SEC v. Parallax Health Sciences, Inc.; Paul R. Arena; and Nathaniel T. Bradley, No. 1:21-cv-05812, Southern District of New York (July 7, 2021) — Complaint

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

UNITED STATES SECURITIES  AND
EXCHANGE COMMISSION,

  P la intif f ,

 v.

PARALLAX HEALTH SCIENCES,  INC.,
PAUL R. ARENA, and NATHANIEL T.
BRADLEY,

  Defendants.

     Civil Action No.

     COMPLAINT

     JURY TRIAL DEMANDED

P laintiff   Securities  &  Exchange  Commission   (the  “Commission”) ,   in  its  Complaint
against  Defendants Parallax Health Sciences, Inc. (“Parallax”), Paul R. Arena (“Arena”) and
Nathaniel T. Bradley  (“Bradley”), a lle ge s   a s  f ollow s :
SUMMARY

1. Between March 11,  2020  and  April  9,  2020,  Parallax, a healthcare company
founded  in  2010 whose stock is publicly  traded, issued  a series of seven press releases
mis le a ding  investors about  the company’s ability   to  capitalize   on  the  COVID-19 pandemic.    The
releases made several false representations,  including that  a COVID-19 screening test that
Parallax purported  to be developing  would  be “available  soon,” and that the company had
personal  protective  equipment   (“P P E”)  and  ventilators   and  other  medical  equipment  for
“immediate  sale .   ”  In fact,  when the company issued the releases,  Parallax was insolvent  and did
not have the capital  to  develop  a test.    P arallax’s  own  internal   projections   also  estimated  that,
even if the company  had the funds,  it  would  take it    more than a year to  develop a test.  Moreover,
P a r a lla x  did  not  possess the  P P E and medical  equipment  that it offered for sale,  and had neither

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the money to purchase the equipment  nor  the Food  and Drug Administration  (“FDA”)
registrations  needed to  import  and  distribute  the equipment.
2. Arena, Parallax’s Chief Executive Officer, directed  and oversaw the company’s
operations  and  finances.  Arena knew that  Parallax did  not  have  enough  money to develop  a
COVID-19 screening test or to acquire  P P E or medical  equipment.    He also knew that Parallax
lacked  the FDA registrations   required  to import  and sell the  P P E and medical  equipment.
However, he drafted the seven misleading  press releases to boost  P arallax’s declining  stock
price, deliberately  misrepresenting  that the company would  make a COVID-19 test available
soon  and  that  it  possessed  P P E and medical  equipment.    This   plan was successful.  During  the
approximately  four-week  period beginning   March 11,  2020,  the  daily  closing  price of P arallax’s
common  stock  in the U.S. markets was, on average, 20% higher than the period  between January
1,  2020  and March 10,  2020,  the day before Parallax issued  the first mis le a ding  release.
3. Bradley,  P arallax’s  Chief  Technology   Officer,  was primarily   responsible  for
developing  the company’s  remote monitoring  healthcare technology,  but,  during  the COVID-19
pandemic,  he assisted in  the company’s  attempt to  source and sell PPE and medical  equipment.
In connection  with these efforts, Bradley  helped Arena draft two press releases and posted
content  on  Parallax’s    website,  claiming  that the company  had P P E and medical  equipment  for
immediate  sale.  Although  Bradley  was unaware of Arena’s plan to artificially  boost Parallax’s
stock price, he publicized  Parallax’s claims  that it had PPE and medical  equipment  available  for
sale without  verifying that Parallax had the  requisite  capital  and  the necessary FDA registrations
in place to acquire and distribute  the equipment.

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  VIOLATIONS
4. By  engaging  in  the  conduct  alleged  in  this  Complaint,  Parallax and Arena violated
Sections  17(a)(1) and (3) of the Securities  Act of  1933  (‘Securities  Act”) [15 U.S.C. §§ 77q(a)(1)
and (3)] and Section  10(b) of the Securities Exchange  Act  of 1934 (“Exchange Act”) [15 U.S.C.
§ 78j(b)]  and Rule  10b-5  thereunder  [17  C.F.R. § 240.10b-5],  and  Bradley  violated  Section
17(a)(3) of the Securities  Act [15 U.S.C. § 77q(a)(3)].
JURISDICTION AND VENUE
5. The  Commission   brings  this  action  pursuant  to  Sections  20(b)  and  20(d)  of  the
Securities  Act  [15 U.S.C. §§ 77t(b)  and  77t(d)],    and Section  21(d)  of  the  Exchange  Act [15
U.S.C. § 78u(d)].
6. The Commission respectfully  requests a Fina l  Judgment:  (a) permanently
enjoining  Defendants   from  violating   the  federal securities laws and rules this   C ompla int   a lle ge s
they  have violated;  (b) ordering  Defendants   to  pay  civil   money  penalties  pursuant  to  Section
21(d)  of  the  Securities  Act  [15  U.S.C.  §  77t(d)]  and  Section  21(d)(3)  of  the  Exchange  Act  [15
U.S.C. § 78u(d)(3)];  (c) barring  Defendants Arena and Bradley from  participating   in  any  offering
of a penny stock pursuant  to  Section  20(g)  of  the  Securities  Act  [15  U.S.C.§ 77t(g)] and Section
21(d) of the Exchange Act [15 U.S.C. § 78u(d)(6)];  (d)  imposing  an officer and director  bar
against  Arena pursuant to Section  20(e) of the Securities  Act [15 U.S.C. § 77t(e)] and Section
21(d)(2)  of the Exchange Act [15 U.S.C. § 78u(d)(2)];  and,  (e) ordering  any other and further
relief the Court may deem just  and proper.
7. This  Court  has  jurisdiction   over  this  action pursuant  to Sections  20(b) and 22(a)
of the Securities  Act [15 U.S.C. §§ 77t(b) and 77v(a)] and Sections  21(d),  21(e) and 27 of the
Exchange  Act [15  U.S.C. §§ 78u(d),  78u(e)  and 78aa].

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8.  In connection  with the conduct  alleged  in  this  Complaint,  Defendants,  dir e c tly  or
indir e c tly,  singly   or  in  concert,  made use of the means or instruments  of  transportation  or
communication   in,  or instrumentalit ies  of,  interstate commerce or the mails  or the facilities  of a
national   securities  exchange.
9. V e nue   lie s   in  this   D is tr ic t  under Section  22(a) of the Securities  Act [15 U.S.C. §
77v(a)]  and Section  27 of the Exchange  Act [15  U.S.C. § 78aa], because certain acts, practices,
transactions,  and  courses  of  business  alleged  in  this  Complaint   occurred  within   this  District.   At
all times relevant to this   Complaint,   P arallax  maintained   an  office  in  New  York,  New  York  and
offered  its  products  and  securities  for  sale  in  this   D is tr ic t.
DEFENDANTS
10. Parallax  He alth Scie nce s, Inc. is a Nevada corporation  with  offices in     New
York,  New  York  and  Santa  Monica,   California.     P arallax’s  common  stock  is  registered  with  the
Commission   pursuant  to  Section  12(g)  of  the  Securities  Act  and was quoted on OTC Link
operated by the OTC Markets Group  Inc. until  the Commission  issued an order on April  10,
2020  that  temporarily   suspended  trading  in  the  company’s  securities  from  April  13,  2020 to
April  24,  2020.    P arallax’s  common  stock  is  presently  bought  and  sold  over the counter.
11. Paul  R. Are na, age 63,  is a resident of New York, New York.  Arena has been
the Chief Executive  Officer (“CEO”) and a director of P arallax since July  2017.  From July  2017
to March 2020,  he also served as P arallax’s President.
12. Nathanie l T. B radle y, age 45, is a resident  of Colts  Neck, New Jersey.  Bradley
has been the Chief Technology  Officer (“CTO”) of P arallax since January 2016 and a director  of
the company  since June 2018.

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FACTUAL BACKGROUND
13. A t  a ll  time s    r e levant to this  Complaint, Defendant Parallax was a publicly   traded
company with  the  ticker  symbol   P RLX  and was required  to  f ile   periodic   reports  with  the
Commission.
14. On May 18,  2020,  following  the suspension  of trading  in the company’s
securities,  Parallax  f ile d  an   annual  report with  the Commission  on Form  10-K for the year ended
December 31,  2019 (“2019  10-K”).  Parallax  has not f ile d  more current reports with the
C ommis s ion.
15. Parallax  described  itself  in  the  2019  10-K as “a healthcare company focused on
developing  products  and services that can provide  remote communication,  diagnosis,  treatment,
and monitoring  of patients  on  a  proprietary  platform.”
16. P arallax  filed  audited  financial   statements  for  the  year  ended  December  31,  2019,
with the 2019  10-K.  The financial  statements show that P arallax suffered a $6.4 million
operating  loss  in  2019, and that the company’s  liabilities  exceeded its assets.
17. Parallax  reported in the 2019  10-K that its assets included,   among  other  things,
(1) the Target System  testing  platform,   consisting   of  the Target Antigen  Detection (“TAD”)
Cartridge and  the FDA-cleared VT-1000  Desktop  Analyzer  (“VT-1000”),  and (2) twenty-f ive
FDA-cleared blood  tests  designed  to  be  utilized  with the Target System  testing  platform  to detect
certain infectious diseases, cardiac and other medical conditions ,   pregnancy,  and  drug use.
Operationally,  the TAD Cartridge was said to test a blood  sample  and produce  a qualitative   result
(positive  or negative), and additional   quantitative  information  could be derived  by inserting  the
TAD Cartridge into  the VT-1000.

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18. P arallax  did  not  develop  the Target System  testing  platform.  The diagnostic
platform  was developed by another company in  the  late  1980s  and  early  1990s.  In 2010,
Parallax entered into  a license  agreement giving Parallax  the right  to commercialize  the Target
System.  Parallax reported  in  the  2019  10-K that, as of December 31, 2019, it  “ has not  yet
commenced commercial  operations of the Target System,  and thus has yet to develop   methods  of
distribution   for  its  diagnostics  products  beyond  the  business  plan  stage.”  Parallax  further
reported in the 2019  10-K that “[t]he Target System is not commercially  available  at this time, as
the  product  is  currently  in  redesign  and  development,   with  a  primary   focus  on  developing   the
SP ARKS Mobile™,  the patented handheld  mobile  version  of the VT-1000  desktop  analyzer.”
Parallax’s  2019  10-K  further  noted  that “[t]he  SP ARKS Mobile™  is  currently  in  the  design  stage
of the development  process.”
19. A t  a ll  time s    r e le va nt  to  this    C ompla int,  Parallax did not  possess a test that had
been approved  or  cleared by the FDA to  screen for COVID-19.  P arallax reported in the 2019  10-
K that it was “in  the process of developing  a test cartridge for the diagnosis  of the COVID-19
virus,”  and that the company  “anticipates  the need for a minimum  of an additional  three million
dollars   ($3,000,000)   of  investment   capital  for  it  to  achieve  its  goals  of  developing   a
commercially  viable  rapid ...COVID-19 diagnostic  test and the SP A R K S Mobile ™  Analyzer
version  of the VT-1000  Desktop  Analyzer.”
20. From at least January 1, 2020  through A pr il  10,  2020,  P arallax raised
approximately  $912,000  from a private  offering  and  sale of securities  and  a  promissory   note.
P arallax used the proceeds from the sale of the shares and the promissory  note to pay operating
expenses and short-term  debt obligations.   As of  March 31, 2020,  P arallax had approximately
$172,000   in  cash.

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Parallax  and  Are na M ade  M is leading State me nts
About the  Impe nding Availability  of a COVID-19 Test

21. In late February 2020,  Defendants P arallax and Arena decided that the  company
should  attempt to develop  a TAD Cartridge  to screen for COVID-19 that could  be utilized  with
either the VT-1000  or  the (yet to  be developed) SPARKS Mobile .    Shortly  thereafter,  Parallax
issued four press releases, all drafted by Arena,  that  mis le d  investors  about  when the company’s
purported  COVID-19 screening  test would  become  available.
22. On March 11, 2020,  Parallax issued  a press release addressing, for the first time,
the COVID-19 pandemic.   The release stated that Parallax was “in  discussions  with”  the Centers
for Disease Control  (“CDC”),  the  World  Health  Organization (“WHO”),  and  private  laboratories
a nd  unive r s itie s    “to  a s s is t  in  f a c ilita ting   its   participation  in  providing  diagnostic  solutions  for  the
creation  of  mobile   screening  tests.”  The release announced  Parallax’s “Intent  to  Develop  a
Rapid  Screening Test for COVID-19 on  its  FDA  510(K)  Approved  Diagnostic  P latform.”
23. On March 12, 2020,  P arallax  issued  another  press release addressing  the COVID-
19  pandemic.    Arena was quoted in  the release, saying:  “Yesterday we announced our strategic
initiative   for  the  creation  of  a  rapid  screening  test  on  our  VT-1000  diagnostics  device  for the
Covid-19  that  when available  s oon will  produce  results  within   15  minutes.”  (Emphasis  added.)
24. On March 16, 2020  and March 17, 2020,  P arallax disseminated  two more press
releases concerning  the COVID-19 pandemic.   The  March 16,  2020 release stated that Parallax
had a “strategic initiative  for the creation of a rapid screening test on  its  VT-1000  diagnostics
device  for COVID-19 that when s oon available will   produce  results  within   15  minutes.”
(Emphasis  added.)  The March 17,  2020 release stated  that  the  company’s  “ongoing  strategic
initiative   for  the  creation  of  a  rapid  screening  test  on  its  VT-1000  diagnostics  device  for COVID-

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19,  coronavirus  testing  that  when  s oon available w ill   produce  results  in  15  minutes.”  (Emphasis
added.)
25. As Parallax and Arena knew or recklessly ignored, P arallax  was  not  in
discussions  with  the CDC, the WHO,  or  private  labs  or  universities   concerning  the  development
of the company’s  purported  COVID-19 screening test,  and the test would  not be available  within
the timeframes they represented to investors.    Indeed, an  internal  P arallax  document  emailed  by
Arena to  others at Parallax on  March  14,  2020  estimated  it  would  take  approximately 12  months
to commercialize the  VT-1000,  about 12  to  14  months  to  develop  the SP ARKS   Mobile,   and
approximately 12 months  to commercialize  the TAD Cartridge.    As Parallax  had only  begun
planning  to  create its COVID-19 test at the end of February 2020,  the statements by Defendants
Parallax and Arena that P arallax’s  test would  be “available  soon” were false and mis le a ding.
26. Moreover, as Parallax and Arena knew or recklessly ignored, Parallax lacked the
funds  to  develop  a  COVID-19 test.  Indeed,  the company  was insolvent.   None of the March
2020 public  statements alerted investors that Parallax  was insolvent   and  did  not  otherwise  have
the financial  wherewithal  to develop  and launch a rapid  screening test for COVID-19.  Parallax
did  not  have  the estimated $3   million   in   funds needed to develop  prototypes,  or to conduct
required c linic a l   tr ia ls ,  a nd  further, had no reasonable prospect of raising  that much  capital.

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Parallax,  Are na, and  B radle y M ade  Mis leading State me nts
About the  Availability  of  COVID-19 Related Products  and Sale s

27. Defendants Parallax  and Arena also  misled  investors  by  falsely  stating  that the
company  had  available  for imme dia te  sale COVID-19  test  kits  (produced  by  others),  PPE,
ventilators  and other medical  equipment;  Bradley  negligently   misled  investors  by  making  such
statements.
28. On March 23, 2020,  P arallax issued a press release, drafted by Arena and
Bradley,  with  the  headline,   “P arallax  Announces  Imme diate  Availability  of P oint-of-Care
COVID  Diagnostic   Testing  Kits,  P ersonal  P rotection  Equipment   (P P E)  and  Medical  Supplies.”
(Emphasis  added.)  The release stated that Parallax had “signed  a contract with a medical
distribution  company  in China  owned by a prominent  businessman”  and, beginning  that day,
“the  Company  [was]  accepting  orders  for  and  [had]  imme diate  availability of the Coronavirus,
(“COVID-19”)  P oint-of-Care Diagnostics Kits for American medical practices, hospitals,
nursing  operations,  emergency  centers  and  nursing  homes.”  (Emphasis  added.)  The release
further  stated  “the  Company  [would]  also  be  providing imme diate  availability  and acce s s to
P ersonal P rotection  Equipment,  (“P P E”)  including,   but  not  limited   to,  FDA approve d medical
masks,  protective  sterile  gowns,  eye  protecting  goggles,  face  shields,  ventilators,  and other
medical  grade equipment.” (Emphasis  added.)
29. The March 23, 2020  release contained  quotes from both  Arena and  Bradley  about
Parallax.   Arena stated that Parallax  was “fortunate to have the U.S. ... Government  lift  sanctions
and  tariffs  on  medical  products  from  China  that  opened  up  this  opportunity   ...  and  for P arallax to
imme diate ly provide  a s olution to fill  the  void of ove rwhe lming de mand re late d to Pe rs onal
Prote ctive  Equipme nt.” (Emphasis added.)  Bradley emphasized  that Parallax’s remote patient

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monitoring   system  would  permit  Parallax  “to capture in real-time  the test results achieved from
the  te s t kits we are offe ring through  this   partne rs hip  today.” (Emphasis  added.)
30. Additionally,  the March 23,  2020 release stated that Parallax had “created a
Government  and Medical  Practice website  to pro ce s s  o rders  imme diate ly,” and that the
company had “access to large inventories  of all the available  products  and [was] offering  the
products  in  all  fifty  U.S.  states  and  all  U.S.  territories  from  the  Company’s  website  located  at
www.goodhealthoutcomes.com.”   (Emphasis  added.)    A    “supply  booklet,” which Bradley created
and posted on  the  P arallax  website,  identified   the  PPE and medical  equipment  that purportedly
could  be  purchased  from  P arallax  by  completing   an  online   order  form.    Bradley  listed  each  piece
of equipment  for sale, the minimum  and maximum  quantity  purportedly for sale, and the price.
The “supply  booklet”  included  COVID-19  test kits,  ventilators, PPE, thermometers,  surface
cleaning  agents and hand sanitizer.   All  of the equipment  was represented to be FDA-approved,
and the website lis te d  the delivery  time  for most items as “within  7 days.”
31. In fact, P arallax never possessed the equipment that it  offered for sale on its
website.  Rather, Arena and Bradley  planned  to acquire the equipment  under  a “Master
Distribution/Reseller  Agreement” (the “D is tr ibutio n  Agreement”) that Parallax executed with a
supplier  (the “Supplier”)  on  March  22,  2020.    All  of the information  concerning  the equipment
that  Bradley  posted  to  P arallax’s  website  was  provided   by the Supplier.
32. Even  with  the  Distribution   Agreement  in  place,  P arallax  was not  in  a position  to
deliver  the P P E and medical  equipment  that it  offered for sale.  Critical  hurdles  prevented  the
company from buying  and reselling  any equipment  sourced by the  Supplier.    On March 22, 2020,
when it  entered into  the Distribution   Agreement,  Parallax  was insolvent  and it    did  not have the
necessary financial  wherewithal  to  fulfill   its  obligations   under  the  agreement.    Parallax a ls o

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lacked  the FDA registrations  required to import  and distribute  the equipment.    Parallax and
Arena knew  of, or recklessly  disregarded,  these hurdles.  Bradley  failed  to  take reasonable steps
to ascertain whether Parallax had  surmounted  them.
33. Before disseminating the March 23, 2020 press release,  neither  Arena  nor  Bradley
consulted  anyone  about  the  legality   of  importing   or  distributing  PPE or medical  equipment
supplied  by foreign  parties.    Rather, the person who replaced Arena as President of Parallax in
early March 2020 (the “Parallax President”),  upon  reading  the  March 23,  2020 press release after
it  was issued,  emailed  Arena and Bradley  the same day informing  them that P arallax could  not
sell  the  equipment   it  was  offering  on  its  website  until   the  company  registered  with  the  FDA.    The
Parallax President further  informed  Arena and  Bradley  that each device and its manufacturer also
had to be registered with the FDA.
34. After receiving the Parallax President’ s   e ma il,  Arena and  Bradley  approached  an
FDA-registered  company  (the “Distribution Company”) authorized  to  import  and  export medical
equipment   in  the  U.S. to partner with P arallax to distribute  the equipment  purportedly  being
sourced by the Supplier.    P arallax  and  the  Distribution   Company exchanged drafts of a joint
venture  agreement,  but did  not execute it because they failed  to settle on all  of the terms.  Neither
company  was able  to obtain documentation   confirming   the  FDA  registrations   for  the  equipment
P arallax offered for sale or the manufacturers of the equipment.
35. Nonetheless,  on March  30,  2020,  P arallax  issued  a press release, drafted by Arena
and Bradley, falsely  stating  that  “world  leading  inventories  and end-to-end  logistics   services
related to the International  Coronavirus,  (“COVID-19”) response are now  becoming  available  at
[Parallax’s] website www.goodhealthoutcomes.com
.”   The press release further touted that
Parallax  was “offering  ...  procurement  managers  from  both  private  and  government  entities  the

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ability  to purchase ... much  needed  personal  protection   equipment,   (“P P E”)  items  from  FDA-
registered  manufacturers”  through  its  “online  portal,”  including   “medical   masks,  invasive  and
passive  ventilators,   thermometers,  medical  protective  gowns,  face  protection,   other  personal
protective  equipment  and COVID-19 point  of care test kits.”
36. On April  9, 2020,  P arallax issued  another  press  release continuing  to  mis le a d
investors that it was capitalizing   on  the COVID-19 pandemic.  D rafted by  Arena, the press
release stated that Parallax  had “Receive[d] Ove r $10 million of Te le he alth and Me dical
Supply  Contracts.”  (Emphasis added.)  Arena quoted hims e lf  in the press release, remarking,
“We are pleased to report that we have presently received over $10 million of orders for
Te le health re late d and M e dical Supply  contracts  we  are  in the  proce s s of fulfilling  and we
anticipate  that number  to grow significantly  in the coming  weeks and months.” (Emphasis
added.)
37. The purported  “medical  supply  contracts” referenced in  the April  9,  2020  press
release referred to orders that Parallax had received for the COVID-19-related  products  offered
for sale on its website .  However,  contrary  to  the company’s  representations, P arallax  only  had
approximately $245,000  in  orders at the time.    Parallax and Arena knew, or recklessly
disregarded,  that the other orders that the company  claimed  were merely requests for price
quotations  that had not been pursued by the requesting  parties or orders that had been cancelled.
De fe ndants ’ M is leading State me nts Caus ed a Surge  in M arke t Activity

38. Between  January  1,  2020  and  March  10,  2020,   the  average  price  of  P arallax’s
common  stock  at the close of the U.S. securities markets each day was $0.045  per share and
daily  trading  volume  averaged 282,228  shares (collectively,  the “Q1 Averages”).  However,
between March 11, 2020,  the day that P arallax first announced  its efforts to combat COVID-19

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by  developing   a  screening test, and April  9, 2020,  the last day of trading  before the Commission
suspended  trading  in  the  company’s  securities,  P arallax’s  closing stock  price  each day averaged
$0.054  per share,  and daily  trading  volume  averaged 1,095,515  shares, which  was respectively
20% and 288% higher  than the Q1 Averages.
39. On the days that Parallax made the false statements described  in  this  Complaint,
the surge in  market activity  was even greater.  During  the four trading  days between March 12,
2020  and March 17,  2020,  when P arallax claimed a COVID-19 test that it  was producing  would
be available  soon,  the company’s stock price at the close of U.S. securities  markets  averaged
$0.064  per share and the daily  trading  volume  averaged 2,141,300  shares, 42% and 659% higher
than  the  Q1 Averages.
40. Moreover,  when P arallax mis le a ding ly  claimed  on  March  23,  2020  and  March  30,
2020  to have COVID- 19 related equipment  for  sale,  the  volume  of  trading   in  its  common  stock
rose substantially.   On March 23, 2020,  2,049,200 Parallax shares traded,  reflecting  a 182%
increase over the 726,100  shares exchanged the prior  trading  day.  The company’s  stock price
also increased, climbing  7% from $0.056  to $0.060  per share at the close  of the U.S. securities
markets.  Likewise,  on March 30, 2020,  trading  volume  rose 33%, as 1,036,500 Parallax shares
traded  compared  to  777,000   shares  the  day  before,  although   P arallax’s  stock  price  closed  at
$0.050  per  share  on  both  days.
41. Parallax  and Arena made the mis le a ding  statements concerning  the availabilit y  of
the  company’s  purported  COVID-19 test, its possession  of P P E and medical  equipment  and the
volume  of telehealth  and medical  supply  orders with the intent  to a r tif ic ia lly  increase, or  at least
stabilize,  Parallax’s stock price.  P rior to the issuance of the misleading  statements, Parallax’s
stock price declined  from a high  of $0.070  per share to a low of $0.025  per share between

14

January 1,  2020  and  March  10,  2020.  As CEO of Parallax, Arena was under  pressure  to  stop  the
decline  in  the  company’s  stock  price.
42. Arena and Bradley were impacted  by P arallax’s declining  stock price,  because
each  had  accepted  stock  and  options   in  lieu  of  salary.
FIRST CLAIM
Fraud  in the  Purchas e  or Sale  of Se curitie s  in Violation  of
Se ction 10(b) of the  Exchange  Act and Rule  10b-5 The re unde r
(Agains t Parallax  and  Are na)

43. The Commission   repeats and incorporates  by  reference the allegations  in
paragraphs  1-42 above as if set forth fully  herein.
44. Defendants P arallax and Arena engaged in  a fraudulent  course of conduct that
included  making  material  misrepresentations  and  omissions  regarding  the  immediate  availability
of a COVID-19 screening test and/or COVID-19 related  equipment,   including   P P E.
45. By engaging  in  the  conduct  described  above,  Defendants Parallax and Arena,
directly  or indirectly,  acting knowingly  or recklessly,  by the use of means or instrumentalit ies  of
interstate commerce or of the mails,  in  connection  with  the purchase or sale of securities,
employed  devices, schemes or artifices to defraud; made untrue statements of material  fact or
omitted  to state material  facts  necessary to make the statements made, in light  of the
circumstances  under  which  they  were made, not  misleading;  and engaged in acts, practices or
courses of business  which operated   as a fraud or deceit upon  certain persons.
46. By reason of the forgoing,  each of the Defendants P arallax and Arena violated
Section  10(b) of the Exchange Act [15 U.S.C. § 78j(b)]  and  Rule  10b-5  thereunder  [17  C.F.R.  §
240.10b-5].

15

SECOND CLAIM
Fraud  in the  Offe r or Sale  of Se curitie s  in
Violation of Se ctions    17(a)(1) and (3) of  the  Se curitie s  Act
(Agains t Parallax  and  Are na)

47. The Commission  repeats and incorporates  by reference the allegations  in
paragraphs  1-42 above as if set forth fully  herein.
48. Defendants P arallax and Arena engaged in  a fraudulent  course of conduct that
included  making  material  misrepresentations  and  omissions  regarding  the  immediate  availability
of a COVID-19 screening test and/or COVID-19 related equipment,  including  P P E.
49. By engaging  in the conduct  described above, Defendants Parallax and Arena,
directly  and indirectly,  acting knowingly,  recklessly,  or  negligently,  in the offer or sale of
securities by the use of means or instrumentalit ies  of interstate commerce or the   ma ils,   employed
devices, schemes or artifices to defraud and engaged in  transactions,  practices or courses of
business  which  operated   as a fraud or deceit upon  purchasers of the securities.
50. By reason of the forgoing,  Defendants P arallax and Arena violated  Sections
17(a)(1) and (3) of the Securities  Act [15  U.S.C. § 77q(a)(1)  and (3)].
THIRD CLAIM
Fraud  in the  Offe r or Sale  of Se curitie s in
Violation  of Se ction 17(a)(3) of the  Se curitie s  Act
(Agains t De fe ndant B radle y)

51. The Commission  repeats and incorporates  by reference the allegations  in
paragraphs  1-42 above as if set forth fully  herein.
52. Defendant  Bradley  engaged  in  a  course  of  conduct  that  included   making   material
misrepresentations  and  omissions  regarding  the  immediate  availability   of  COVID-19 related
equipment,  including  P P E.

16

53. By engaging  in the conduct  described above, Defendant Bradley,  directly  and
indirectly,   acting  negligently,  in  the offer or sale of securities  by the use of means or
ins tr ume nta lit ie s  of interstate commerce or the   ma ils,   employed  devices,  schemes or artifices  to
defraud  and  engaged  in  transactions,  practices  or  courses  of  business  which  operated   as a fraud
or deceit upon  purchasers of the securities.
54. By reason of the forgoing,  Defendant Bradley violated  Section  17(a)(3) of the
Securities  Act [15  U.S.C. § 77q(a)(3)].
PRAYER FOR RELIEF

 WHEREFORE, the Commission  respectfully  requests  that  this  Court  enter  a  judgment:

A. permanently  enjoining   and restraining Defendants,  and  each  of  their  agents,
servants, employees  and attorneys and those persons in  active concert or participation  with them
who receive actual notice  of the injunction  by personal  service or otherwise,  including  facsimile
transmission  or overnight  delivery service,  from  directly  or  indirectly   engaging   in  the  conduct
described  above,  or  in  conduct  of  similar   purport  and  effect;
B. requiring  Defendants to pay the appropriate  civil  monetary  penaltie s  pursuant  to
Section  20(d) of the Securities  Act [15 U.S.C. § 77t(d)]  and Section 21(d)(3)  of the Exchange
Act [15  U.S.C. § 78u(d)(3)];
C. barring  Defendants Arena and Bradley from participating  in any offering  of a
penny  stock,  including:   acting  as a promoter,  finder,  consultant,  agent or other person who
engages in activities  with  a broker,  dealer or issuer for purposes  of the issuance or trading  in any
penny stock,  or inducing  or attempting  to induce the purchase or sale of a penny  stock pursuant
to Section  20(g)  of  the  Securities  Act  [15  U.S.C. §    77(t)g]  and Section  21(d) of the Exchange Act
[15  U.S.C. § 78u(d)(6)];

17

D.   barr ing  Defendant Arena,  pursuant  to Section  20(e) of the Securities  Act [15
U.S.C. § 77t(e)] and Section  21(d)(2)  of the Exchange Act [15  U.S.C. § 78u(d)(2)],  from  acting
as an officer or director  of any issuer that has a class of securities  registered pursuant to Section
12 of the Exchange  Act [15 U.S.C. § 781] or that is required  to file  reports pursuant  to Section
15(d)  of  the  Exchange Act [15 U.S.C. § 78o(d)],   Section  20(e) of the Securities  Act [15  U.S.C. §
77t(e)],  or  Section  21(d)(2)  of  the  Exchange  Act  [15 U.S.C. § 78u(d)(2)];
E. Retain  jurisdiction   over  this  action  to  implement   and  carry  out  the  terms  of  all
orders and  decrees that may be entered; and
F. Award such other and further relief  as the Court deems just and proper.

Dated:  J uly  7 ,  2021
By:
Alexander M. Vasilescu
Alfred  A. Day*
R ua   M.   K e lly*
Susan  Curtin*
A ndr e w   P a lid*
U.S.  Securities  and  Exchange  Commission
New York  Regional  Office
200  Vesey  Street,  Suite  400
New York,  New York  10281-1022
(617)  573-8941
ke llyr [email protected]

*Seeking  admission pro hac vice in the S.D.N.Y.

UNITED STATES DISTRICT COURT  
SOUTHERN DISTRICT OF NEW YORK 

 
 
UNITED STATES SECURITIES AND 
EXCHANGE COMMISSION, 
 
  Plaintiff, 
 
 v. 
 
PARALLAX HEALTH SCIENCES, INC.,  
PAUL R. ARENA, and NATHANIEL T. 
BRADLEY,  
 
  Defendants.  

 
 
 
 
 
 
     Civil Action No.  

 
     COMPLAINT 
 
     JURY TRIAL DEMANDED  

  
 

Plaintiff Securities & Exchange Commission (the “Commission”), in its Complaint 

against Defendants Parallax Health Sciences, Inc. (“Parallax”), Paul R. Arena (“Arena”) and 

Nathaniel T. Bradley (“Bradley”), alleges as follows: 

SUMMARY 
 

1. Between March 11, 2020 and April 9, 2020, Parallax, a healthcare company 

founded in 2010 whose stock is publicly traded, issued a series of seven press releases 

misleading investors about the company’s ability to capitalize on the COVID-19 pandemic.  The 

releases made several false representations, including that a COVID-19 screening test that 

Parallax purported to be developing would be “available soon,” and that the company had 

personal protective equipment (“PPE”) and ventilators and other medical equipment for 

“immediate sale.”  In fact, when the company issued the releases, Parallax was insolvent and did 

not have the capital to develop a test.  Parallax’s own internal projections also estimated that, 

even if the company had the funds, it would take it more than a year to develop a test.  Moreover, 

Parallax did not possess the PPE and medical equipment that it offered for sale, and had neither 

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2 
 

the money to purchase the equipment nor the Food and Drug Administration (“FDA”) 

registrations needed to import and distribute the equipment.        

2. Arena, Parallax’s Chief Executive Officer, directed and oversaw the company’s 

operations and finances.  Arena knew that Parallax did not have enough money to develop a 

COVID-19 screening test or to acquire PPE or medical equipment.  He also knew that Parallax 

lacked the FDA registrations required to import and sell the PPE and medical equipment.  

However, he drafted the seven misleading press releases to boost Parallax’s declining stock 

price, deliberately misrepresenting that the company would make a COVID-19 test available 

soon and that it possessed PPE and medical equipment.  This plan was successful.  During the 

approximately four-week period beginning March 11, 2020, the daily closing price of Parallax’s 

common stock in the U.S. markets was, on average, 20% higher than the period between January 

1, 2020 and March 10, 2020, the day before Parallax issued the first misleading release. 

3. Bradley, Parallax’s Chief Technology Officer, was primarily responsible for 

developing the company’s remote monitoring healthcare technology, but, during the COVID-19 

pandemic, he assisted in the company’s attempt to source and sell PPE and medical equipment.  

In connection with these efforts, Bradley helped Arena draft two press releases and posted 

content on Parallax’s website, claiming that the company had PPE and medical equipment for 

immediate sale.  Although Bradley was unaware of Arena’s plan to artificially boost Parallax’s 

stock price, he publicized Parallax’s claims that it had PPE and medical equipment available for 

sale without verifying that Parallax had the requisite capital and the necessary FDA registrations 

in place to acquire and distribute the equipment.  

  

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3 
 

  VIOLATIONS 

4. By engaging in the conduct alleged in this Complaint, Parallax and Arena violated 

Sections 17(a)(1) and (3) of the Securities Act of 1933 (‘Securities Act”) [15 U.S.C. §§ 77q(a)(1) 

and (3)] and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. 

§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], and Bradley violated Section 

17(a)(3) of the Securities Act [15 U.S.C. § 77q(a)(3)].  

JURISDICTION AND VENUE 

5. The Commission brings this action pursuant to Sections 20(b) and 20(d) of the 

Securities Act [15 U.S.C. §§ 77t(b) and 77t(d)], and Section 21(d) of the Exchange Act [15 

U.S.C. § 78u(d)].  

6. The Commission respectfully requests a Final Judgment: (a) permanently 

enjoining Defendants from violating the federal securities laws and rules this Complaint alleges 

they have violated; (b) ordering Defendants to pay civil money penalties pursuant to Section 

21(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 

U.S.C. § 78u(d)(3)]; (c) barring Defendants Arena and Bradley from participating in any offering 

of a penny stock pursuant to Section 20(g) of the Securities Act [15 U.S.C.§ 77t(g)] and Section 

21(d) of the Exchange Act [15 U.S.C. § 78u(d)(6)]; (d) imposing an officer and director bar 

against Arena pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)] and Section 

21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)]; and, (e) ordering any other and further 

relief the Court may deem just and proper. 

7. This Court has jurisdiction over this action pursuant to Sections 20(b) and 22(a) 

of the Securities Act [15 U.S.C. §§ 77t(b) and 77v(a)] and Sections 21(d), 21(e) and 27 of the 

Exchange Act [15 U.S.C. §§ 78u(d), 78u(e) and 78aa].  

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4 
 

8.  In connection with the conduct alleged in this Complaint, Defendants, directly or 

indirectly, singly or in concert, made use of the means or instruments of transportation or 

communication in, or instrumentalities of, interstate commerce or the mails or the facilities of a 

national securities exchange. 

9. Venue lies in this District under Section 22(a) of the Securities Act [15 U.S.C. § 

77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa], because certain acts, practices, 

transactions, and courses of business alleged in this Complaint occurred within this District.  At 

all times relevant to this Complaint, Parallax maintained an office in New York, New York and 

offered its products and securities for sale in this District. 

DEFENDANTS 

10. Parallax Health Sciences, Inc. is a Nevada corporation with offices in New 

York, New York and Santa Monica, California.  Parallax’s common stock is registered with the 

Commission pursuant to Section 12(g) of the Securities Act and was quoted on OTC Link 

operated by the OTC Markets Group Inc. until the Commission issued an order on April 10, 

2020 that temporarily suspended trading in the company’s securities from April 13, 2020 to 

April 24, 2020.  Parallax’s common stock is presently bought and sold over the counter.   

11. Paul R. Arena, age 63, is a resident of New York, New York.  Arena has been 

the Chief Executive Officer (“CEO”) and a director of Parallax since July 2017.  From July 2017 

to March 2020, he also served as Parallax’s President.   

12. Nathaniel T. Bradley, age 45, is a resident of Colts Neck, New Jersey.  Bradley 

has been the Chief Technology Officer (“CTO”) of Parallax since January 2016 and a director of 

the company since June 2018.  

  

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5 
 

FACTUAL BACKGROUND 

13. At all times relevant to this Complaint, Defendant Parallax was a publicly traded 

company with the ticker symbol PRLX and was required to file periodic reports with the 

Commission.     

14. On May 18, 2020, following the suspension of trading in the company’s 

securities, Parallax filed an annual report with the Commission on Form 10-K for the year ended 

December 31, 2019 (“2019 10-K”).  Parallax has not filed more current reports with the 

Commission.   

15. Parallax described itself in the 2019 10-K as “a healthcare company focused on 

developing products and services that can provide remote communication, diagnosis, treatment, 

and monitoring of patients on a proprietary platform.”   

16. Parallax filed audited financial statements for the year ended December 31, 2019, 

with the 2019 10-K.  The financial statements show that Parallax suffered a $6.4 million 

operating loss in 2019, and that the company’s liabilities exceeded its assets.   

17. Parallax reported in the 2019 10-K that its assets included, among other things, 

(1) the Target System testing platform, consisting of the Target Antigen Detection (“TAD”) 

Cartridge and the FDA-cleared VT-1000 Desktop Analyzer (“VT-1000”), and (2) twenty-five 

FDA-cleared blood tests designed to be utilized with the Target System testing platform to detect 

certain infectious diseases, cardiac and other medical conditions, pregnancy, and drug use.  

Operationally, the TAD Cartridge was said to test a blood sample and produce a qualitative result 

(positive or negative), and additional quantitative information could be derived by inserting the 

TAD Cartridge into the VT-1000.  

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6 
 

18. Parallax did not develop the Target System testing platform. The diagnostic 

platform was developed by another company in the late 1980s and early 1990s.  In 2010, 

Parallax entered into a license agreement giving Parallax the right to commercialize the Target 

System.  Parallax reported in the 2019 10-K that, as of December 31, 2019, it “has not yet 

commenced commercial operations of the Target System, and thus has yet to develop methods of 

distribution for its diagnostics products beyond the business plan stage.”  Parallax further 

reported in the 2019 10-K that “[t]he Target System is not commercially available at this time, as 

the product is currently in redesign and development, with a primary focus on developing the 

SPARKS Mobile™, the patented handheld mobile version of the VT-1000 desktop analyzer.”  

Parallax’s 2019 10-K further noted that “[t]he SPARKS Mobile™ is currently in the design stage 

of the development process.”   

19. At all times relevant to this Complaint, Parallax did not possess a test that had 

been approved or cleared by the FDA to screen for COVID-19.  Parallax reported in the 2019 10-

K that it was “in the process of developing a test cartridge for the diagnosis of the COVID-19 

virus,” and that the company “anticipates the need for a minimum of an additional three million 

dollars ($3,000,000) of investment capital for it to achieve its goals of developing a 

commercially viable rapid …COVID-19 diagnostic test and the SPARKS Mobile™ Analyzer 

version of the VT-1000 Desktop Analyzer.”   

20. From at least January 1, 2020 through April 10, 2020, Parallax raised 

approximately $912,000 from a private offering and sale of securities and a promissory note.  

Parallax used the proceeds from the sale of the shares and the promissory note to pay operating 

expenses and short-term debt obligations.  As of March 31, 2020, Parallax had approximately 

$172,000 in cash.  

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7 
 

Parallax and Arena Made Misleading Statements 
About the Impending Availability of a COVID-19 Test 

 
21. In late February 2020, Defendants Parallax and Arena decided that the company 

should attempt to develop a TAD Cartridge to screen for COVID-19 that could be utilized with 

either the VT-1000 or the (yet to be developed) SPARKS Mobile.  Shortly thereafter, Parallax 

issued four press releases, all drafted by Arena, that misled investors about when the company’s 

purported COVID-19 screening test would become available. 

22. On March 11, 2020, Parallax issued a press release addressing, for the first time, 

the COVID-19 pandemic.  The release stated that Parallax was “in discussions with” the Centers 

for Disease Control (“CDC”), the World Health Organization (“WHO”), and private laboratories 

and universities “to assist in facilitating its participation in providing diagnostic solutions for the 

creation of mobile screening tests.”  The release announced Parallax’s “Intent to Develop a 

Rapid Screening Test for COVID-19 on its FDA 510(K) Approved Diagnostic Platform.” 

23. On March 12, 2020, Parallax issued another press release addressing the COVID-

19 pandemic.  Arena was quoted in the release, saying: “Yesterday we announced our strategic 

initiative for the creation of a rapid screening test on our VT-1000 diagnostics device for the 

Covid-19 that when available soon will produce results within 15 minutes.” (Emphasis added.)   

24. On March 16, 2020 and March 17, 2020, Parallax disseminated two more press 

releases concerning the COVID-19 pandemic.  The March 16, 2020 release stated that Parallax 

had a “strategic initiative for the creation of a rapid screening test on its VT-1000 diagnostics 

device for COVID-19 that when soon available  will produce results within 15 minutes.” 

(Emphasis added.)  The March 17, 2020 release stated that the company’s “ongoing strategic 

initiative for the creation of a rapid screening test on its VT-1000 diagnostics device for COVID-

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8 
 

19, coronavirus testing that when soon available  will produce results in 15 minutes.” (Emphasis 

added.)   

25. As Parallax and Arena knew or recklessly ignored, Parallax was not in 

discussions with the CDC, the WHO, or private labs or universities concerning the development 

of the company’s purported COVID-19 screening test, and the test would not be available within 

the timeframes they represented to investors.  Indeed, an internal Parallax document emailed by 

Arena to others at Parallax on March 14, 2020 estimated it would take approximately 12 months 

to commercialize the VT-1000, about 12 to 14 months to develop the SPARKS Mobile, and 

approximately 12 months to commercialize the TAD Cartridge.  As Parallax had only begun 

planning to create its COVID-19 test at the end of February 2020, the statements by Defendants 

Parallax and Arena that Parallax’s test would be “available soon” were false and misleading.   

26. Moreover, as Parallax and Arena knew or recklessly ignored, Parallax lacked the 

funds to develop a COVID-19 test.  Indeed, the company was insolvent.  None of the March 

2020 public statements alerted investors that Parallax was insolvent and did not otherwise have 

the financial wherewithal to develop and launch a rapid screening test for COVID-19.  Parallax 

did not have the estimated $3 million in funds needed to develop prototypes, or to conduct 

required clinical trials, and further, had no reasonable prospect of raising that much capital. 

  

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9 
 

Parallax, Arena, and Bradley Made Misleading Statements  
About the Availability of COVID-19 Related Products and Sales 

 
27. Defendants Parallax and Arena also misled investors by falsely stating that the 

company had available for immediate sale COVID-19 test kits (produced by others), PPE, 

ventilators and other medical equipment; Bradley negligently misled investors by making such 

statements. 

28. On March 23, 2020, Parallax issued a press release, drafted by Arena and 

Bradley, with the headline, “Parallax Announces Immediate Availability of Point-of-Care 

COVID Diagnostic Testing Kits, Personal Protection Equipment (PPE) and Medical Supplies.”  

(Emphasis added.)  The release stated that Parallax had “signed a contract with a medical 

distribution company in China owned by a prominent businessman” and, beginning that day, 

“the Company [was] accepting orders for and [had] immediate availability of the Coronavirus, 

(“COVID-19”) Point-of-Care Diagnostics Kits for American medical practices, hospitals, 

nursing operations, emergency centers and nursing homes.” (Emphasis added.)  The release 

further stated “the Company [would] also be providing immediate availability and access to 

Personal Protection Equipment, (“PPE”) including, but not limited to, FDA approved medical 

masks, protective sterile gowns, eye protecting goggles, face shields, ventilators, and other 

medical grade equipment.” (Emphasis added.)   

29. The March 23, 2020 release contained quotes from both Arena and Bradley about 

Parallax.  Arena stated that Parallax was “fortunate to have the U.S. … Government lift sanctions 

and tariffs on medical products from China that opened up this opportunity … and for Parallax to 

immediately provide a solution to fill the void of overwhelming demand related to Personal 

Protective Equipment.” (Emphasis added.)  Bradley emphasized that Parallax’s remote patient 

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10 
 

monitoring system would permit Parallax “to capture in real-time the test results achieved from 

the test kits we are offering through this partnership today.” (Emphasis added.) 

30. Additionally, the March 23, 2020 release stated that Parallax had “created a 

Government and Medical Practice website to process orders immediately,” and that the 

company had “access to large inventories of all the available products and [was] offering the 

products in all fifty U.S. states and all U.S. territories from the Company’s website located at 

www.goodhealthoutcomes.com.” (Emphasis added.)  A “supply booklet,” which Bradley created 

and posted on the Parallax website, identified the PPE and medical equipment that purportedly 

could be purchased from Parallax by completing an online order form.  Bradley listed each piece 

of equipment for sale, the minimum and maximum quantity purportedly for sale, and the price.  

The “supply booklet” included COVID-19 test kits, ventilators, PPE, thermometers, surface 

cleaning agents and hand sanitizer.  All of the equipment was represented to be FDA-approved, 

and the website listed the delivery time for most items as “within 7 days.”   

31. In fact, Parallax never possessed the equipment that it offered for sale on its 

website.  Rather, Arena and Bradley planned to acquire the equipment under a “Master 

Distribution/Reseller Agreement” (the “Distribution Agreement”) that Parallax executed with a 

supplier (the “Supplier”) on March 22, 2020.  All of the information concerning the equipment 

that Bradley posted to Parallax’s website was provided by the Supplier.   

32. Even with the Distribution Agreement in place, Parallax was not in a position to 

deliver the PPE and medical equipment that it offered for sale.  Critical hurdles prevented the 

company from buying and reselling any equipment sourced by the Supplier.  On March 22, 2020, 

when it entered into the Distribution Agreement, Parallax was insolvent and it did not have the 

necessary financial wherewithal to fulfill its obligations under the agreement.  Parallax also 

Case 1:21-cv-05812   Document 1   Filed 07/07/21   Page 10 of 17

http://www.goodhealthoutcomes.com/


11 
 

lacked the FDA registrations required to import and distribute the equipment.  Parallax and 

Arena knew of, or recklessly disregarded, these hurdles.  Bradley failed to take reasonable steps 

to ascertain whether Parallax had surmounted them.       

33. Before disseminating the March 23, 2020 press release, neither Arena nor Bradley 

consulted anyone about the legality of importing or distributing PPE or medical equipment 

supplied by foreign parties.  Rather, the person who replaced Arena as President of Parallax in 

early March 2020 (the “Parallax President”), upon reading the March 23, 2020 press release after 

it was issued, emailed Arena and Bradley the same day informing them that Parallax could not 

sell the equipment it was offering on its website until the company registered with the FDA.  The 

Parallax President further informed Arena and Bradley that each device and its manufacturer also 

had to be registered with the FDA.   

34. After receiving the Parallax President’s email, Arena and Bradley approached an 

FDA-registered company (the “Distribution Company”) authorized to import and export medical 

equipment in the U.S. to partner with Parallax to distribute the equipment purportedly being 

sourced by the Supplier.  Parallax and the Distribution Company exchanged drafts of a joint 

venture agreement, but did not execute it because they failed to settle on all of the terms.  Neither 

company was able to obtain documentation confirming the FDA registrations for the equipment 

Parallax offered for sale or the manufacturers of the equipment.   

35. Nonetheless, on March 30, 2020, Parallax issued a press release, drafted by Arena 

and Bradley, falsely stating that “world leading inventories and end-to-end logistics services 

related to the International Coronavirus, (“COVID-19”) response are now becoming available at 

[Parallax’s] website www.goodhealthoutcomes.com.”  The press release further touted that 

Parallax was “offering … procurement managers from both private and government entities the 

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https://www.globenewswire.com/Tracker?data=3K8dfkF1dliY1vKk0bL4j8xA6pEnJeYXaxPmQ4BrU-2Dp693NyrG-XQMd1qWymGE2_oML4ncRTQ4CqXy80SZ54Dmy1Zl98wL8mSeD4l4Kwl8BMyBvnOvmVDb_OMZIxHS


12 
 

ability to purchase … much needed personal protection equipment, (“PPE”) items from FDA-

registered manufacturers” through its “online portal,” including “medical masks, invasive and 

passive ventilators, thermometers, medical protective gowns, face protection, other personal 

protective equipment and COVID-19 point of care test kits.”  

36. On April 9, 2020, Parallax issued another press release continuing to mislead 

investors that it was capitalizing on the COVID-19 pandemic.  Drafted by Arena, the press 

release stated that Parallax had “Receive[d] Over $10 million of Telehealth and Medical 

Supply Contracts.”  (Emphasis added.)  Arena quoted himself in the press release, remarking, 

“We are pleased to report that we have presently received over $10 million of orders for 

Telehealth related and Medical Supply contracts we are in the process of fulfilling and we 

anticipate that number to grow significantly in the coming weeks and months.” (Emphasis 

added.) 

37. The purported “medical supply contracts” referenced in the April 9, 2020 press 

release referred to orders that Parallax had received for the COVID-19-related products offered 

for sale on its website.  However, contrary to the company’s representations, Parallax only had 

approximately $245,000 in orders at the time.  Parallax and Arena knew, or recklessly 

disregarded, that the other orders that the company claimed were merely requests for price 

quotations that had not been pursued by the requesting parties or orders that had been cancelled.        

Defendants’ Misleading Statements Caused a Surge in Market Activity 
 

38. Between January 1, 2020 and March 10, 2020, the average price of Parallax’s 

common stock at the close of the U.S. securities markets each day was $0.045 per share and 

daily trading volume averaged 282,228 shares (collectively, the “Q1 Averages”).  However, 

between March 11, 2020, the day that Parallax first announced its efforts to combat COVID-19 

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by developing a screening test, and April 9, 2020, the last day of trading before the Commission 

suspended trading in the company’s securities, Parallax’s closing stock price each day averaged 

$0.054 per share, and daily trading volume averaged 1,095,515 shares, which was respectively 

20% and 288% higher than the Q1 Averages.   

39. On the days that Parallax made the false statements described in this Complaint, 

the surge in market activity was even greater.  During the four trading days between March 12, 

2020 and March 17, 2020, when Parallax claimed a COVID-19 test that it was producing would 

be available soon, the company’s stock price at the close of U.S. securities markets averaged 

$0.064 per share and the daily trading volume averaged 2,141,300 shares, 42% and 659% higher 

than the Q1 Averages. 

40. Moreover, when Parallax misleadingly claimed on March 23, 2020 and March 30, 

2020 to have COVID- 19 related equipment for sale, the volume of trading in its common stock 

rose substantially.  On March 23, 2020, 2,049,200 Parallax shares traded, reflecting a 182% 

increase over the 726,100 shares exchanged the prior trading day.  The company’s stock price 

also increased, climbing 7% from $0.056 to $0.060 per share at the close of the U.S. securities 

markets.  Likewise, on March 30, 2020, trading volume rose 33%, as 1,036,500 Parallax shares 

traded compared to 777,000 shares the day before, although Parallax’s stock price closed at 

$0.050 per share on both days. 

41. Parallax and Arena made the misleading statements concerning the availability of 

the company’s purported COVID-19 test, its possession of PPE and medical equipment and the 

volume of telehealth and medical supply orders with the intent to artificially increase, or at least 

stabilize, Parallax’s stock price.  Prior to the issuance of the misleading statements, Parallax’s 

stock price declined from a high of $0.070 per share to a low of $0.025 per share between 

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January 1, 2020 and March 10, 2020.  As CEO of Parallax, Arena was under pressure to stop the 

decline in the company’s stock price.      

42. Arena and Bradley were impacted by Parallax’s declining stock price, because 

each had accepted stock and options in lieu of salary.   

FIRST CLAIM 
Fraud in the Purchase or Sale of Securities in Violation of 

Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder 
(Against Parallax and Arena) 

 
43. The Commission repeats and incorporates by reference the allegations in 

paragraphs 1-42 above as if set forth fully herein. 

44. Defendants Parallax and Arena engaged in a fraudulent course of conduct that 

included making material misrepresentations and omissions regarding the immediate availability 

of a COVID-19 screening test and/or COVID-19 related equipment, including PPE. 

45. By engaging in the conduct described above, Defendants Parallax and Arena, 

directly or indirectly, acting knowingly or recklessly, by the use of means or instrumentalities of 

interstate commerce or of the mails, in connection with the purchase or sale of securities,  

employed devices, schemes or artifices to defraud; made untrue statements of material fact or 

omitted to state material facts necessary to make the statements made, in light of the 

circumstances under which they were made, not misleading; and engaged in acts, practices or 

courses of business which operated as a fraud or deceit upon certain persons. 

46. By reason of the forgoing, each of the Defendants Parallax and Arena violated 

Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 

240.10b-5]. 

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SECOND CLAIM 
Fraud in the Offer or Sale of Securities in 

Violation of Sections 17(a)(1) and (3) of the Securities Act 
(Against Parallax and Arena) 

 
47. The Commission repeats and incorporates by reference the allegations in 

paragraphs 1-42 above as if set forth fully herein. 

48. Defendants Parallax and Arena engaged in a fraudulent course of conduct that 

included making material misrepresentations and omissions regarding the immediate availability 

of a COVID-19 screening test and/or COVID-19 related equipment, including PPE.  

49. By engaging in the conduct described above, Defendants Parallax and Arena, 

directly and indirectly, acting knowingly, recklessly, or negligently, in the offer or sale of 

securities by the use of means or instrumentalities of interstate commerce or the mails, employed 

devices, schemes or artifices to defraud and engaged in transactions, practices or courses of 

business which operated as a fraud or deceit upon purchasers of the securities. 

50. By reason of the forgoing, Defendants Parallax and Arena violated Sections 

17(a)(1) and (3) of the Securities Act [15 U.S.C. § 77q(a)(1) and (3)]. 

THIRD CLAIM 
Fraud in the Offer or Sale of Securities in 

Violation of Section 17(a)(3) of the Securities Act 
(Against Defendant Bradley) 

 
51. The Commission repeats and incorporates by reference the allegations in 

paragraphs 1-42 above as if set forth fully herein. 

52. Defendant Bradley engaged in a course of conduct that included making material 

misrepresentations and omissions regarding the immediate availability of COVID-19 related 

equipment, including PPE.  

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53. By engaging in the conduct described above, Defendant Bradley, directly and 

indirectly, acting negligently, in the offer or sale of securities by the use of means or 

instrumentalities of interstate commerce or the mails, employed devices, schemes or artifices to 

defraud and engaged in transactions, practices or courses of business which operated as a fraud 

or deceit upon purchasers of the securities. 

54. By reason of the forgoing, Defendant Bradley violated Section 17(a)(3) of the 

Securities Act [15 U.S.C. § 77q(a)(3)]. 

PRAYER FOR RELIEF 
 

 WHEREFORE, the Commission respectfully requests that this Court enter a judgment: 
 

A. permanently enjoining and restraining Defendants, and each of their agents, 

servants, employees and attorneys and those persons in active concert or participation with them 

who receive actual notice of the injunction by personal service or otherwise, including facsimile 

transmission or overnight delivery service, from directly or indirectly engaging in the conduct 

described above, or in conduct of similar purport and effect;  

B. requiring Defendants to pay the appropriate civil monetary penalties pursuant to 

Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange 

Act [15 U.S.C. § 78u(d)(3)]; 

C. barring Defendants Arena and Bradley from participating in any offering of a 

penny stock, including: acting as a promoter, finder, consultant, agent or other person who 

engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any 

penny stock, or inducing or attempting to induce the purchase or sale of a penny stock pursuant 

to Section 20(g) of the Securities Act [15 U.S.C. § 77(t)g] and Section 21(d) of the Exchange Act 

[15 U.S.C. § 78u(d)(6)]; 

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D.   barring Defendant Arena, pursuant to Section 20(e) of the Securities Act [15 

U.S.C. § 77t(e)] and Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)], from acting 

as an officer or director of any issuer that has a class of securities registered pursuant to Section 

12 of the Exchange Act [15 U.S.C. § 781] or that is required to file reports pursuant to Section 

15(d) of the Exchange Act [15 U.S.C. § 78o(d)], Section 20(e) of the Securities Act [15 U.S.C. § 

77t(e)], or Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)]; 

E. Retain jurisdiction over this action to implement and carry out the terms of all 

orders and decrees that may be entered; and 

F. Award such other and further relief as the Court deems just and proper.  

 

Dated:  July 7, 2021 

By:        
Alexander M. Vasilescu 
Alfred A. Day*  
Rua M. Kelly* 
Susan Curtin* 
Andrew Palid* 
U.S. Securities and Exchange Commission 
New York Regional Office 
200 Vesey Street, Suite 400 
New York, New York 10281-1022 
(617) 573-8941 
[email protected] 
 
*Seeking admission pro hac vice in the S.D.N.Y.  

 

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