FREQUENTLY ASKED QUESTIONS FOR INVESTORS

Leonhardt’s Launchpads by Cal-X Stars Business Accelerator, Inc.
Investor Relations

Q: Where is Leonhardt’s Launchpads headquarters?
A:  12655 W Jefferson Blvd, Los Angeles, CA 90066
Q: When was Leonhardt’s Launchpads formed?
A:  Accelerator/incubator operations for organ regeneration and recovery focused startups began in Northern California in 2008, in Southern California in 2012 and in Utah in 2015.   Cal-X Stars Business Accelerator, Inc. DBA Leonhardt’s Launchpads was incorporated in California in 2013, Leonhardt’s Launchpads Utah, Inc. was incorporated in 2016 in Utah.   Leonhardt Ventures LLC began in 1982 in Minneapolis, Minnesota as HJ Leonhardt & Co. a sole proprietorship and was converted to Leonhardt Vineyards LLC in 2005 and DBA Leonhardt Ventures in Los Angeles in 2013 and Leonhardt Ventures LLC in 2018.  Leonhardt Ventures LLC the parent of Leonhardt’s Launchpads was founded in Minneapolis, Minnesota in 1982 originally as H.J. Leonhardt & Co., moved to Savannah, Georgia in 1983, to Miami/Ft. Lauderdale in 1985, to Geyserville/Santa Rosa, California in 2000 and to Santa Monica/Los Angeles, CA in 2008 with a branch office opened in Salt Lake City, Utah in November 2015. Leonhardt Ventures LLC headquarters today is at 12760 Millennium Drive, A213, Playa Vista, California 90094 which is in the Los Angeles metro area.
Q: Where does Leonhardt’s Launchpads operate?
A:  Los Angeles (Playa Vista), Santa Monica and Pasadena in Southern California at WeWork and at 12760 Millennium Drive, Unit 213, Los Angeles, CA the Leonhardt Ventures LLC headquarters.  Petaluma at the University of Northern California in Northern California and at the C&S Business Incubator and BioInnovations Gateway in Salt Lake City, Utah.  We have technology development, testing and manufacturers collaborations with Biomerics in Utah, Biomerics Advanced Catheter in Minneapolis, Mettler Electronics in Anaheim, CA, Prizm Medical in Modesto, Ca, QIG Greatbatch in Santa Clarita, CA, Nelson Labs in Utah, Minnetronix in Minnesota, U of Louisville in Kentucky, Caltech, UCLA and USC in the Los Angeles area, Forysth Institute and Tufts University in Boston, the University of Utah in Salt Lake City, Los Angeles Biomedical Research Institute in Torrance, CA and the Pacific Neurosciences Institute in Santa Monica, CA.
Q: Where do Leonhardt’s Launchpads startups conduct their research?
A:  We have access to our own lab research space at these locations:
1.  BioInnovation Gateway, South Salt Lake City, Utah.
2.  Pacific Neuroscience Institute, Santa Monica, CA
3.  University of Northern California Science & Technology Innovation Institute.

We have access to additional research facilities via Scientific Advisory Board with more than 37 members.

We conduct research at numerous universities including the University of Utah, UCLA, USC, Caltech, Tufts University, Forsyth Institute, University of Buenos Aires, Queenland University, University of Louisville, Ohio State, University of Arizona, University of Georgia, University of Miami, Texas Heart Institute.   We have access to the Los Angeles Biomedical Research Institute (LA Biomed) for pre-clinical studies and core labs at UCLA and University of Utah for numerous support services including small animal studies.

We conduct research at these technology partnership facilities.

1.  Biomerics Advance Catheter, Minneapolis, Minnesota.
2.  Biomerics Utah, Salt Lake City, Utah
3.  Fluid Synchrony LLC, Pasadena, California.
4.  Mettler Electronics, Anaheim, California
5.  QIG Greatbatch, Santa Clarita, California.
6.  Prizm Medical, Modesto, California.

Q: Who currently owns Leonhardt’s Launchpads by Cal-X Stars Business Accelerator, Inc.?
A:  Cal-X Stars Business Accelerator, Inc. DBA Leonhardt’s Launchpads currently has approximately 165 stakeholders.  50.1% is owned by Leonhardt Ventures LLC and 49.9% is held by 164 other stakeholders the lions share of whom are involved with the company as advisors in addition to being investors.
Q: What is the Leonhardt’s Launchpads business model?
A:  We focus on organ regeneration and recovery innovations and startups. We accelerate approximately 30 to 35 innovations and their corresponding startups in any given portfolio class year.  Most of the startups are based on the same Leonhardt patented and patent pending technology platform of bioelectric stimulation + micro infusion pump + mixed stem cell based regeneration composition just directed towards different organs.   The business model is to accelerate each innovation through first-in-man clinical study results and then seek out a strategic partner/buyer to carry the development the rest of the way to market leadership.  The accelerator strives to arrange a 3% royalty on net sales for all products forward when possible.   We have a small portfolio of three regenerative economy startups that are designed to generate short term revenues and profits which are intended to re-invested in organ regeneration and recovery research non-dilutive to shareholders.
Q: What is the 2:1 accelerator investment deal for early stage investors?
A:  This means if you invest as example $30,000 you receive $30,000 value worth of stock shares certificate in Cal-X Stars Business Accelerator, Inc. DBA Leonhardt’s Launchpads AND a warrant giving you the right to acquire $30,000 worth of shares of any of the startups in the accelerator at no additional charge.  So you receive 2:1 $60,000 worth of shares in exchange for a $30,000 investment.   You can wait until Dec. 31 of the year you invested to decide your allocation or you can apply it immediately.  You can for example allocated $1000 each into all 30 startups OR you can decide to allocated $10,000 each into only 3 of your most favorite startups.  In all cases the conversion of cash warrants into shares is at the prevailing market price of the shares at the time of executing the warrant.
Q: How is our private placement filed?
A:  Under 506D part C in California and other states which permits public solicitation and is restricted to verified accredited investors only.  The original accelerator PPM was created and filed in 2013 with the help of Methven & Associates and is updated annually with our Annual Report or Newsletter.
Q: Where can I find current shares prices and valuations for each startup to know the number of shares I would receive when I convert my held 2:1 warrant into shares?
A:  Current share prices and valuations may be found at https://leonhardtventures.com/our-companies/#toggle-id-2 and by writing to investorrelations@leonhardtventures.com or investorrelations@calxstars.com requesting that information by email
Q: What is the advantage of applying my 2:1 warrant into startup shares immediately instead of waiting until Dec. 31st of the year I invest?
A:  If you allocate your warrant immediately into a startup’s shares the advantage is that you get that current lower strike price.  During the course of the year the per share price will be increased in increments as the startups achieves major development milestones.
Q: What is the advantage of waiting to apply my 2:1 warrant into startup shares until the last possible day December 31st of the year I invested?
A:  The advantage of waiting is you get sit back and watch and monitor the progress of each startup during the course of the year and can decide to allocate to startups that have reduced risk by gathering more data, gaining more talented team members or more protective patents or may be on the brink of securing a strategic partnership.   If your goal is to minimize risk not strike price and to only choose to allocate to those startups most close to securing a strategic partnership, then this waiting strategy may be right for you.
Q: How exactly do I get a return on my investment?
A:  In earliest launch stages the startups are all valued between $2.3 million and $5 million and the goal is to sell them after first-in-man results for $230 million to $980 million with a 3% royalty forward on net sales ideally.   We have a goal to have at least 6 startups in position to be ripe to secure a strategic partner/buyer each year over the next 5 years totaling 30 over 5 years.  Upon the close of each sale the proceeds are distributed immediately to all stakeholders.  Royalty checks will be distributed pro-rata on a quarterly basis as the royalties are received.  The target long term 5 year plus goal for ROI for accelerator shares is 23X your original investment and for individual startup shares 63X your original investment.  Of course these lofty goals will be very difficult to reach with many obstacles and risks in the way.
Q: What percentage ownership does Cal-X Stars Business Accelerator, Inc. DBA Leonhardt’s Launchpads have in each startup?
A:   Cal-X Stars starts off with 9% ownership in each startup in exchange for startup launch support services.  As money comes into the accelerator and is allocated into the startups their ownership stake increases.  Cal-X Stars has a pre-emptive right to acquire up to 20% ownership in each startup during the full course of acceleration within the accelerator.  Dilution from direct investors, advisor and direct management server to lessen the percentage of ownership.   It is expected at the time of exit Cal-X Stars on average will hold somewhere between 8% and 20% ownership of each startup but in some cases this could be lower and in some cases higher.
Q: Can you show an example of what I would get if you reach your goal to sell 12 startups two year with a 3% royalty forward on sales?
As a hypothetical example let’s say you invested $120,000 in Cal-X Stars Accelerator Inc. on 2:1 terms in early 2018 and immediately applied your warrant allocation as below in even increments of $10,000 each in our top 12 startups progressing towards strategic partnerships/buyers.

You would receive…

$120,000 shares of Cal-X Stars Business Accelerator, Inc. at $0.36585 a share = 328,004 shares

You would receive 2:1 $120,000 worth of startup shares as follows….

Top 6 startups in our accelerator ripe for finding a strategic buyer in 2018…
1. OrthodontiCell > $10,000 at $2 per share = 5,000 shares
2. VascuStim > $10,000 at $4.34 per share = 2,305 shares 
3. Second Heart Assist, Inc. >  $10,000 at $2 per share = 5,000 shares. 
4. Stem Cell Bra > $10,000 at $1 per share = 5,000 shares 
5. HairCell > $10,000 at $1 per share = 10,000 shares 
6. BioLeonhardt > $10,000 at $3 per share = 3,334 shares 
Top 6 startups in our accelerator ripe for finding a strategic partner/buyer in 2019..
1. CancerCell > $10,000 at $1 per share = 10,000 shares. 
2. CerebraCell > $10,000 at $4.35 per share = 2,299 shares 
3. MyoStim ED > $10,000 at $1 per share = 10,000 shares 
4. SkinStim > $10,000 at $1 per share = 10,000 shares 
5. PancreaCell > $10,000 at $1 per share = 10,000 shares 
6. PressureStim > $10,000 at $1 per share = 10,000 shares 
Let’s say in our hypothetical example that each startup sells for $78 a share coming close to the goal of 63X ROI for the entire group on average. 
You would receive…
For your Cal-X Stars Business Accelerator, Inc. 328,004 shares assuming Cal-X Stars owned 20% of each of the 12 startups at time of exit would be $940,000
Top 6 startups in our accelerator ripe for finding a strategic buyer in 2018…
1. OrthodontiCell > $10,000 at $2 per share = 5,000 shares x $78 = $390,000
2. VascuStim > $10,000 at $4.34 per share = 2,305 shares x $78 = $179,790
3. Second Heart Assist, Inc. >  $10,000 at $2 per share = 5,000 shares x $78 = $390,000
4. Stem Cell Bra > $10,000 at $1 per share = 5,000 shares x $78 = $390,000
5. HairCell > $10,000 at $1 per share = 10,000 shares x $78 = $780,000
6. BioLeonhardt > $10,000 at $3 per share = 3,334 shares  x $78 = $260,052
Top 6 startups in our accelerator ripe for finding a strategic partner/buyer in 2019..
1. CancerCell > $10,000 at $1 per share = 10,000 shares x $78 = $780,000
2. CerebraCell > $10,000 at $4.35 per share = 2,299 shares x $78 = $179,322
3. MyoStim ED > $10,000 at $1 per share = 10,000 shares x $78 = $780,000
4. SkinStim > $10,000 at $1 per share = 10,000 shares x $78 = $780,000
5. PancreaCell > $10,000 at $1 per share = 10,000 shares x $78 = $780,000
6. PressureStim > $10,000 at $1 per share = 10,000 shares x $78 = $780,000 
Assuming all these 12 startups together are achieving $1 billion in annual sales the 3% royalty to Cal-X Stars Annually would be $30 million.  With $15 million of that going to 164 shareholders about evenly divided = $91,464 in annual royalties per shareholder. 
So your total 24 month return on a $120,000 investment in this hypothetical example would be…
$7,592,092 and you would still have exit opportunity forward on at least 18 more startups.

Q: How much is the company raising, what does that give the investors and where does that capital take us?
A:  We are raising $15 million through the accelerator which gives the buyers close to 49% ownership of the accelerator before advisor and management options are exercised and about 20% ownership of all 30 (32) startups.  It is estimated that advisor and management option exercises will dilute accelerator ownership holdings by 15 to 30% and startup holdings by 10 to 15% over time if ALL eligible stock options are exercised.  This amount of capital is deemed sufficient to take us to exit after first-in-man results for all 30 startups assuming investors will voluntarily re-invest some of their winnings of early exits into later exits.  Our plan is 6 exits a year starting in 2018 for the next 5 years to reach 30 exits after 5 years of acceleration.  As startups exit new ones will come forward to take their positions in the accelerator.
Q: What is the basic development plan for the startups over the 5 year course of acceleration with the accelerator.
Year 1 = Build basic starter web site, build launch team, build slide deck, build related scientific articles list, build executive summary, build first test prototypes.
Year 2 = File patents, build advisory board, get lab data, raise capital, create animations video, upgrade web site, seek out research partners, secure vendors. 
Year 3 = Finalize design, completed animal studies, publish and present data, build opinion leader support, get positive press, start presenting at trade meetings. 
Year 4 = Prepare final safety data and regulatory filings to enter clinical studies. 
Year 5 = Complete first-in-man pilot studies OUS first 5 patients followed by U.S.A. 5 to 25 patients and then seek strategic buyer.
Q. What are the basic budget costs for each stage of development of the startups in the bootstrapping mode?
> Product development, web site development, building team = $300,000
> Patents, lab data, animation, trade shows, capital raising = $500,000
> Animal studies = $200,000 to $500,000
>.Prep for first clinical studies = $100,000 to $2,000,000 depending on product. 
> First-In-Man Clinical Studies = $100,000 to $1,500,000
 
Note – Vascustim has completed 70 pilot clinical cases OUS at under $50,000 cost due to collaborations and support from others and is now moving to clinical studies in the USA for diabetic foot ulcer treatment.  Vascustim published their first pre-clinical animal study in CIRCULATION for a cost of only $20,000.   Patent costs have been about $3000.  We also have costs shared across all 30 startups so the cost per startup is substantially lower as a result especially for common overhead items and common technology base development ie; stimulators.  So the above is over estimated for some and under estimated for others and averages out to about the above.   Warning:  Most traditional biotech and biomedical firms spend substantially more to get to these milestones and we indeed may have to spend more as well.
Q: What happens for Cal-X Stars Business Accelerator, Inc. DBA Leonhardt’s Launchpads shareholders when exits occur?
A:  Their pro-rata portion of that asset sale is distributed to them the day after closing.  Example > if OrthodontiCell sells for $780 million and Cal-X Stars Business Accelerator, Inc. DBA Leonhardt’s Launchpads shareholders hold 20% ownership at time of sale then the day after the closing $156 million would be distributed pro-rata to each shareholder according to their ownership position in the accelerator and if any of those Cal-X Stars Business Accelerator, Inc. DBA Leonhardt’s Launchpads stakeholders also had a stake, lets say 10% directly in OrthodontiCell as an example, they would also receive $78,000,000 more.  Each investor gets one distribution from the accelerator and another directly from the startup itself, if they have a direct stake in that startup separate from their accelerator ownership.
Q: What are management’s ROI goals for the accelerator and the startups?
A:  Our goal is to secure an exit for each startup in the accelerator before their 6th year anniversary in the accelerator.  ROI goals are clear…
23X for accelerator shares.
63X for individual startup shares. 
The above ROI goals factor in the intention for a 3% royalty on net sales for products over time that we will strive to always secure if possible.
Q: What are the biggest risks?
A:  These are early stage developments in high risk sectors.  The risks are numerous including…
 
1.  Not enough capital to bring products through first-in-man studies. 
2.  There may be unforeseen side effects to products.
3.  Lack of focus with so many startups under one umbrella. 
4.  Patents issued may not defend against competitors.  Patents pending may not be issued. 
5.  Company may not be able to meet all financial and other obligations to keep patent licenses or other contracts active. 
6.  Competition with greater resources may pass the companies up in progress. 
7.  Our startups depend on outside vendors for manufacturing and nearly all services and these relationships may not deliver the results intended or may breakdown for a variety of reasons.
Q: What exactly does the core bioelectric technology patents do and why is it important?
A:  Precise bioelectric signals and sequences communicate with the DNA and membranes of cells to control specific protein expressions for specific purposes.   Some examples are listed below….
 
1.  SDF-1 = stem cell homing.
2.  VEGF, SDF1, PDGF, HIF1a, HGF, Tropoelastin and PDGF = growing a new network of mature large inner diameter blood vessels for improving circulation. 
3.  Follistatin = growing new contractile muscle in previous scar tissue. 
4.  Tropoelastin = improving elasticity of arteries, skin, heart, ligaments, tendons, aorta and more. 
5.  IGF-1 = DNA repair. 
6.  CXCL5 = plaque prevention in arteries and on heart valves and cancer prevention.
Q: How are patent licenses handled amongst accelerator startup portfolio companies?
A:  If a startup is accepted into the accelerator they automatically get exclusive rights to any patents held by the accelerator for the organ they serve ie; eye for EyeCell, liver for LiverCell.  If any startup that has not yet graduated from the accelerator makes a new discovery that converts into a new patent the other organ specific startups within the accelerator automatically get an exclusive license to their organ.  There are rare exceptions to this rule.  Howard Leonhardt and other Leonhardt;s Launchpads associated inventors have agreed to give startups within the accelerator exclusive rights organ by organ to their patents in exchange only for their equity stake in those companies with no further fees or royalties due other than those associated with every shareholder.
Q: Does Cal-X Stars Business Accelerator, Inc. DBA Leonhardt’s Launchpads have any debt?
A:  Howard J. Leonhardt forgave $2.7 million debt owed to him by U.S. Stem Cell, Inc. to get certain patent rights to key patents licensed free of charge onto startups within the accelerator.  He also invested over $8 million of his own money to get the core technologies developed and off the ground. The Board of Directors of Cal-X Stars Business Accelerator, Inc,. agreed in 2014 in light of the above to record on the books $2 million owed to Howard Leonhardt at a 13% annual interest rate that is un-secured.  The company will only pay this debt when cash reserves permit.  Leonhardt has no collateral interest to protect the repayment of this loan.  In 2014, 2015, 2016 the average interest and principal paid down on these loans annually was about $14,000.  In 2017 this increased to about $60,000.   There is another debt owed to Bruce Methven our securities attorney of about $38,000 and certain management team officers have recorded deferred salary on our books.
Q: How can I get a copy of the company financials for the most recent closed year?
A:  Write to Brittany Brown our CPA and interim CFO at bbrown@ledgergurus.com copied to leonhardt@ledgergurus.com
Q: How much capital did the company raise for its startups in 2017?
A;  $1. 6 million.
Q: Approximately how much did our micro bioelectric stimulator partner invest in the development of the implantable device?
A:  $50 million.
Q: Approximately how much in National Science Foundation Small Business Innovation Research Grant support did our micro infusion pump technology partner Fluid Synchrony LLC receive to help develop the pump for our combination device?
A:  $2.3 million
Q: How do innovations or startups come into Leonhardt's Launchpads accelerator?
Leonhardt Ventures LLC (Leonhardt Vineyards LLC DBA Leonhardt Ventures) screens approximately 1000 startup opportunities annually in the areas of organ regeneration/recovery and social good impact.  The criteria for organ regeneration opportunity screening includes whether the innovation can leverage existing Leonhardt IP https://patents.justia.com/inventor/howard-j-leonhardt
Leonhardt’s Launchpads was formed by Howard J. Leonhardt with the primary purpose to convert his organ regeneration patented or patent pending inventions into full fledged startups, and accelerate those selected innovations/startups thought first in human studies, at which time a strategic partnership will be sought to take the innovation the rest of the way to market. 
Note – Inventor Howard J. Leonhardt  – https://patents.justia.com/inventor/howard-j-leonhardt–  is the originator of most, if not all, the IP fueling most of the startups and has the choice at any time to have his ownership certificates held in his personal name Howard J. Leonhardt or his 100% owned single person LLC Leonhardt Vineyards LLC DBA Leonhardt Ventures. 
They choose the best of the best, about 2 to 6 of them annually, to enter the CalXelerator www.calxelerator.com 108 day “create to great” program. The best of the best of these few candidates may be invited to join one or our long term innovation and startup launch accelerators.  They will be invited to join Leonhardt’s Launchpads by Cal-X Stars Business Accelerator, Inc. if they are organ regeneration and recovery focused and Cal-Impact if they are social good impact focused.  Once they join a long term accelerator they are under initial evaluation for the about the first 180 days to 1 year to determine if they are a full fit for long term acceleration. Organ regeneration startups are accelerated through first in human studies and then seek out a strategic partnership to advance development.  Social good impact innovation and startups are accelerated up through full launch and then seek out a strategic partnership.  
In most all cases Leonhardt Ventures LLC (Howard J. Leonhardt) owns 100% of the IP and all rights to commercialization of the innovation and corresponding startup before entering the Leonhardt’s Launchpads accelerator.  When Leonhardt Ventures LLC (Howard J. Leonhardt) agrees to place the innovation/startup into the accelerator they agree to give up to 49.9% ownership to others over time as new investors or service providers provide cash or sweat equity investments.  9% un-dilutable (unless waived) ownership is immediately granted to Leonhardt’s Launchpads in exchange for mentoring.   Leonhardt’s Launchpads has the pre-emptive right to purchase up to 20% ownership in any startup right up to exit purchasing shares at market prices.  As capital comes into Leonhardt’s Launchpads via the 2:1 warrant investment plan and is re-directed into startups their ownership position in each grows.  
Outside startups, innovations or IP may be invited to join either of our accelerators if they are a good fit they will be invited to merge into one of our existing startups is a match. 
Subsidiary accelerator units such as Leonhardt’s Launchpads Utah, Inc., Leonhardt’s Launchpads Santa Rosa, Minneapolis, Pittsburgh, Australia or Brazil may earn equity stakes in LTPs or startup C corporations by this formula…
1.  Up to 3% for providing meaningful IP.
2.  Up to 3% for providing meaningful positive support data (generally 1% for pre-clinical and 2% for clinical). 
3.  Up to 3% for providing meaningful capital or research grants (generally 1% for research grants and 2% for > $1,000,000 in local capital raised). 
Q:  How does the Licensable Technology Platform (LTPs) model work?
All new innovations that enter our innovation and startup launch accelerator are classified into a Licensable Technology Platform (LTP) to start.  An LTP is a basket of assets directed towards a specific purpose ie; LiverCell LTP focuses on liver regeneration, RegenaLung LTP focuses on lung regeneration, KidneyCell LTP on kidney regeneration. The basket of assets includes IP, regulatory progress, test data, technical know how, web site, executive summaries, animations, slide decks, trademarks, advisory board, vendor and research collaboration agreements. Most of the initial value is in the IP including any licenses, options or patents issued or pending.  The LTP is handled in every way as a security, just like a stock, and is able to place interest stakes with founding members, advisors, consultants, research partners and suppliers.  What LTP stakeholders own is a percent ownership of the assets.  If market feedback/research, data, positive press, opinion leader endorsements and patent prosecution all point towards the innovation to have likelihood of success in the marketplace steps begin to transition the LTP into a C corporation.  In general, but not always, LTPs do not transition to become stand alone C corporations until they meet these conditions. 
1.  Enough data, preferably clinical, has been gathered to truly know that the innovation does indeed work. 
2.  Patents have been issued, licensed or optioned or are will into USPTO prosecution as a pending patent with sufficient believability that the innovation can be protected against infringers and will provide defendable intellectual property protection. 
3.  A critical mass of opinion leader endorsements have been gained
4.  Sufficient buzz has been creating in the marketplace with positive press. 
5.  The startup has gained enough financial backing to the at least 95% financially self reliant with its own President and CFO and has reasonable prospects lined up for additional funding if needed. 
6.  The startup has generated significantly strategic partnership or acquirer interest.  
In most cases Leonhardt Ventures LLC (Howard J. Leonhardt) has 50.1% anti-dilutive (unless waived) controlling interest in the LTP (down from 100% before entering the accelerator).  Leonhardt’s Launchpads by Cal-X Stars Business Accelerator, Inc. starts off having 9% anti-dilutive (unless waived) ownership interest in the LTP in exchange for mentoring services.  As capital comes into the accelerator and flows into the LTPs Leonhardt’s Launchpads equity interest increases.   Leonhardt’s Launchpads has pre-emptive right to purchase up to 20% ownership equity interest in any startup, LTP or C corporation, right up to exit at prevailing full market prices of interest stakes. 
Thus far both Leonhardt Ventures LLC (Howard J. Leonhardt/Leonhardt Vineyards LLC DBA Leonhardt Ventures) and Leonhardt’s Launchpads has only waived it anti-dilution floors of 50.1% and 9% respectively with two startups, OrthodontiCell LTP and Second Heart Assist, Inc. a Utah C Corporation. 
When an Licensable Technology Platform asset basket security is converted (usually right after first in human full study results are in for a an organ regeneration startup – near to final product to go to market) to a full fledged C corporation any stakeholder in the LTP is guaranteed to have the exact same initial ownership percentage in the C corporation.  By example if John Doe held 1% ownership interest in the LTP he will hold 1% ownership interest in the C corporation in the form of common stock. 
LTPs do not ever have any employees.  They only have formation stage co-founders, advisors and startup launch organizers.  They may be assisted by mentors and employees of the accelerator(s) at various stages of development.  LTPs never ever pay cash out, especially to employees or team members, and in fact do not even have a checking account.  They may have people in designated roles for organizational and efficiency purposes but these are not officers or employees in any form.  The employment of employees and the designation of corporate officers does not begin until the day a C corporation is legally formed and that C corporation opens up its own bank checking account. 
There are many sounds business reasons for keeping an early stage development as an LTP instead of a C corporation. These include…
1.  As soon as you file a C corporation you need to file a stand alone tax return which costs at minimum $1600 annually.
2.  As soon as you file a C corporation you have to pay separate city, county, state annual fees which are > $1000 annually.
3.  As soon as you file a C corporation and you are raising capital you have to make separate Form D and blue sky filings which can cost > $50,000.
4.  A separate C corporation needs to have its own officers, directors, board meetings all of which requires maintenance costs > $10,000 annually. 
5.  If an LTP after early stage evaluation is deemed not to be commercially viable it can be cut from the accelerator quickly and easily and replaced with another LTP with minimal difficulty and costs. 
6.  A separate C corporation has to have its own bank account which has to be reconciled monthly.
7.  A separate C corporation needs to have its own stand alone monthly financial statements which cost up to $1000 per month to be prepared properly. 
Q:  What is the normal time course for innovations and startups in the accelerator? 
Year 1 1H = CalXelerator www.calxelerator.com 108 day “create to great” program = market research + build web site + build test prototypes + build animation video + build slide deck + build executive summary + build advisory board + file new patents + license and option patents > at end of 108 days DEMO DAY to attempt to get first seed funding via 2:1 investments into the accelerator with investor choosing to exercise their 2:1 warrant with that particular startup. 
Year 1 2H = Test prototypes in lab + find pre-clinical research collaborators + file for research grants + get Series A funding.
Year 2 = Test prototypes in small animals + get Series B funding. 
Year 3 = Test prototypes in large animals + file new patents + gets Series C funding. 
Year 4 1H = Prepare for regulatory filings to begin first in human studies + get Series D funding. 
Year 4 2H = Complete first in human pilot study + get opinion leader endorsements + get positive press + reach out to strategic partners + get Series E financing. 
Year 5 to 7  = Land strategic partnership most often in milestone deal over time that leads to full acquisition later and preferably future royalties. 
Normal budgets by stage of development….
  • Launch = $100,000
  • Lab tests = $100,000
  • Small animal tests = $150,000
  • Large animal tests = $250,000
  • First in Human studies = $200,000 to $500,000
Note – These costs are sometimes higher and sometimes are lower by large margins. MyoStim ED, EyeCell, HairCell and OrthodontiCell by example ALL got all the way through first in human studies with less than $230,000 each in total spending from beginning to end and are now pursuing a strategic partnership/acquirer.     They accomplished this working with strategic partners such as Mettler Electronics of Anaheim, CA that already had FDA 510K market clearance for their device for improving blood circulation, which greatly reduced investment costs and time to clinical studies. Second Heart Assist on the other extreme has spent > $4,000,000 to get through first in human studies. 
Warning: Investment in our innovation and startup accelerator must be viewed as very high risk for loss. We are attempting to develop organ regeneration technologies where others with far more substantial resources have failed. Our developments are all very early stage. Despite some early data our technologies cannot be considered to be proven to be either safe or effective. Our patents issued, optioned or licensed may not be maintained. Our patents pending may not be issued. We may be found to infringe on others patents. We are developing more than 30 innovations which spreads our small staff thin. We are highly dependent on outside supplier and consultants. Any timelines quoted may take substantially longer by many years. Most, if not all, our team members derive income from other sources which may limit their focus on our accelerator and its startups. The company lacks sufficient resources at this time in all forms to complete development of its products. This investment is only suitable to accredited highly experienced investors with substantial knowledge of the healthcare industry and the risk associated with medical device and biotech startups and their product developments that are prepared to lose their entire investment without incurring financial hardship. Information about the status of our many projects is subject to change often. With a small staff we are not able to keep all web site pages up to date at all times. Much of the information on many of our thousands of web site pages requires updating. If you have any questions please email us at howard@leonhardtventures.com

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