Quarterly report pursuant to sections 13 or 15(d)

Acquisition of Assets

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Acquisition of Assets
 3 Months Ended
Sep. 30, 2013
Business Combinations [Abstract]  
Business Combination Disclosure [Text Block]
Note 4 Acquisition of Assets
 
On January 30, 2013, the Company closed on an asset purchase agreement with the Chapter 7 Estate of PR Pharmaceuticals, Inc. (PRP).   Pursuant to the agreement, the Company acquired certain tangible and intangible assets in exchange for $400,000 in cash plus an initial deposit of $100,000 paid to the Chapter 11 Trustee of PRP which is included in the purchase price, plus contingent consideration up to a maximum amount of $44,000,000.  
 
As the purchase was treated as an asset acquisition, the value assigned for the assets acquired was based on the estimated fair value of the assets and liabilities.  The allocation of the price paid in cash is as follows:
 
Material inventory
 
$
223,000
 
Fixed assets
 
 
264,000
 
Intangible assets
 
 
13,000
 
 
 
$
500,000
 
 
The contingent consideration is payable in the following amounts, upon the occurrence of the following events:
 
·
Two million dollars ($2,000,000) related to the initiation of Phase 2b clinical studies for a multi-day injectable insulin, payable 30 days after the first dosing of a patient in a formal Phase 2b clinical study;
 
·
Two million dollars ($2,000,000) to be paid within 30 days after the exclusive license of the multi-day injectable insulin in the United States to a commercial pharmaceutical company.
 
·
Five million dollars ($5,000,000) after the initiation of Phase 3 clinical studies for the multi-day injectable insulin by the Company or a licensee of the Company, payable 30 days after the first dosing of a patient in a formal Phase 3 clinical study.
 
·
Ten million dollars ($10,000,000) upon the approval by the FDA or EMEA to allow the marketing and sales of the multi-day injectable insulin by the Company or a licensee of the Company, payable 30 days after the receipt of the approval letter or notice from the FDA or EMEA.
 
·
Twenty five million dollars ($25,000,000) if the twelve month cumulative sales of the multi-day injectable insulin by the Company or a licensee of the Company reaches five hundred million dollars ($500,000,000) in any given twelve consecutive month period, so long as such period occurs during the life of the patents included in the purchased assets, payable 90 days after the twelfth month in which sales equaled or exceeded five hundred million dollars.
 
All contingent consideration events must occur within five years of the closing of the asset purchase agreement.  If an event is not reached within five years, no remaining contingent consideration would be required to be paid.   No contingent events have occurred through the report date.