...Selvin Passen, M.D. Selvin Passen has served as the Company's Chairman of the Board since May 22, 2004.Dr. Passen is a retired pathologist who was the Medical Director of Maryland Medical Laboratory, Inc., a subsidiary of Corning, until 1994.
Since 1994, Dr. Passen
has been involved in real estate development and is the principal holder in Baltimore Marine Center
in Baltimore, Maryland, and the Lauderdale Marine Center
in Fort Lauderdale, Florida.Dr. Passen is the owner of 22% of Maple Leaf Distillers, a former major supplier of the Company prior to Maple Leaf's 2006 bankruptcy.
...In addition, Mr. Weber has served since 1996 and continues to serve as financial advisor and Chief Financial Officer for Dr. Passen's various other ventures.
...Selvin Passen, M.D., our Chairman of the Board, owns 22% of Maple Leaf Distillers, Inc., a former supplier for the Company ("MLD"), and was a member of the Board Directors of MLD until July 2005.Dr. Passen
also loaned money to MLD
and its affiliates.
In addition, Dr. Passen
, individually or through affiliates, has loaned significant sums of money to MLD
.These amounts were not re-paid.Dr. Passen
is owed in excess of $2,000,000.
In November 2005, MLD
announced that it was in the process of selling its assets to Angostura Limited
").Upon consummation of this transaction, certain secured creditors of MLD
would be repaid; however, certain of MLD unsecured creditors, like Dr. Passen
, would not be repaid.Dr. Passen
was concerned about the effect this sale would have on our agreements with MLD
and, despite several requests, was not able to obtain assurances that the agreements with MLD
would be honored.Also, Dr. Passen
was concerned that the determination to sell MLD
assets to Angostura
was an attempt to defraud, defeat or delay the creditors of MLD
which include Dr. Passen
.Thus, Dr. Passen determined, upon consultation with his
counsel, that it was in his
best interest to initiate the claims described below to protect his
interest in MLD
. In December 2006, Selvin Passen initiated certain legal proceedings against MLD and MLD's principals Costas Ataliotis, a former Director and Chief Executive Officer of the Company, and David Wolinsky.
On December 6, 2005, Dr. Passen
caused to be filed in Winnipeg, Canada various Statements of Claim against, among others, MLD
.On December 19, 2005, Dr. Passen
filed a Complaint in Broward County, Florida, against, among others, Costas Ataliotis.
Finally, Dr. Passen
filed a petition in Winnipeg, Canada, to have MLD
involuntarily adjudged bankrupt.MLD
was placed in court-ordered receivership on January 13, 2006 and filed for bankruptcy on April 5, 2006.
These actions were initiated by Dr. Passen
own behalf and not on the Company's behalf.However, while attempting to work out a settlement with MLD
and Ataliotis regarding his own claims, Dr. Passen
also sought assurances from MLD
as to the continuity of the co-branding agreement between MLD
and the Company upon consummation of the transaction with Angostura
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able to receive written confirmation of our ability to operate under the brand names upon consummation of the transaction with Angostura
.While the initiation of these claims against MLD
and Mr. Ataliotis is unfortunate, Dr. Passen
believes that they are in his best interest.
Moreover, Dr. Passen
believes that he
has also continued to exercise his
fiduciary responsibility to the Company and our stockholders by attempting to obtain assurances about the continuity of the co-branding agreement between MLD
and the Company. Relationship with Selvin Passen The Company leases its office space on a month-to-month basis from a company in which Selvin Passen, the current Chairman of the Board and a principal stockholder, is a partner.
For the fiscal years ended May 31, 2005 and May 31, 2006, rent payments to this related party totaled $13,335 and $17,063, respectively.In addition, we paid $39,188 for accounting and office services to a company in which Dr. Passen is a partner.
We owed this related party $27 as of May 31, 2006 which is included in "Accounts Payable - Related Parties."
To fund operations, the Company has had to rely on loans from Selvin Passen
.As of May 31, 2006, the amount due to Dr. Passen
was $225,000, plus accrued interest.
Pursuant to the terms of two subscription agreements with Qualmax
, Dr. Passen
and affiliated entities currently own 874,125 shares of common stock of Qualmax
and hold warrants to purchase an additional 1,398,600 shares of common stock of Qualmax