Parallax Health Sciences Inc (EDVP) SEC Annual Report (10-K) for 2012

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from o to o

Commission file number 333-166487

Copy of all Communications to:
Lawrence I. Washor
Washor & Associates
21800 Oxnard Street, Suite 790
Woodland Hills, CA 91367
(310) 479-2660

The aggregate market value of Common Stock held by non-affiliates of the Registrant as of June 30, 2012 was $3,978,851, based on a closing price of $0.05 for the Common Stock on June 29, 2012, the last business day of the Registrant's most recently completed second fiscal quarter. For purposes of this computation, all executive officers and directors have been deemed to be affiliates. Such determination should not be deemed to be an admission that such executive officers and directors are, in fact, affiliates of the Registrant.

Indicate the number of shares outstanding of each of the registrant's
classes of common stock as of the latest practicable date.

151,306,558 Common Shares issued and outstanding as of April 12, 2013

DOCUMENTS INCORPORATED BY REFERENCE

Current Report, Item 2.01 on Form 8-K filed on November 15, 2012

TABLE OF CONTENTS

PART I

I TEM 1. BUSINESS

This annual report contains forward-looking statements. These statements relate to future events or the Company's future financial performance, and include statements made by the Company regarding product development and obtaining FDA clearances. In some cases, forward-looking statements can be identified by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or 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 the Company's or its industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

The Company's financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this annual report, unless otherwise specified, all dollar amounts are expressed in United States Dollars and all references to "common shares" refer to the common shares in the Company's capital stock.

As used in this annual report, the terms "we", "us", "our" and "Endeavor" mean Endeavor Power Corporation, and its wholly-owned subsidiary, Endeavor Sciences, Inc. (formerly Parallax Diagnostics, Inc.), unless otherwise indicated.

Corporate Overview

The Company's principal executive office is located at 2 Canal Park 5th Floor, Cambridge, MA 02141, with operations at 1327 Ocean Avenue, Suite B, Santa Monica, California, 90401. The Company's telephone number is 310-899-4442.

The Company's website is www.endeavorpowercorp.com .

The Company is currently a fully reporting Company with its stock traded on the OTC Bulletin Board and the OTCQB under the symbol "EDVP".

On March 8, 2013, the Company was notified that the Securities and Exchange Commission ("SEC") had suspended the trading of the Company's securities for 10 days, until March 21, 2013. This temporary suspension of trading arose out of concerns that the Company had incorrectly stated within its public filings and press releases that certain components related to the Company's Target Antigen Detection System ("Target System") are patented, when these patents have expired.

The Company, after discussions with the SEC and with the Company's counsel, has addressed any questions raised regarding the accuracy of assertions in the Company's public filings. The Company has clarified the status of the patents in question, and the way in which the Company refers to its Target System components. The Company has also clarified that it currently has filed four patent applications with the USPTO, which are deemed "patent pending", and the Company has disclosed that there can be no assurance that the patents will be granted. For additional information on the Company's patent applications, please refer to the section entitled "Intellectual Property" contained within this Annual Report.

Pursuant to Rule 15c2-11 under the Exchange Act, at the termination of the trading suspension, no quotation may be entered unless and until the Company has strictly complied with all of the provisions of the rule, including the filing of a new Form 15c2-11 and obtaining FINRA approval to commence trading.

The Company is entitled to file its Annual Report with the SEC for the purposes of satisfying its financial reporting requirements. However, in addition to the Company's reporting obligations, the Company must have a FINRA Member Market Maker file a 15c211 with FINRA in order that the Company's shares can resume trading on the OTCBB and OTCQB markets. These actions do not impact or otherwise affect the Company's results of operations or disclosures as set out in this Annual Report. The Company believes that this Annual Report fully complies with the requirements of the Securities Exchange Act of 1934, as amended and, in accordance with generally accepted accounting principles, that it fairly presents, in all material respects, the financial condition and results of operations of the Company as at the relevant dates. The Company anticipates that it will file its new form 15c2-11 within the next 10 days.

Corporate History

Formation and Development

Endeavor Power Corporation (the "Company") was incorporated in the State of Nevada on July 6, 2005 under the name VB Biotech Laboratories, Inc. On September 21, 2007, the Company filed a Certificate of Amendment with the State of Nevada to change its operating name to VB Trade, Inc., with principal business operations to develop an online website that allowed web designers to sell their website designs in exchange for a commission on all products that were sold through the website. On September 21, 2007, the Company entered into a Plan of Merger (the "Merger") with Endeavor Uranium, Inc., a mineral exploration company with mineral properties in the northwestern United States. Effectively, the Company changed its name to Endeavor Uranium, Inc. as part of the Merger transaction. On December 23, 2008, the Company entered into a Joint Venture Agreement (the "Agreement") with Federated Energy Corporation, a Tennessee corporation, for working interests in prospective oil and gas wells located in Nowata County, Oklahoma. Effectively on December 23, 2008, the Company changed its operating name to Endeavor Power Corporation.

In November 2010, Management assessed a potential business opportunity and determined that in an effort to create value for its Shareholders, the Company should change its business direction. On November 8, 2010, the Company discontinued its operations in its working interests in oil and gas exploration and changed its operating focus to the development of E-Waste processing services aimed at industrial and government clients. The Company's new direction sought to limit the impact of discarded "E-Waste" on the environment, as discarded computers and electronic equipment pose environmental hazards.

On May 26, 2011, Mr. Alfonso Knoll resigned from all positions with the Company, including but not limited to, that of President, Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary. The resignation did not involve any disagreement with the Company. On June 8, 2011, the Company entered into a Settlement Agreement and General Mutual Release ("Settlement Agreement") to terminate Mr. Knoll's Employment Agreement dated November 8, 2010, and to accept his resignation. Pursuant to the Settlement Agreement, Mr. Knoll immediately ceased all services to the Company and, on June 11, 2011, returned to the Company any and all shares of its common stock currently held by him.

On June 2, 2011, Mr. Matthew Carley was appointed as the Company's President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director. Mr. Carley accepted the appointment, but effectively resigned his positions on September 27, 2011. The Company's Board of Directors accepted the resignation of Mr. Carley, as well as the resignation of Mr. Keith Kress as a member of the Board of Directors. Simultaneously, the Board of Directors appointed Tom Mackay as the President/Chief Executive Officer, Secretary, Treasurer/Chief Financial Officer and the sole member of the Board of Directors.

In accordance with a change in management effective September 27, 2011, the Company's business operations changed. The Company intended to change its business focus to provide managerial services, and pursue potential funding opportunities for the Company. It also retained consultants to perform due diligence on certain mining properties located in Venezuela, Brazil, Bolivia, Guyana and several other South American countries. Management, however, determined that the outcome of such due diligence did not provide the Company a viable

opportunity, nor did it provide sufficient economic benefit for the Company. Management therefore pursued other viable opportunities to increase shareholder market value.

During 2012, the Company's management entered discussions and assessed a potential business opportunity with Parallax Diagnostics, Inc., a Nevada corporation ("Parallax'), whose principal line of business is in the bio-medical sector.

About Parallax
Parallax was incorporated in the state of Delaware on December 30, 2008 under the name Roth Kline, Inc. ("Roth Kline"). In September 2010, Roth Kline acquired the exclusive rights to certain FDA 510(k) approved tests from Montecito BioSciences, Ltd., a Nevada corporation ("Montecito"), in perpetuity, in exchange for royalties and equity (the "Assignment"). In addition, Roth Kline acquired the exclusive license to Montecito's pending Patent Applications for a suite of proprietary medical devices, tests and utility processes from Montecito in perpetuity, in exchange for royalties and equity (the ‘License"). The Assignment and License agreements were modified in September 2011, to increase the royalty percentages due to Montecito (the "Modifications"). On December 29, 2010, Roth Kline changed its name to Parallax Diagnostics, Inc. On January 11, 2011 (the "Closing Date"), Parallax entered into and closed a share exchange agreement (the "Share Exchange Agreement") with ABC Acquisition Corp. ("ABC") a fully reporting Nevada corporation. On the Closing Date, pursuant to the terms and conditions of the Share Exchange Agreement, (i) ABC acquired 100% of the issued and outstanding shares of common stock of Parallax in exchange for the issuance of 21,000,000 shares of its common stock. Parallax merged with and into ABC whereupon ABC continued as the surviving entity and the corporate existence of Parallax ceased (the "ABC Merger"). Subsequent to the Closing Date, ABC changed its name to Parallax Diagnostics, Inc.

The foregoing summaries of the Assignment, License and Modification agreements are not complete and are qualified in their entirety by reference to their complete text, which are included as Exhibits 10.19, 10.20, 10.21 and 10.22, respectively, to the Company's Current Report filed on Form 8-K November 15, 2012.

On August 15, 2012, the Company entered into a non-binding Letter of Intent ("LOI") with Parallax, that outlined the terms and conditions for a proposed merger of the companies as understood by their respective boards. The terms of the LOI included, but were not limited to, an exchange of common stock, and a replacement of management. The LOI also stated that the anticipated merger take place before November 15, 2012.

The foregoing summary of the LOI is not complete and is qualified in its entirety by reference to its complete text, which is included as Exhibit 2.2 in the Company's Current Report filed on Form 8-K November 15, 2012.

On November 1, 2012, the Company, and its wholly owned subsidiary Endeavor Holdings, Inc. ("Endeavor Holdings") entered into an Agreement and Plan of Merger (the "Parallax Merger") with Parallax and the shareholders of Parallax (the "Parallax Shareholders"), whereby Endeavor Holdings acquired 100% (one hundred percent), or 24,870,000 shares, of Parallax common stock (the "Parallax Stock") from the Parallax Shareholders. In exchange for the Parallax Stock, the Company issued 90,375,750 shares of its common stock to the Parallax Shareholders. The 90,375,750 shares, issued at par value $.001, represent approximately 60% of the Company's total issued and outstanding shares. The Common Stock Purchase Agreement, and subsequent transaction closing, was completed on October 22, 2012. On October 27, 2012, the Common Stock Purchase Agreement was finalized, and a change in control of the Registrant took place.

The foregoing summary description of the terms of the Parallax Merger may not contain all information that is of interest to the reader. For further information regarding specific terms and conditions of the Parallax Merger, the complete text is included as Exhibit 2.1 to the Company's Current Report filed on Form 8-K November 15, 2012.

As a result of the transactions effected by the Merger Agreement, (i) Parallax merged with and into Endeavor Holdings whereupon Endeavor Holdings continued as the surviving entity and the corporate existence of Parallax

ceased; (ii) the former business of Parallax is now the Company's primary business, (iii) the Company's existing business activities will continue as ancillary operations, and (iv) there is a change of control whereby the former shareholders of Parallax now own a controlling 60% ownership interest in the Company on a fully diluted basis. A copy of the Articles of Merger filed with the Nevada Secretary of State on November 6, 2012, is included as Exhibit 3.3 to the Company's Current Report filed on Form 8-K November 15, 2012.

As a further condition of the Merger Agreement, the then-current officer and director of the Company, Mr. Gardner Williams, resigned from all positions, and Mr. J. Michael Redmond was appointed to serve as Chief Executive Officer and President of the Company, and also as a Director on the Board of Directors. Additionally, Ms. Calli Bucci was appointed to serve as the Company's Treasurer and Chief Financial Officer, Mr. Kyle W. Withrow was appointed to serve as the Company's Corporate Secretary, Dr. Roger Morris was appointed to serve as the Company's Chief Science Officer, and Mr. Mike Contarino was appointed to serve as the Company's Vice President. Mr. Edward W. Withrow III was appointed to serve as Executive Chairman of the Board of Directors, and Mr. Redmond, Dr. Jorn Gorlach, Mr. Anand Kumar, Mr. David Engert and Mr. E. William Withrow Jr. were appointed to serve as Directors.

On November 26, 2012, Parallax changed its name to Endeavor Sciences, Inc. ("ESI"), a wholly owned subsidiary of Endeavor Power Corporation.

NOTE : The following sections of this annual report and any further reference made to "the Company", "we", "us", "our" and "Endeavor" shall mean Endeavor Power Corporation and its wholly-owned subsidiary, Endeavor Sciences, Inc. (previously known as Parallax Diagnostics, Inc.), unless otherwise indicated.

Description of Business

The Company is a development stage company whose principal line of business is in the bio-medical sector. More specifically, the Company, through its wholly owned subsidiary, Endeavor Sciences, Inc. ("ESI"), is focused on the exploitation of a diagnostic and monitoring platform and processes.

Product Strategy and Overview

In recent years, there has been a continuing shift from the use of laboratory-based analyzers to point-of-care ("POC") tests that can be performed in a matter of minutes. Unlike the centralized clinical laboratory segment of the diagnostic market, which is mature and highly competitive, the POC market is still in its relatively early stages, According to the recent worldwide research reports, however, such as the 2010 Worldwide IVD Market, by the research firm Kalorama Information, the growth rate of the POC market continues to rise. Although certain simple, single analyte diagnostic tests have been developed, such tests have remained incapable of precise and highly sensitive quantitative measurements. As a result, medical tests that require precise quantization of the target analyte have remained the domain of immunoassay analyzers in the centralized laboratory.

Point-of-care diagnostic kits typically consist of test strips that the health care provider applies a patient's sample to and then reads the strip either visually or with an instrument in order to determine a result. They are simple to use, fast, disposable and reliable within an acceptable range. More sensitive analytes or tests requiring quantitative analysis and definitive antibody screening needed in most situations, must be sent out to a diagnostic lab, and hours or days later results arrive. These tests are comparatively complex, expensive, and time consuming; only centralized diagnostic facilities can manage sample handling and the cost of instruments and reagents. A point-of-care instrument that has the advantage of a test strip device in terms of ease of use and rapid results along with ELISA-like capabilities for major diseases would circumscribe diagnosis routinely within the course of a patient visit. This could disrupt the current model. The Company is developing just such a device that it intends to sell to doctors and health care providers.

The commercial success of the current generation of small, simple to use diagnostic devices which provide rapid results in POC applications has been limited by their inability to provide precise, highly sensitive, quantitative measurement. 

Despite these limitations, the rapid increase in discovery of individual markers of disease processes, coupled with the advancements in rapid detection technologies, has made these tools available to medical professionals on a wide scale and POC diagnostics are quickly becoming a high growth industry.

The Company believes that there is market potential for advanced POC diagnostic products that provide quick and accurate diagnosis during a patient visit, shortening the decision time to medical intervention and minimizing the need for additional patient follow-up, thereby reducing overall health care delivery costs.

The Company's Target System (the systems includes the VT-1000 Desktop Analyzer, the Target Antigen Detection Cartridge and associated reagents) technology addresses these limitations by applying sophisticated immunochemical and optical methods to detect and quantify analytes present in various human specimens, including blood, urine, and feces. Data indicates that sensitivity will be comparable to expensive and complicated laboratory-based analyzers. 

The Company also believes that there is growth opportunity for the exploitation of its Target System platform in developing nations and regions such as Africa, India, South America, Eastern Europe, Russia and Asia as well as developed markets of North America and Western Europe. One of the first initiatives to be developed for this market will combine the Company's SPARKS Mobile (a portable hand-held diagnostic analyzer based on the VT-1000 Desktop Analyzer technology, but smaller and more portable), currently in development, with a test for the monitoring of AIDS/TB patients through the use of a proprietary rapid point-of-care immunoassay CD4-CD8 test called PROMISE CD4, also in development.

The Products

Overview

The Company's existing product line includes a previously FDA-cleared VT-1000 Desktop Analyzer and more than a dozen FDA 510(k) cleared diagnostic tests.

The Company's previously FDA-cleared VT-1000 Desktop Analyzer and immunoassay system incorporates a flow-through rapid antigen test platform configuration that has the ability to produce high-performance quantitative blood test results with the ease of rapid qualitative diagnostic strips. The Company has patent applications related to its current and future products, as well as methods for future test development. The Target VT-1000 Desktop Analyzer is ideally suited for rapid development and commercialization of all new tests that may be introduced.

VT-1000 Desktop Analyzer: Quantitative and Qualitative Immunoassay

The Company's VT-1000 Desktop Analyzer was FDA 510(k) cleared and is capable of rapidly detecting qualitative and quantitative data for the Company's FDA-cleared Target Platform tests. The VT-1000 Desktop Analyzer is used for all Target Platform Tests, allowing for clinical personnel to be trained once and also gives consistent results for either qualitative or quantitative testing.

Target Antigen Detection System ("TADS")

The Target Antigen Detection System consists of a unique disposable cartridge with preloaded reagents capable of testing multiple test markers, combined with the VT-1000 Desktop Analyzer. The TADS requires a small amount of sample and provides results in minutes. The simplicity of the fully loaded disposable test cartridge and

subsequent ease-of-use of the instrument helps to alleviate the technical burden on medical staff and makes patient diagnosis more efficient.

The Company's Target Antigen Detection System is a departure from the standard devices typical to the rapid testing markets. The device is part of the manufacturer's qualitative and quantitative "Target System Diagnostics Platform," which offers an array of improved modifications and features to the traditional qualitative and semi-quantitative flow-through immunoassay test. With its platform uniformity, vacuum pump, absorption layer for sample overflow, and complete compatibility with single and multi-light source reflectometer technology, the TADS cartridge is a unique collection of tests for qualitative and quantitative detection diseases and of conditions.

The Company is currently developing the SPARKS Mobile, a hand-held analyzer unit, similar in size to a mobile phone/PDA, which will be based on the VT-1000 Desktop Analyzer (see Products in Development).

TADS Vacuum Control Flow Device

The TADS cartridge utilizes a vacuum technology to deposit specimen samples uniformly on test membranes. The Vacuum Control Flow Device provides a vacuum pump action, which reduces test time and ensures maximum contact with the membrane antibodies. This collection device allows for numerous tests to be incorporated. The vacuum specimen filtration and excess specimen absorption is built right in.

Target System Patent Status: The Target System and certain of its related components were previously issued patents by the United States Patent and Trademark Office ("USPTO"). The following previously-issued patents have expired:

The Company's Current Technology

The Company currently holds the rights to certain technology related to the VT-1000 Desktop Analyzer and the Target System, for which four patent applications have been filed and are pending with the USPTO.

The Company also retained the services of Marathon Patent Group to perform an analysis of the Company's intellectual property ("Patent Report"). The Patent Report, included in this filing as Exhibit 99.2, was issued on April 1, 2013, and was intended to inform the Company and its shareholders of the accurate and current state of the commercial patent pending coverage and, where possible, to identify the existence of novel and patentable inventions present in the current innovation initiative. The Patent Report concluded that the Company has a strong patent portfolio protecting its business, and recommended that the Company aggressively proceed with additional patent applications to protect the Company's inventions and innovations. As a result, the Company has initiated the drafting of a minimum of one (potentially two) additional USPTO and International patent applications.

There can be no assurance that the Company will be granted patents for any of the patent applications it has filed with the USPTO.

For more information on the Company's patent applications, please see the section entitled "Intellectual Property" contained within this Annual Report.

The Company's previously FDA-Cleared Tests in the area of Infectious Diseases

Rubella

Rubella, German measles, is a highly contagious disease, which is generally transmitted by direct contact with infected persons. Rubella is generally a mild disease. However, when a pregnant woman becomes infected with rubella, the virus may infect the placenta, multiply and induce serious damage to the fetus. Rubella and congenital rubella syndrome became nationally notifiable diseases in 1966. The largest annual total of cases of rubella in the United States was in 1969, when 57,686 cases were reported (58 cases per 100,000 populations). Following vaccine licensure in 1969, rubella incidence fell rapidly. By 1983, fewer than 1,000 cases per year were reported (<0.5 cases per 100,000 population). A moderate resurgence of rubella occurred in 1990-1991, primarily due to outbreaks in California (1990) and among the Amish in Pennsylvania (1991). In 2002 a record low annual total of 18 cases were reported.

Rotavirus

Human rotavirus is recognized as a major cause of gastroenteritis in infants, young children, and the elderly. During the winter months a portion of gastroenteritis in children is due to rotavirus infection. The disease manifests with the symptoms of vomiting, diarrhea, and fever. Rapid and accurate diagnosis is important to avoid inappropriate antibiotic therapy, provide proper treatment early, and to prevent spread of nosocomial infection.

Globally, rotavirus accounts for an estimated 125 million cases of diarrhea each year and represents 30% - 40% of hospitalizations for diarrhea in children less than five years. In developing countries, between 600,000 and 800,000 children die from rotavirus each year (or approximately 2,000 children each day.) This accounts for about one quarter of the deaths from diarrhea and about 5% of all deaths among children less than five years of age.

CMV- Herpes

Cytomegalovirus (CMV) is a human viral pathogen belonging to the Herpes family. Infection in humans is widespread and usually results in asymptomatic disease. However, severe symptomatic infections are a very significant risk in infants and Immuno-compromised individuals. An important primary source of such infection is via blood transfusion and allograft transfer. The serological status of donor and recipient is, therefore, important in patient management.

The United States is not unique in its high rates of CMV seroprevalence. Virtually every country in the world presents similar numbers. Since recurrences are often mild and few patients are aware that they are infected, the infection is likely to continue to rise at double-digit rates without an intervention.

Group A Streptococci: Strep A, Strep Throat, Necrotizing Fasciitis, impetigo

Strep throat is an infection of the pharynx (the part of the throat between the tonsils and the larynx) caused by streptococcus bacteria. The infection is spread by person-to-person contact with nasal secretions or saliva, often among family or household members. Even though the sore throat usually gets better on its own, people who have strep throat should take antibiotics to prevent some of the more serious complications of this infection, particularly acute rheumatic fever.

Approximately 15% of children who have a sore throat and fever are infected by Group A streptococci. CDC estimates that approximately 9,100 cases of invasive GAS disease (rate: 3.2/100,000) and 1,350 deaths occurred nationally during 2002. Disease incidence was highest among children aged <1 year (6.9/100,000) and adults aged >65 years.

Infectious Mononucleosis: EB, Epstein-Barr Viral Syndrome, Mono 

Infectious mononucleosis (IM) is a viral infection causing high temperature, sore throat, and swollen lymph glands, especially in the neck. The Epstein-Barr virus typically causes it. Infectious mononucleosis may begin slowly with fatigue, malaise, headache, and sore throat. The sore throat becomes progressively worse, often with enlarged tonsils covered with a whitish-yellow fibrinous exudate. The lymph nodes in the neck are frequently enlarged and painful. Symptoms of mononucleosis gradually subside over a period of weeks to a month. The disease is generally self-limited.

Tests Currently in Development for the Target System Diagnostic Platform

The Company is in the process of developing and obtaining FDA clearance for the following products. There can be no assurance that the Company will be successful in developing such tests or in obtaining the required FDA clearance.

HIV 1 & 2 TADS Rapid Test

Today, 42 million people are estimated to be living with HIV/AIDS. Of these, 38.6 million are adults. 19.2 million are women, and 3.2 million are children under 15. During 2002, AIDS caused the deaths of an estimated 3.1 million people, including 1.2 million women and 610,000 children under 15. With the recent advent of Rapid HIV testing, HIV detection and prevention programs around the world have become increasingly effective by reducing their time and costs of detecting the virus, thus allowing for a far greater number of individuals to be screened. The FDA has approved several rapid Immunoassay tests for the detection of HIV, but none of these tests are designed for HIV 1 and 2. The current "rate" of these "rapid" tests is from 15 minutes to hours and only a few can produce results less than 15 minutes.

The Company has an HIV 1 & 2 qualitative rapid test in development. The Company realizes that there are numerous competing HIV 1 & 2 tests but has decided to develop the test so that health care providers utilizing the Target VT-1000 Desktop Analyzer and Platform would have the opportunity to incorporate the Company's HIV 1 & 2 test into their use of the Company's platform. The Company has prepared a Clinical Trial Protocol to test the accuracy of the test and the efficacy and specificity of the results. The Company will need to secure additional capital to conduct the FDA-required trials and to prepare the test for commercialization if the FDA approves it for commercialization.

Additional Products in Development

The Company also believes that there is growth opportunity for the exploitation of the Target System platform in developing nations and regions such as Africa, India, South America, Eastern Europe, Russia and Asia as well as developed markets of North America and Western Europe.

One of the first initiatives for the development of this specific market will be to combine the SPARKS Mobile, the Company's hand-held analyzer (the portable version of its VT-1000 Desktop Analyzer), currently in development, with a test for the monitoring of HIV/AIDS patients and Tuberculosis patients, through the use of the Company's proprietary rapid POC immunoassay PROMISE CD4 quantitative test, also in development.

The Target System Hand-Held Analyzer: SPARKS Mobile

The Company's next generation Target System Analyzer, the SPARKS Mobile, a hand-held analyzer currently under development, will include a small, rapid testing format, in conjunction with a hand-held data acquisition and test reading device. The SPARKS Mobile will be a re-engineered version of the Company's previously FDA-approved VT-1000 Desktop Analyzer.

Whether searching for markers in the blood stream, or diagnosing a pathogen in urine, the Company's SPARKS Mobile will be a portable tool for rapid diagnostics. The SPARKS Mobile will also provide an improvement in POC diagnostics and applications in countries with limited health care infrastructures and geographic limitations, both of which are of paramount importance in the combat against infectious diseases and in the fight against proliferation of endemic and pandemic diseases.

This innovative SPARKS Mobile will allow for a fast (minutes instead of hours or days) performance of tests at the point-of-care, and will only require a test cartridge and a small number of ready-to-use solutions in preformatted quantities. Moreover, the SPARKS Mobile will include the ability to store patient information, test data, and QC data, and transmit data through wireless connections.

The SPARKS Mobile is being developed to:

The basic design of the Company's SPARKS Mobile is based on the same 510(k) cleared technology employed in its VT-1000 Desktop Analyzer and is compatible with existing Test Cartridges. However, a number of innovative features will be integrated into the design to meet customer and patient needs:

The SPARKS Mobile is being specifically designed to work with the Company's Target System Diagnostics Platform to provide reliable quantitative results within minutes, right at the point-of-care or site of testing. The continuity of the Company's Platform upgrades and the continuous development of new tests based on an increasing point-of-care market paradigm, points to the VT-1000 Desktop Analyzer and the SPARKS Mobile as low cost alternatives to large laboratory analyzers and specialized training of personnel on multiple machinery. The ultimate value to the clinician or the attending physician is the ease of use, reproducibility and the history of accuracy of this type of rapid immunoassay principle in the area of quantitative analysis.

PROMISE CD4: CD4-CD8 Rapid Monitoring Test

The Company has initiated the development of the CD4-CD8 monitoring rapid test using an immunoassay test the Company has named PROMISE CD4, which the Company believes has the potential to enhance the testing, monitoring and treatment of AIDS patients in developing economies such as South Africa, Sub-Saharan countries, India and other nations struggling to deal with the treatment of AIDS. The PROMISE CD4 monitoring test is being developed in conjunction with some of the leaders of research in the HIV testing community. 

AIDS Diagnostics and Immune Status

The Company's aim is to use markers for a disease progression instead of using the cell count method that is associated with and based on those markers. The PROMISE CD4 will include quantification of CD4-CD8 protein in either total blood or CD3 + pre-selected cell populations. This quantification can directly be used to assess an individual's immune status.

AIDS Immune Status: Value Proposition

The treatment of AIDS patients represents a challenge, in the developed world and much more so in developing countries. The current methodology to determine the status of an HIV-positive individual involves elaborate technologies to determine the immune status of an individual as well as the presence of the HIV virus in the individual's blood (called the "viral load").

Determination of the immune status is usually performed through so-called cell counts of T-cells, in particular the determination of CD4 + cell count or the relationship of CD4 and CD3 positive cells. This diagnostic procedure requires high-tech machinery (e.g. cell counters), and well-educated laboratory personnel in a stationary laboratory setting. In addition, the cell counting method presently employed and defined by the Western medical community as the "Gold Standard" has shortcomings, which limit its reproducibility and reliability. These factors might cause changes in diagnostic procedures even within those communities in the future. The determination of the amount of virus populating the blood of a person infected with HIV is currently performed through quantitative PCR, again a method requiring stationary settings, as well as highly educated personnel and sophisticated machinery. These setting are usually not available in developing economies. While, in the Western economic environment, the medical care of HIV positive individuals and AIDS patients involves a combination of the above mentioned medical diagnostics in combination with additional, patient dependent procedures, the situation in developing countries looks to the contrary. 

In South Africa, the country with one of the highest infection rates with HIV in the world, treatment is only available to a small number of infected people. Even under those medication-limited circumstances, treatment is usually administered without any diagnostic procedures concerning the immune status or the viral load of an individual in question, leading to unnecessary treatment of otherwise non-immuno-compromised individuals and the lack of treatment for others with AIDS at later progression. Countries like China have only recently begun to diagnose for HIV positive individuals, and have not moved into the AIDS diagnostic either. The same can be said for many other countries in Africa and Asia.

Requirements for "appropriate" AIDS diagnostics have been defined by many national and international, organizations, amongst them the World Health Organization ("WHO"), under strong influence of scientists mainly from the US and the EU. These requirements have led to the above described situation in developing counties: No appropriate diagnosis of AIDS patients caused by requirements that cannot be achieved under the given circumstances and a strong increase of HIV infection in most of these countries over the last years.

Furthermore, the lack of financial resources are limiting to the expansion of suitable points of diagnostics. Cell counts require elaborate machinery (like FACS or alike) and there are no low-cost or highly portable testing systems available to date. There is an overwhelming demand and urgent need to reduce the costs for cell counting or other methods to determine the immune status, and to increase their usefulness in non-laboratory settings. 

In addition, the geographic and social structures of many countries require a more POC oriented approach, as opposed to the dominating centralized care found in highly populated countries in North America and Europe. Therefore, it would by highly desirable to reduce the measurements used as a guide for disease progression or treatment to more simple technologies, like an ELISA performed on a handheld device or similar. 

For the Company and its efforts to design a handheld diagnostics device for optimal market use, this means:

Tests for Other Diseases

The Company's testing system is not limited to HIV or AIDS diagnostics. The test format has been applied in the past to viral and bacterial infections (e.g., Rubella, Rotavirus, Strep. A), and can easily be adopted toward other epidemics. Diseases like malaria, cholera, hepatitis, yellow fever, or West Nile virus and other viral diseases present increasing health threats to large populations in the world, with major existing problems at the stage of proper diagnosis. The Company believes that it can adapt its VT-1000 Desktop Analyzer and SPARKS Mobile to the rapid, simple, point-of-care diagnosis of almost all of these diseases without the requirement of additional equipment. Further, the Company believes that the combination of a mobile, hand-held testing device with a large number of different tests provided by a family of cartridges will improve the ability of current health care and disease diagnostics in a fast majority of today's underserved regions. In addition, the Target System Platform also allows for the monitoring of environmental components influencing the health of populations, including the presence of toxins in soil and drinking water as well as contamination of food supply.

The Company's innovative process for the development of new antibodies, which is patent pending, will also be used in the identification of test markers for its Target System Platform, adding a dimension that further distinguishes the Company from its competition. The Company believes that the innovative antibody development process will allow it to create new barriers to entry on certain antigens that it identifies by subsequent patent application filings for use in conjunction the Company's VT-1000 Desktop Analyzer and SPARKS Mobile.

Ease of Use

The Company's platform provides tremendous flexibility in sample requirements, clinician training and result interpretation. The Company's "train once" system means the clinician can now perform a number of single use

tests on a wide variety of conditions with the interpretation of results consistent through the platform paradigm. The "while you watch" speed of the test development, results in a significant cost saving in time and training.

Application and Economy of Scale

The Company's unique vacuum pump action reduces test time and ensures maximum contact with the membrane antibodies. This collection device is versatile in the number of different tests that can be incorporated. The economy of scale is provided to health care provider or any other customer group by being able to utilize a single test system for multiple tests with varies little variance in training needed. A clinician can move from one test to the next in a matter of minutes.

Furthermore, the capability of acquiring and transmitting patient related data in addition to the tests performed at the point-of-care will enable the Company's SPARKS Mobile Analyzer to become the central diagnostic device in a decentralized, patient oriented, and cost-conscious environment to provide or maintain a high level of health care in the face of threatening epidemics.

Safety and Accuracy by Design

For all tests, the Company's bar code activation system identifies the test to be analyzed, allowing only those medical personal that possess that test will be aware that it is available. Without the Company's specific Target System Test Cartridge, read by the bar code reader, the analyzer will not calibrate to that test. This precludes mistakes by the user or erroneous results by the device.

Each Test Cartridge bar code must be read to initialize the analyzer, and load the appropriate algorithm from the software table. This provides a level of security for patient related tests and eliminates errors based on operator's mistakes.

The Company provides a combination of innovative, fast, and inexpensive diagnostic and testing products with a highly mobile data collection and transfer test reader. In this regard, the Company's Target System is suitable for rapid, point-of-care testing in almost every environment, which includes emergency situations, remote locations within the US as well as other parts of the world, immediate response teams, personal testing in a home setting, and many more.

Advantageously, many different tests can be performed using the same reader, e.g., either the Company's VT-1000 Desktop Analyzer or its SPARKS Mobile, currently in development, at any location.

Mobility

The Company's mobile testing, data acquisition, and data transmission system being developed is intended to meet the needs for diagnostics in particular in areas where either no structured health care systems exist or where, due to geographic nature and population density and distribution, a more decentralized approach is necessary. The highly mobile test reader can be used in basically all environments, and will be suited to use power sources independent of an electric network (rechargeable batteries, solar panel, running on motor vehicle voltage and power supply). Furthermore, the tests can be performed within short time periods, and do not require the performing medical personnel, the physician, or the patient to return for test results or potential initiation of treatment.

New Product Screening Criteria

The Target System Platform is broken down into three categories and their associated sub-groups. The categories are:

The following list represents a general representation of targeted test to be developed in the area of infectious or highly contagious diseases:

 Raw substances as well as fully developed and commercially available disease markers and antibodies for the diseases listed above as well as many others can be purchased by the Company from a variety of sources and incorporated into the Target System Platform.

This in no way represents the complete segment of Qualitative or Semi-Quantitative tests available for rapid development on the Target System Platform.

New Product Identification

Market Opportunities

In recent years, there has been a continuing shift from the use of laboratory-based analyzers to more technologically advanced point-of-care tests that can be performed in a matter of minutes. Unlike the centralized clinical laboratory segment, which is mature and highly competitive, the point-of-care market is still a relatively early stage market. Although certain simple single analyte diagnostic tests have been developed, such tests have remained incapable of precise and highly sensitive quantitative measurements. As a result, medical tests that require precise quantization of the target analyte have remained the domain of immunoassay analyzers.

Global Statistics

The global In Vitro Diagnostics ("IVD") market was valued at $44 billion in the year 2011, growing at a CAGR of 7.8% from 2011 to 2016. The U.S. represented the biggest market for the IVD equipment's accounting for a share of 47% of the total IVD market in the year 2011. The European region accounted for 31% of the global IVD market, with Germany accounting for the largest share of 23.24%, followed by France (16.89%) and Italy (16.41%) of the total IVD market. Asia is the fastest growing region of the global market and accounts to be 22.88% of the global market and is estimated to reach the market of $17.20 billion with a CAGR 11.3% from 2011 to 2016. China is the fastest growing market within Asia and is growing at a CAGR of 18.8% to reach the market of $1.24 billion by 2016. The Asian region is expected to be ruled by the emerging economies such as China and India, showing the highest CAGR by the year 2016. The Chinese IVD market is taking frog leap amongst the emerging nations, followed by India, Russia, and Brazil.

Budget constraints causing and unfavorable reimbursement scenario for tests especially for severe conditions like cancer are prime reasons for slow growth in the U.S., and Canadian market. However, the condition is reverse in the Latin American countries like Brazil and Mexico. There has been huge funding from the Brazilian government and the public sector with increased efforts being taken to prevent infectious diseases in the country by conducting all the preventive tests.

Molecular diagnostics is the largest growing segment of the global IVD market with a highest CAGR for year 2011 to 2016. The major players in the IVD market are Roche Diagnostics (Germany), Abbott Diagnostics (U.S.), Beckman Coulter (U.S.), BD Diagnostics (U.S.), and Siemens Diagnostics (Germany).

The major driving factor for the IVD industry to boom in the emerging countries is the government funding and improved healthcare facilities. However, the condition is completely reverse in the developed countries such as North America and Eu-5 as these countries are facing major financial, thus hampering the growth of the IVD industry. The major factors driving the growth of the IVD market are:

Other major drivers for the growth of the IVD industry is rise in the number of diseases, like respiratory infections, hospital acquired infections, and sexually transmitted diseases. Similarly, rises in the chronic diseases such as diabetes, hypertension, cardiovascular diseases, and cancer are driving the overall IVD market.

Point-of-Care Diagnostics

The trend is moving toward POC diagnostics using systems and procedures, which do not require extensive laboratory equipment. Here, direct read-out technology will provide a suitable tool, which can be used in basically every environment. The global point-of-care (POC) diagnostics market reached $13.4 billion in 2010 and is expected to reach $13.8 billion in 2011. It will further grow to $16.5 billion in 2016 for a compound annual growth rate (CAGR) of 3.7% between 2011 and 2016. The growth in the POC market is expected to continue through the end of the decade.

The point-of-care market includes hospitals, clinicians, laboratories, assisted living facilities, retirement communities and geriatric facilities and the international market. The Company's system provides the platform for the development of a series of quantitative tests for important diagnostic applications that can provide results at a patient's bedside, in a doctor's office, in the emergency room, in a clinic or in an ambulance. 

The two factors that are significant to the rapid growth of POC testing are technology advancements and health care economics. The development of new and improved technologies has resulted in the ability to make evidence-based medical decisions that improve patient outcomes and reduce patient acuity, criticality, morbidity and mortality. Quicker diagnosis of infectious agents can also permit the earlier prescription of appropriate medications, thereby potentially shortening the duration of illness. 

Additionally, the economic climate is driving significant changes in the manner in which patients will be tested and how results are delivered. Recent revisions to government regulations, together with growing patient and insurer pressures on hospitals and physicians have increased incentives to reduce overall patient healthcare costs while providing a higher level of care to a greater number of patients. One cost-cutting measure is to reduce the high cost of diagnostic testing carried out in central laboratory sites.

The Target System provides the platform for the development of a series of quantitative tests for important diagnostic applications that can provide results at a patient's bedside, in a doctor's office, in the emergency room, in a clinic, in an ambulance, on the battlefield, on site agri-business locations, rural and economically disadvantaged areas. 

The Target System expects to meet the POC diagnostic market criteria as follows:

Immunoassays: Defined

Immunoassays are chemical tests used to detect or quantify a specific substance, the analyte, in a blood or body fluid sample, using an immunological reaction. Immunoassays are highly sensitive and specific. Their high specificity results from the use of antibodies and purified antigens as reagents. An antibody is a protein

(immunoglobulin) produced by B-lymphocytes (immune cells) in response to stimulation by an antigen. Immunoassays measure the formation of antibody-antigen complexes and detect them via an indicator reaction. High sensitivity is achieved by using an indicator system (e.g., enzyme label) that results in amplification of the measured product. Immunoassays may be qualitative (positive or negative) or quantitative (amount measured). An example of a qualitative assay is an immunoassay test for pregnancy. Pregnancy tests detect the presence of human chorionic gonadotropin (hCG) in urine or serum. Highly purified antibodies can detect pregnancy within two days of fertilization. Measuring the signal produced by the indicator reaction performs quantitative immunoassays. This same test for pregnancy can be made into a quantitative assay of hCG by measuring the concentration of product formed.

The purpose of an immunoassay is to measure (or, in a qualitative assay, to detect) an analyte. Immunoassay is the method of choice for measuring analytes normally present at very low concentrations that cannot be determined accurately by other less expensive tests. Common uses include measurement of drugs, hormones, specific proteins, tumor markers, and markers of cardiac injury. Qualitative immunoassays are often used to detect antigens on infectious agents and antibodies that the body produces to fight them. For example, immunoassays are used to detect antigens on Hemophilus, Cryptococcus, and Streptococcus organisms in the cerebrospinal fluid (CSF) of meningitis patients. They are also used to detect antigens associated with organisms that are difficult to culture, such as hepatitis B virus and Chlamydia trichomatis. Immunoassays for antibodies produced in viral hepatitis, HIV, and Lyme disease are commonly used to identify patients with these diseases.

Quantitative Immunoassay Analysis

Immunoassays are powerful techniques for understanding the role of specific components in complex systems. They work on the basis of the recognition of a specific component (target X) by an antibody or equivalent (affibody, RNA aptamer, recombinant antibody, etc.), which results in the production of a detectable signal. In most cases immunoassays are qualitative, providing information in terms of signal intensity. What is really wanted, however, is quantitative assay providing information in absolute chemical terms, namely the concentration of target X.

Quantitative Immunoassays would allow:

Quantitative Immunoassays are simple to construct. They require the simultaneous analysis of experimental (or test) samples and calibration standards. The signal intensity generated by calibration standards of known concentration permits conversion of the signals generated by the test samples into absolute units of concentration.

Calibration curve

A calibration curve (or standard curve) establishes the relationship between the amount of material present and the signal intensity measured. In the case of immunoassays, this would represent the relationship between the epitope concentration and the signal intensity obtained. This relationship is often non-linear, and in many applications displays a dynamic range (or response range) of approximately two orders of magnitude in the concentration of target X.

To perform a Quantitative Immunoassay, a set of "calibration standards" containing the epitope in various concentrations, are deployed in the immunoassay alongside experimental "test samples". Densitometry is performed on all data from the assay, and curve fitting used to define the relationship between epitope concentration and signal intensity. This mathematical relationship is then used to convert the signals generated by experimental samples into concentration of target X, which in the Company's experience is highly accurate.

Molecular Identity of Calibration Standards

For Western Blot applications, a calibration standard is a molecule which contains the epitope feature of an immunoassay covalently bonded to a protein of known molecular weight. Two configurations of this structure are possible (Figure 1), where the epitope structure is either linked to the amino acid backbone (Fig 1a) in the form of a fusion protein or linked to a side chain of a specific amino acid (Fig 1b).

Figure 1

Figure 1 : Schematic representation of calibration standard molecules.

A set of calibration standards to common epitope tags (His6, c-myc, HA, FLAG, AU1, AU5, glu-glu,) was analyzed by SDS-PAGE/Western blotting (detected via the His6 tag). A single band of 55kDa was detected, and the intensity of signal decreased with decreasing calibration standard loading as expected (Figure 2).

Figure 2

Figure 2 : Immunodetection of a serial dilution of His6-calibration standard.

Densitometry of the data was performed and the data plotted to define the relationship between epitope amount and signal intensity (Figure 3). Mathematical fitting of the data was performed, with the best fit achieved by "one site-specific binding" analysis (GraphPad Prism) as shown in Figure 3. An excellent fit of the data was achieved using 6 calibration standard concentrations each analyzed in quadruplicate. Similar excellent fits could also be achieved by analysis of fewer standards, with indistinguishable results obtained from 3 calibration standard samples analyzed in triplicate.

Figure 3

Figure 3 : Mathematical description of a calibration curve.

To determine the epitope concentration of an experimental sample, the mathematical description of the calibration curve is rearranged to calculate epitope concentration from raw signal intensity. Figure 4 displays the quantitative measurement of three "test" samples. Test samples of 2pmol and 0.5 pmol were analyzed and the results obtained were 2.153± 0.127 pmol (mean ± standard error, n=4), 0.552± 0.045 pmol (mean ± standard error, n=4),

confirming the accuracy of the measure (Figure 4). Samples should only be analyzed which fall within the calibration range, as errors are higher for observations beyond the confines of the calibration curve e.g. 0.125 pmol in this example.

Figure 4

Figure 4 : Accuracy of Quantitative Immunoassays.

In summary, Quantitative Immunoassays are easy to construct and offer several valuable benefits to the researcher. They permit calculation of the absolute concentration of the component of study with high accuracy (error <10%) and high reproducibility. This enhances the quality of research results and also the productivity of research programs by facilitating the direct comparison of data obtained on separate occasions.

The Immunoassay Market

Overview

Immunoassays have been used since the mid-1960's by hospitals, laboratories and research facilities. With the widespread usage of blood and other biological specimen tests for disease and medical condition diagnoses, there is a growing need for new and better technologies to achieve fast and accurate test results. Though the traditional laboratory testing of blood samples has been an acceptable form of screening for certain conditions for quite some time, it has only been in the last twenty years that rapid POC qualitative (yes/no) and semi quantitative (based on predetermined cutoff levels) testing has become an acknowledged source of accurate information. 

Rapid Immunoassay Test

With continuing breakthroughs in detectable markers in the body that can identify the presence of a growing number of diseases and conditions, coupled with the advancements in rapid detection technologies, the tools available to medical professionals is quickly becoming a booming industry.

Rapid immunoassays generally come in two configurations: Lateral Flow and Flow-Through. Examples of the rapid immunoassay test are the home pregnancy test and the on-site drug screening test. While both of these examples are based on urine specimens, many of the new rapid screening devices have been developed to use blood as the specimen. The different types of rapid immunoassay test include:

Lateral Flow Tests

A popular testing method used by both professional and over-the-counter tests, the lateral flow test is quick and efficient. Depending on the specific test kit, a sample of urine, whole blood, blood plasma, and in some cases

feces, may be mixed with diluting substances, reactive agents or other solutions that are provided for the conduct of the test. Most of the tests are classified as solid phase enzyme immunoassays.

Most home pregnancy tests utilize lateral-flow technology, whereby urine is absorbed through the exposed sample application pad and is allowed (by natural wicking) to migrate to the analytical membrane and react with an embedded agent designed to change color if hormones associated with pregnancy are present in the urine. This is a direct specimen application and does not require dilution or other agents to be added for results to appear. The typical finished product in general use encases all but the application pad in plastic with view openings for the test line or dot and the control line.

Lateral flow devices have been used for home pregnancy tests, drugs of abuse testing in clinical laboratories and, more recently, for home use. Manufactured in continuous membrane strips cut to the desired length and batch tested for accuracy, the manufacture of test kits is highly automated and inexpensive, making lateral flow tests well suited for mass market applications.

Lateral flow devices, however, can suffer in performance when the sample being tested is not handled within strict conditions. Test samples may be affected by environmental conditions (barometric pressure, temperature and humidity), thereby requiring special care in sample preparation, exact dilution controls and controlled time for the test to develop properly. Test development time, for example, can vary from a few minutes (3 to 5) for urine-based tests and up to 20 minutes for whole blood or plasma.

Solid Phase Tests

Solid phase assays include the so-called "dipstick" or "dipstick comb" tests. As its title suggests, the detection materials are in a solid state affixed to a solid, non-porous base. The dipstick is then incubated with the patient's specimen.

The solid phase tests use urine, saliva, serum, plasma, or whole blood as its specimen and the same patient can be tested for multiple parameters with a single assay. Results are usually provided in an hour or less. The sensitivity and accuracy is generally lower than the flow through and lateral flow tests.

Agglutination Test

The basic principle of an agglutination test is the formation of clumps (agglutination) of small particles coated with antigens when exposed to antibodies specific for the antigen. The test particles and the patient antibodies combine to form a visible precipitate. This usually is observed under a microscope.

Some of the advantages of the agglutination test are that its individual test cost is low, the results are semi-quantitative, and it takes a relatively short time to obtain results. However, results can vary as the test reaction depends upon careful control of the test re-agents and environmental conditions. The sensitivity/accuracy is lower than the flow through or lateral flow tests.

Flow-Through Immunoassay

The flow through test procedure requires a number of steps, and includes a vacuum device that deposits fluid containing the test sample through a porous membrane and into an absorbent pad. A second layer, or sub-membrane, inhibits the immediate back-flow of fluids, which can obscure results.

Positive, uniform deposition of test samples on a membrane containing selected diagnostic reagents provides for a flexible, inexpensive and reproducible platform technology to test for a large number of diseases.

The flow-through platform technology can be used to detect both antibodies and antigens. To perform the test, a sample is applied to the membrane followed by a wash step, the addition of the signal reagent, and a second wash to clear the membrane. The solutions can be added as rapidly as the previous liquids are absorbed into the cassette.

The time it takes for a test to display results is subject to the viscosity of the sample, which can be affected by environmental conditions, such as humidity and barometric pressure, further interfering with the time the test takes is the amount of sample used.

Limitations

Each of the screening devices described above have limitations in their utility and range of application. Many screening devices have been adopted from their use in clinical laboratories and, when applied to POC application, required special handling of the specimen samples (blood, urine, and feces) and decreased sensitivity and/or specificity.

Competition

There are approximately 40 to 50 companies in the point-of care ("POC") diagnostic industry in the U.S. and approximately another 100 outside the U.S. The POC space can be broken down into various sub-sets such as molecular biologist developing reagents, and markers to diagnostic equipment and test development companies, as well as companies who do neither and focus on marketing tests, equipment and assays. Most notably in the POC space are the large pharmaceutical companies such as Bayer, Roche, Abbot Labs and others. The Company's specific competitive landscape is tied to its patent pending process involving its SPARKS Mobile Analyzer and Target System Platform In-Vitro Tests. There are a number of companies developing mobile devices to perform a host of health industry-related services and the Company believes that more companies will enter the mobile diagnostic space in the next few years. The industry has yet to develop a standardized point of care immunoassay platform for any device to be integrated into. The goal of the Company's SPARKS Mobile Analyzer is to deliver a device that adds immediate value to health providers, patients and health insurance companies. The Company's primary goal is to create a mobile platform that could integrate and utilize the flow-through process of the Company's Target System Platform and offer the healthcare provider a system that is fully interoperable and ubiquitous with a potentially large number of in vitro tests. There are other test platforms in the space but the Company has filed a patent on the process of its SPARKS Mobile Analyzer and its TADS Cartridge. There can be no assurance that the Company's POC device will prove to be competitive with the other POC devices under development.

Until the Company secures a minimum of two million dollars ($2,000,000) of additional capital to operate for the next eighteen months the Company will remain highly vulnerable from the Company's competition. The Company anticipates the need for a minimum of an additional four million ($4,000,000) dollars of investment capital will be required for it to achieve its goal of developing a commercially viable rapid point of care CD4-8 immune status test and its proposed mobile SPARKS Mobile version of its FDA Approved VT 1000 Desktop Analyzer. There can be no assurance that such amount will prove adequate to develop the Company's products. Furthermore, the Company's competition has significant resources that it can deploy and anytime to head off competition.

In Vitro Diagnostic Sales Leaders

Top Medical Device Manufacturers

Barriers to Use

The main barriers and constraints to the use of rapid diagnostic tests can be put into three main categories:

Intellectual Property

The Company's products include a previously FDA-cleared VT-1000 Desktop Analyzer and more than a dozen previously FDA 510(k)-cleared tests. The Company holds the rights in perpetuity to a number of pending USPTO Patent Applications on the Company's products, as well as methods for future test development.

USPTO and International Patent Pending Applications:

The Company acquired exclusive rights in perpetuity to certain USPTO Patent Applications in the area of Infectious Diseases through a License Agreement with Montecito BioSciences, Ltd. The Company is currently prosecuting its pending USPTO Patents Applications under the following applications numbers:

For further information on the exclusive license of these Patent Applications, and the complete text of the License Agreement and subsequent Modification, please refer to Exhibits 10.20 and 10.22, respectively, to the Company's Current Report filed November 15, 2012 on Form 8-K, which is incorporated by reference.

The Company considers its US Patent Application US 11/924,033 "Portable Apparatus for Improved Sample Analysis" an important Patent Application for the potential protection of its Test Platform and its mobile version of its VT-1000 Desktop Analyzer. The US Patent Application US 11/924,033 "Portable Apparatus for Improved Sample Analysis" was filed to protect the process of testing with the Company's Target Antigen Detection System Cartridge and a mobile version of the Company's VT-1000 Desktop Analyzer. Currently, Patent Application US 11/924,033 is the only Patent Application that the Company has sought to protect outside of the U.S. However, the Company intends to seek Intellectual Property protection for all of its products, both domestically and internationally. Moreover, the Company intends to seek Intellectual Property protection for all supporting products such as novel biomarker candidates, antibodies, proteins, and diagnostic tests surrounding the Company's core indication areas, in order to create a barrier to entry for its competitors.

The Company retained the services of Marathon Patent Group to perform an analysis of the Company's intellectual property ("Patent Report"). The Patent Report, included in this filing as Exhibit 99.2, was issued on April 1, 2013, and was intended to inform the Company and its shareholders of the accurate and current state of the commercial patent pending coverage and where possible to identify the existence of novel and patentable inventions present in the current innovation initiative. The Patent Report concluded that the Company has a strong patent portfolio protecting its business, and recommended that the Company aggressively proceed with additional patent applications to protect the Company's inventions and innovations. As a result, the Company has initiated the drafting of a minimum of one (potentially two) additional USPTO and International patent applications.

There can be no assurance that the Company will be granted patents for any of the patent applications it has filed with the USPTO.

USPTO Patent Applications Abstracts

Following are the Company's Patent Application Abstracts, which provide information on the methods and practice underlying Company's pending the Patent Application(s):

Expired Patents :

The Target System and certain of its related components were previously issued patents by the USPTO. The following previously-issued patents have expired:

The Company's Previously FDA-Cleared Tests

The Company acquired the exclusive rights in perpetuity to the following FDA-approved 510(k) tests (the "Tests") through an Assignment Agreement with Montecito BioSciences, Ltd.:

For further information on the exclusive rights to these Tests, and the complete text of the Assignment Agreement and subsequent Modification, please refer to Exhibits 10.19 and 10.21, respectively, to the Company's Current Report filed November 15, 2012 on Form 8-K, which is incorporated by reference.

It is expected that after successful re-introduction of the Target System and the introduction of its novel PROMISE CD4 immune status test, additional tests will be developed and protected by the Company. Generally, the Company and Montecito BioSciences, Ltd. will own improvements to the basic technology platform in exclusivity.

Trademarks

The Company will also utilize trademark applications to protect its Intellectual Property that may not be suitable for patent protection. Unlike patent applications, which in many cases must be filed in advance of a particular date, there is no specific date by which a trademark application must be filed. Instead, the time constraint is in a different direction. In the United States an ordinary so-called "use" trademark application can only be filed after the goods or services have been in interstate commerce.

Government Regulations

The long legal journey toward medical device regulation began with the Pure Food and Drugs Act of 1906. Medical devices were not included, as no one envisioned how technology would grow increasingly complex, and would ultimately require regulation.

The Medical Device Amendments of 1976 gave FDA authority to ensure the safety and effectiveness of a range of life-saving medical devices, while also protecting the public from fraudulent devices. The Amendments:

Subsequent legislation strengthened the FDA's regulatory authority. The following table identifies the legislation and significance for the Major Medical Device:

The least burdensome provision allows industry and FDA to consider the least burdensome appropriate means of evaluating a device's effectiveness when there is a reasonable likelihood of its approval. The intent is to help expedite the availability of new device technologies without compromising scientific integrity in the decision-making process or FDA's ability to protect the public health. This provision does not lower the standard for premarket clearance.

Medical Devices: Defined

The definition has several components. A medical device:

FDA's Center for Devices and Radiological Health regulates companies that design, manufacture, repackage, relabeling, and/or import medical devices into the United States. The agency does not regulate the practice of medicine – how and which physicians can use a device. The only exception is FDA's regulation of mammography facilities under the Mammography Quality Standards Act.

Combination Products

Combination products are therapeutic and diagnostic products that combine drugs, devices, and/or biological products. The term acknowledges the role technological advancements have made in merging medical product types. Examples of combination products include a drug-eluting stent, a nicotine patch, and surgical mesh with antibiotic coating, prefilled syringes, and a steroid-eluting pacing lead.

Combination products raise regulatory challenges because they involve components that were normally regulated under different types of authorities and often by different FDA Centers. Differences in regulatory pathways for each component can affect the regulatory processes for all aspects of product development and management, including preclinical testing, clinical investigation, marketing applications, manufacturing and quality control, adverse event reporting, promotion and advertising, and post-approval modifications.

Three classes of regulatory control

The three device classes are based on the degree of regulatory control necessary to ensure their safety and effectiveness:

FDA Review of Medical Devices

Investigational Device Exemptions (IDE)

An IDE allows an investigational device to be used in a clinical study to collect the safety and effectiveness data required for a Premarket Approval (PMA) application or a Premarket Notification (510(k)) submission to FDA. Both FDA and an Institutional Review Board (IRB) must approve clinical studies with devices of significant risk before the study can begin. Studies with devices posing non-significant risk must be approved by an IRB before the study can begin.

FDA observes a 30-day review period for IDE applications. The agency focuses its review on the data provided to demonstrate the safety and anticipated benefits of the device for use in humans, as well as the scientific validity of the proposed clinical trial protocol. 

Following clinical studies, a device's journey to market can take one of four major pathways:

Premarket Notification (510(k))

510(k) is required when demonstrating substantial equivalence to a legally marketed device, when making significant modifications to a marketed device, and when a person required to register with FDA introduces a device for the first time. If a device requires the submission of a 510(k), it cannot be commercially distributed until the FDA authorizes it.

Substantial Equivalence

A device is substantially equivalent (SE) if it has the same intended use and same technological characteristics as a legally marketed device, known as the predicate. A legally marketed device:

Applicants must compare their device to one or more similar legally marketed devices and make and support their SE claims. If the device is SE to a predicate, it is placed in the same class. If it is not SE, it becomes non-SE and is placed into Class III.

Examples of 510(k)s include x-ray machines, dialysis machines, fetal monitors, lithotripsy machines, and muscle stimulators.

Premarket Approval (PMA)

PMA refers to the scientific and regulatory review necessary to evaluate the safety and effectiveness of Class III devices or devices that were found not substantially equivalent to a Class I or II predicate through the 510(k) process.

PMA is the most involved process. To reasonably assure that a device is safe and effective, PMA requires valid scientific evidence that the probable benefits to health from the intended use of a device outweigh the probable risks, and that the device will significantly help a large portion of the target population. Sources of valid scientific evidence may include well controlled investigations, partially controlled studies, historical controls, well documented case histories by qualified experts, and robust human experience.

Independence is an important concept for PMAs, meaning that each PMA should establish the safety and effectiveness of the device under review, and that data about one device cannot be used to support another. Examples of PMAs include digital mammography, minimally invasive and non-invasive glucose testing devices, implanted defibrillators, and implantable middle ear devices.

Summary Comparison of 510(k) and PMA

Humanitarian Device Exemption (HDE)

An HDE is a device that is intended to benefit patients by treating or diagnosing a disease or condition that affects fewer than 4,000 individuals in the United States per year. HDEs are exempt from requirements to demonstrate effectiveness. Still, they must pose no unreasonable risks, or at least the probable benefits should outweigh the risks. And the device must be used at a facility with an Institutional Review Board.

HDEs provide a powerful incentive for device manufacturers to develop devices that help diagnose or treat patients with rare conditions. Otherwise, a company's research and development costs would likely exceed the market returns for serving such small patient populations.

Examples of HDEs include a fetal bladder stent, iris replacement, radioactive microspheres for cancer treatment, and semi-constructed finger joints.

Post-Approval Studies

The FDA can impose requirements at the time of approval of a PMA or HDE, or by regulation afterwards. One requirement may be the need for post-approval studies. The CDRH Post-Approval Studies Program helps ensure that well designed post-approval studies are conducted effectively and efficiently and in the least burdensome manner. Post-approval studies should not be used to evaluate unresolved premarket issues that are important to the initial establishment of device safety and effectiveness.

With post-approval studies, FDA can evaluate device performance and potential problems when the device is used more widely than in clinical trials and over a longer period of time. This allows FDA to build in accountability and gather essential post market information, including:

Manufacturing

The Company does not intend to manufacture in house for at least three years, with the exception of prototype and small batch production of tests for clinical trials and in-house testing. The Company is required to use manufacturers who operate under Good Manufacturing Practices ("GMP").

A GMP is a production and testing practice that helps to ensure a quality product. Many countries have legislated that pharmaceutical and medical device companies must follow GMP procedures, and have created their own GMP guidelines that correspond with their legislation. Basic concepts of all of these guidelines remain more or less similar to the ultimate goals of safeguarding the health of the patient as well as producing good quality medicine, medical devices or active pharmaceutical products. In the U.S. a drug may be deemed adulterated if it has passed all of the specifications tests but is found to be manufactured in a condition which violates current good manufacturing practice guidelines. Therefore, complying with GMP is a mandatory aspect in pharmaceutical manufacturing.

Although there are a number of them, all guidelines follow a few basic principles:

Food & Drug Administration ("FDA") and International Regulatory recognition of GMP [1]

GMPs are enforced in the United States by the US FDA, under Section 501(B) of the 1938 Food, Drug, and Cosmetic Act (21 USCS § 351). The regulations use the phrase "current good manufacturing practices" ("cGMP") to describe these guidelines. Courts may theoretically hold that a drug product is adulterated even if there is no specific regulatory requirement that was violated as long as the process was not performed according to industry standards. As of June 2010, a different set of cGMP requirements apply to all manufacturers of dietary supplements.

The World Health Organization ("WHO") version of GMP is used by pharmaceutical regulators and the pharmaceutical industry in over one hundred countries worldwide, primarily in the developing world. The European Union's GMP enforces similar requirements to the WHO GMP, as does the Food and Drug Administration's version in the US. Similar GMPs are used in other countries, with Australia, Canada, Japan, Singapore, Philippines and others having highly developed/sophisticated GMP requirements. In the United Kingdom, the Medicines Act (1968) covers most aspects of GMP in what is commonly referred to as "The Orange Guide", which is named so because of the color of its cover; it is officially known as Rules and Guidance for Pharmaceutical Manufacturers and Distributors .

Since the 1999 publication of GMPs for Active Pharmaceutical Ingredients , by the International Conference on Harmonization (ICH), GMPs now apply in those countries and trade groupings that are signatories to ICH (the EU, Japan and the U.S.), and applies in other countries (e.g., Australia, Canada, Singapore) which adopt ICH guidelines for the manufacture and testing of active raw materials.

[1] Source: " Guideline Versions ", Good Manufacturing Practices, Wikipedia, 2012.

Distribution

As the Company is still in the development stages and has not yet commenced commercial operations, it has yet to develop methods of distribution for its products beyond the business plan stage.

In order to commercially sell the Company's VT-1000 Desktop Analyzer, the Company must have it manufactured under GMP. The Company can and will provide demonstrations of its VT-1000 Desktop Analyzer capabilities to potential customers.

The Company will need to secure additional capitalization before it can acquire additional antibody markers, produce additional Target System cartridges or produce its VT-1000 Desktop Analyzer under GMP.

Principal Suppliers

Corder Engineering, LLC : Located in Chesterton, Indiana, Corder Engineering provides the Company with engineering services related to the Company's medical testing equipment, and manufactured the Company's evaluation units, including software, hardware and instrumentation.

Meyers Stevens Group, Inc. : Located in Montebello, California, Meyers Stevens Group manufactures and supplies the Company's diagnostic assays related to the Company's medical testing equipment.

The Company relies upon these suppliers to provide all of its test cartridges and materials used in association with the development of its products. If these suppliers were to cease providing test cartridges and materials to the Company, the Company's ability to develop its products may be adversely affected.

Facilities

In addition to its corporate headquarters, the Company maintains operations at 1327 Ocean Avenue Suite B, Santa Monica, California 90401.

Employees

As of December 31, 2012, the Company had no employees, in addition to its directors and executive officers.

The Company currently has no employees, in addition to its directors and executive officers.

Research and Development

The Company has incurred $0 and $75,194 during 2012 and 2011, respectively, in expenditures relating to the research and development of its proprietary medical diagnostic equipment, including costs for consultants, costs to develop and manufacture prototype units, and assays, costs to conduct clinical trials, and costs incurred to develop new products.

Reports to Security Holders

The Company is not required to deliver an annual report to its stockholders, but will voluntarily send an annual report, together with the Company's annual audited financial statements upon request. The Company is required to file annual, quarterly and current reports, proxy statements, and other information with the Securities and Exchange Commission. The Company's Securities and Exchange Commission filings are available to the public over the Internet at the SEC's website at www.sec.gov.

The public may read and copy any materials filed by the Company with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The Company is an electronic filer. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The Internet address of the site is www.sec.gov.

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.

None.

The Company's principal executive offices are located at 2 Canal Park 5 th Floor Cambridge, MA 02141, with operations at 1327 Ocean Avenue, Suite B, Santa Monica, CA 90401. The Company currently rents the Canal Park space for approximately $300 a month, and sub-leases the Ocean Avenue space for $1,000 per month. Currently, this space is sufficient to meet the Company's needs. However, once the Company expands its business to a significant degree, it will require additional space. The Company does not currently own any real estate.

The Company knows of no material, existing or pending legal proceedings against it, nor is the Company involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which its director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to its interest.

The Company's Common Stock is quoted on the OTC Bulletin Board "OTCBB – U.S. Registered" under the trading symbol EDVP.OB. The following table sets forth the high and low bid prices for its Common Stock per quarter as reported by the OTCBB since the Company began trading. These prices represent quotations between dealers without adjustment for retail mark-up, markdown or commission and may not represent actual transactions.

The high and low prices of the Company's common shares for the periods indicated below are as follows:

The Company's common stock is subject to rules adopted by the Commission regulating broker dealer practices in connection with transactions in "penny stocks." Those disclosure rules applicable to "penny stocks" require a broker dealer, prior to a transaction in a "penny stock" not otherwise exempt from the rules, to deliver a standardized list disclosure document prepared by the Securities and Exchange Commission. That disclosure document advises an investor that investment in "penny stocks" can be very risky and that the investor's salesperson or broker is not an impartial advisor but rather paid to sell the shares. The disclosure contains further warnings for the investor to exercise caution in connection with an investment in "penny stocks," to

independently investigate the security, as well as the salesperson with whom the investor is working and to understand the risky nature of an investment in this security. The broker dealer must also provide the customer with certain other information and must make a special written determination that the "penny stock" is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. Further, the rules require that, following the proposed transaction, the broker provide the customer with monthly account statements containing market information about the prices of the securities.

On March 8, 2013, the Company was notified that the Securities and Exchange Commission ("SEC") had suspended the trading of the Company's securities for 10 days, until March 21, 2013. This temporary suspension of trading arose out of concerns that the Company had incorrectly stated within its public filings and press releases that certain components related to the Company's Target Antigen Detection System ("Target System") are patented, when these patents have expired.

The Company, after discussions with the SEC and with the Company's counsel, has addressed any questions raised regarding the accuracy of assertions in the Company's public filings. The Company has clarified the status of the patents in question, and the way in which the Company refers to its Target System components. The Company has also clarified that it currently has filed four Patent Applications with the USPTO, which are deemed "patent pending", and the Company has disclosed that there are no guarantees that the patents will be granted. For additional information on the Company's patent applications, please refer to the section entitled "Intellectual Property" contained within this Annual Report.

Pursuant to Rule 15c2-11 under the Exchange Act, at the termination of the trading suspension, no quotation may be entered unless and until the Company has strictly complied with all of the provisions of the rule, including the filing of a new Form 15c2-11 with FINRA. If any party has any questions as to whether or not the Company has complied with the rule, they should contact the staff in the Division of Trading and Markets, Office of Interpretation and Guidance, at (202) 551-5777.

The Company is required to file its Annual Report with the SEC for the purposes of satisfying its financial reporting requirements. However, in addition to the Company's reporting obligations, the Company must have a FINRA Member Market Maker file a 15c211 with FINRA in order that the Company's shares can resume trading on the OTCBB and OTCQB markets. These actions do not impact or otherwise affect the Company's results of operations or disclosures as set out in this Annual Report. The Company believes that this Annual Report fully complies with the requirements of the Securities Exchange Act of 1934, as amended and, in accordance with generally accepted accounting principles, that it fairly presents, in all material respects, the financial condition and results of operations of the Company as at the relevant dates. The Company anticipates the filing of a new Form 15c2-11 within the next 10 days.

These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for its common stock. Many brokers may be unwilling to engage in transactions in its common stock because of the added disclosure requirements, thereby making it more difficult for stockholders to dispose of their shares.

Record Holders

The Company's common shares are issued in registered form. Action Stock Transfer Corp., 2469 E. Fort Union Blvd., Suite 214, Salt Lake City, UT 84121 (Telephone 801-274-1088, Facsimile 801-274-1099) is the registrar and transfer agent for the Company's common shares.

As of December 31, 2012, pursuant to Action Stock Transfer Corp., the shareholders' list of the Company's common shares showed 51 registered shareholders and 151,063,898 shares outstanding. The total number of shares outstanding stated in the Action Stock Transfer Corp. list of 151,063,898, which includes all common shares that have been recorded by the Company.

As of December 31, 2012, an aggregate of 835,803 shares of the Company's preferred stock were issued and outstanding and are held by 4 shareholders. All preferred shares are convertible into the Company's common stock at a conversion ratio of 20 shares of common stock and 20 warrants for each preferred share held (see Warrants).

Re-Purchase of Equity Securities

None.

Dividends

The Company has not declared any dividends on its common stock since the Company's inception. There is no restriction in the Company's Articles of Incorporation and Bylaws that will limit its ability to pay dividends on its common stock. However, the Company does not anticipate declaring and paying dividends to its shareholders in the near future. 

Dividends are payable semi-annually on the Company's preferred stock at a rate of 7% per annum. Dividends may be paid in kind, at the option of the Company, to the extent that if the Company is not legally permitted to distribute cash dividends, it shall pay dividends in the form of preferred shares equal to the amount of the dividend. No dividends have been declared on the Company's preferred stock.

Equity Compensation Plan Information

On June 30, 2010, the board of directors of the Company adopted the 2010 Employee Stock Option Plan (the "2010 Plan"). Under the 2010 Plan, 2,800,000 restricted shares of common stock have been reserved for issuance upon exercise of options granted from time to time under the stock option plan. The 2010 plan is intended to assist the Company in securing and retaining key employees, directors and consultants by allowing them to participate in the Company's ownership and growth through the grant of incentive and non-qualified options. Under the 2010 Plan, the Company may grant incentive stock options only to key employees and employee directors, or the Company may grant non-qualified options to employees, officers, directors and consultants. Subject to the provisions of the 2010 Plan, the board of directors will determine who shall receive options, the number of shares of common stock that may be purchased under the options.

On October 1, 2010, the Company, under the 2010 Plan, granted the CEO of the Company qualified stock options to purchase 1,375,000 shares of the Company's common stock at $0.10 per share for a period of 10 years. The options, which vested quarterly over a period of 18 months, were valued at $137,500, and have been fully expensed. On November 30, 2010, the Company, under the 2010 Plan, granted two officers of the Company qualified stock options to purchase 300,000 shares of the Company's common stock at $0.25 per share for a period of 5 years. The options, which vested quarterly over a period of 18 months, were valued at $75,000, and have been fully expensed. On January 11, 2011, the Company, under the 2010 Plan, granted two consultants qualified stock options to purchase 225,000 shares of the Company's common stock at $0.25 per share for a period of 5 years. The options, which vest quarterly over a period of 18 months, were valued at $56,250, and have been fully expensed. On February 28, 2011, the Company, under the 2010 Plan, granted the former Chief Financial Officer of the Company qualified stock options to purchase 50,000 shares of the Company's common stock at $0.25 per share for a period of 5 years. The options, which vest quarterly over a period of 18 months, were valued at $12,500, and have been fully expensed, but were subsequently cancelled due to the holder's death in October 2012. In connection with the total options granted, $281,250 was recorded as deferred compensation and amortized over a 12 to18 month period.

On March 26, 2011, the Company adopted and approved the 2011 Equity Incentive Plan ("the 2011 Plan"), wherein twenty million (20,000,000) restricted shares of common stock were reserved for issuance. The 2011 Plan was intended to assist the Company in securing and retaining key employees, directors and consultants by allowing them to participate in the Company's ownership and growth through the grant of incentive and non-qualified options. The 2011 Plan is currently administered by the Company's board of directors. Subject to the provisions of the plan, the board will determine who shall receive options, the number of shares of common stock that may be purchased under the options. Under the 2011 Plan, no options have been granted.

As of December 31, 2012, the Company has granted options to purchase a total of 1,900,000 shares. In connection with the options granted, a total of $281,250 was recorded as deferred compensation.

Warrants

Prior to the Parallax Merger, and in connection with the issuance of 230,000 shares of preferred stock, warrants were issued to purchase 4,600,000 shares of common stock. Of these warrants, 4,000,000 were issued at an exercise price of $1.00 per share, and 600,000 were issued at an exercise price of $1.50 per share. The number of shares of common stock underlying the warrants and the exercise price were subject to adjustment upon certain events.

As part of the Merger Agreement, the warrants were adjusted at an exchange ratio of 3.633926 warrants for each warrant. As a result, the 4,600,000 warrants were converted to 16,716,061 warrants. In addition, the $1.00 exercise price was adjusted to $0.27518 per share, and the $1.50 exercise price was adjusted to $0.41278 per share:

As of December 31, 2012, the Company had 16,716,061 warrants issued and outstanding.

Purchase of Equity Securities by the Issuer and Affiliated Purchasers

The Company did not purchase any shares of its common stock or other securities during the year ended December 31, 2012.

Recent Sales of Unregistered Securities

On November 1, 2012, the Company, and its wholly owned subsidiary Endeavor Holdings, Inc. ("Endeavor Holdings") entered into an Agreement and Plan of Merger (the "Merger Agreement") with Parallax Diagnostics, Inc, a Nevada corporation ("Parallax") and the shareholders of Parallax (the "Parallax Shareholders"), whereby Endeavor Holdings acquired 24,870,000 shares of common stock (100%) of Parallax (the "Parallax Stock") from the Parallax Shareholders. In exchange for the Parallax Stock, the Company issued 90,375,750 shares of its common stock to the Parallax Shareholders. The 90,375,750 shares, issued at par value $.001, represent approximately 60% of the Company's total issued and outstanding shares. The Common Stock Purchase Agreement, and subsequent transaction closing, was completed on October 22, 2012. On October 27, 2012, the Common Stock Purchase Agreement was finalized, and a change in control of the Registrant took place. The complete text to the Merger Agreement is incorporated by reference to Exhibit 2.1 of the Company's Current Report filed on Form 8-K November 15, 2012.

Exemption From Registration . The shares of Common Stock referenced herein were issued in reliance upon an exemption from registration afforded either under Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering, or Regulation D promulgated thereunder, or Regulation S for offers and sales of securities outside the U.S.

As a "smaller reporting company", the Company is not required to provide the information required by this Item.

The following discussion should be read in conjunction with the Company's consolidated audited financial statements and the related notes for the years ended December 31, 2011 and December 31, 2012 that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect the Company's plans, estimates and beliefs. The Company's actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this annual report.

Our consolidated audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

Overview

The Company was incorporated in the State of Nevada on July 6, 2005, and began its development activities in the field of online website design and commerce. In September 2007, it merged with Endeavor Uranium, Inc. and began activities in the mineral exploration field, with mineral properties in the northwestern United States. Furthering the Company's development, on December 23, 2008, the Company entered into a Joint Venture Agreement with Federated Energy Corporation, a Tennessee corporation, for working interests in prospective oil and gas wells, and changed its operating name to Endeavor Power Corporation. The Company's development activities in oil and gas exploration continued until November, 2010.

In November 2010, management assessed a potential business opportunity and determined that in an effort to create value for its Shareholders, the Company should change its business direction. On November 8, 2010, the Company discontinued its operations in its working interests in oil and gas exploration and changed its operating focus to the development of E-Waste processing services aimed at industrial and government clients. The Company's new direction sought to limit the impact of discarded "E-Waste" on the environment, as discarded computers and electronic equipment pose environmental hazards. However, in accordance with a change in management effective September 27, 2011, the Company's business operations changed, and its activities in the e-waste were discontinued.

The Company began developing activities in managerial services, and pursued potential funding opportunities for the Company. It also retained consultants to perform due diligence on certain mining properties located in Venezuela, Brazil, Bolivia, Guyana and several other South American countries. Management, however, determined that the outcome of such due diligence did not provide the Company a viable opportunity, and that it did not provide sufficient economic benefit for the Company. Management therefore ceased its due diligence, and continued its operations in managerial services whilst pursuing other viable business opportunities to increase shareholder value.

During 2012, the Company's management entered discussions and assessed a potential business opportunity with Parallax Diagnostics, Inc., a Nevada corporation ("Parallax'), whose principal business is in the bio-medical sector. More specifically, Parallax is focused on the exploitation of a proprietary diagnostic and monitoring platform and processes in the area of infectious disease. Parallax, in its development stage, holds the right, title, and interest to certain FDA 510(k) approved tests in perpetuity. In addition, Parallax acquired the exclusive license to a suite of medical devices, tests and utility processes in perpetuity.

On November 1, 2012, the Company, and its wholly owned subsidiary Endeavor Holdings, Inc. entered into an Agreement and Plan of Merger (the "Merger Agreement") with Parallax and the shareholders of Parallax. As a result of the transactions effected by the Merger Agreement, (i) Parallax merged with and into Endeavor Holdings whereupon Endeavor Holdings continued as the surviving entity and the corporate existence of Parallax ceased; (ii) the former business of Parallax is now the Company's primary business, (iii) the Company's existing business in managerial services will continue as ancillary operations, and (iv) there is a change of control whereby the former shareholders of Parallax now own a controlling 60% ownership interest in the Company on a fully diluted basis. On November 26, 2012, Parallax changed its name to Endeavor Sciences, Inc. ("ESI"), a wholly owned subsidiary of Endeavor Power Corporation.

About Parallax

Parallax was incorporated in the state of Delaware on December 30, 2008 under the name Roth Kline, Inc. ("Roth Kline"). In September 2010, Roth Kline acquired the exclusive rights to certain FDA 510(k) approved tests from Montecito BioSciences, Ltd., a Nevada corporation ("Montecito"), in perpetuity, in exchange for royalties and equity (the "Assignment"). In addition, Roth Kline acquired the exclusive license to Montecito's Patent Pending Applications for a suite of proprietary medical devices, tests and utility processes from Montecito in perpetuity, in exchange for royalties and equity (the ‘License"). The Assignment and License agreements were modified in September 2011, to increase the royalty percentages due to Montecito (the "Modifications"). On December 29, 2010, Roth Kline changed its name to Parallax Diagnostics, Inc. On January 11, 2011 (the "Closing Date"), Parallax entered into and closed a share exchange agreement (the "Share Exchange Agreement") with ABC Acquisition Corp. ("ABC") a fully reporting Nevada corporation. On the Closing Date, pursuant to the terms and conditions of the Share Exchange Agreement, (i) ABC acquired 100% of the issued and outstanding shares of common stock of Parallax in exchange for the issuance of 21,000,000 shares of its common stock. Parallax merged with and into ABC whereupon ABC continued as the surviving entity and the corporate existence of Parallax ceased (the "ABC Merger"). Subsequent to the Closing Date, ABC changed its name to Parallax Diagnostics, Inc.

The Company is a development stage company as defined by ASC 915-10, "Accounting and Reporting by Development Stage Enterprises". A development stage enterprise is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenues there from. At December 31, 2012 the Company has not yet commenced its principal operations, which is in the bio-medical and diagnostics sector.

Results of Operations

The following summary of the Company's results of operations should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2012 and 2011, which are included herein. The financial information provided includes the accounts of the Company and its wholly owned subsidiary, Endeavor Sciences, Inc., formerly Parallax Diagnostics, Inc. ("ESI"), on a consolidated basis. All significant inter-company accounts and transactions have been eliminated.

As a result of the Share Exchange, a change in control occurred whereby the Company is the legal parent/accounting subsidiary of ESI, and ESI is the legal subsidiary/accounting parent of the Company. The Share Exchange has therefore been identified and recorded as a reverse acquisition and, pursuant to ASC 805-40-45-1, the historical and cumulative financial information are a continuation of the financial information of the legal subsidiary, ESI. For cumulative purposes, the date of inception is that of ESI, December 30, 2008.

General and Administrative Expenses

During the year ended December 31, 2012, the Company incurred operating expenses related to continuing operations in the amount of $482,568, compared with $409,457 during the year ended December 31, 2011. The increase in operating expenses in the amount of $73,111 is attributable to:

Net Loss

During the year ended December 31, 2012, the Company incurred a net loss of $554,668 compared with a net loss of $660,283 for the year ended December 31, 2011. The decrease in net loss of $105,615 is attributable to a decrease in stock option amortization of $196,510 resulting from stock options fully amortized in 2012, compared to a full year of amortization in 2011; an increase in general and administrative expenses of $73,111; an increase in depreciation expense of $6,604 and an increase in interest expense of $11,180.

Liquidity and Capital Resources

As at December 31, 2012, the Company had cash in the amount of $9,397 compared to $136,066 as of December 31, 2011.

The Company had a working capital deficit of $704,590 as of December 31, 2012, compared to a working capital deficit of $238,611 at December 31, 2011. The increase in working capital deficit of $465,979 is primarily attributable to a decrease in cash of $126,669; additional debt acquired as a result of the merger of $290,044; a decrease in accounts payable and accrued expenses of $676; a decrease in notes payable of $144,000 due to the assignment of short-term debt to long-term related party loans; and an increase in related party payable of $193,942.

During the year ended December 31, 2012, the Company received $100,000 in proceeds from the issuance of 10,000 shares of preferred stock at $10 per share. No other proceeds were received from the issuance of the Company's common stock or other equity instruments.

Cash Flows from Operating Activities

During the year ended December 31, 2012, the Company used $238,983 of cash flow for operating activities, compared with $228,816 for the year ended December 31, 2011. The decrease in cash used for operating activities of $10,167 is primarily attributable to a reduction in the net loss from operations of $105,615, an increase in depreciation of $6,604, an increase in stock compensation of $5,000, a decrease in stock option amortization of $196,510, a decrease in accounts payable and accrued expenses of $30,370 and an increase in related party payables of $99,494.

Cash Flows from Investing Activities

During the years ended December 31, 2012 the Company used $2,186 of cash flow for investing activities, compared with $51,393 for the year ended December 31, 2011. The decrease in cash used for investing activities of $49,207 is attributable to the reduction in the purchase of equipment.

Cash Flows from Financing Activities

During the year ended December 31, 2012, the Company was provided with $114,500 of cash flow from financing activities compared with $416,275 during the year ended December 31, 2011. The decrease in cash flows provided from financing activities of $301,775 is attributable to an increase in related party loans of $500, a reduction in repayments of related party loans of $1,450, a reduction in the proceeds from the sale of preferred stock of $300,000, a reduction of $3,600 in cash received related to mergers and acquisitions, and the reduction in subscriptions received of $125.

Future Financings

The Company will require additional financing in order to proceed with its plan of operations, including approximately $2,000,000 over the next 12 months to pay for its ongoing expenses. These cash requirements include working capital, general and administrative expenses, the development of the Company's product line, and the pursuit of acquisitions. These cash requirements are in excess of the Company's current cash and working capital resources. Accordingly, the Company will require additional financing in order to continue operations and to repay its liabilities. There is no assurance that any party will advance additional funds to the Company in order to enable the Company to sustain its plan of operations or to repay its liabilities. There can be no assurance that raising the desired amount of financing will enable the Company successfully to complete its plan of operations.

On January 10, 2013, the Company entered into a consulting agreement with Capital Group Communications, Inc. ("CGC") for certain financial advisory services (the "CGC Agreement"). The term of the CGC Agreement is for a period of twelve months, and contains consideration for such advisory services in the form of 1,500,000 shares of the Company's restricted common stock (the "CGC shares") at a par value of $0.001 per share. The Company has retained the services of CGC to develop investor recognition and awareness of the Company in the public capital marketsand to represent the Company in investors' communications and public relations and to consult with management concerning such Company activities.

The Company anticipates continuing to rely on equity sales of its common stock in order to continue to fund its business operations. Issuances of additional shares will result in dilution to the Company's existing stockholders. There is no assurance that the Company will achieve any additional sales of its equity securities or arrange for debt or other financing to fund its planned business activities.

Personnel

As of December 31, 2012, the Company had no employees in addition to its executive officers and directors. Currently, the Company has no employees in addition to its executive officers and directors.

Contractual Obligations

As a "smaller reporting company", the Company is not required to provide tabular disclosure obligations.

Going Concern

These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities as a going concern in the normal course of business. The Company has not generated significant revenues to date and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. As at December 31, 2012, the Company had a working capital deficit of $704,590, and an accumulated deficit of $1,389,052. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability to raise equity or debt financing, and the attainment of profitable operations from the Company's future business. These factors raise substantial doubt regarding the Company's ability to continue as a going concern.

Off-Balance Sheet Arrangements

The Company has no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Critical Accounting Policies

The discussion and analysis of the Company's financial condition and results of operations are based upon the Company's consolidated audited financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. The Company believes that understanding the basis and nature of the estimates and assumptions involved with the following aspects of the Company's financial statements is critical to an understanding of its consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and

adversely from the Company's estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Endeavor Sciences, Inc., formerly Parallax Diagnostics, Inc. ("ESI"). All significant inter-company accounts and transactions have been eliminated.

In November 2012, the Company acquired 100% of ESI's common stock in exchange for, among other things, approximately 60% of the Company's common stock (the "Share Exchange"). As a result of the Share Exchange, a change in control occurred whereby the Company is the legal parent/accounting subsidiary of ESI, and ESI is the legal subsidiary/accounting parent of the Company. The Share Exchange has therefore been identified and recorded as a reverse acquisition and, pursuant to ASC 805-40-45-1, the consolidated financial statements' historical and cumulative data are a continuation of the financial statements of the legal subsidiary, ESI. For cumulative purposes, the date of inception is that of ESI, December 30, 2008.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 605,  Revenue Recognition . Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service has been provided, and collectability is reasonably assured.

Stock-Based Compensation

The Company records stock-based compensation in accordance with ASC 718,  Share-Based Payments , using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.

Recently Adopted Accounting Standards : 

The Company evaluates the pronouncements of various authoritative accounting organizations, primarily the Financial Accounting Standards Board ("FASB"), the US Securities and Exchange Commission ("SEC"), and the Emerging Issues Task Force ("EITF"), to determine the impact of new pronouncements on US GAAP and the impact on the Company. The Company has adopted the following new accounting standards during 2012:

the fair value of a reporting unit is less than its carrying amount. If the entity determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, it would then perform the first step of the goodwill impairment test; otherwise, no further impairment test would be required. The amendments will be effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted.

Disclosures about Offsetting Assets and Liabilities : Issued in December, 2011, ASU 2011-11 requires disclosures to provide information to help reconcile differences in the offsetting requirements under U.S. GAAP and IFRS. The differences in the offsetting requirements account for a significant difference in the amounts presented in statements of financial position prepared in accordance with U.S. GAAP and IFRS for certain entities. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.

Impairment Testing-Intangibles: Issued in July 2012, ASU 2012-02 reduces the cost and complexity of performing an impairment test for indefinite-lived intangible assets by simplifying how an entity tests those assets for impairment, and improves consistency in impairment testing guidance among long-lived asset categories. The amendments will be effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted.

As a "smaller reporting company", the Company is not required to provide the information required by this Item.

The Company's consolidated audited financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following consolidated audited financial statements are filed as part of this annual report:

Stan J.H. Lee, CPA
2160 North Central Rd. Suite 209 * Fort Lee * NJ 07024-7547
P.O. Box 436402 * San Diego * CA 92143-6402
619-623-7799 * Fax 619-564-3408 * E-mail) stan2u@gmail.com

R EPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Management and Members of
PARALLAX DIAGNOSTICS INC.

We have audited the accompanying balance sheets of PARALLAX DIAGNOSTICS, INC. (the "Company") as of December 31, 2011 and 2010, the related statements of operations, stockholders' deficit and cash flows for the years then ended, and the cash flows for period beginning December 30, 2008 (inception) to December 31, 2011. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of PARALLAX DIAGNOSTICS INC.  as of December 31, 2011 and 2010, and the results of its operations and its cash flows for the period aforementioned in conformity with accounting principles generally accepted in the United States of America.

The financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in the note to the financial statements, the Company has not established any source of revenue to cover its operating costs and losses from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The accompanying notes are an integral part of these financial statements

The accompanying notes are an integral part of these financial statements