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
Date of
Report (Date of earliest event reported) December 4, 2009
UPSTREAM
BIOSCIENCES INC.
(Exact
name of registrant as specified in its charter)
Nevada
(State or
other jurisdiction of incorporation)
000-50331
(Commission
File Number)
98-0371433
(IRS
Employer Identification No.)
71130,
198 – 8060 Silver Spring Blvd., Calgary, Alberta T3B 5K2
(Address
of principal executive offices and Zip Code)
(403)
537-2516
Registrant's
telephone number, including area code
Suite
200 – 1892 West Broadway, Vancouver, British Columbia, Canada V6J
1Y9
(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 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))
This
current report contains forward-looking statements. These statements
relate to future events or our future business. In some cases, you
can identify forward-looking statements by terminology such as “may”, “should”,
“expects”, “plans”, “anticipates” or the negative of these terms or other
comparable terminology. These statements are only predictions and
involve known and unknown risks, uncertainties and other factors that may cause
our results, performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by these
forward-looking statements. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we cannot guarantee
future results, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.
Item
1.01 Entry into a Material Definitive Agreement.
On
December 14, 2009, our company entered into several agreements which
collectively had the effect of restructuring our business. On August
10, 2009, our company issued a press release announcing that we were actively
seeking licensors or acquirors for our novel anti-parasitic drug discovery
portfolio and cancer diagnostic platform. To that end, our company
formed an independent committee of the board to assess the strategic direction
of the company. During the four months following the issuance of the
press release, the independent board shortlisted a number of potential
candidates that may have had interest in the acquisition of our company’s
pharmaceutical business as formerly held by our subsidiary Pacific Pharma
Technologies Inc. Our independent committee contacted such
organizations but discussions did not result in any offers or agreements to
acquire such assets.
After
several months, our company continued to face challenges in raising funds due to
the continued financial downturn, especially for early-stage life sciences
companies. To this end, and as discussed in our periodic reports,
Joel Bellenson and Dexster Smith, both former directors and officers of our
company, agreed to voluntarily defer their salaries for the 2009 calendar year,
or until such time that our company completed a sizeable
financing. TCF Ventures Corp., a company through which Tim Fernback
provided services as Chief Financial Officer of our company, agreed to defer a
portion of the amounts owed to him for consulting services on the understanding
that such amounts would be repaid when our company obtained sufficient
funds. However, a dispute arose as to the terms of the deferral as
discussed under the heading “Item 7.01 Legal Proceedings with TCF
Ventures”. Following the continued downturn, low cash reserves, no
available financing, and the commencement of litigation with TCF Ventures, our
company was left with two available options. The first option was to
restructure our company, including a change of its management and board of
directors, and the second option was bankruptcy. As bankruptcy would
effectively prevent our shareholders from realizing any value in our company,
the board agreed to restructure our company. As a result, and following a
write-down of the pharmaceutical business operated by Pacific Pharma, our
wholly-owned subsidiary, we entered into the Asset Sale Agreement to transfer
such assets as described below under the heading “Asset Sale
Agreement”. Joel Bellenson and Dexster Smith then agreed to enter
into return to treasury agreements and cancel the remaining stock held by them
to treasury for no consideration. The entire board of directors and
management resigned but not before appointing Mike McFarland as sole director
and officer of our company. See the disclosure under Item 5.02 for
more information. Following the appointment of the new director, the
new board of directors intends to seek out viable business opportunities in
order to maximize shareholder value.
Asset
Sale Agreement
On
December 14, 2009, our subsidiary, Pacific Pharma, a British Columbia company,
entered into and closed an asset sale agreement with JTAT Consulting Inc., a
company wholly-owned by Art Cherkasov, a third party. Pursuant to the
terms of the agreement, Pacific Pharma sold all of the assets held by Pacific
Pharma to JTAT Consulting for the payment of $1.00. The assets
included the URL domain name www.pacificpharmatech.com, Pacific Pharma’s
patents, patent applications, and inventions, methods, processes and discoveries
that may be patentable, Pacific Pharma’s know-how, trade secrets, confidential
information, technical information, data, process technology and plans and
drawings, owned, used, or licensed by Pacific Pharma as licensee or
licensor. Prior to the sale, and following an analysis carried out by
our board of directors, our company wrote-off the assets formerly held by
Pacific Pharma. See Item 2.06 “Material Impairments” for more
information.
Return
to Treasury Agreements
In
connection with the restructuring of our company, and on December 4, 2009, we
entered into a return to treasury agreement with each of Joel Bellenson and
Dexster Smith, both former directors and officers of our
company. Pursuant to the terms of the agreements, each of Mr.
Bellenson and Mr. Smith agreed to return 8,095,470 restricted common shares to
the treasury of our company for cancellation without consideration effective
December 4, 2009. Following the share cancellations, each of Joel
Bellenson and Dexster Smith held nil shares in our company.
Option
Termination Agreements
On
December 14, 2009, Mr. Bellenson and Mr. Smith, both former directors and
officers of our company, entered into Option Termination Agreements with our
company, whereby the 400,000 options held by each person were immediately
cancelled.
Release
with Former Directors and Management
On
December 14, 2009, our company executed a mutual release with each of Mr.
Bellenson and Mr. Smith, whereby each party agreed to release the other for all
claims each party may have against the other.
Item
1.02 Termination of a Material Definitive Agreement
Please
refer to the disclosure under the heading “Option Termination Agreements” set
out in Item 1.01 of this current report on Form 8-K for more information which
is incorporated by reference under Item 1.02.
Item
2.01 Completion of Acquisition or Disposition of Assets
Please
refer to the disclosure under the heading “Asset Sale Agreement” set out in Item
1.01 of this current report on Form 8-K for more information which is
incorporated by reference under Item 2.01.
Item
2.06 Material Impairments
Our board
of directors decided to write-off the assets related to our company’s
pharmaceutical business formerly operated by our wholly-owned subsidiary Pacific
Pharma. These assets included the URL domain name
www.pacificpharmatech.com, Pacific Pharma’s patents, patent applications, and
inventions, methods, processes and discoveries that may be patentable, Pacific
Pharma’s know-how, trade secrets, confidential information, technical
information, data, process technology and plans and drawings, owned, used, or
licensed by Pacific Pharma as licensee or licensor. The board decided
to proceed with the write-down following our inability to find any potential
acquiror or licensor to purchase the assets and advance the technology and upon
deciding to cease any further research and development of this segment of our
business. Our company estimates that the write-down resulted in an
impairment charge of $234,961, offset by a related deferred income tax recovery
of $34,448. Our company does not believe that this net amount will
result in any future cash expenditures.
Item
3.02 Unregistered Sales of Equity Securities.
On
November 19, 2009, we issued 1,000,000 shares to one person. We
issued the shares upon an exemption from registration in an offering of
securities in an offshore transaction to a non US Person (as that term is
defined in Regulation S of the Securities Act of 1933), relying on Regulation S
and/or Section 4(2) of the Securities Act of 1933.
Item
5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
On
December 4, 2009, Dexster Smith resigned as our President and a director of our
company.
On
December 14, 2009, Joel Bellenson resigned as our Chief Executive Officer and a
director of our company and Dr. Geert Cauwenbergh and Jeffrey Bacha resigned as
directors of our company. On that same date Mike McFarland was
appointed director and the President, Secretary, Treasurer, Chief Executive
Officer and Chief Financial Officer of our company.
On
December 14, 2009, Dexster Smith and Joel Bellenson resigned as directors and
officers in all capacities of our subsidiary, Upstream Biosciences Inc., a
Canadian corporation. On that same date Mike McFarland was appointed
as the President, Secretary and Treasurer and a director of our subsidiary,
Upstream Biosciences Inc.
On
December 14, 2009, Joel Bellenson and Dexster Smith resigned as directors and
officers in all capacities of our subsidiary, Pacific Pharma. On that
same date, Mike McFarland was appointed as the President, Secretary and
Treasurer and a director of our subsidiary, Pacific Pharma.
Mike
McFarland
Mr.
McFarland earned his Bachelor of Science degree in 1982 and his Bachelor of
Education in 1984, both from St. Francis Xavier University. Mr. McFarland
has been in the education and teaching profession for over 25 years. Since
2005, he has been teaching at Notre Dame H.S. in Calgary, Alberta. He has
been an active investor in both private and public ventures for the past 10
years.
Family
Relationships
There
were no family relationships between Mike McFarland and any director or
executive officer or former director or executive officer of our
company.
Related
Party Transactions
Except as
disclosed herein and as disclosed in the periodic reports filed with the
Securities and Exchange Commission and available at www.sec.gov, we have not
been a party to any transaction since the beginning of our company’s last fiscal
year, or any currently proposed transaction, in which our company was or is to
be a participant and the amount involved exceeds $120,000, and in which any
related person had or will have a direct or indirect material
interest.
Item
7.01 Regulation FD Disclosure
Legal
Proceedings with TCF Ventures
As
discussed in our periodic reports, and in an effort to save costs, Joel
Bellenson and Dexster Smith agreed to voluntarily defer their salaries for the
2009 calendar year, or until such time that our company completed a sizeable
financing. Prior to August 28, 2009, we paid $150,000 annually to TCF
Ventures Corp. for consulting services primarily pertaining to the function of
Chief Financial Officer. TCF Ventures is a company beneficially owned by Mr. Tim
Fernback, our former Chief Financial Officer. On August 24, 2009, our
company received notice that TCF Ventures was terminating its management
services contract effective August 28, 2009. The notice alleged TCF Ventures’
right to terminate due to an un-rectified material breach arising from our
company’s failure to pay a portion of the compensation owing under the contract
on a timely basis. Our company denied the breach since the
compensation was voluntarily deferred by TCF Ventures.
On
September 1, 2009, TCF Ventures filed a Writ of Summons and Statement of Claim
against our company. The Statement of Claim alleged that our company
notified TCF Ventures that is would be reducing amounts payable to TCF Ventures
by 33% and that our company would eventually repay the salary owed when it had
sufficient funds. TCF Ventures accepted the deferral of salary on the
understanding that the deferral was temporary and that it would be repaid as
soon as possible. The Statement of Claim further alleged that on or
about January 2009, our company notified TCF Ventures that our company would be
deferring the salary by 50%. In response, on or about February 3,
2009, the Statement of Claim alleged that TCF Ventures delivered a written
notice to our company advising that our company was in material breach of the
agreement for failing to pay the salary. TCF Ventures claimed
judgment against our company for $68,750 plus GST for outstanding salary under
the agreement and $150,000 for severance.
On
September 22, 2009, our company filed a Statement of Defence against TCF
Ventures, whereby our company denied the allegations made against our company
and counter claimed against TCF Ventures, which counterclaim included the
following: (a) causing our company to pay GST on amounts payable to TCF
Ventures, even though the agreement did not provide for the payment of GST to
TCF Ventures; (b) failure to cause our company to deduct GST from amounts
payable to TCF Ventures and to remit such payments to the required government
authority; and (c) during the term of the agreement, Mr. Fernback caused our
company to overpay on salary payments by applying a rate of exchange between the
Canadian and US dollars that was more favourable to TCF Ventures than existing
market rates. Our company took the position that such breaches
constituted repudiation of the agreement with TCF Ventures such that our company
was entitled to treat the agreement at an end and that TCF Ventures has no cause
of action against our company for the severance. Our company further
claimed that our company was entitled to repayment of the GST paid to TCF
Ventures and the amount paid in excess of the market exchange rates, and
therefore claimed a right of set-off for such amounts against any amount held to
be owing to TCF Ventures.
|
Item
9.01
|
Financial
Statements and Exhibits
|
|
10.1
|
Return
to Treasury Agreement dated December 4, 2009 between our company and Joel
Bellenson
|
|
10.2
|
Return
to Treasury Agreement dated December 4, 2009 between our company and
Dexster Smith
|
|
10.3
|
Asset
Sale Agreement dated December 14, 2009 between Pacific Pharma Technologies
Inc. and JTAT Consulting Inc.
|
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.
UPSTREAM
BIOSCIENCES INC.
/s/ Mike
McFarland
Mike
McFarland
President,
Secretary, Treasurer, Chief Executive
Officer,
Chief Financial Officer and Director
Date: December
14, 2009