UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 28, 2005
Xenomics, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 04-3721895
- --------------------------------- -------------------
(State or other jurisdiction IRS Employer
of incorporation or organization) Identification No.)
420 Lexington Avenue, Suite 1701
New York, New York 10170
---------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (212) 297-0808
------------------------------------------------------------
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communication 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))
Item 1.01 Entry into a Material Definitive Agreement.
The information required to be disclosed in this Item 1.01 is
incorporated herein by reference from Item 3.02.
Item 3.02 Unregistered Sales of Equity Securities.
On January 28, 2005, the Company closed a private placement of
1,470,718 shares of common stock and 367,681 warrants to certain investors (the
"Investors"). The securities were sold as a unit (the "Units") at a price of
$1.95 per Unit for aggregate proceeds of approximately $2.9 million. Each Unit
consisted of one share of common stock and a warrant to purchase one quarter
share of common stock. The warrants are immediately exercisable at $2.95 per
share and are exercisable at any time within five years from the date of
issuance. The Company paid an aggregate $193,438 and issued an aggregate 123,659
warrants to purchase common stock to various selling agents. In addition, the
Company issued an aggregate 24,461 shares of common stock to certain of such
selling agents, in lieu of cash. The warrants are immediately exercisable at
$2.15 per share and will expire five years after issuance.
In connection with the offer and sale of securities to the Investors
and the selling agents, the Company relied on the exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act"), and Rule 506 promulgated thereunder. The Company believes
that the Investors and the selling agents are "accredited investors", as such
term is defined in Rule 501(a) promulgated under the Securities Act.
The Company also entered into a Registration Rights Agreement, dated as
of January 28, 2005 (the "Registration Rights Agreement"), with the Investors
pursuant to which the Company has agreed to file, within 120 days after the
closing, a registration statement covering the resale of the shares of common
stock sold to the Investors and the shares of common stock issuable upon
exercise of the Warrants issued to the Investors.
Copies of the form of Warrant issued to the Investors and the
Registration Rights Agreement are filed herewith as Exhibits 4.1 and 10.1,
respectively, and are incorporated herein by reference.
2
Item 4.01 Changes in Registrant's Certifying Accountant
On January 28, 2005, Baum & Company, PA resigned as the principal
registered independent public accounting firm of Xenomics, Inc. From January 11,
2003, the date of their appointment, to January 28, 2005, the date of their
resignation, (i) the reports of Baum & Company, PA on the Company's financial
statements as of and for the year ended January 31, 2004 and for the period
commencing April 26, 2002 (date of inception) to January 31, 2003 contained no
adverse opinion or disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope or accounting principles and (ii) there were no
disagreements with Baum & Company, PA on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of Baum & Company, PA would
have caused them to make reference thereto in their reports on the financial
statements for such years.
The Company provided Baum & Company, PA with a copy of this Current
Report on Form 8-K on February 1, 2005, prior to its filing with the SEC, and
requested that they furnish the Company with a letter addressed to the SEC
stating whether they agree with the statements made in this Current Report on
Form 8-K, and if not, stating the aspects with which they do not agree. A copy
of the letter provided by Baum & Company, PA, dated February 3, 2005, is
attached to this Form 8-K as Exhibit 16.1.
On January 28, 2005, the Company engaged Lazar Levine & Felix LLP
("LLF") as its principal independent registered public accounting firm. The
Company's audit committee has approved the appointment of LLF as the Company's
new principal independent registered public accounting firm.
Prior to engaging LLF the Company did not consult with them regarding
either:
1. the application of accounting principles to any specified
transaction, either completed or proposed, or the type of audit opinion
that might be rendered in the Company's financial statements, and
neither a written report was provided to the Company nor oral advice
was provided that LLF concluded was an important factor considered by
the Company in reaching a decision as to the accounting, auditing or
financial reporting issue; or
2. any matter that was either subject of disagreement or event, as
defined in Item 304(a)(1)(iv)(A) of Regulation S-B and the related
instruction to Item 304 of Regulation S-B, or a reportable event, as
that term is explained in Item 304(a)(1)(iv)(A) of Regulation S-B
3
Item 9.01 Financial Statements and Exhibits
(c) Exhibits.
4.1 Form of Warrant to purchase shares of Common Stock
issued in connection with the sale of the Common
Stock
10.1 Form of Registration Rights Agreement, dated as of
January 28, 2005 by and among the Registrant and the
purchasers set forth on the signature page thereto.
16.1 Letter from Baum & Company, PA Re: Change in
Certifying Accountant.
99.1 Press Release dated February 3, 2005.
SIGNATURE
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.
Dated: February 3, 2005 XENOMICS, INC.
By: /s/ V. Randy White
---------------------------
V. Randy White, Ph.D.
Chief Executive Officer
4
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS. THESE SECURITIES
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT OR LAWS.
January 28, 2005 W-______
XENOMICS, INC.
COMMON STOCK WARRANT
THIS CERTIFIES that, for value received, ____________ and its permitted
transferees hereunder (the "Holder"), is entitled to subscribe for and purchase
from XENOMICS, INC., a Florida corporation (the "Company"), up to ____ fully
paid and nonassessable shares (the "Warrant Shares") of common stock, $.0001 par
value, of the Company (the "Common Stock") at $2.95 per share (the "Warrant
Price") subject to adjustment as provided in Section 2 hereof, at any time or
from time to time during the period (the "Exercise Period") commencing on the
date hereof and ending on January 28, 2010.
SECTION 1. Exercise of Warrant. This Warrant may be exercised by the Holder as
to the whole or any lesser number of the Warrant Shares covered hereby, upon
surrender of this Warrant to the Company at its principal executive office
together with the Notice of Exercise attached hereto as Exhibit A, duly
completed and executed by the Holder, and payment to the Company of the
aggregate Exercise Price for the Warrant Shares to be purchased in the form of
(i) a check made payable to the Company, (ii) wire transfer according to the
Company's instructions or (iii) any combination of (i) and (ii). The exercise of
this Warrant shall be deemed to have been effected on the day on which the
Holder surrenders this Warrant to the Company and satisfies all of the
requirements of this Section 1. Upon such exercise, the Holder will be deemed a
shareholder of record of those Warrant Shares for which the warrant has been
exercised with all rights of a shareholder (including, without limitation, all
voting rights with respect to such Warrant Shares and all rights to receive any
dividends with respect to such Warrant Shares). If this Warrant is to be
exercised in respect of less than all of the Warrant Shares covered hereby, the
Holder shall be entitled to receive a new warrant covering the number of Warrant
Shares in respect of which this Warrant shall not have been exercised and for
which it remains subject to exercise. Such new warrant shall be in all other
respects identical to this Warrant.
SECTION 2. Adjustment of Warrant Price. If, at any time during the Exercise
Period, the number of outstanding shares of Common Stock is (i) increased by a
stock dividend payable in shares of Common Stock or by a subdivision or split of
shares of such class of Common Stock, or (ii) decreased by a combination or
reverse split of shares of Common Stock, then, following the record date fixed
for the determination of holders of Common Stock entitled to receive the
1
benefits of such stock dividend, subdivision, split-up, reverse split-up or
combination, the Warrant Price shall be proportionately reduced, in the case of
an increase in shares of Common Stock outstanding, or proportionately increased,
in the case of a decrease in shares of Common Stock outstanding, in both cases
by the ratio which the total number of shares of Common Stock to be outstanding
immediately after such event bears to the total number of shares of Common Stock
outstanding immediately prior to such event.
SECTION 3. Adjustment of Warrant Shares. Upon each adjustment of the Warrant
Price as provided in Section 2, the Holder shall thereafter be entitled to
subscribe for and purchase, at the Warrant Price resulting from such adjustment,
the number of Warrant Shares equal to the product of (i) the number of Warrant
Shares existing prior to such adjustment and (ii) the quotient obtained by
dividing (A) the Warrant Price existing prior to such adjustment by (B) the new
Warrant Price resulting from such adjustment. No fractional shares of capital
stock of the Company shall be issued as a result of any such adjustment, and any
fractional shares resulting from the computations pursuant to this paragraph
shall be eliminated without consideration.
SECTION 4. No Shareholder Rights. This Warrant shall not entitle the holder
hereof to any voting rights or other rights as a shareholder of the Company.
SECTION 5. Covenant of the Company. The Company covenants and agrees that the
Company shall at all times have authorized and reserved or shall authorize and
reserve, free from preemptive rights, a sufficient number of shares of its
Common Stock to provide for the exercise of the rights represented by this
Warrant.
SECTION 6. Investment Representations and Warranties. The Holder hereby
represents and warrants to the Company as follows:
(a) The Holder is acquiring the Warrant, and it will acquire the Common
Stock issuable upon exercise thereof, for its own account, for investment and
not with a view to the distribution thereof, nor with any present intention of
distributing the same. The Holder understands that the Warrant and Common Stock
issuable upon exercise thereof, will not be registered under the Act or
registered or qualified under any state securities or "blue-sky" laws, by reason
of their issuance in a transaction exempt from the registration and/or
qualification requirements thereof, and that they must be held indefinitely
unless a subsequent disposition thereof is registered under the Act or
registered or qualified under any applicable state securities or "blue-sky" laws
or is exempt from registration and/or qualification.
(b) The Holder understands that the exemption from registration
afforded by Rule 144 (the provisions of which are known to the Holder)
promulgated under the Act depends on the satisfaction of various conditions and
that, if applicable, Rule 144 may only afford the basis for sales under certain
circumstances only in limited amounts.
(c) The Holder has no need for liquidity in its investment in the
Company, and is able to bear the economic risk of such investment for an
indefinite period and to afford a complete loss thereof.
(d) The Holder is an "accredited purchaser" as such term is defined in
Rule 501 (the provisions of which are known to the Holder) promulgated under the
Act.
2
SECTION 7. Restrictions on Transfer. The Holder of this Warrant by acceptance
hereof agrees that the transfer of this Warrant and the shares of Common Stock
issuable upon exercise of this Warrant are subject to the following provisions:
(a) General. Subject to the requirements of the Act or any applicable
state securities laws, the Holder may sell, assign, transfer or otherwise
dispose of all or any portion of the Warrants or the Warrant Shares acquired
upon any exercise hereof at any time and from time to time. Upon the sale,
assignment, transfer or other disposition of all or any portion of the Warrants,
Holder shall deliver to the Company a written notice of such in the form
attached hereto as Exhibit B, duly executed by Holder, which includes the
identity and address of any purchaser, assignor or transferee.
(b) Restrictive Legend. Each certificate for Warrant Shares held by the
Holder and each certificate for any such securities issued to subsequent
transferees of any such certificate shall be stamped or otherwise imprinted with
legends in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR ANY RELEVANT STATE SECURITIES LAWS.
THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND APPLICABLE
STATE SECURITIES LAWS".
(c) Indemnification. Holder acknowledges that he, she or it understands
the meaning and legal consequences of the representations, warranties and
acknowledgments he, she or it has made in Section 7 and elsewhere in this
Warrant and he, she or it understands that the Company is relying upon the truth
and accuracy thereof. Accordingly, the Holder hereby agrees to indemnify and
hold harmless the Company, its officers, agents and representatives, from and
against any and all loss, damage or liability due to or arising out of a breach
of any representation or warranty of Holder contained in this Warrant.
SECTION 8. Amendment. The terms and provisions of this Warrant may not be
modified or amended, except with the written consent of the Company and the
Holder.
SECTION 9. Reorganizations, Etc. In case, at any time during the Exercise
Period, of any capital reorganization, of any reclassification of the stock of
the Company (other than a change in par value or from par value to no par value
or from no par value to par value or as a result of a stock dividend or
subdivision, split-up or combination of shares), or the consolidation or merger
of the Company with or into another corporation (other than a consolidation or
merger in which the Company is the continuing operation and which does not
result in any change or reclassification in the Warrant Shares) or of the sale
of all or substantially all the properties and assets of the Company as an
entirety to any other corporation, the Company, at its sole discretion, shall
have the right and option to (A) provide 10 days prior written notice of such
event to the Holder and this Warrant shall terminate and be of no further force
and effect on and after the effective date of such capital reorganization or
reclassification or the consummation of such consolidation, sale or merger; or
(B) provide that this Warrant shall, after such reorganization,
3
reclassification, consolidation, merger or sale, be exercisable for the kind and
number of shares of stock or other securities or property of the Company or of
the corporation resulting from such consolidation or surviving such merger or to
which such properties and assets shall have been sold to which such holder would
have been entitled if he, she or it had held the Warrant Shares issuable upon
the exercise hereof immediately prior to such reorganization, reclassification,
consolidation, merger or sale.
SECTION 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is
lost, stolen, mutilated or destroyed, the Company may, on such terms as to
indemnity or otherwise as it may in its discretion impose (which shall, in the
case of a mutilated Warrant, include the surrender thereof), issue a new Warrant
of like denomination and tenor as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated
or destroyed Warrant shall be at any time enforceable by anyone.
SECTION 11. Notices. All notices, advices and communications to be given or
otherwise made to any party to this Agreement shall be deemed to be sufficient
if contained in a written instrument delivered in person or by telecopier or
duly sent by first class registered or certified mail, return receipt requested,
postage prepaid, or by overnight courier, or by electronic mail, with a copy
thereof to be sent by mail (as aforesaid) within 24 hours of such electronic
mail, addressed to such party at the address set forth below or at such other
address as may hereafter be designated in writing by the addressee to the
addresser listing all parties:
(a) If to the Company, to:
Xenomics, Inc.
420 Lexington Avenue, Suite 1701
New York, New York 10170
Facsimile: (212) 297-1888
Attention: V. Randy White
Chief Executive Officer
and
(b) If to the Holder, to:
or to such other address as the party to whom notice is to be given may have
furnished to the other parties hereto in writing in accordance herewith. Any
such notice or communication shall be deemed to have been delivered and received
(i) in the case of personal delivery or delivery by telecopier, on the date of
such deliver, (ii) in the case of nationally-recognized overnight courier, on
the next business day after the date when sent and (ii) in the case of mailing,
on the third business day following that on which the piece of mail containing
such communication is posted. As used in this Section 11, "business day" shall
mean any day other than a day on which banking institutions in the State of New
York are legally closed for business.
4
SECTION 12. Binding Effect on Successors. Subject to Section 9 hereof, this
Warrant shall be binding upon any corporation succeeding the Company by merger,
consolidation or acquisition of all or substantially all of the Company's
assets.
SECTION 13. Descriptive Headings and Governing Law. The description headings of
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of New York (without giving effect to
conflicts of law principles thereunder).
SECTION 14. Fractional Shares. No fractional shares shall be issued upon
exercise of this Warrant. The Company shall, in lieu of issuing any fractional
share, pay the holder entitled to such fraction a sum in cash equal to such
fraction multiplied by the then effective Warrant Price.
* * *
5
IN WITNESS WHEREOF, the undersigned has caused this Common Stock
Warrant to be executed by its duly authorized officer as of the date first above
written.
XENOMICS, INC.
By: ______________________________
Name: V. Randy White
Title: Chief Executive Officer
6
Exhibit A
Form of Subscription
NOTICE OF EXERCISE
COMMON STOCK WARRANT
To: Xenomics, Inc.
The undersigned hereby elects to purchase _______ shares of Common
Stock ("Common Stock") of Xenomics, Inc., a Florida corporation, (the "Company")
pursuant to the terms of the attached Warrant, and tenders herewith payment of
the aggregate exercise price therefor and any transfer taxes payable pursuant to
the terms of the Warrant.
Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name or names as
are specified below:
Name:
-----------------------------------------------
Address:
-----------------------------------------------
IN WITNESS WHEREOF, the Warrant Holder has executed this Notice of
Exercise effective this ___ day of --------, ------.
-------------------------------
(Signature)
Exhibit B
Form of Assignment
[To be signed only upon transfer of Warrant]
For value received, the undersigned hereby sells, assigns and
transfers unto the right represented by the within Warrant to purchase _______
shares of Common Stock of XENOMICS, INC., to which the within Warrant relates,
and appoints Attorney to transfer such right on the books of XENOMICS, INC.,
with full power of substitution in the premises.
Dated: _____________________________
(Signature)
Signed in the presence of:
- ------------------------------
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of January 28, 2005 (this
"Agreement"), is made by and between XENOMICS, INC., a Florida corporation,
having its principal place of business located at 420 Lexington Avenue, Suite
1701, New York, NY 10170 (the "Company"), and each entity named on a signature
page hereto (each, an "Initial Investor") (each agreement with an Initial
Investor being deemed a separate and independent agreement between the Company
and such Initial Investor, except that each Initial Investor acknowledges and
consents to the rights granted to each other Initial Investor under such
agreement).
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of the
Subscription Agreement between the Initial Investor and the Company, the Company
has agreed to issue and sell to the Initial Investor shares of the Common Stock
and Warrants of the Company; and
WHEREAS, to induce the Initial Investor to execute and deliver the
Subscription Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), with respect to the Registrable Securities;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investor hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the following meanings:
(a) "Equity Securities" of any Person means (i) any capital stock,
partnership, membership, joint venture or other ownership or equity interest,
participation or securities in or of such Person (whether voting or non-voting,
whether preferred, common or otherwise, and including any stock appreciation,
contingent interest or similar right) and (ii) any option, warrant, security or
other right (including debt securities) directly or indirectly convertible into
or exercisable or exchangeable for, or otherwise to acquire directly or
indirectly, any stock, interest, participation or security described in clause
(i) above
(b) "Investor" means the Initial Investor and any permitted transferee
or assignee who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof and who holds Registrable Securities.
(c) "Potential Material Event" means any of the following: (i) the
possession by the Company of material information not ripe for disclosure in a
registration statement, which shall be evidenced by a determination in good
faith by the Board of Directors of the Company that disclosure of such
information in the registration statement would be detrimental to the business
and affairs of the Company or (ii) any material engagement or activity by the
Company which would, in the good faith determination of the Board of Directors
of the Company, be adversely affected by disclosure in a registration statement
at such time; in each case where such determination shall be accompanied by a
good faith determination by the Board of Directors of the Company that the
registration statement would be materially misleading absent the inclusion of
such information.
(d) "Register," "Registered," and "Registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(e) "Registrable Securities" means (i) Common Stock held by the
Investors as of the date hereof, including the shares of Common Stock issuable
upon exercise of the Warrants and (ii) any Equity Securities of the Company
issued as (or issuable upon the conversion or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution with respect
to, in exchange for or in replacement of the shares referenced in clause (i)
above, excluding in all cases, however, (a) any Registrable Securities that have
been previously sold pursuant to a registration statement filed and declared
effective by the SEC, (b) Registrable Securities that have been sold by a Person
in a transaction in which his or her rights under this Section 1 are not duly
assigned as provided herein, (c) any Registrable Securities after such
securities have been sold in a Public Sale.
(f) "Registration Statement" means a registration statement of the
Company under the Securities Act covering Registrable Securities on Form S-3, if
the Company is then eligible to file using such form, and if not eligible, on
Form SB-2 or other appropriate form.
(g) "Effective Date" means the date the SEC declares a Registration
Statement covering Registrable Securities and otherwise meeting the conditions
contemplated hereby to be effective.
(h) "Public Sale" means a sale of securities pursuant to a registration
statement declared effective under the Securities Act or to the public through a
broker, dealer or market maker pursuant to the provisions of Rule 144 (or any
similar provision then in effect) adopted under the Securities Act.
2. Registration.
(a) Mandatory Registration. The Company shall prepare and file with the
SEC, as soon as possible after the final Closing Date but no later than one
hundred twenty (120) days after the Closing Date (the "Required Filing Date"),
either a Registration Statement or an amendment to an existing Registration
Statement, in either event registering for resale by the Investor a sufficient
number of shares of Common Stock for the Initial Investors to sell the
Registrable Securities, but in no event less than the number of shares equal to
2
the Registrable Securities at the time of filing of such Registration Statement
(or such lesser number as may be required by the SEC). The Registration
Statement shall include the Registrable Securities, and shall also state that,
in accordance with Rule 416 and 457 under the Securities Act, it also covers
such indeterminate number of additional shares of Common Stock as may become
issuable to prevent dilution resulting from stock splits, or stock dividends.
The Company will use its reasonable best efforts to cause such Registration
Statement to be declared effective on a date (the "Initial Effective Date")
which is no later than the earlier of five (5) days after oral or written notice
by the SEC that it may be declared effective or two hundred seventy (270) days
after the Closing Date.
(b) Payments by the Company.
(i) If the Registration Statement covering the Registrable
Securities is not filed in accordance with the terms of this Agreement with the
SEC by the Required Filing Date, the Company will make payment to the Initial
Investor in such amounts and at such times as shall be determined pursuant to
this Section 2(b).
(ii) The amount (the "Periodic Amount") to be paid by the
Company to the Initial Investor shall be determined as of each Computation Date
(as defined below) and such amount shall be equal to one eighth percent (1/8%)
of the Purchase Price for the period from the date following the Required Filing
Date to the first relevant Computation Date, and thereafter to each subsequent
Computation Date, in each case prorated on a daily basis. By way of illustration
and not in limitation of the foregoing, if the Registration Statement is not
filed until one hundred eighty (180) days after the final Closing Date, the
Periodic Amount will aggregate one-quarter percent (1/4%) of the Purchase Price
(1/8% for days 121-150, plus 1/8% for days 151-180).
(iii) Upon demand therefor by the Investor, each Periodic
Amount will be payable by the Company, at the Company's option, in cash or in
common stock of the Company (which if issued shall be deemed to be Registrable
Securities pursuant to this Agreement) to the Investor (1) on the earlier of the
thirty-first day after the Required Filing Date, and (2) on the earlier of (A)
each thirtieth day thereafter or, (B) the third business day after the date the
Registration Statement is filed. Any common stock of the Company issued pursuant
to this Section 2(b)(iii) shall be valued at the closing bid price of the
Company's common stock as reported by the OTC Bulletin Board (or Nasdaq if the
common stock is then quoted on Nasdaq) on the day preceding the Investor's
demand or if the common stock is not trading on the OTC Bulletin Board (or
Nasdaq) the common stock of the Company shall be valued at a price determined in
good faith by the Board of Directors of the Company.
(iv) The parties acknowledge that the damages which may be
incurred by the Investor if the Registration Statement is not filed by the
Required Filing Date, including if the right to sell Registrable Securities
under a previously effective Registration Statement is suspended may be
difficult to ascertain. The parties agree that the Periodic Amounts represent a
reasonable estimate on the part of the parties, as of the date of this
Agreement, of the amount of such damages.
3
(v) Notwithstanding the foregoing, the amounts payable by the
Company pursuant to this provision shall not be payable (A) to the extent any
delay in the filing of the Registration Statement occurs because of an act of,
or a failure to act or to act timely by the Initial Investor or its counsel, or
(B) in the event all of the Registrable Securities may be sold pursuant to Rule
144 or another available exemption under the Act without volume or other
restrictions or limits.
(vi) "Computation Date" means (A) the date which is the
earlier of (1) thirty (30) days after the Required Filing Date or (2) the date
after the Required Filing Date on which the Registration Statement is filed
(with respect to payments due as contemplated by Section 2(b)(i) hereof) and (B)
each date which is the earlier of (1) thirty (30) days after the previous
Computation Date or (2) the date after the previous Computation Date on which
the Registration Statement is filed (with respect to payments due as
contemplated by Section 2(b)(i) hereof).
3. Obligations of the Company. In connection with the registration of
the Registrable Securities, the Company shall do each of the following:
(a) Prepare promptly, and file with the SEC by the Required Filing Date
a Registration Statement with respect to not less than the number of Registrable
Securities provided in Section 2(a) above, and thereafter use its reasonable
best efforts to cause such Registration Statement relating to Registrable
Securities to become effective by the Initial Effective Date and keep the
Registration Statement effective at all times during the period (the
"Registration Period") continuing until the earliest of (i) the date that is two
(2) years after the last day of the calendar month following the month in which
the relevant Effective Date occurs, (ii) the date when the Investors may sell
all Registrable Securities under Rule 144 without volume or other restrictions
or limits or (iii) the date the Investors no longer own any of the Registrable
Securities, which Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading;
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period, and, during the Registration Period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement;
(c) Permit a single firm of counsel designated by the Initial Investors
to review the Registration Statement and all amendments and supplements thereto
a reasonable period of time (but not less than three (3) business days) prior to
their filing with the SEC, and not file any document in a form to which such
counsel reasonably objects;
4
(d) Notify each Investor and such Investor's legal counsel identified
to the Company and which has requested by written notice to the Company that it
receive such notification ("Investor's Counsel") and any managing underwriters
immediately (and, in the case of(i)(A) below, not less than three (3) business
days prior to such filing) and (if requested by any such person) confirm such
notice in writing no later than one (1) business day following the day (i)(A)
when a Prospectus or any Prospectus supplement or post-effective amendment to
the Registration Statement is proposed to be filed; (B) whenever the SEC
notifies the Company whether there will be a "review" of such Registration
Statement; (C) whenever the Company receives (or a representative of the Company
receives on its behalf) any oral or written comments from the SEC in respect of
a Registration Statement (copies or, in the case of oral comments, summaries of
such comments shall be promptly furnished by the Company to the Investors); and
(D) with respect to the Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the SEC or any other
Federal or state governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional information; (iii) of the
issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Registrable Securities or the
initiation of any proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any proceeding for such
purpose; and (v) of the occurrence of any event that to the best knowledge of
the Company makes any statement made in the Registration Statement or Prospectus
or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. In
addition, the Company shall furnish the Investor's Counsel with copies of all
intended written responses to the comments contemplated in clause (C) of this
Section 3(d) not later than one (1) business day in advance of the filing of
such responses with the SEC so that the Investors shall have the opportunity to
comment thereon;
(e) Furnish to each Investor and such Investor's Counsel (i) promptly
after the same is prepared and publicly distributed, filed with the SEC, or
received by the Company, one (1) copy of the Registration Statement, each
preliminary prospectus and prospectus, and each amendment or supplement thereto,
and (ii) such number of copies of a prospectus, and all amendments and
supplements thereto and such other documents, as such Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor;
(f) As promptly as practicable after becoming aware thereof, notify
each Investor of the happening of any event of which the Company has knowledge,
as a result of which the prospectus included in the Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
5
statements therein, in light of the circumstances under which they were made,
not misleading, and use its best efforts promptly to prepare a supplement or
amendment to the Registration Statement or other appropriate filing with the SEC
to correct such untrue statement or omission, and deliver a number of copies of
such supplement or amendment to each Investor as such Investor may reasonably
request;
(g) As promptly as practicable after becoming aware thereof, notify
each Investor who holds Registrable Securities being sold (or, in the event of
an underwritten offering, the managing underwriters) of the issuance by the SEC
of a Notice of Effectiveness or any notice of effectiveness or any stop order or
other suspension of the effectiveness of the Registration Statement at the
earliest possible time;
(h) Notwithstanding the foregoing, if at any time or from time to time
after the date of effectiveness of the Registration Statement, the Company
notifies the Investors in writing of the existence of a Potential Material
Event, the Investors shall not offer or sell any Registrable Securities, or
engage in any other transaction involving or relating to the Registrable
Securities, from the time of the giving of notice with respect to a Potential
Material Event until such Investor receives written notice from the Company that
such Potential Material Event either has been disclosed to the public or no
longer constitutes a Potential Material Event.
(i) Use its reasonable efforts to secure and maintain the designation
of all the Registrable Securities covered by the Registration Statement on the
OTC Bulletin Board.
(j) Provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the Initial Effective
Date.
(k) Cooperate with the Investors who hold Registrable Securities being
offered to facilitate the timely preparation and delivery of certificates for
the Registrable Securities to be offered pursuant to the Registration Statement
and enable such certificates for the Registrable Securities to be in such
denominations or amounts as the case may be, as the Investors may reasonably
request, and, within five (5) business days after a Registration Statement which
includes Registrable Securities is ordered effective by the SEC, the Company
shall deliver, and shall cause legal counsel selected by the Company to deliver,
to the transfer agent for the Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such Registration
Statement) an appropriate instruction and, if necessary, an opinion of such
counsel; and
(l) Take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities pursuant to
the Registration Statement.
4. Obligations of the Investors. In connection with the registration of
the Registrable Securities, the Investors shall have the following obligations:
(a) It shall be a condition precedent to the obligations of the Company
to complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall furnish
to the Company such information regarding itself, the Registrable Securities
held by it, and the intended method of disposition of the Registrable Securities
held by it, as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such
6
registration as the Company may reasonably request. At least ten (10) days prior
to the first anticipated filing date of the Registration Statement, the Company
shall notify each Investor of the information the Company requires from each
such Investor (the "Requested Information") if such Investor has any Registrable
Securities included in the Registration Statement. If at least two (2) business
days prior to the filing date the Company has not received the Requested
Information from an Investor (a "Non-Responsive Investor"), then the Company may
file the Registration Statement without including Registrable Securities of such
Non-Responsive Investor;
(b) Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement; and
(c) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(f) or
3(g), above, such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f) or 3(g) and, if
so directed by the Company, such Investor shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in such Investor's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
5. Expenses of Registration. All reasonable expenses (other than
underwriting discounts and commissions of the Investor) incurred in connection
with registrations, filings or qualifications pursuant to Section 3, but
including, without limitation, all registration, listing, and qualifications
fees, printers and accounting fees, the fees and disbursements of counsel for
the Company shall be borne by the Company.
6. Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Investor who holds such Registrable Securities, the directors, if
any, of such Investor, the officers, if any, of such Investor, each person, if
any, who controls any Investor within the meaning of the Securities Act or the
Exchange Act (each, an "Indemnified Person" or "Indemnified Party"), against any
losses, claims, damages, liabilities or expenses (joint or several) incurred
(collectively, "Claims") to which any of them may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations in the Registration Statement, or any post-effective amendment
thereof, or any prospectus included therein: (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
any post-effective amendment thereof or the omission or alleged omission to
7
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, (ii) any untrue statement or alleged
untrue statement of a material fact contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof or
supplement thereto with the SEC) or the omission or alleged omission to state
therein any material fact necessary to make the statements made therein, in
light of the circumstances under which the statements therein were made, not
misleading or (iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state securities law or any rule or
regulation under the Securities Act, the Exchange Act or any state securities
law (the matters in the foregoing clauses (i) through (iii) being, collectively,
"Violations"). Subject to clause (b) of this Section 6, the Company shall
reimburse the Investors, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a) shall not (I) apply to a Claim arising out of or
based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto,
after such prospectus was made available by the Company pursuant to Section 3(c)
hereof; (II) be available to the extent such Claim is based on a failure of the
Investor to deliver or cause to be delivered the prospectus made available by
the Company or the amendment or supplement thereto made available by the
Company; (III) be available to the extent such Claim is based on the delivery of
a prospectus by the Investor after receiving notice from the Company under
Section 3(f), (g) or (h) hereof (other than a notice regarding the effectiveness
of the Registration Statement or any amendment or supplement thereto), or (IV)
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed. Each Investor will indemnify the Company and
its officers, directors and agents (each, an "Indemnified Person" or
"Indemnified Party") against any claims arising out of or based upon a Violation
which occurs in reliance upon and in conformity with information furnished in
writing to the Company, by or on behalf of such Investor, expressly for use in
connection with the preparation of the Registration Statement or the amendment
or supplement thereto, subject to such limitations and conditions as are
applicable to the Indemnification provided by the Company to this Section 6.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investors pursuant to Section
9.
(b) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be. In case any such action is brought against any Indemnified Person
or Indemnified Party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
8
and after notice from the indemnifying party to such Indemnified Person or
Indemnified Party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such Indemnified Person or Indemnified
Party under this Section 6 for any legal or other reasonable out-of-pocket
expenses subsequently incurred by such Indemnified Person or Indemnified Party
in connection with the defense thereof other than reasonable costs of
investigation, unless the indemnifying party shall not pursue the action to its
final conclusion. The Indemnified Person or Indemnified Party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and reasonable out-of-pocket expenses of such
counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the Indemnified Person or Indemnified Party provided such
counsel is of the opinion that all defenses available to the Indemnified Party
can be maintained without prejudicing the rights of the indemnifying party. The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person or Indemnified Party under this
Section 6, except to the extent that the indemnifying party is prejudiced in its
ability to defend such action. The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.
7. Contribution. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; provided,
however, that (a) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6; (b) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of such fraudulent misrepresentation; and (c)
except where the seller has committed fraud (other than a fraud by reason of the
information included or omitted from the Registration Statement as to which the
Company has not given notice as contemplated under Section 3 hereof) or
intentional misconduct, contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
8. Reports under Securities Act and Exchange Act. With a view to making
available to Investor the benefits of Rule 144 promulgated under the Securities
Act or any other similar rule or regulation of the SEC that may at any time
permit Investor to sell securities of the Company to the public without
Registration ("Rule 144"), the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
9
(c) furnish to Investor so long as Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of the Securities Act and the
Exchange Act, and (ii) such other information as may be reasonably requested to
permit Investor to sell such securities pursuant to Rule 144 without
Registration.
(d) The Company will, at the request of any Holder of Registrable
Securities, upon receipt from such Holder of a certificate certifying (i) that
such Holder has held such Registrable Securities for a period of not less than
one (1) year, (ii) that such Holder has not been an affiliate (as defined in
Rule 144) of the company for more than the ninety (90) preceding days, and (iii)
as to such other matters as may be appropriate in accordance with such Rule,
remove from the stock certificate representing such Registrable Securities that
portion of any restrictive legend which relates to the registration provisions
of the Securities Act, provided, however, counsel to Investor may provide such
instructions and opinion to the transfer agent regarding the removal of the
restrictive legend.
9. Assignment of the Registration Rights. The rights to have the
Company register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to any transferee of the Registrable
Securities only if: (a) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment, (b) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (i) the name and address of such transferee or assignee and
(ii) the securities with respect to which such registration rights are being
transferred or assigned, (c) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is
restricted under the Securities Act and applicable state securities laws, (d) at
or before the time the Company received the written notice contemplated by
clause (b) of this sentence the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions contained herein, and (e) such
transfer of Registrable Securities is completed and disclosed to the Company
prior to the Initial Effective Date. In the event of any delay in filing or
effectiveness of the Registration Statement as a result of such assignment, the
Company shall not be liable for any damages arising from such delay, or the
payments set forth in Section 2(b) hereof arising from such delay.
10. Amendment of Registration Rights. Any provision of this Agreement
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and Investors who hold a sixty-seven percent
(67%) interest of the Registrable Securities. Any amendment or waiver effected
in accordance with this Section 10 shall be binding upon each Investor and the
Company.
11. Miscellaneous.
(a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
10
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(b) Notices required or permitted to be given hereunder shall be given
in the manner contemplated by the Securities Purchase Agreement, (i) if to the
Company or to the Initial Investor, to their respective address contemplated by
the Securities Purchase Agreement, and (ii) if to any other Investor, at such
address as such Investor shall have provided in writing to the Company, or at
such other address as each such party furnishes by notice given in accordance
with this Section 11(b).
(c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) This Agreement shall be governed by and interpreted in accordance
with the laws of the State of New York for contracts to be wholly performed in
such state and without giving effect to the principles thereof regarding the
conflict of laws. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the City of New York or the
state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on forum non coveniens, to the bringing of any such proceeding in such
jurisdictions. To the extent determined by such court, either party hereto shall
reimburse the other party for any reasonable legal fees and disbursements
incurred by such party in enforcement of or protection of any of its rights
under this Agreement.
(e) If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
(f) Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
(g) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
(h) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning thereof.
(i) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by telephone line facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
11
(j) The Company acknowledges that any failure by the Company to perform
its obligations under Section 3(a) hereof, or any delay in such performance
could result in loss to the Investors, and the Company agrees that, in addition
to any other liability the Company may have by reason of such failure or delay,
the Company shall be liable for all direct damages caused by any such failure or
delay, unless the same is the result of force majeure. Neither party shall be
liable for consequential damages.
(k) This Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof This Agreement may
be amended only by an instrument in writing signed by the party to be charged
with enforcement thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
12
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
COMPANY:
XENOMICS, INC.
By:
------------------------------------
Name:
---------------------------------
Title:
--------------------------------
INITIAL INVESTOR:
[Print Name of Initial Investor]
By:
-----------------------------------
Name;
---------------------------------
Title:
--------------------------------
13
February 3, 2005 Office of the Chief Accountant- SECPS Letter File/Mail Stop 1103 Securities and Exchange Commission 450 5th Street, N.W. Washington, DC 20549 Dear Sir: This is to confirm that on January 28, 2005, Baum & Company, PA has resigned as the auditor of Xenomics, Inc. (Commission File No. 333-103083). Baum and Company, PA's report on the financial statements of Xenomics, Inc. during the fiscal year ended January 31, 2004 and for the period commencing April 26, 2002 (date of inception) to January 31, 2003, and subsequent interim period, contained no adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal year ended January 31, 2004 and for the period commencing April 26, 2002 (date of inception) to January 31, 2003, and the subsequent interim period preceding the determination to resign as principal accountant, there were no disagreements (either material or immaterial) with Xenomics, Inc. on any matter of accounting principles or practices, financial statement disclosures, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Baum and Company, would have caused it to make a reference to the subject matter of the disagreements in connection with its report. None of the "reportable events" described in Item 304 (a)(1)(v) of Regulation S-K occurred with respect to Xenomics, Inc. within the fiscal year ended January 31, 2004 and for the period commencing April 26, 2002 (date of inception) to January 31, 2003, and the subsequent interim period to the date of our resignation. Very truly yours, Joel S. Baum CPA BAUM AND COMPANY, PA
Xenomics Closes $2.9 Million Financing
Proceeds to Fund Commercialization of Proprietary Technology to Enable
New Generation of DNA-based Medical Tests
NEW YORK, N.Y. - February 3, 2005 - Xenomics, Inc. (OTCBB: XNOM), a developer of
next-generation molecular diagnostic techniques for medical and life sciences
applications, announced today the closing of a private placement financing
totaling $2.9 million. The proceeds will fund expansion of the Company's
research and commercialization of its proprietary solutions in a range of key
medical and life science markets. The announcement was made by Dr. Randy White,
CEO of Xenomics.
Xenomics is an advanced molecular diagnostic company that is developing a
proprietary technology platform that uses a safe and easily obtained urine
sample - rather than blood or tissue -- to evaluate genetic markers of disease
and medical conditions. The Company's non-invasive technology may provide a
range of significant advantages over existing DNA testing methods, including
enhanced diagnostic capabilities, ease of use, cost, speed of testing and speed
of production of results.
"This funding will enable Xenomics to continue to achieve important strategic
milestones in our efforts to develop and commercialize our proprietary
technology platform for use in the life science marketplace," said Dr. White.
"Our technology in the field of molecular diagnostics has the potential to
directly impact millions of patients. We continue to conduct important research
that may significantly improve health care and diagnostic testing options in a
range of areas, such as prenatal testing for Down Syndrome, and other medical
conditions."
The private placement consists of approximately 1.47 million units at a price of
$1.95 per unit, for aggregate proceeds totaling approximately $2.9 million. Each
Unit consists of one share of common stock and a warrant to purchase one quarter
share of common stock. The warrants are exercisable at $2.95 per share and are
exercisable at any time within five years from the date of issuance.
The common stock and warrants issued in the private placement has not been
registered under the Securities Act of 1933, as amended. Accordingly, these
securities may not be offered or sold in the United States, except pursuant to
the effectiveness of a registration statement or an applicable exemption from
the registration requirements of the Securities Act. Xenomics has agreed to file
a registration statement covering resale of the shares of common stock and the
shares underlying the warrants by the private placement investors. This press
release shall not constitute an offer to sell or the solicitation of an offer to
buy the securities. About Xenomics, Inc.
Xenomics is a molecular diagnostic company that focuses on the development of
DNA-based tests using trans-renal DNA (Tr-DNA). Xenomics' patented technology
uses safe and simple urine collection and can be applied to a broad range of
testing including: prenatal testing; tumor detection and monitoring; tissue
transplantation; infectious disease; forensic identity; drug development and
bioterrorism. Xenomics believes that its technology will open new molecular
markets. Xenomics' scientists were the first to report that a portion of DNA
from normal cell death throughout the body not only appears in the bloodstream
but crosses the kidney barrier and can be detected in urine. Xenomics has 3
issued patents covering different applications of the technology for molecular
diagnostics and genetic testing. Xenomics has organized a joint venture to
conduct research on infectious disease detection with the Spallanzani National
Institute for Infectious Diseases (Instituto Nazionale per le Malattie
Infettive) in Rome, Italy, in the form of a new R&D company called SpaXen
Italia, S.R.L.
Forward-Looking Statements
Certain statements made in this press release are forward-looking. Such
statements are indicated by words such as "expect," "should," "anticipate" and
similar words indicating uncertainty in facts and figures. Although Xenomics
believes that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations reflected in such
forward-looking statements will prove to be correct. As discussed in the
periodic reports of Xenomics, as filed with the Securities and Exchange
Commission, actual results could differ materially from those projected in the
forward-looking statements as a result of the following factors, among others:
uncertainties associated with product development, the risk that Xenomics will
not obtain approval to market its products, the risk that Xenomics' technology
will not gain market acceptance, the risks associated with dependence upon key
personnel and the need for additional financing.
Contact:
Xenomics, Inc.,
Dr. Randy White, CEO 212-297-0808