be established in the future to pursue promising joint venture opportunities. We expect initial marketing activities to focus on developing an impactful and credible company image, which integrates all products and technologies into one cohesive appearance. All marketing collateral will incorporate a consistent look and display prominent logo recognition.

 

Hydrolyte™ -- Initially, Paradigm intends to rely on members of management and outside consultants to seek licensing and/or joint venture agreements for the Hydrolyte™ technology. In addition, Paradigm has a distributor agreement with an individual for distribution rights of Hydrolyte™ in California.

 

BioPlax® -- In 2014 Paradigm entered into a joint venture agreement with Centrix Partners, Inc., a Seychelles corporation, for plastic products rights. The agreement provides that the parties intend to establish a joint venture company to design a business plan and market the BioPlax® product on a non-exclusive worldwide basis. The agreement remains effective so long as the joint venture company exists and the agreement may be terminated by written agreement due to a material breach.

 

Competition

 

In all of our target markets, Paradigm will compete directly with large firms selling competing, but toxic, legacy cleanser and disinfectant products. They have longer operating histories, more experience, substantially greater financial and human resources, greater size, more substantial R&D and marketing operations, established distribution channels and are well positioned in the market to fight aggressively to defend their market share. However, the combined markets in which Paradigm is engaged are so massive that its competitive position as non-toxic and, in a significant number of applications, less expensive will allow Paradigm to prosper.

 

There are a limited number of potential competitors providing some form of anolyte-based biocide. Based on management’s research these companies are largely in early operating stages, concentrated in local or regional markets and have no technology or pricing advantage. These include Aquaox, Ecologic Solutions, Integrated Environmental Technologies, MIOX Corporation, and eWater Advantage.

 

In the institutional facilities and agricultural industries, Paradigm believes that its proprietary technologies in production, distribution, applications management and tracking will provide a competitive advantage in direct competition. In the oil and gas industry Paradigm has demonstrated the effectiveness and efficiencies of its products and processes. It is well positioned with respect to other companies providing anolyte-based biocides. In the water treatment industry, “Filtering” technologies similar to Hydrolyte™ range from simple decanting to distillation. They are typically implemented as multi-stage processes to attain water quality standards for the planned reuse. Where that planned reuse is desired to be biocide-free, leaving no residual biocides in the water output, Paradigm’s technology has a distinct competitive advantage. Where there is less or no concern regarding residuals, other methods often will have a cost advantage, limiting opportunities in this sector.

 

Research and Development

 

Paradigm’s research and development costs for the years ended 2015, 2014 and 2013 were $29,871, $75,026 and $222,313, respectively. During that period Paradigm conducted testing of the application of the Hydrolyte™ technology in the oil and gas industry; as a biocide in institutional facilities such as hospitals, jails and medical facilities; and, in agriculture and food processing.

 

In 2016 through 2018 the company expects to spend an average of $200,000 per year on research and development. Products and systems for the institutional facilities market have been largely finalized and are expected to be available in the short term. Consequently, the expenditures will be predominantly in the agricultural sector with a lesser amount devoted to BioPlax® applications.

 

In October 2015 Paradigm entered into an agreement with Florida Pesticide Research, Inc. to conduct agricultural research intended to support an aggressive rollout of tested and certified applications for the treatment and prevention of numerous specific microbial infestations of a wide variety of crops. While company management and technical staff and consultants are certain of Hydrolyte™’s ability to kill virtually any microbe, testing is required to determine proper application concentrations, volumes, frequency and delivery techniques (which could be any or all of: root drenching, foliar spray or injection) needed to be most effective and least costly. It must be demonstrated that the treatment does no harm to the plants or the product to be harvested.

 

Principal Suppliers

 

Hydrolyte™ Production Equipment: Most of Paradigm’s production equipment will be fabricated and assembled under contract by Werks Manufacturing Inc., a manufacturing firm in Ft. Wayne, Indiana. The balance will be assembled in the company’s research and development facility in Little River, South Carolina.

 

BioPlax® Production: Paradigm intends to rely upon a local, strategic partner company to continue to manufacture and produce our BioPlax® as needed.

 

Major Customers

 

As of the date of this Report, Paradigm has entered into a distributorship agreement and a joint venture agreement; however, these agreements are not currently providing consistent revenues.

 

Intellectual Property

 

Paradigm holds the North American rights to the patented Hydrolyte™ production system

 

Paradigm holds a United States patent for BioPlax® (Patent No. 5948848); and is currently developing a new patent application related to variants of the BioPlax® product formulations. On January 14, 2014, Paradigm applied for registration of the North America trademark for BioPlax® and the application was approved in 2015.

 

In July 2016 Paradigm acquired the complete intellectual property and patent rights to the hardware, firmware and software comprising the inventory production, disbursement, containerization, tracking and reporting system, trademarked as the Annihilyzer®, which is to be employed in the use of the Hydrolyte™ in large hospitals facilities.

 

Paradigm has recently applied for trademark registration for Hydrolyte™ and the registration is currently in process. It is also in the process of acquiring the full patent rights to Hydrolyte™ and perfecting the production innovation, know-how, trade secrets and patentable innovations incorporated into the improved production, inventory management and reporting systems.

 

Government Regulations and Compliance with Environmental Laws

 

Paradigm is not aware of any existing or probable government regulations that would negatively impact our operations. The company is currently seeking EPA registration of our technologies. As a licensor of water treatment technology, it is not subject to government regulations for the removal of oils, solids and pathogens from water, other than normal safety standards and certifications (such as UL or CE) for goods that we manufacture for demonstrations and joint ventures, and our product lines. However, prospective customers are subject to local, state and federal laws and regulations governing water quality, environmental quality and pollution control. To date, compliance with government regulations has had no material effect on the company’s operations, capital, earnings, or competitive position, and the cost of such compliance has not been material. Paradigm is unable to assess or predict at this time what effect additional regulations or legislation could have on its activities.

 

In addition, Paradigm’s prospective customers will be subject to the Clean Water Act which regulates the discharge of pollutants into streams and other waters of the U.S. (as defined in the statute) from a variety of sources. If wastewater or runoff from facilities or operations may be discharged into surface waters, the Clean Water Act requires that person to apply for and obtain discharge permits, conduct sampling and monitoring and, under certain circumstances, reduce the quantity of pollutants in those discharges. The federal government may delegate Clean Water Act authority to the states.

 

Employees

 

As of the date of this Report, Paradigm has four full-time employees and two contract consultants. Management expects to confer with consultants, attorneys and accountants as necessary. The company does not anticipate a need to engage more full-time employees so long as it is seeking and evaluating licensing and distribution opportunities.

 

PARADIGM PROPERTIES

 

Paradigm subleases approximately 650 square feet of office space in Lenexa, Kansas from United Resource Holdings, LLC, a Kansas limited liability company. The sublease amount is $1,500 per month and the term commenced on September 1, 2015 and expires November 30, 2016 with the option to renew for two additional one year periods. Either party may terminate the sublease by providing written notice to the other party and if the other party fails to correct or remedy the condition within 30 days, then the sublease will be terminated.

 

Paradigm also leases 2,500 square feet of office space in Little River, South Carolina for $1,500 per month. This lease terminates August 31, 2016.

 

 

RISK FACTORS

 

You should carefully consider the risks described below together with all of the other information included in this report before making an investment decision with regard to Bingham’s securities. The statements contained in, or incorporated herein, that are not historic facts are forward looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward looking statements. The risks and uncertainties described below are not the only risks and uncertainties facing us. Additional risks not currently known to us or that we currently believe are immaterial may also impair our operating results, financial condition, and liquidity. Our business is also subject to general risks and uncertainties that affect many other companies. For purposes of this section, references to our business include the business of our wholly-owned subsidiary, Paradigm. The risks discussed below are not presented in order of importance or probability of occurrence.

 

Risks Related to Our Business

We have a history of losses and may never become profitable.

 

Neither Bingham nor Paradigm have recorded net income for the past two years and both have significant accumulated deficits. Bingham has relied on advances and loans to fund operations and Paradigm has relied on loans and private placements for operating capital. As of the date of this report, total revenues will be insufficient to pay off existing debt and fund research and development.  We cannot assure you that we can identify suitable license or joint venture opportunities, or that any such agreements will be profitable. We may be required to rely on further debt financing, further loans from related parties, and private placements of our common stock for our additional cash needs. Such funding sources may not be available or the terms of such funding sources may not be acceptable to the Company.

 

Paradigm’s inability to generate sufficient cash flows may result in Paradigm not being able to continue as a going concern.

 

Paradigm’s overall cash position as of June 30, 2016 provides only limited liquidity to fund day-to-day operations. The company’s independent registered public accounting firm has expressed substantial doubt about its ability to continue as a going concern. We may need to seek additional financing or sell our assets to support our continued operations; however, there are no assurances that any such financing or asset sale can be obtained or achieved on commercially reasonable terms, if at all. In view of these conditions, our ability to continue as a going concern depends on our ability to generate sufficient cash flows from our new technology products or to obtain the necessary financing for operations. The outcome of these matters cannot be predicted at this time. The consolidated financial statements for the year ended June 30, 2016 do not include any adjustment to the amounts and classification of assets and liabilities that might be necessary should we be unable to continue business operations. Any such adjustment could be material.

 

We expect revenues to be largely derived from a small number of technologies and revenues may not increase if we are not able to market our technologies.

 

As of June 30, 2016, Paradigm has entered into technology distributorship and marketing agreements with third parties; however, these agreements are not supplying revenues at this time. The lack of licensing revenues could have a material adverse impact on our financial condition and results of operations. There can be no assurance that our technology products will be commercially viable in the marketplace or that revenues will be derived from such products.

 

Our ability to license our products and technologies on a commercially viable basis is unproven, which could have a detrimental effect on our ability to generate or sustain revenues.

 

The technologies we offer to clean oil and gas water, and waste water, have never been utilized on a full-scale commercial basis. The Hydrolyte™ technology was only recently developed and all of the tests conducted to date with respect to the technology have been performed in a limited scale or small commercial scale environment and the same or similar results may not be obtainable at competitive costs on a large-scale commercial basis. Accordingly, the Hydrolyte™ technology may not perform successfully on a commercial basis and may never generate any revenues or be profitable.

 

We may not be able to successfully protect our intellectual property rights.

 

We rely on a combination of copyright, trademark, patent and other proprietary rights laws to protect the intellectual property rights that we own or license. It is possible that third parties may challenge our rights to such intellectual property. In addition, there is a risk of third parties infringing upon our licensors’ or our intellectual property rights and producing counterfeit products. These events may result in lost revenue as well as litigation, which may be expensive and time-consuming even if a favorable outcome is obtained. There can be no assurance that adequate remedies would be available for any infringement of the intellectual property rights owned or licensed by the Company. Any such failure to successfully protect our intellectual property rights may have a material adverse effect on our competitive position.

 

Our long-term success depends on future royalties paid to us by licensees and we face the risks inherent in a royalty-based business model.

 

Paradigm intends to generate revenue through the licensing of technologies and systems, and our long-term success depends on future royalties paid to us by prospective customer licensees. The amount of licensing fees and/or royalty payments we may receive is expected to be based upon the revenues generated by our prospective customer licensees’ operations, and so we will be dependent on the successful operations of our prospective customer licensees for a significant portion of our revenues. We face risks inherent in a royalty-based business model, many of which are outside of our control, including those arising from our reliance on the management and operating capabilities of our customer licensees and the cyclicality of supply and demand for end-products produced using our technology. Should our prospective customer licensees fail to achieve sufficient profitability in their operations, our licensing fees and/or royalty payments would be diminished and our results of operations, cash flows and financial condition could be adversely affected, and any such effects could be material.

 

Because our technology products are designed to provide a solution which competes with existing methods, we are likely to face resistance to change, which could impede our ability to commercialize this business.

 

Our Hydrolyte™ products are designed to provide a solution to replacing traditional chemicals that are used in the treatment of bacteria and scaling in industrial water processes. Specifically, we believe it can provide a cost effective and environmentally friendly solution in industrial facilities, agriculture, oil and gas and other industries that consume large amounts of water in their industrial processes. Currently, large and well-capitalized service companies provide traditional chemical equipment and services in these areas. These competitors have strong relationships with their customers’ personnel, and there is a natural reluctance for businesses to change to new technologies. This reluctance is increased when potential customers make significant capital investments in competing technologies. Because of these obstacles, we may face substantial barriers to commercializing our business.

 

Because our business model is centered on licensing technologies to third parties, we may not be able to control key aspects of the timing of the commercialization of our business, which can adversely affect our future results of operations.

 

Our business model is to license patented technologies to financially stable companies to service their customers. Thus our ability to commercialize our future business will be dependent upon third parties who we will not be in a position to control and, as a result, we could be adversely affected if the third parties do not perform on their agreements with us in the manner we anticipate.

 

Risk Related to Our Industries

 

Global increases in the supply of natural gas or oil may reduce drilling operations in shale deposits, which could adversely affect the attractiveness of our Hydrolyte™ technology in the oil and gas industry.

 

The development of new horizontal drilling techniques and the discovery of unconventional oil and gas in new shale areas throughout the U.S. and world market have opened up an enormous opportunity for the Hydrolyte™ technology to replace traditional chemicals used to kill bacteria in waters used for hydraulic fracturing. These fracturing operations rely on enormous supplies of clean water to be pumped downhole to break the rock that holds the oil and gas. Much of the water used in drilling oil and natural gas wells and the resulting water that flows back needs to be treated and creates an opportunity for our Hydrolyte™ technology. However, horizontal drilling in shale areas is very expensive; and if current oil prices remain depressed, horizontal drilling may not be cost-effective and the lack thereof may adversely affect the market for the Hydrolyte™ technology.

 

If federal and state legislation and regulatory initiatives relating to horizontal drilling are passed, then it could materially and adversely affect our results of operations.

 

Our business relies upon supplying chemical-free solutions for cleaning the large amounts of water used in hydraulic fracturing applications. Objections have been raised by environmentalists, some land owners and some government officials including environmental authorities that there have been adverse side effects affecting the purity of the water supply as a result of the injection of chemicals and water in connection with horizontal drilling. Although we believe that Hydrolyte™ is a chemical-free solution which should result in increased business, we cannot assure you that legislation or rules will not be passed or action taken by environmental authorities that will preclude the use of horizontal drilling.

 

At the state level, certain states and localities have implemented moratoriums and certain obligations on oil and gas companies using horizontal drilling. The adoption of any future federal, state or local laws or implementing regulations imposing reporting or permitting obligations on, or otherwise limiting, the horizontal drilling process could make it more difficult to perform, or even prohibit oil and gas companies from using horizontal drilling, to complete gas and oil wells. These additional costs to drillers could result in reduced oil and gas drilling. This would reduce our potential licensing revenue. If this were to occur more widely in the United States, the demand for Hydrolyte™ may be eliminated or substantially reduced. If any such federal or state legislation on horizontal fracturing were passed, our revenues and results of operations could be adversely affected.

 

Risks Related to Bingham’s Common Stock

 

There is currently no trading market for our common stock and liquidity of shares of our common stock is limited.

 

Bingham’s shares of common stock are not registered under the securities laws of any state or other jurisdiction. Our common stock is cleared for quotation on the OTC Bulletin Board, but is not trading as of the date of this report. Accordingly, there is no public trading market for our common stock. Therefore, outstanding shares of common stock cannot be offered, sold, pledged or otherwise transferred unless subsequently registered pursuant to, or exempt from, registration under the Securities Act and any other applicable federal or state securities laws or regulations.

 

Since Bingham has been a shell company as defined in subparagraph (i) of Rule 144, our shares of common stock cannot be publicly resold under Rule 144. Any “restricted securities” issued by the Company while we are a shell company cannot be publicly sold for at least one year from the date that we file a report supplying Form 10 type information regarding Paradigm’s operations and after the Company is no longer considered a shell company. In addition, we must have filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months.

 

Compliance with the criteria for securing exemptions under federal securities laws and the securities laws of the various states is extremely complex, especially in respect of those exemptions affording flexibility and the elimination of trading restrictions in respect of securities received in exempt transactions and subsequently disposed of without registration under the Securities Act or state securities laws.

 

We are an “emerging growth company” under the JOBS Act and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

 

As an emerging growth company we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. In addition we have elected to use the extended transition period that allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies and, therefore, our financial statements may not be comparable to companies that comply with public company effective dates.

 

We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. We will remain an emerging growth company for up to five years, although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three-year period, or if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any December 31.

 

Financial Industry Regulatory Authority, Inc. (“FINRA”) sales practice requirements may limit a shareholder’s ability to buy and sell our common shares.

 

FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

 

If we fail to maintain effective internal controls over financial reporting, then the price of our common stock may be adversely affected.

 

Our internal control over financial reporting may have weaknesses and conditions that could require correction or remediation, the disclosure of which may have an adverse impact on the price of our common stock. We are required to establish and maintain appropriate internal controls over financial reporting. Failure to establish those controls, or any failure of those controls once established, could adversely affect our public disclosures regarding our business, prospects, financial condition or results of operations. In addition, management’s assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting or disclosure of management’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our common stock.

 

We do not intend to pay dividends on our common stock in the foreseeable future.

 

For the foreseeable future, we intend to retain any earnings to finance the development of our business, and we do not anticipate paying any cash dividends on our common stock. Any future determination to pay dividends will be at the discretion of our board of directors (the “Board”) and will be dependent upon then-existing conditions, including our operating results and financial condition, capital requirements, contractual restrictions, business prospects and other factors that our Board considers relevant. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize a return on their investment.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

 

The following discussion and analysis of the results of operations and financial condition of Paradigm for the years ended December 31, 2015 and 2014 and the six months ended June 30, 2016, should be read in conjunction with our financial statements and the notes to those financial statements that are included as exhibits to this Current Report. References in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “the company,” “us,” “we,” “our,” and similar terms refer to Paradigm Convergence Technologies Corporation, a Nevada corporation. This discussion includes forward looking statements, as that term is defined in the federal securities laws, based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. Words such as “anticipate,” “estimate,” “plan,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions are used to identify forward-looking statements.

 

We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Factors that may affect our results include, but are not limited to, the risk factors elsewhere in this Current Report. Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.

 

Paradigm’s audited financial statements as of December 31, 2015 and 2014 are filed with this Current Report on Form 8-K as Exhibit 99.1 and the unaudited financial statements for the six month period ended June 30, 2016 are filed with this Current Report on Form 8-K as Exhibit 99.2. The unaudited pro forma condensed combined financial statements for Bingham for the fiscal year ended December 31, 2015 and the six month period ended June 30, 2016 are filed with this Current Report as Exhibit 99.3.

 

Paradigm’s Liquidity and Capital Resources

 

SUMMARY OF BALANCE SHEET		Six month period ended June 30, 2016				Year ended Dec. 31, 2015
Cash and cash equivalents		$	34,158			$	42,486
Total current assets			161,286				121,166
Total assets			311,033				239,869
Total liabilities			565,193				232,396
Accumulated deficit			(2,210,300	)			(1,773,331	)
Total stockholders’ equity (deficit)		$	(254,160	)		$	7,473

 

Paradigm recorded revenues during 2014 from licensing agreements, but has not recorded revenues in 2015 or the six-month period ended June 30, 2016. During the year ended December 31, 2015 and the six month period ended June 30, 2016, Paradigm primarily relied upon the sale of common stock and long and short-term notes to related and other parties to fund operations. At June 30, 2016, Paradigm had an accumulated deficit of $2,210,300 and will require additional financing to fund short-term cash needs. Paradigm may have to rely on additional debt financing, loans from existing shareholders and private placements of common stock for additional funding. However, the company cannot assure you that it will be able to obtain short-term financing, or that sources of such financing, if any, will continue to be available, and if available, that they will be on terms favorable to Paradigm.

 

Paradigm recorded a net loss of $494,290 and $349,251 and used cash in operating activities of $444,447 and $575,057 during the years ended December 31, 2015 and 2014, respectively.  For the six-month period ended June 30, 2016 Paradigm recorded a net loss of $436,969 and used cash of $357,261 in operating activities. Accordingly, our auditors have expressed doubt of Paradigm’s ability to continue as a going concern.

 

For the 2016 six-month period Paradigm had $34,158 in cash compared to $42,486 cash at December 31, 2015. We had total assets of $311,033 for the 2016 six-month period compared to $239,869 at December 31, 2015 due to an increase in deposits for a new generation of equipment. Paradigm’s total liabilities increased to $565,193 for the 2016 six-month period compared to $232,396 at December 31, 2015 due to an increase in accounts payable, accrued interest expense and an increase in loans from shareholders.

 

Paradigm Commitments and Obligations

 

During the 2016 six-month period ended June 30, 2016, Paradigm entered into seven short-term promissory notes with the company President, Gary J. Grieco, totaling $241,500. In addition, during this period the President paid $2,500 of expenses on behalf of the company. The notes are each due twelve months from their issuance dates (between February, 2017 and May, 2017) are unsecured and bear interest at a rate of 5% per annum. During the six months ended June 30, 2016, the Company paid back $50,000 of the loans to the President. The outstanding loan balance of all promissory notes issued to the company President was $294,000 at June 30, 2016.

 

During the six months ended June 30, 2016, Paradigm paid back $14,000 to a related entity controlled by a company shareholder on two promissory notes. $5,000 of this amount paid one of the promissory notes in full. The remaining balance on the other note due to this entity is $16,000 and bears interest at the rate of 5% per annum.

 

During the six months ended June 30, 2016, Paradigm entered into a short term promissory note with a related entity controlled by a company shareholder in the amount of $7,500. The note is for a period of six months, is unsecured, and bears interest at a rate of 5% per annum.

 

During the six months ended June 30, 2016, Paradigm entered into a loan agreement with an unrelated individual in the amount of $150,000. The note is due June 1, 2018. The note is secured by a mortgage or deed of trust on a property located in North Carolina and by a personal guarantee of the President of the company. The note bears interest at the rate of 13% per annum. The company paid an origination fee of 10%, a broker’s commission of 3% of the loan amount, and other closing fees of approximately $9,500.

 

From 2012 through 2015 Paradigm issued long and short term notes totaling $817,670 to related and third parties to fund operations. The notes payable carry interest from 0% to 6% and are secured by our assets and a personal guarantee of our President the majority shareholder of the company.

 

Paradigm has also entered into two leases for office space: one is located in Lenexa, Kansas and the second in Little River, South Carolina. The office space lease amounts total $3,000 per month and the Kansas lease includes an option to renew for two additional one year periods.

 

We intend to obtain capital from management, significant stockholders and/or third parties to cover minimal operations; however, there is no assurance that additional funding will be available. Our ability to continue as a going concern during the long term is dependent upon our ability to find a suitable business opportunity and acquire or enter into a merger with such company. The type of business opportunity with which we acquire or merge will affect our profitability for the long term.

 

During the next 12 months we anticipate incurring additional costs related to the filing of Exchange Act reports. We believe we will be able to meet these costs through funds provided by management, significant stockholders and/or third parties. We may also rely on the issuance of our common stock in lieu of cash to convert debt or pay for expenses.

 

Paradigm Results of Operations

 

Year ended December 31, 2015 compared to year ended December 31, 2014

 

SUMMARY OF OPERATIONS		Year ended December 31,
		2015				2014
Revenues, net		$	141			$	400,000
Cost of sales			—				—
Gross profit			141				400,000
Total operating expenses			(484,257	)			(747,918	)
Total other income (expense)			(10,174	)			(1,333	)
Loss from operations			(494,290	)			(349,251	)
Income tax provision			—				—
Net loss		$	(494,290	)		$	(349,251	)
Net earnings (loss) per share both (basic) and diluted		$	(0.02	)		$	(0.02	)

 

Revenues decreased to $141 for 2015 compared to $400,000 for 2014 primarily as a result of not signing any additional technology licensing agreements. Cost of sales remained at $0 for 2015; the same as for 2014.

 

Total operating expenses decreased to $484,257 for 2015 compared to $747,918 for 2014 due to reductions in general and administrative expense and research and development. General and administrative expense decreased to $418,866 for 2015 compared to $554,148 for 2014 due to less travel and lower consulting fees. Research and development decreased to $29,871 for 2015 compared to $164,525 for 2014. During 2014 we made multiple stock issuances to pay for research and development services which were not required in 2015 due to our concentration on current technology. Depreciation and amortization includes depreciation of fixed assets and amortization of our patents and proprietary technology. Depreciation and amortization increased to $35,520 for 2015 compared to $29,245 for 2014 primarily due to increased depreciation of fixed assets.

 

Total other expense increased to $10,174 for 2015 compared to $1,333 for 2014 primarily due to interest expense as a result of the loans.

 

As a result of the above, Paradigm recorded a net loss of $494,290 for 2015 and a net loss of $349,251 for 2014.

 

Management expects net losses to continue until the company increases the number of licensing agreements and increases royalty income.

 

 

 

 

 

 

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Three and six month period ended June 30, 2016 compared to three and six month period ended June 30, 2015

 

SUMMARY OF OPERATIONS		Three month period ended June 30,								Six month period ended June 30,
		(Unaudited)								(Unaudited)
		2016				2015				2016				2015
Revenues, net		$	69,963			$	80			$	79,061			$	80
Cost of sales			24,400				—				30,606				—
Gross profit		$	45,563				80				48,455				80
Total operating expenses			203,098				115,382				421,457				196,055
Total other expense			(59,758	)			(842	)			(63,967	)			(856	)
Income tax provision			—				—				—				—
Net loss		$	(217,293	)		$	(116,144	)		$	(436,969	)		$	(196,831	)
Net earnings (loss) per share both (basic) and diluted		$	(0.01	)		$	(0.01	)		$	(0.02	)		$	(0.01	)

 

Revenues increased to $69,963 for the three months ended June 30, 2016 compared to $80 for the three months ended June 30, 2015. Revenues increased to $79,061 for the six months ended June 30, 2016 compared to $80 for the six months ended June 30, 2015. The revenue increases for both periods were due to the increased volume of fluids sold and the sale of a piece of fluid producing equipment.

 

Cost of sales increased to $24,400 for the three months ended June 30, 2016 compared to $0 for the three months ended June 30, 2015. Cost of sales increased to $30,606 for the six months ended June 30, 2016 compared to $0 for the six months ended June 30, 2015. The cost of sales increases for both periods were due to the cost associated with the increased volume of fluids sold and the sale of a piece of fluid producing equipment.

 

Total operating expenses increased to $203,098 for the three months ended June 30, 2016 compared to $115,382 for the three months ended June 30, 2015. Total operating expenses increased to $421,457 for the six months ended June 30, 2016 compared to $196,055 for the six months ended June 30, 2015. The total operating expense increases for both periods were due to hiring three new employees and opening two new office locations.

 

General and administrative expenses increased to $187,709 for the three months ended June 30, 2016 compared to $110,074 for the three months ended June 30, 2015. General and administrative expenses increased to $330,894 for the six months ended June 30, 2016 compared to $188,088 for the six months ended June 30, 2015. General and administrative expense increases for both periods were due to hiring three new employees and opening two new office locations.

 

Research and development expenses increased to $7,437 for the three months ended June 30, 2016 compared to $2,648 for the three months ended June 30, 2015. Research and development expenses increased to $77,004 for the six months ended June 30, 2016 compared to $2,648 for the six months ended June 30, 2015. Research and development expenses increased for both periods due to field testing required for EPA certification.

 

Depreciation and amortization expenses increased to $7,952 for the three months ended June 30, 2016 compared to $2,660 for the three months ended June 30, 2015. Depreciation and amortization expenses increased to $13,559 for the six months ended June 30, 2016 compared to $5,319 for the six months ended June 30, 2015. Depreciation and amortization expenses increased for both periods due to the acquisition of fixed assets associated with opening two new office locations.

 

Total other expenses increased to $59,758 for the three months ended June 30, 2016 compared to $842 for the three months ended June 30, 2015. Total other expenses increased to $63,967 for the six months ended June 30, 2016 compared to $856 for the six months ended June 30, 2015. Total other expenses increased for both periods due to increased interest expense on increased funds borrowed for continuing operations and the additional expense associated with the election by two holders of convertible debentures to convert the debentures solely to common stock.

 

Net loss from operations and after income taxes increased to $217,293 for the three months ended June 30, 2016 compared to $116,144 for the three months ended June 30, 2015. Net loss from operations and after income taxes increased to $436,969 for the six months ended June 30, 2016 compared to $196,831 for the six months ended June 30, 2015. Net loss from operations and after income taxes increased for the three months ended June 30, 2016 primarily due to increased general and administrative expenses. Net loss from operations and after income taxes increased for the six months ended June 30, 2016 due to increased general and administrative expenses and increased research and development costs. 

 

EXECUTIVE COMPENSATION

 

Executive Officer Compensation

 

Bingham did not pay any compensation to its directors or officers for the last two fiscal years. The following table sets forth certain information with respect to compensation for the fiscal years ended December 31, 2015 and 2014 earned by or paid to Paradigm’s directors and officers.

 

Name and Principal Position	Year	Salary	Stock Awards	All Other Compensation	Total
Gary J. Grieco President	2015 2014	$ 36,000 $ 36,000	$ 0 $ 0	$ 0 $ 0	$ 36,000 $ 36,000
C. Clark Burns Director	2015 2014	$ 30,000 $ 30,000	$ 0 $ 18,000 (1)	$ 0 $ 0	$ 30,000 $ 38,400
Bayan O. T. Giltsoff Former CEO	2015 2014	$ 36,000 $ 36,000	$ 0 $ 0	$ 0 $ 0	$ 36,000 $ 36,000

 

(1)

Represents 15,000 shares per month for 12 months valued at $0.10 per share.

 

Compensation of Directors

 

Bingham does not have any standard arrangement for compensation of our directors for any services provided as director, including services for committee participation or for special assignments.

 

Employment Contracts

 

As of the date of this Current Report, Bingham has not entered into any compensation agreement with Messrs. Grieco or Albers and Bingham does not have any other employment or consultant agreements. However, Paradigm has employment agreements with Messrs. Grieco and Burns.

 

Mr. Grieco earns a base salary of $2,000 per month to serve on the Paradigm Board and serve as an executive officer. His employment agreement provides for one week’s vacation and indemnification rights. He is subject to a non-compete provision during the term of his employment, plus one year after termination. Per the terms of the employment agreement he is obligated to protect Paradigm’s information and any work product he creates shall belong to Paradigm. His employment may be terminated by him or Paradigm with or without cause. This employment agreement expires December 31, 2017.

 

Mr. Burns earns a base salary of $2,500 per month as an employee of Paradigm. Per the terms of his employment agreement he is obligated to protect Paradigm’s information and any work product he creates shall belong to Paradigm.

 

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

Prior to August 10, 2016, Bingham and its affiliates have not engaged in any related party transactions involving Paradigm’s executive officers, directors, more than 5% stockholders, or immediate family members of these persons for the past two fiscal years. On August 10, 2016, Gary J. Grieco, a Director and President of Paradigm, was appointed as a Director and President of Bingham. Bingham has not entered into any compensation agreements with Mr. Grieco as of the date of this Current Report.

 

 

LEGAL PROCEEDINGS

 

Neither Bingham nor Paradigm is a party to any legal proceedings as of the date of this Current Report.

 

SECTION 3 – SECURITIES AND TRADING MARKETS

 

ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES

 

On August 31, 2016, in accordance with the terms of the Exchange Agreement, Bingham’s Board issued 16,790,625 shares of common stock to the stockholders of Paradigm in exchange for all of their 22,387,500 shares of Paradigm common stock. The exchange rate was one share of Paradigm common stock in exchange for a .75 fractional share of Bingham’s common stock. All shares were privately issued with a restrictive legend in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933.

 

In connection with each of these isolated issuances of our securities, we believe that each purchaser (i) was aware that the securities had not been registered under federal securities laws, (ii) acquired the securities for his/her/its own account for investment purposes and not with a view to or for resale in connection with any distribution for purpose of the federal securities laws, (iii) understood that the securities would need to be indefinitely held unless registered or an exemption from registration applied to a proposed disposition and (iv) was aware that the certificate representing the securities would bear a legend restricting their transfer. We believe that, in light of the foregoing, the sale of our securities to the respective acquirers did not constitute the sale of an unregistered security in violation of the federal securities laws and regulations by reason of the exemptions provided under Sections 3(b) and 4(2) of the Securities Act, and the rules and regulations promulgated thereunder.

 

 

DESCRIPTION OF BINGHAM SECURITIES

 

Description of Common Stock

 

Bingham is authorized to issue 100,000,000 shares of common stock, par value $.001, of which 35,940,625 were issued and outstanding as of August 31, 2016. All shares of common stock have equal rights and privileges with respect to voting, liquidation and dividend rights. Each share of common stock entitles the holder thereof (i) to one non-cumulative vote for each share held of record on all matters submitted to a vote of the stockholders, (ii) to participate equally and to receive any and all such dividends as may be declared by the Board out of funds legally available; and (iii) to participate pro rata in any distribution of assets available for distribution upon liquidation of the Company. Our stockholders have no preemptive rights to acquire additional shares of common stock or any other securities

 

Holders

 

Bingham has 135 stockholders of record as of August 31, 2016.

 

Dividends

 

Holders of Bingham common stock are entitled to receive pro rata such dividends as our Board, from time to time, may declare out of funds legally available therefor. The current policy of the Board is to retain earnings, if any, for operations and growth.

 

Transfer Agent

 

The transfer agent and registrar for Bingham’s common stock is Standard Registrar & Transfer Co., Inc., 12528 South 1840 East, Draper, Utah 84020.

 

 

BINGHAM MARKET PRICE AND DIVIDENDS ON OUR COMMON EQUITY

AND RELATED STOCKHOLDER MATTERS

 

Market Information

 

In 2010 we received notification from the Financial Industry Regulatory Authority (“FINRA”) that our common stock was cleared for quotation on the OTC Bulletin Board using the symbol “BGHM”. As of the date of this report, there has not been any trading activity in our common stock.

 

Our shares of common stock are subject to Section 15(g) and Rule 15g-9 of the Securities and Exchange Act, commonly referred to as the “penny stock” rule. The rule defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. These rules may restrict the ability of broker-dealers to trade or maintain a market in our common stock and may affect the ability of stockholders to sell their shares. Broker-dealers who sell penny stocks to persons other than established customers and accredited investors must make a special suitability determination for the purchase of the security. Accredited investors, in general, include individuals with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse, and certain institutional investors. The rules require the broker-dealer to receive the purchaser’s written consent to the transaction prior to the purchase and require the broker-dealer to deliver a risk disclosure document relating to the penny stock prior to the first transaction. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the security. Finally, monthly statements must be sent to customers disclosing recent price information for the penny stocks.

 

Dividend Policy

 

Bingham has never declared or paid a cash dividend. Any future decisions regarding dividends will be made by our Board. We currently intend to retain and use any future earnings for the development and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. Our Board has complete discretion on whether to pay dividends. Even if our Board decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the Board may deem relevant.

 

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

As a result of the Share Exchange, the following tables set forth the beneficial ownership of our outstanding common stock by our management and each person or group known by us to own beneficially more than 5% of our voting stock as of the date of this Current Report. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Except as indicated by footnote, the persons named in the table below have sole voting power and investment power with respect to all shares of common stock shown as beneficially owned by them. The percentage of beneficial ownership is based on 35,940,625 shares of common stock outstanding as of August 31, 2016.

 

CERTAIN BENEFICIAL OWNERS
Name and address of beneficial owner	Amount and nature of beneficial ownership	Percent of class
VIP Worldnet, Inc. 800 E. Charleston Blvd Las Vegas, NV 89104	15,009,450 (1)	41.76
Willy L. Ung 3961 E. Chandler Blvd. Phoenix, AZ 85048	1,875,000	5.21
(1) VIP Worldnet, Inc. holds 15,000,000 shares and its affiliates beneficially own 9,450 shares.

 

MANAGEMENT
Name of beneficial owner	Amount and nature of beneficial ownership	Percent of class
Gary J. Grieco	3,750,000	10.43
Gregory W. Albers	37,500	Less than 1%
Directors and officers as a group	3,787,500	10.54

 

 

SECTION 4 – MATTERS RELATED TO ACCOUNTANTS AND FINANCIAL STATEMENTS

 

ITEM 4.01 CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANTS

 

On August 31, 2016, Bingham Canyon Corporation dismissed Pritchett Siler & Hardy, P.C., as our independent registered public accounting firm. Pritchett Siler & Hardy, P.C. had audited our financial statements for the fiscal years ended December 31, 2015 and 2014 and its report, dated March 3, 2016, was modified only as to the uncertainty of our ability to continue as a going concern. Except for this modification, the report did not contain an adverse opinion, disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles.

 

Our board of directors approved the dismissal of Pritchett Siler & Hardy, P.C. and there were no disagreements between the Company and Pritchett Siler & Hardy, P.C. on any matter regarding accounting principles or practices, financial statement disclosure, or auditing scope or procedure during the two fiscal years ended December 31, 2015 and 2014 or any subsequent interim period preceding the date of dismissal.

 

There were no reportable events (as that term is used in Item 304(a)(1)(v) of Regulation S-K) between the Company and Pritchett Siler & Hardy, P.C. occurring during the two fiscal years ended December 31, 2015 and 2014 or any subsequent interim period preceding the date of dismissal.

 

On August 31, 2016, the Company engaged Sadler, Gibb & Associates, LLC, Certified Public Accountants, as our independent registered public accounting firm. The decision to engage Sadler, Gibb & Associates, LLC was approved by our board of directors and during the two most recent fiscal years ended December 31, 2015 and 2014, and through the date of engagement, neither Bingham nor anyone on our behalf consulted with Sadler, Gibb & Associates, LLC regarding either:

 

(i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, and neither a written report was provided to us nor oral advice was provided that Sadler, Gibb & Associates, LLC concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or

(ii) any matter that was either the subject of a disagreement or a reportable event.

 

We provided a copy of this Current Report on Form 8-K to Pritchett Siler & Hardy, P.C. prior to filing this report and we requested that Pritchett Siler & Hardy, P.C. furnish a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with the statements made in this report. Pritchett Siler & Hardy, P.C. has furnished the requested letter and it is attached to this report as exhibit 16.1 

 

SECTION 5 – CORPORATE GOVERNANCE AND MANAGEMENT

  

ITEM 5.06 CHANGE IN SHELL COMPANY STATUS

 

As explained more fully in Items 1.01 and 2.01 above, Bingham was a "shell company" (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended) immediately before the closing of the Exchange Agreement. As a result of the Share Exchange, Paradigm became our wholly-owned subsidiary and became our main operating business. As a result, we believe that the Share Exchange has caused Bingham to cease to be a shell company. For information about the Share Exchange, please see the information set forth above under Items 1.01 of this Current Report and as reported in Bingham’s Form 10-Q for the period ended June 30, 2016, filed on August 15, 2016, which information is incorporated herein by reference.

 

 

CORPORATE GOVERNANCE

 

Directors and Executive Officers

 

Our directors and executive officers and their respective ages, positions, term of office and biographical information are set forth below. Our bylaws require at least two directors to serve for a term of one year or until they are replaced by a qualified director. Our executive officers are chosen by our board of directors and serve at its discretion. There are no existing family relationships between or among any of our executive officers or directors.

 

Name	Age	Position Held	Director Term
Gary J. Grieco	75	Director and President	From August 10, 2016 until next annual meeting.
Gregory W. Albers	67	Director and Secretary/Treasurer	From April 1, 2016 until next annual meeting.

 

Gary J. Grieco -- Pursuant to the Exchange Agreement Mr. Grieco was appointed to serve as a Director and as President of Bingham on August 10, 2016. He currently serves as a Director for Paradigm and from June 2014 to the present he serves as the President of Paradigm and has served as Secretary of that company since June 2012. He also served as Paradigm’s Chief Financial Officer from June 2012 to June 2014. His responsibilities have included sales, marketing and testing of the Paradigm technologies and seeking additional technology for the company to license. He supervises four employees and two outside consultants. In addition, for the past 25 years he has served as President of 3GC, Ltd. He attended the University of Buffalo and studied securities analysis at the New York Institute of Finance and New York University.

 

Mr. Grieco’s experience as a director and officer of Paradigm and his knowledge and experience with the products and operations of Paradigm should assist our Board with future decisions regarding the development of the Paradigm subsidiary.

 

Gregory W. Albers – Mr. Albers was appointed to fill a vacancy on our Board and to serve as Secretary/Treasurer on April 1, 2016. He is the President and Chief Executive Officer of Life Insurance Buyers, Inc., a life insurance brokerage. Since 1995 to the present, Mr. Albers has worked in the viatical and life settlement industry and, based on his experience, he has testified as an expert regarding that industry’s issues in Kansas legislative committees. Prior to 1995 he worked as an independent life broker and a New England Life Insurance Company insurance agent. He earned a Bachelor’s degree in Business from Kansas State University.

 

Mr. Albers experience owning and operating his own insurance business may prove helpful in management of our subsidiary’s operations. Prior to his appointment, Mr. Albers has not had any related party transactions with the Company or its affiliates and he has no family relationship with any current executive officer or director of the Company.

 

During the past ten years none of our executive officers have been involved in any legal proceedings that are material to an evaluation of their ability or integrity; namely: (1) filed a petition under federal bankruptcy laws or any state insolvency laws, nor had a receiver, fiscal agent or similar officer appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing; (2) been convicted in a criminal proceeding or named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) been the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from or otherwise limiting his/her involvement in any type of business, securities or banking activities; or (4) been found by a court of competent jurisdiction in a civil action, by the SEC or the Commodity Futures Trading Commission to have violated any federal or state securities law, and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated.

 

Meetings and Committees of the Board of Directors

 

Bingham did not hold formal meetings of the Board during the year ended December 31, 2015. Bingham is a small reporting company with a minimal number of directors and officers who have active roles in our operations. As a result, we do not have a standing compensation or nominating committee, nor do we have an audit committee with an audit committee financial expert serving on that committee. Our entire Board acts as our compensation, nominating, and audit committee. As the Company grows we anticipate that the Board will form separate compensation and audit committees, with the audit committee including an audit committee financial expert.

 

Board Leadership Structure and Role in Risk Oversight

 

Our Board is primarily responsible for overseeing our risk management processes. The Board receives and reviews periodic reports from management, auditors, legal counsel and others, as considered appropriate regarding our Company’s assessment of risks. Our Board is apprised of material risks by management and the Board evaluates how these risks interrelate, how they affect the Company, and how management addresses those risks. The Board focuses on the most significant risks facing our Company and our Company’s general risk management strategy. While the Board oversees our Company, the management of the Company and Paradigm are responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing our Company and that our Board leadership structure supports this approach.

 

Board Diversity

 

While we do not have a formal policy on diversity, our Board considers diversity to include the skill set, background, reputation, type and length of business experience of our Board members, as well as a particular nominee’s contributions to that mix. Although there are many other factors, the Board seeks individuals with industry knowledge and experience, senior executive business experience, and legal and accounting skills.

 

Board Independence

 

At the Closing Date, neither of the Company’s current Directors are independent as defined by NASDAQ Stock Market Rule 5605(a)(2). This rule defines persons as “independent” who are neither officers nor employees of the company and have no relationships that, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out their responsibilities as directors.

 

Code of Ethics

 

Since Bingham has a small number of persons serving as directors and executive officers, we have not adopted a code of ethics for our principal executive and financial officers. Our Board will revisit this issue in the future to determine if, and when, adoption of a code of ethics is appropriate. In the meantime, our management intends to promote honest and ethical conduct, full and fair disclosure in our reports to the SEC, and comply with applicable governmental laws and regulations.

 

 

INDEMNIFICATION OF OFFICERS AND DIRECTORS

 

Pursuant to Nevada Revised Statutes Section 78.7502 and 78.751, Bingham’s Articles of Incorporation and bylaws provide for the indemnification of present and former directors and officers and each person who serves at our request as our officer or director. Indemnification for a director is mandatory and indemnification for an officer, agent or employee is permissive. We will indemnify such individuals against all costs, expenses and liabilities incurred in a threatened, pending or completed action, suit or proceeding brought because such individual is our director or officer. Such individual must have conducted himself in good faith and reasonably believed that his conduct was in, or not opposed to, our best interest. In a criminal action he must not have had a reasonable cause to believe his conduct was unlawful. This right of indemnification shall not be exclusive of other rights the individual is entitled to as a matter of law or otherwise. We will not indemnify an individual adjudged liable due to his negligence or wilful misconduct toward us, or if he improperly received personal benefit. Indemnification in a derivative action is limited to reasonable expenses incurred in connection with the proceeding. Also, we are authorized to purchase insurance on behalf of an individual for liabilities incurred whether or not we would have the power or obligation to indemnify him pursuant to our bylaws. Our bylaws provide that directors may receive advances for expenses if the individual provides a written affirmation of his good faith belief that he has met the appropriate standards of conduct and he will repay the advance if he is judged not to have met the standard of conduct.

 

SECTION 9 – FINANCIAL STATEMENTS AND EXHIBITS

 

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

 

(a)

Financial Statements of Business Acquired.

 

Paradigm’s unaudited financial statements for the six month period ended June 30, 2016 are attached to this Current Report as Exhibit 99.1. Paradigm’s audited financial statements for the years ended December 31, 2015 and 2014 are attached to this Current Report as Exhibit 99.2.

 

(b)

Pro Forma Financial Information.

 

Bingham’s pro forma condensed combined financial statements for the six month period ended June 30, 2016 and for the year ended December 31, 2015 are attached to this Current Report as Exhibit 99.3.

 

(c)

Shell Company Transactions.

 

Reference is made to Items 9.01(a) and 9.01(b) and the exhibits referred to therein which are incorporated herein by reference.

 

(d)

Exhibits.

 

Exhibit No.	Description
2.1	Securities Exchange Agreement between Bingham and Paradigm Convergence Technologies Corp., dated August 10, 2016 (Incorporated by reference to exhibit 2.1 to Form 10-Q filed August 15, 2016)
3(i)	Articles of Incorporation of Bingham Canyon (Incorporated by reference to exhibit 3.1 to Form 10-SB, filed September 18, 2000)
3(ii)	Bylaws of Bingham Canyon (Incorporated by reference to exhibit 3.3 to Form 10-SB filed September 18, 2000)
16.1	Letter of agreement from Pritchett Siler & Hardy, P.C., dated August 31, 2016
99.1	Paradigm unaudited financial statements for the six month period ended June 30, 2016 and 2015
99.2	Paradigm audited financial statements for the years ended December 31, 2015 and 2014
99.3	Bingham pro forma condensed, combined financial statements for the year ended December 31, 2015 and six month period ended June 30, 2016

 

 

SIGNATURES

 

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

 

Date: September 1, 2016		Bingham Canyon Corporation
	By:	/s/ Gary J. Grieco
		Gary J. Grieco, President