SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 or 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
DateNovember 30, 2006______________________________
BIOTECH HOLDINGS LTD. _
(Exact name of Registrant as specified in its charter)
#160 - 3751 Shell Road, Richmond, British Columbia, Canada, V6X 2W2 _
(Address of principal executive offices)
Commission file number0-29108 _
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F)
Form 20-F Yes Form 40-F No
(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
No
Biotech Holdings Ltd.
Filed in this Form 6-K
Documents index
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BIOTECH HOLDINGS LTD.
By: /s/ Robert Rieveley
Name: Robert Rieveley
Title: Chief Executive Officer
Date: November 30, 2006
BiO
BIOTECH HOLDINGS LTD.
SECOND QUARTER REPORT
September 30, 2006
Head Office:
Suite 160 - 3751 Shell Road
Richmond, British Columbia
Canada V6X 2W2
Telephone: (604) 295-1119
Facsimile: (604) 295-1110
Toll Free: 1-888-216-1111
Website:www.biotechltd.com
E-mail: biotech@direct.ca
Shares Listed
TSX Venture: BIO.V
NASD OTC-BB: BIOHF
Frankfurt Stock Exchange: 925970.F
President^s Letter to Shareholders
In the Company^s fiscal second quarter, ended September 30, 2006, the Company had Sucanon sales of $22,881 (all figures Canadian dollars unless otherwise stated), reflecting the fact that the Company had reduced access to funds for marketing due to the difficulty of raising funds during the period, from December 2005 to August, 2006 during which the Company^s shares were not traded on the TSX Venture Exchange. As a result, amounts spent on advertising had been drastically reduced from the beginning of calendar 2006 onward, increasingly impacting sales and exacerbating underperformance by the Company^s Mexican marketing company.
In the quarter ended September 30, 2006, the Company^s agreement with the Mexican marketing company was modified so that the Company^s own managers in Mexico could become directly involved in marketing and advertising Sucanon. Based on these contractual changes, the Company took over Sucanon marketing in Mexico during September, 2006, through its controlled subsidiary PharmaRoth Latin America SA de CV. At the same time, the resumption of trading of the Company^s shares on the TSX Venture Exchange, in August, 2006, played an important role in helping the company obtain funds for resuming advertising in Mexico, beginning in September, 2006.
Loss per share for the six months ending September 30 was $.01 (2005: $01).
Sucanon sales for October, 2006, the first month of the Company^s third quarter, were $33,362, an increase of $10,481 (45.8%) over the $22,281 sales of the entire three-month period ending September 30. Further, the current month^s sales ---$34,774 Cdn to November 23 --- have been more than equal to the sales recorded in the full month of October. Advertising both on television and in print is supporting the growth of sales. The new marketing approach also puts an emphasis on contact with doctors, clinics and diabetes associations, as well as attending diabetes trade shows and developing direct contacts with diabetics.
The new arrangement with the marketing company permits Biotech^s managers to handle all marketing activities for Sucanon, while the marketing company continues to deliver Sucanon to the customers that it introduced during 2005, such as Wal-Mart Mexico. Under the revised agreement, Biotech^s managers have the right to establish new distributors and deal directly with distributors originally introduced by the marketing company, which has a favorable financial result for the Company since, in dealing with the previously-introduced distributors, a portion of the per-package margin that was going to the marketing company now goes to Biotech, while the retailer^s cost remains the same and the retail price per package to the consumer remains at approximately $30 US per one-month package.
After the end of the period, the Company carried out an upgrade of its website for Sucanon sales. The upgraded website, www.sucanonhealth.com, is scheduled for launch by December 4.
The company is continuing discussions with potential distributors for expansion of Sucanon distribution to Argentina and has started discussions for Sucanon distribution in some markets outside Latin America, including United Arab Emirates, Egypt and Pakistan. Once an agreement for distribution is reached, regulatory approval must be received in Egypt and Pakistan, though not in the U.A.E. There is however no assurance that regulatory approval where needed will be achieved or that sales will be material.
The Company^s strategy going forward is to achieve profitability based on sales of Sucanon in Mexico. With the marketing changes that have been made, and with continuing advertising, the company believes that it is progressing towards this goal.
Robert Rieveley, President
For the Board of Directors
November 23, 2006
Biotech Holdings Ltd.
Notice to Shareholders
For the Six Months September 30, 2006
Responsibility for Financial Statements
The accompanying financial statements for Biotech Holdings Ltd. have been prepared by management in accordance with Canadian generally accepted accounting principles. The most significant accounting principles are set out in the March 31, 2006 audited financial statements. Only changes in accounting information have been disclosed in these financial statements. Estimates and approximations have been made using careful judgement. Recognizing that the Company is responsible for both the integrity and objectivity of the financial statements, management is satisfied that these financial statements have been presented fairly.
Auditor Involvement
The auditor of Biotech Holdings Ltd. has not performed a review of the unaudited financial statements for the six months or the quarters ended September 30, 2006 and September 30, 2005.
Forward-looking Information
Forward looking statements in the management discussion and analysis ("MD&A") and the Report to Shareholders, including statements regarding the Company^s business which are not based on historical facts, are made pursuant to the "safe harbour" provisions of the United States Securities Litigation Reform Act of 1995 and pursuant to Form 51-102F1 of National Instrument 51-102 as implemented in rules, regulations, and policies of Canadian securities regulatory authorities. These Quarterly Financial Statements contain certain forward-looking statements and information relating to Biotech Holdings Ltd. that are based upon the beliefs of its management as well as assumptions made by and information currently available to the Company. When used in this document, the words "anticipate", "believe", "estimate" and "expect" and similar expressions, as they relate to the Company or its management, a re intended to identify forward-looking statements. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performances or achievements that may be expressed or implied by such forward-looking statements.
Financial Statement Basis of Presentation
These consolidated financial statements have been prepared in accordance with the Canadian Institute of Chartered Accountants (CICA) Standards for interim financial statements and with Canadian generally accepted accounting principles applicable to a going concern. Accordingly, these financial statements reflect the carrying value of assets and liabilities, the reported revenues and expenses and balance sheet classifications on the basis that the going concern assumption is appropriate. If this assumption were not appropriate, adjustments could be material. Interim financial statements do not include all the disclosure requirements for annual financial statements and, accordingly, should be read in conjunction with the Company^s audited financial statements dated March 31, 2006.
Biotech Holdings Ltd.
Management Discussion and Analysis
For the 6 Months ended September 30, 2006
Discussion of Operations and Financial Condition
The following 3 pages have been extracted from the Company^s Management Discussion and Analysis ("MD&A") for the 6 Months ended September 30, 2006. The full MD&A also includes information provided in the Notes to the Financial Statements and other information. The MD&A is available on the Company^s website www.biotechltd.com and on the System for Electronic Document Analysis and Retrieval ("SEDAR"), which may be accessed at www.sedar.com.
Operating Results
The following table highlights the Company^s quarterly results from operations for the current and last fiscal year:
June 30, 06 | Sept 30, 06 | Dec 31, 06 | Mar 31, 07 | Total Year | |
Revenues | $ 48,621 | $ 22,881 | $ 71,502 | ||
Cost of Sales | 23,897 | 19,586 | 43,483 | ||
Gross Profit | 24,724 | 3,295 | 28,019 | ||
General, Administrative | |||||
and Selling Expenses | 126,112 | 160,805 | 286,918 | ||
Amortization | 127,981 | 136,899 | 264,880 | ||
Product Marketing Costs | 34,710 | 69,391 | 104,101 | ||
Professional Fees | 14,767 | 45,626 | 60,393 | ||
Interest Expense | 16,670 | 22,047 | 38,717 | ||
Office rent, utilities & Maintenance | 15,084 | 17,117 | 32,201 | ||
Stock-based compensation | 40,135 | 56,168 | 96,303 | ||
Foreign Exchange | 5,854 | 23,204 | 29,058 | ||
Loss from Operations | (356,591) | (527,962) | (884,552) | ||
Profit (Loss) from Discontinued Operations | 0 | 0 | 0 | ||
Loss for the period | (356,591) | (527,962) | (884,552) | ||
Outstanding Common Shares | 92,229,512 | 92,229,512 | 92,229,512 | ||
Loss per share | (0.00) | (0.01) | (0.01) | ||
Quarter Ended | June 30, 05* | Sept 30, 05* | Dec 31, 05* | Mar 31, 06 | Total Year |
Revenues | $ 123,411 | $ 211,654 | $ 119,540 | $ 28,235 | $ 482,840 |
Cost of Sales | 42,626 | 37,994 | 38,446 | 10,221 | 129,287 |
Gross Profit | 80,785 | 173,660 | 81,094 | 18,014 | 353,553 |
General, Administrative | |||||
and Selling Expenses | 169,585 | 171,679 | 162,831 | 211,061 | 715,156 |
Amortization | 152,480 | 152,480 | 152,481 | 152,671 | 610,112 |
Product Marketing Costs | 0 | 0 | 0 | 571,985 | 571,985 |
Professional Fees | 27,058 | 692 | 32,372 | 4,606 | 64,728 |
Interest Expense | 13,989 | 14,318 | 14,144 | 18,345 | 60,796 |
Stock-based compensation | 74,610 | 74,610 | 83,695 | 50,629 | 283,544 |
Foreign Exchange | 6,490 | 56,944 | (4,937) | 1,604 | 60,101 |
Loss before undernoted items | (363,427) | (297,063) | (359,492) | (992,887) | (2,012,869) |
Non-controlling interest share | (17,165) | 17,165 | 0 | 0 | 0 |
Profit (Loss) from Discontinued Operations | 13,224 | 0 | 0 | 63,000 | 76,224 |
Loss for the period | (367,368) | (279,898) | (359,492) | (929,887) | (1,936,645) |
Outstanding Common Shares | 92,229,512 | 92,229,512 | 92,229,512 | 92,229,512 | 92,229,512 |
Loss per share | (0.01) | (0.00) | (0.00) | (0.01) | (0.02) |
*The quarters of June 30, September 30, and December 30 2005 have been restated to reflect the year-end reclassification of private placement finders fee as a reduction of contributed surplus.
Biotech Holdings Ltd.
Management Discussion and Analysis
For the 6 Months ended September 30, 2006
Operating Results (Continued)
Year to date Discussion
Revenues from the sale of Sucanon in the 6 months ended September 30, 2006 were $71,502 which resulted in a Gross Profit of $28,019. The revenues in the same 6 month period ended September 30, 2005 were $335,065 and the Gross Profit was $254,445. Management is disappointed with the $263,563 (78.7%) decline in revenues in comparison with the prior year. The following factors contributed to the decline:
Operating expenses totaled $912,571 representing a $2,236 (0.2%) decrease from the $914,935 expenses incurred in the 6 months ended September 30, 2005.
Operating expenditures include $104,101 (2005 - $Nil) in product marketing costs. In the first 3 quarters of the fiscal year ended March 31, 2006, these expenditures were included in amounts receivable because they were considered to be advances to the marketing company for advertising and were wholly repayable once sales levels reached a certain contracted level. During the year-end audit, management and the audit committee met to review developments with regard to these amounts. This review led to a determination to expense a significant portion ($571,985) of these advances in the quarter ended March 31, 2006.
The loss for the 6 months ended September 30, 2006 was $884,552 (2005: $647,266) and the loss per common share was $0.01 for both periods.
Quarterly Comparison
Revenues from the sale of Sucanon in the 3 months ended September 30, 2006 were $22,881 which resulted in a Gross Profit of $3,295. The revenues in the same 3 month period ended September 30, 2005 were $211,654 and the Gross Profit was $173,660. Management is disappointed with the significant decline in revenues in comparison with the prior year. The factors contributing to the decline are outlined in the year to date discussion above.
Operating expenses totaled $531,257 representing a $60,534 (12.9%) increase from the $470,723 expenses incurred in the 3 months ended September 30, 2005.
Operating expenditures include $69,391 (2005 - $Nil) in product marketing costs. These costs were deferred in the 2005 quarter. Professional fees increased from $692 to $45,626 which was mainly due to the cost of the 2006 audit.
The loss for the quarter ended September 30, 2006 was $527,962 (2005: $279,898).
Biotech Holdings Ltd.
Management Discussion and Analysis
For the 6 Months ended September 30, 2006
Financial Highlights
The net loss for the 6 months was $884,552 (2005: $647,266). Items not involving cash (including amortization, stock-based compensation) totaled $361,183 (2005: $440,956), and changes in non-cash operating working capital items provided $11,901 (2005: used $735,231). In 2005 Advances to the Mexican Marketing company increased by $449,463. These advances were charged against income as Product marketing costs in the fourth quarter ended March 31, 2006.
As a result of the above, operating activities used $511,468 (2005: $941,541) in cash during the six-months ended September 30, 2006.
Financing activities provided $483,495 (2005: $641,951) in cash flow. During the quarter amounts due to related parties increased $483,495 (2005: $65,426). In 2005 the Company received $576,525 (net of Private Placement Finder^s Fee) through the issuance of Common Shares. There was no change in Share Capital in 2006.
In November 2005, the Company agreed to a private placement with a related party. The private placement, for the purchase of 984,666 common share units, was subject to the approval of the TSX Venture Exchange. Each unit included a common share and a warrant to purchase an additional common share at $0.16 per share until November 7, 2007. In January 2006 the TSX Venture Exchange approved this private placement but as at September 30, 2006 the shares had not been issued and the amount received ($118,160) has been included in amounts due to related parties. Subsequent to September 30, 2006, the private placement was cancelled and the funds remained repayable to the related party.
Investing activities used $1,283 to purchase computer equipment (2005: provided $46,730) in cash.
As a result cash decreased $29,256 (2005: $252,860) in the six-month period. As at September 30, 2006, the working capital deficiency was $2,608,238 (2005: $2,083,586).
Management plans to raise debt and equity capital on a private placement basis to finance the operating and capital requirements of the Company. It is management's intention to continue using debt and equity to finance planned capital expansion and initial market development in Latin America and other markets and operations until such time as the Company's operations are self-sustaining.
Biotech Holdings Ltd.
Consolidated Balance Sheet
as at | Sept. 30 | Mar 31, | |
2006 | 2006 | ||
(unaudited) | (audited) | ||
ASSETS | |||
Current Assets | |||
Cash | $ 39,023 | $ 68,279 | |
Accounts receivable - net | 69,474 | 52,214 | |
Advances - net | 73,388 | 75,000 | |
Inventory | 38,321 | 49,647 | |
220,206 | 245,140 | ||
Property Plant and Equipment | |||
Continuing operations | 122,519 | 128,492 | |
Held for resale | 1 | 1 | |
Technology Interests | 164,313 | 421,937 | |
$ 507,039 | $ 795,570 |
LIABILITIES & SHAREHOLDERS^ (DEFICIENCY)
LIABILITIES | |||
Current | |||
Accounts payable and | |||
accrued liabilities | $ 1,392,849 | $ 1,376,626 | |
Due to related parties - secured | 1,121,212 | 642,626 | |
- unsecured | 314,383 | 309,474 | |
2,828,444 | 2,328,726 | ||
Note payable | 224,343 | 224,343 | |
3,052,787 | 2,553,069 | ||
SHAREHOLDERS' (DEFICIENCY) | |||
Share Capital | |||
Common shares | 25,733,318 | 25,733,318 | |
Convertible Preferred Shares | 1,380,691 | 1,380,691 | |
Contributed Surplus | 820,238 | 723,935 | |
Deficit | (30,479,995) | (29,595,443) | |
(2,545,748) | (1,757,499) | ||
$ 507,039 | $ 795,570 | ||
Interim financial statements do not include all the disclosure requirements for annual financial statements and, accordingly, should be read in conjunction with the Company^s audited financial statements dated March 31, 2006.
Biotech Holdings Ltd.
Consolidated Statements of Operations and Deficit
6 Months to | 6 Months to | 3 Months to | 3 Months to | |
Sept. 30 | Sept. 30 | Sept. 30 | Sept. 30 | |
2006 | 2005* | 2006 | 2005* | |
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |
Sales | $ 71,502 | $ 335,065 | $ 22,881 | $ 211,654 |
Cost of Sales | 43,483 | 80,620 | 19,586 | 37,994 |
28,019 | 254,445 | 3,295 | 173,660 | |
General, administrative | ||||
and selling | 286,918 | 313,688 | 160,805 | 158,114 |
Amortization | 264,880 | 304,960 | 136,899 | 152,480 |
Product marketing costs | 104,101 | 0 | 69,391 | 0 |
Stock-based compensation | 96,303 | 149,220 | 56,168 | 74,610 |
Professional fees | 60,393 | 27,750 | 45,626 | 692 |
Interest - current debt and other | 38,717 | 28,307 | 22,047 | 14,318 |
Office rent, utilities and maintenance | 32,201 | 27,576 | 17,117 | 13,565 |
Foreign exchange | 29,058 | 63,434 | 23,204 | 56,944 |
912,571 | 914,935 | 531,257 | 470,723 | |
Loss from continuing operations: | (884,552) | (660,490) | (527,962) | (297,063) |
Non-controlling interest share of profit | 0 | 0 | 0 | 17,165 |
Gain from sale of equipment | 0 | 13,224 | 0 | 0 |
Loss for the period | (884,552) | (647,266) | (527,962) | (279,898) |
Deficit, beginning of period | (29,595,443) | (27,658,798) | (29,952,033) | (28,088,073) |
Deficit, end of period | (30,479,995) | (28,367,971) | (30,479,995) | (28,367,971) |
Basic and Fully Diluted Loss per | ||||
Common Share | ||||
From continuing operations | (0.01) | (0.01) | (0.01) | (0.00) |
From discontinued operations | 0.00 | 0.00 | 0.00 | 0.00 |
* The financial statements for both the 6 and 3 months ended September 30, 2005 have been restated to reflect the March 31, 2006 year-end reclassification of private placement finder^s fees as a reduction of contributed surplus.
Biotech Holdings Ltd.
Consolidated Statements of Cash Flow
6 Months to | 6 Months to | 3 Months to | 3 Months to | |
Sept. 30 | Sept. 30 | Sept. 30 | Sept. 30 | |
2006 | 2005* | 2006 | 2005* | |
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |
Operating Activities: | ||||
Loss for the period | $ (884,552) | $ (647,266) | $ (519,530) | $ (279,898) |
Add (Deduct): | ||||
Amortization | 264,880 | 304,960 | 136,899 | 152,480 |
Stock-based compensation | 96,303 | 149,220 | 56,168 | 74,610 |
Non-controlling interest in profit | 0 | 0 | 0 | (17,165) |
Gain from sale of equipment | 0 | (13,224) | 0 | 0 |
(523,369) | (206,310) | (326,463) | (69,973) | |
Add (Deduct) changes in: | ||||
Accounts receivable | (17,260) | (234,630) | 1,992 | (119,742) |
Advances | 1,612 | (449,463) | 1,612 | (217,144) |
Inventory | 11,326 | 4,032 | 4,463 | (10,970) |
Deposits and prepaid expenses | 0 | (3,450) | 0 | 0 |
Accounts payable | 16,223 | (51,720) | 40,920 | (25,497) |
(511,468) | (941,541) | (277,476) | (443,326) | |
Financing Activities: | ||||
Due to related parties | 483,495 | 65,426 | 233,281 | 53,290 |
Issuance of Common Shares | 0 | 638,431 | 0 | 0 |
Private placement finder^s fee | 0 | (61,906) | 0 | 0 |
483,495 | 641,951 | 233,281 | 53,290 | |
Investing Activities: | ||||
Acquisition of capital assets | (1,283) | 0 | (1,283) | 0 |
Proceeds from sale of equipment | 0 | 46,730 | 0 | (1) |
(1,283) | 46,730 | (1,283) | (1) | |
Increase (Decrease) in Cash | (29,256) | (252,860) | (45,478) | (390,037) |
Cash, beginning of period | 68,279 | 440,604 | 84,501 | 577,781 |
Cash, end of period | $ 39,023 | $ 187,744 | $ 39,023 | $ 187,744 |
* The financial statements for both the 6 and 3 months ended September 30, 2005 have been restated to reflect the March 31, 2006 year-end reclassification of private placement finder^s fees as a reduction of contributed surplus.
Biotech Holdings Ltd.
Notes to the Consolidated Interim Financial Statements
September 30, 2006
The Company^s business focus remains the development and distribution of the Company^s Type II Diabetes drug, particularly in Mexico and Latin America.
These consolidated financial statements are stated in Canadian dollars and have been prepared in accordance with generally accepted accounting principles in Canada, on a going-concern basis, which contemplates the realization of assets and the liquidation of liabilities in the ordinary course of business. They do not include any adjustments to the recoverability and classification of recorded asset amounts and liabilities that might be necessary should the Company be unable to continue as a going concern. The Company has incurred recurring operating losses and has an accumulated deficit of $30,479,995 and a Shareholders^ Deficiency of $2,545,748 at September 30, 2006. These factors, among others, raise substantial doubt about the Company's ability to be able to continue as a going concern. The future of the Company and the realization of its asset values will depend upon the Company's ability to obtain adequate financing and continuing support from shareholders and creditors including refinancing and to attain profitable operations.
Management plans to raise debt and equity capital on a private placement basis to finance the operating and capital requirements of the Company. It is management's intention to continue using debt and equity to finance planned capital expansion and initial market development in Latin America and other markets and operations until such time as the Company's operations are self-sustaining.
While the Company is expending its best efforts to achieve the above plans, there is no assurance that any such activity will generate sufficient funds for operations.
2. Basis of presentation and summary of significant accounting policies
The Summary of Significant Accounting Policies found in the audited financial statements dated March 31, 2006 should be read in conjunction with these interim financial statements. These interim financial statements follow the same accounting policies and methods of their application as the most recent annual financial statements. The most significant accounting policies are as follows:
Revenue Recognition
The Company^s principal revenue is derived from its Type II diabetes drug (Sucanon) currently sold in Mexico. The Company has entered into agreements with two non-related companies in Mexico. The first company manufactures and packages the tablets from a pre-mix of active ingredients manufactured by the Company in Canada. The second company markets the drug.
Revenue from product sales is recognized upon the delivery of the product to a retailer or final consumer when persuasive evidence of an arrangement exists, the price is fixed or determinable and collection is reasonably assured and the Company has no future performance obligations under any licensing agreement or other significant post-delivery obligations.
Technology Interests
Technology interests are stated at amortized cost less any impairment losses recognized in accordance with the policy for impairment of long-lived assets. The Company evaluates the recoverability of these interests when facts and circumstances suggest the asset could be impaired. Amortization of technology interests is being recorded on a straight-line basis over the shorter of the estimated useful lives or ten years.
Inventory
Inventory is valued at the lower of cost and market. The market value is determined based on the net realizable value of finished goods and the replacement cost for raw materials. Cost is determined on a first-in, first-out basis.
Biotech Holdings Ltd.
Notes to the Consolidated Interim Financial Statements (Continued)
September 30, 2006
Authorized
The Company is authorized to issue an unlimited number of Series Convertible Preferred shares and Common shares without par value. The preferred shares are voting and are convertible into Common shares on a 1:1 basis. They have a cumulative cash dividend of 8% of the original amount contributed plus accrued interest.
Issued and outstanding | Price per | Number of | $ | Number of | $ | |
Share | Common | Common | Preferred | Preferred | ||
$ | Shares | Shares | Shares | Shares | ||
Balance March 31, 2005 | 90,134,310 | 25,089,637 | 13,806,907 | 1,380,691 | ||
Issued in period: | ||||||
Common Shares issued for: | ||||||
Cash | ||||||
by private placement | 0.307 | 2,020,202 | 621,181 | |||
by stock options | 0.230 | 75,000 | 17,250 | |||
Options exercised for which stock-based | ||||||
Compensation has been recorded | 5,250 | |||||
Balance March 31, 2006 to | ||||||
September 30, 2006 | 92,229,512 | 25,733,318 | 13,806,907 | 1,380,691 | ||
Securities issued in the period:
Private Placement and Warrants Granted and exercised in the period
No private placements or warrants were either granted or exercised during the 6 months ended September 30, 2006.
In November 2005, the Company agreed to a private placement with a related party. The private placement, for the purchase of 984,666 common share units, was subject to the approval of the TSX Venture Exchange. Each unit included a common share and a warrant to purchase an additional common share at $0.16 per share until November 7, 2007. In January 2006 the TSX Venture Exchange approved this private placement but as at September 30, 2006 the shares had not been issued and the amount received ($118,160) has been included in amounts due to related parties. On August 30, 2006, trading in the Company^s shares resumed on the TSX Venture Exchange. As of September 30, 2006, the shares remained unissued. Subsequent to September 30, 2006, the private placement was cancelled and the funds remained repayable to the related party.
Outstanding Warrants to Purchase Common Shares as of September 30, 2006
Expiry Date | Exercise Price | Total Outstanding | Directors & Officers | Other |
December 16, 2006 | $0.550 | 1,528,480 | 480,000 | 1,048,480 |
October 6, 2006 | $0.400 ($0.33 USD) | 2,020,202 | 2,020,202 | 0 |
TOTAL | 3,548,682 | 2,500,202 | 1,048,480 |
Outstanding Warrants to Purchase Preferred Shares
No preferred share warrants were outstanding on September 30, 2006.
Biotech Holdings Ltd.
Notes to the Consolidated Interim Financial Statements (Continued)
September 30, 2006
3. Share Capital (continued)
Stock Options Exercised in the Period
No stock options were exercised during the 6 months ended September 30, 2006.
Stock Options Expired in the Period
The following stock options expired in the 6 months ended September 30, 2006:
Total Directors &
Exercise Price and expiry date Number Officers Employees Consultants
$0.54 Aug 11, 2006 75,000 0 75,000 0
$0.66 Aug 26, 2006 150,000 0 0 150,000
Stock Options Granted in the Period
In June 2006, the Board of Directors replaced 896,000 stock options exercisable at $0.25 per share which expired on January 2, 2006, with new stock options exercisable at $0.16 per share. The replacement options vest on October 22, 2006 and expire on June 22, 2008. A total of 560,000 of these options were granted to Directors and Officers of the Company and the remaining 336,000 were granted to Consultants to the Company.
The Board of Directors also replaced 545,000 stock options exercisable at $0.55 per share which expired or were cancelled by March 24, 2006 with new stock options exercisable at $0.10 per share. These replacement options will vest October 22, 2006 and expire on June 22, 2008. A total of 470,000 of these options were granted to directors and officers and 75,000 were granted to consultants to the company.
On June 26, 2006, 300,000 share options exercisable at $0.10 per share, vesting October 26, 2006 and expiring June 25, 2008 were granted to a new Director of the Company.
The stock options described above comply with the Stock Option Plan approved by the shareholders on September 30, 2005 and are subject to the approval of the TSX Venture Exchange.
Outstanding Stock Options as at September 30, 2006:
Total Directors &
Exercise Price and expiry date Number Officers Employees Consultants
$0.55 Mar 24, 2007 700,000 500,000 100,000 100,000
$0.55 Mar 24, 2008 1,190,000 900,000 160,000 130,000
$0.135 Feb 22, 2008 300,000 300,000 0 0
$0.16 Jun 22, 2008 896,000 560,000 0 336,000
$0.10 Jun 22, 2008 545,000 430,000 40,000 75,000
$0.10 Jun 25, 2008 300,000 300,000 0 0
Outstanding as at Sept. 30, 20063,931,000 2,990,000 300,000 641,000
A breakdown of outstanding options as at September 30, 2006 to Directors and Officers was as follows:
Grant Date | 24-Nov-04 | 24-Nov-04 | 22-Feb-06 | 23-Jun-06 | 23-Jun-06 | 26-Jun-06 | ||
Exercise Date | 24-Apr-06 | 24-Apr-07 | 22-Jun-06 | 22-Oct-06 | 22-Oct-06 | 26-Oct-06 | ||
Expiry Date | 24-Mar-07 | 24-Mar-08 | 22-Feb-08 | 22-Jun-08 | 22-Jun-08 | 25-Jun-08 | ||
Option Price | $0.55 | $0.55 | $0.135 | $0.16 | $0.10 | $0.10 | Total | |
Cheryl Rieveley | Director | 90,000 | 120,000 | 0 | 90,000 | 70,000 | 0 | 370,000 |
Gale Belding | Director | 90,000 | 120,000 | 0 | 0 | 70,000 | 0 | 280,000 |
Johan de Rooy | Director | 70,000 | 100,000 | 0 | 90,000 | 50,000 | 0 | 310,000 |
Robert Rieveley | Director & C.E.O. | 200,000 | 500,000 | 0 | 190,000 | 150,000 | 0 | 1,040,000 |
Art Cowie | Director | 0 | 0 | 300,000 | 0 | 50,000 | 0 | 350,000 |
Ross Wilmot | Director | 0 | 0 | 0 | 0 | 0 | 300,000 | 300,000 |
Lorne Brown | C.F.O. | 50,000 | 60,000 | 0 | 190,000 | 40,000 | 0 | 340,000 |
TOTAL | 500,000 | 900,000 | 300,000 | 560,000 | 430,000 | 300,000 | 2,990,000 |
Notes to the Consolidated Interim Financial Statements (Continued)
September 30, 2006
Using the fair value method to value stock options, $96,303 was recorded to stock-based compensation expense. This amount was determined using a Black-Scholes option pricing model assuming no dividends are to be paid, vesting occurring on the date of grant, exercising on the last day before expiry, a weighted average volatility of the Company^s share price of 100% and a weighted average risk free rate of 6.3%
5.Related party transactions
Due to Related Parties
Sept. 30, 2006 | Mar 31, 2006 | ||||
a) | Unsecured | ||||
(i) Notes payable to RCAR Investment Ltd., a company controlled by the Company^s president, are unsecured, payable on demand and bear interest at 8% per annum compounded annually. During the period ended September 30, 2006, $11,052 in interest was accrued. |
|
$ 287,347 |
$ 276,295 | ||
(ii) Amounts payable to a Director are unsecured, payable on demand and bear no interest. | 22,029 | 20,422 | |||
(iii) Amounts payable to companies controlled by a Director are unsecured, payable on demand and bear no interest. |
5,007 |
12,757 | |||
314,383 | 309,474 |
b)Secured
Notes payable bearing interest at the rate of 8% per annum compounded annually and due on demand. Collateralized by a general security agreement providing a charge over the assets of the Company. | |||||
During the 6 months ended Sept. 30, 2006, the notes | |||||
were increased by advances of $450,941 | |||||
During the period, interest expense of $27,665 was accrued. | 1,003,052 | 524,446 | |||
Amounts advanced by a company controlled by a Director secured by a general security agreement, non-interest bearing and payable on demand. |
118,160 |
118,160 | |||
1,121,212 | 642,626 | ||||
Total | $ 1,435,595 | $ 952,100 |
Amounts paid to related parties were based on exchange amounts which represented the amounts agreed upon by the related parties. No cash compensation is paid to directors in their capacity as directors. Amounts paid or payable to related parties include:
6 Months ended | 6 Months ended | Quarter ended | Quarter ended | |||||
Sept 30 06 | Sept 30 05 | Sept 30 06 | Sept 30 05 | |||||
Management fees paid and | ||||||||
accrued to an officer | $ 67,607 | $ 72,000 | $ 31,607 | $ 36,000 | ||||
Salaries and Benefits | $ 87,499 | $ 70,000 | $ 43,088 | $ 39,000 | ||||
Interest accrued on Notes Payable | ||||||||
to related parties | $ 38,717 | $ 28,307 | $ 22,047 | $ 17,062 | ||||
Services provided by Companies | ||||||||
controlled by Directors | $ 40,085 | $ 21,468 | $ 14,995 | $ 12,253 |
Biotech Holdings Ltd.
Notes to the Consolidated Interim Financial Statements (Continued)
September 30, 2006
6. General Administrative and Selling Expenses:
A more detailed breakdown of this operating expense category is as follows:
Six months ended Quarter Ended
September 30, 2006 September 30, 2006
Salaries and Benefits $ 87,499 $ 43,088
Management Fees 67,607 33,962
Investor Relations 40,494 24,373
Office Expenses - Mexico 24,058 7,435
Communication, Travel and
Promotion 17,521 9,369
Head Office Expenses 17,386 12,141
Bad Debts 20,058 20,058
Stock Exchange and Transfer
Agent Fees 12,295 10,379
Total$ 286,918$160,805
In the opinion of the Company there are no material differences between U.S. and Canadian Generally Accepted Accounting Principles (GAAP) that would have an impact on these financial statements.
