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Capital Pro-Egaux Inc. Due Diligence Report
Company Overview: Pro-Égaux and its wholly-owned subsidiary, Technique d’Usinage Sinlab Inc. (“Sinlab”), specialize in the licensing of titanium products for the dental implant prosthetics restoration market.
Common Shares: 4,195,077
Insider Holdings: 1,636,309 (39% as per the last information circular filed this year)
Options: 419,508 exercisable at $0.10
Note: Most liabilities mentioned are “deferred revenue” which is actually revenue received, but cannot be posted as income yet. See definition: accountingcoach.com
Accounts Receivable: $28,839
Advance to a shareholder: $18,000
Prepaid Expenses: $1,564
Intangible Assets: $42,553
Total Assets: $433,245
Deferred revenue(current): $695,479
Promissory Note: $670,747
Deferred Revenue(non current):$231,826
Total Liabilities: $1,728,933
2017 Income Statement(6 Months)
Net Income: $266,998 or $0.064 earnings per share
2016 Yearly Income Statement(Audited Annual)
Net Income: $706,595 or $0.17 earnings per shares
2014 Yearly Income Statement(Audited Annual)
Net Income: $237,922 or $0.057 earnings per shares
Capital Pro MD&A Highlights from most recent Quarter(ending August 31 2016)
Note: The MD&A on Sedar is very long, this is a strictly highlights.
During the first and second quarters of fiscal 2017, the Company main activities were related to the follow up of the malpractice lawsuit as described in the next section of this MD&A. Also the Company concentrates its effort on pursuing smaller but numerous potential counterfeiters in all countries where our various patents have been validated by the signed licenses.
During the second quarter of fiscal 2017, the Company signed two new licence Agreements. On June 29th, 2016, the subsidiary of the Company, Sinlab entered into a Patent License Agreement with Cybermed Inc. (“Cybermed”). As part of the agreement, Sinlab granted Cybermed and all resellers and users of Cybermed products, a worldwide, irrevocable, non-exclusive, fully paid up, royalty free and transferable license to make, use, sell and offer to sell the inventions of the Guide Patent in the portfolio through Cybermed products and services. The terms and conditions of the Agreement are undisclosed for confidentiality reasons.
Also on August 5th, 2016 the subsidiary of the Company, Sinlab signed a Patent License Agreement with James R. Glidewell Dental Ceramic Inc. (“Glidewell”). Under this agreement, Sinlab granted Glidewell and its affiliates and all resellers and users of Glidewell’s and its affiliates’ products and services worldwide irrevocable, non-exclusive, fully paid up, royalty free and transferable license to make, use, sell, offer to sell and import to United States the inventions of the Licensed Portfolio. The term of these licenses are for the life of the last expiring Patent in the Licensed Portfolio. The terms and conditions of the Agreement are undisclosed for confidentiality reasons. Many other potential agreements are still under discussion as of the date of this MD&A.
As of the date of approval of this MD&A on October 21th, 2016 by the board of directors, the status of the various court actions for the protection of our patents has been summarized to reflect the final result of all of our past court actions ending with the yearly MD&A dated February 29th , 2016 and February 28th, 2015 respectively. Only the current activity is covered in the following Current Court Action section:
Further to a Board of Directors’ resolution dated December 15th, 2013, the Company announced, on December 20th, 2013, that its wholly owned subsidiary, Sinlab, has filed an action for damages it believes are the result of professional malpractice of certain former legal counsels of Sinlab in connection with matters pertaining to the announced settlements involving Delcam USA, Inc. and Delcam Holdings, Inc., Cagenix, Inc., Dentsply International Inc. and the Nobel Entities, comprised of Nobel Biocare AB; Nobel Biocare Italiana S.r.l.; Nobel Biocare Holding AG; Nobel Biocare Deutschland GmbH; Nobel Biocare Canada, Inc.; Biocad Médical Inc.; Nobel Biocare USA, LLC; and Nobel Biocare Procera, LLC.
As of the date of approval of this MD&A on October 21th, 2016, the above filed action, for damages we believes are the result of professional malpractice of certain former legal counsels of Sinlab, is proceeding as follows with very little activity in this quarter:
· Initial exchange of discovery documents completed; document discovery ongoing;
· Written discoveries still ongoing and to date, all request were answered by Sinlab Inc;
· Discovery dispute concerning Nobel confidential information has been resolved in the first quarter of fiscal 2015;
· Oral discovery (Deposition) started in February 2016 and most likely to complete by end of August/ September 2016;
· Experts for most areas have been identified and expert discovery expected to be scheduled for hearing by Court Authorities in last quarter of 2016 or, most likely, in the first half of year 2017;
· The court has placed the case in the complex litigation division;
· Defendants Murphy & King and Smith Gambrel Russel have filed counterclaims for their fees from the underlying action plus interest. Defendant SGR served a “Rule 57.105" motion arguing that the case against it is baseless. If they are successful, Sinlab would be liable for their attorneys’ fees in this action from 30 days after the date of the service. For many reasons, Sinlab considers the defendant success on the motion to be unlikely, and their claims for fees unlikely to be successful.
· Court Authorities will be placing our case on their schedule of court hearing sessions. It is expected to be sometime before the month of June 2017.
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