Important Read!
Inverness License

In December 2007, we entered into a second semi-exclusive, worldwide licensing agreement for our Serum-RECAF technology. This agreement allows Inverness to commercialize products using the Serum-RECAF technology in exchange for paying an upfront fee, royalty payments and meeting product and development milestones. Inverness is responsible for obtaining FDA approvals, and managing manufacturing, marketing, and distribution for clinical laboratory testing. The manual and POC rapid tests, as well as other applications of RECAF, are licensed on a non-exclusive basis. Inverness paid us a $1 million up-front licensing fee for the rights contained in the license agreement. Inverness has been conducting research and development on our technology and may have successfully adapted our technology to their diagnostic platform. The agreement with Inverness provides for periodic exchanges of information between the parties. Our policy is to tell them as much as we can on the technical side. Inverness, on the other hand, has been reluctant to share with us their intentions or progress on their general business strategy including manufacturing, commercialization, regulatory approval and marketing. Inverness has advised us of their intention to implement the RECAF test in a particular format (called Triage), which is not based on classic and widely known assay formats but rather on their proprietary platform. We believe their reluctance is caused in large part on their concern to protect the intellectual property relating to their proprietary diagnostic platform. Our last communication with Inverness took place in June 2009 and, at the time, they indicated that our assay was working in their facilities and generating results consistent with ours. However, they did not share those results with us or indicate what diagnostic platform they used. Inverness has also informed us that they had become self-sufficient and independent in generating the critical reagents necessary to produce the test. We do not know what Inverness intends to do next. If they have been successful in adapting our technology to their diagnostic platform, the logical next step for them would be to initiate clinical trials for the purpose of obtaining regulatory approvals, whether in the United States or elsewhere, but we have not had been able to confirm whether that is the case. Our license agreement with Inverness does not provide for any development or product milestones. However, it does provide that beginning in December 2009, we will begin to earn an annual minimum royalty of $150,000.