As filed with the Securities and Exchange Commission on May 15, 2002
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Registration No. ___________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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NEVADA IVP TECHNOLOGY CORPORATION 65-6998896
(State or Other Jurisdiction of (Name of Registrant in Our Charter) (I.R.S. Employer Identification No.)
Incorporation
or Organization)
2275 LAKESHORE BLVD. WEST, SUITE 401 7372 2275 LAKESHORE BLVD. WEST, SUITE 401
TORONTO, ONTARIO M8V 3Y3 (Primary Standard Industrial Classification TORONTO, ONTARIO M8V 3Y3
Code Number)
CANADA CANADA
(416) 255-7578 (416) 255-7578
(Address and telephone number of Principal (Name, address and telephone number of
Executive Offices and Principal Place of agent for service)
Business)
Copies to:
Clayton E. Parker, Esq. Troy J. Rillo, Esq.
Kirkpatrick & Lockhart LLP Kirkpatrick & Lockhart LLP
201 S. Biscayne Boulevard, Suite 2000 201 S. Biscayne Boulevard, Suite 2000
Miami, Florida 33131 Miami, Florida 33131
(305) 539-3300 (305) 539-3300
Telecopier No.: (305) 358-7095 Telecopier No.: (305) 358-7095
Approximate date of commencement of proposed sale to the public: AS
SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
OFFERING PRICE OFFERING AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE PER SHARE (1) PRICE (1) REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED FEE
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Common stock, par value $0.001 per share 75,238,093 shares $0.19 $14,295,238 $1,315.16
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Common stock, par value $0.001 per share,
underlying convertible debentures 5,952,380 shares $0.19 $ 1,130,952 $104.45
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Common stock, par value $0.001 per share,
underlying outstanding warrants 265,000 shares $0.19 $50,350 $4.63
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TOTAL 81,455,473 shares $0.19 $15,476,540 $1,423.84
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933. For the
purposes of this table, we have used the average of the closing bid and
asked prices as of May 14, 2002.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PROSPECTUS
Subject to completion, dated May 15, 2002
IVP TECHNOLOGY CORPORATION
81,455,473 SHARES OF COMMON STOCK
This prospectus relates to the sale of up to 81,455,473 shares of IVP
Technology's common stock by certain persons who are, or will become,
stockholders of IVP Technology. Please refer to "Selling Stockholders" beginning
on page 15. IVP Technology is not selling any shares of common stock in this
offering and therefore will not receive any proceeds from this offering. We
will, however, receive proceeds from the sale of common stock under the Equity
Line of Credit. All costs associated with this registration will be borne by us.
The shares of common stock are being offered for sale on a "best
efforts" basis by the selling stockholders at prices established on the
Over-the-Counter Bulletin Board during the term of this offering. There are no
minimum purchase requirements. These prices will fluctuate based on the demand
for the shares of common stock.
The selling stockholders consist of:
o Cornell Capital Partners intends to sell up 33,487,476 shares of
common stock.
o Other selling stockholders, who intend to sell up to 47,967,997
shares of common stock.
Cornell Capital Partners, L.P. is an "underwriter" within the meaning
of the Securities Act of 1933 in connection with the sale of common stock under
the Equity Line of Credit Agreement. Cornell Capital Partners, L.P. will pay IVP
Technology 92% of the market price of our common stock. IVP Technology has paid
Cornell Capital Partners a one-time commitment fee payable in 3,032,000 shares
of common stock and warrants to purchase 265,000 shares of common stock, of
which 15,000 shares have an exercise price of $0.50 per share and 250,000 shares
have an exercise price of $0.099 per share. In addition, Cornell Capital
Partners is entitled to retain 3% of each advance under the Equity Line of
Credit. The 8% discount, the one-time commitment fee and the 3% retention are
underwriting discounts.
IVP Technology has engaged Westrock Advisors, Inc., a registered
broker-dealer, to advise it in connection with the Equity Line of Credit.
Westrock Advisors, Inc. was paid a fee of 100,000 shares of IVP Technology's
common stock. Westrock Advisors, Inc. is not participating in this offering as a
registered broker-dealer. Westrock Advisors is a selling shareholder.
IVP Technology has engaged Danson Partners, LLC to advise it in
connection with a number of financial matters. Danson Partners, LLC was paid a
fee of $200,000. Of this fee, $75,000 was paid in cash with the balance paid in
1,040,000 shares of common stock.
Our common stock is quoted on the Over-the-Counter Bulletin Board
maintained by the NASD under the symbol "TALL." On May 14, 2002, the last
reported sale price of our common stock was $0.19 per share.
THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.
PLEASE REFER TO "RISK FACTORS" BEGINNING ON PAGE 6.
With the exception of Cornell Capital Partners, L.P., which is an
"underwriter" within the meaning of the Securities Act of 1933, no other
underwriter or person has been engaged to facilitate the sale of shares of
common stock in this offering. This offering will terminate 24 months after the
accompanying registration statement is declared effective by the Securities and
Exchange Commission. None of the proceeds from the sale of stock by the selling
stockholders will be placed in escrow, trust or any similar account.
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS
HAVE NOT APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is May 15, 2002.
TABLE OF CONTENTS
PROSPECTUS SUMMARY.............................................................3
THE OFFERING...................................................................4
RISK FACTORS...................................................................6
FORWARD-LOOKING STATEMENTS....................................................10
SELLING STOCKHOLDERS..........................................................11
USE OF PROCEEDS...............................................................13
DILUTION 14
EQUITY LINE OF CREDIT.........................................................15
PLAN OF DISTRIBUTION..........................................................16
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.....................18
DESCRIPTION OF BUSINESS.......................................................23
MANAGEMENT....................................................................26
DESCRIPTION OF PROPERTY.......................................................30
LEGAL PROCEEDINGS.............................................................30
PRINCIPAL STOCKHOLDERS........................................................31
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................32
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER STOCKHOLDER MATTERS.............................................33
DESCRIPTION OF SECURITIES.....................................................34
EXPERTS.......................................................................36
LEGAL MATTERS.................................................................36
HOW TO GET MORE INFORMATION...................................................36
FINANCIAL STATEMENTS.........................................................F-1
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We intend to distribute to our stockholders annual reports containing
audited financial statements. Our audited financial statements for the fiscal
year ended December 31, 2001, were contained in our Annual Report on Form
10-KSB.
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PROSPECTUS SUMMARY
OVERVIEW
IVP Technology Corporation is currently a Toronto-based business
software marketer and distributor, and was until December 31, 2001 engaged
solely in distributing a software product marketed under the name PowerAudit.
Since January 1, 2002, IVP Technology has been in the process of expanding its
business towards enterprise software development and implementation, in addition
to adding additional products for marketing and distribution. This expansion is
based on our management's experience in operating other companies and divisions,
and in selling and distributing both enterprise and consumer software products.
LICENSED ENTERPRISE PRODUCTS
IVP Technology currently markets data solutions, which we term mobile
enterprise applications, made up of separate software products that can operate
on a stand-alone basis or integrate with other enterprise level software. We
believe that these products will provide enterprises with increased economy,
efficiency and effectiveness when enterprises are faced with the necessity of
obtaining data from the field and moving it into processes that take place in
the front and back office environment up to the business decision making level.
A description of IVP Technology's mobile enterprise software products is
described below.
POWERAUDIT. IVP Technology is a party to a license and distribution
agreement with Orchestral Corporation that provides it with the exclusive rights
in the United States, the European Economic Community and Switzerland to market
and distribute PowerAudit software. PowerAudit, developed by Orchestral
Corporation, is a software application designed for handheld personal computers
that provides a platform for real-time, remote data capture and market survey
purposes. PowerAudit is a field automation and enterprise integration tool that
allows field personnel to: i) collect a variety of different forms of data; ii)
verify the data at the time of entering; and iii) transmit the data on a
wireless basis via the Internet to a central server where customers may have
access to the data. PowerAudit runs on handheld personal computers employing
Microsoft's Windows CE operating system and allows the software to interface
with other Microsoft platforms. Our marketing and distribution license is valid
through May 31, 2003.
CLASSIFIER. On December 28, 2001, we entered into a two-year,
non-exclusive licensing agreement to distribute the Classifier software program,
developed by The Innovation Group, Plc, throughout the insurance industry. The
Innovation Group is one of the leading developers of software and systems for
financial services. IVP Technology received a non-exclusive right to sell such
software in the United States, Mexican and Canadian markets.
VIPER. On February 20, 2002, we entered into an agreement with
SmartFocus Limited, to resell its Viper(R) suite of products which consists of
Viper Analyze and Visualize, Viper Data Mining, Viper CRM, Viper Campaign
Planner and Smart Campaigner. Pursuant to the license, IVP Technology will be
entitled to a 15% commission on sales of Viper through customer opportunities
created by IVP Technology. SmartFocus will make sales representatives available
to assist in sales presentations.
ABOUT US
Our principal office is located at 2275 Lakeshore Blvd. West, Suite
401, Toronto, Ontario M8V 3Y3 Canada. Our telephone number is (416) 255-7578.
3
THE OFFERING
This offering relates to the sale of common stock by certain persons
who are, or will become, stockholders of ours. The selling stockholders consist
of:
o Cornell Capital Partners intends to sell up to 33,487,476 shares
of common stock.
o Other selling stockholders, who intend to sell up to 47,967,997
shares of common stock.
Pursuant to the Equity Line of Credit, we may, at our discretion,
periodically issue and sell to Cornell Capital Partners, L.P. shares of common
stock for a total purchase price of $10 million. The amount of each advance is
subject to an aggregate monthly maximum advance amount of $425,000 in any
thirty-day period. Cornell Capital Partners will pay IVP Technology 92% of the
market price of our common stock. IVP Technology has paid Cornell Capital
Partners a one-time commitment fee in the amount of 3,032,000 shares of common
stock and warrants to purchase 265,000 shares of common stock, of which 15,000
shares have an exercise price of $0.50 per share and 250,000 shares have an
exercise price of $0.099 per share. In addition, Cornell Capital Partners is
entitled to retain 3% of each advance under the Equity Line of Credit. Cornell
Capital Partners intends to sell any shares purchased under the Equity Line of
Credit at the then prevailing market price. Among other things, this prospectus
relates to the shares of common stock to be issued under the Equity Line of
Credit.
We have engaged Westrock Advisors, Inc., a registered broker-dealer, to
advise us in connection with the Equity Line of Credit. Westrock Advisors, Inc.
was paid a fee of 100,000 shares of IVP Technology's common stock. Westrock
Advisors, Inc. is not participating in this offering as a registered
broker-dealer. Westrock Advisors is a selling shareholder.
IVP Technology has engaged Danson Partners LLC to advise it in
connection with various financial and accounting matters. Danson Partners was
paid a fee of $200,000. Of this fee, $75,000 was paid in cash with the balance
paid in 1,040,000 shares of common stock.
COMMON STOCK OFFERED 81,455,473 shares by selling stockholders
OFFERING PRICE Market price
COMMON STOCK OUTSTANDING BEFORE THE OFFERING(1) 119,526,975 shares
USE OF PROCEEDS We will not receive any proceeds of the shares
offered by the selling stockholders. Any
proceeds we receive from the sale of common
stock under the Equity Line of Credit will be
used for general working capital purposes. See
"Use of Proceeds."
RISK FACTORS The securities offered hereby involve a high
degree of risk and immediate substantial
dilution. See "Risk Factors" and "Dilution."
OVER-THE-COUNTER BULLETIN BOARD SYMBOL TALL
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1 Excludes warrants to purchase 265,000 shares of common stock,
debentures convertible into 551,470 shares of common stock (assuming a
conversion price equal to 80% of $0.105, the closing bid price on April
8, 2002), and up to 19,642,873 shares of common stock to be issued
under the Equity Line of Credit, which amount may be higher or lower if
more or less shares are required upon the conversion of the debentures.
4
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, DECEMBER 31,
2001 2000
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STATEMENT OF OPERATIONS DATA:
Revenue $67,358 $40,002
Operating expenses
Amortization 19,837 114,000
Interest 22,341 12,501
Legal and accounting 125,715 215,569
Management fees -- 308,841
Development and licensing fees and software support 723,527 355,109
Consulting fees 387,086 1,637,279
Other -- 162,312
Total Operating Expenses 1,278,506 2,805,611
Loss from operations (1,211,148) (2,765,609)
Loss before extraordinary item (1,211,148) (2,765,609)
Net loss $(1,211,148) (2,765,609)
Loss per share ($0.03) ($0.08)
DECEMBER 31, DECEMBER 31,
2001 2000
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BALANCE SHEET DATA:
Cash $232 $1,424
Total Current Assets 232 7,876
Other Assets 872 872
Deferred licensing fee, net of amortization 3,600,431 --
Total assets 3,601,535 8,748
Current liabilities
Accounts payable and accrued liabilities 479,571 430,390
Accounts payable - license agreement 3,620,268 --
Note payable 200,000 200,000
Interest payable 34,841 12,501
Total current liabilities 4,334,680 642,891
Note payable - long term 129,020 --
Stockholders' deficiency
Preferred stock, $0.001 par value, 50,000,000 shares authorized,
none issued and outstanding -- --
Common stock, $0.001 par value 150,000,000 shares authorized,
48,752,848 issued and outstanding 48,753 39,111
Common stock to be issued 50,000 720,000
Additional paid-in capital 13,238,354 12,151,156
Accumulated deficit (accumulated in development stage $12,883,106
in 2001) (13,859,272) (12,648,124)
Less deferred compensation and licensing fee (340,000) (896,286)
Total stockholders' deficiency (862,165) (634,143 )
Total liabilities and stockholders' deficiency $3,601,535 $8,748
5
RISK FACTORS
WE ARE SUBJECT TO VARIOUS RISKS THAT MAY MATERIALLY HARM OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. YOU SHOULD CAREFULLY CONSIDER THE
RISKS AND UNCERTAINTIES DESCRIBED BELOW AND THE OTHER INFORMATION IN THIS FILING
BEFORE DECIDING TO PURCHASE OUR COMMON STOCK. IF ANY OF THESE RISKS OR
UNCERTAINTIES ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL CONDITION OR OPERATING
RESULTS COULD BE MATERIALLY HARMED. IN THAT CASE, THE TRADING PRICE OF OUR
COMMON STOCK COULD DECLINE AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT.
RISKS RELATED TO OUR BUSINESS
WE HAVE HISTORICALLY LOST MONEY AND LOSSES MAY CONTINUE IN THE FUTURE
We have historically lost money. In the years ended December 31, 2001
and 2000, we had net losses of $1,211,148 and $2,765,609, respectively. Future
losses are likely to occur. Accordingly, we may experience significant liquidity
and cash flow problems because historically our operations have not been
profitable. No assurances can be given that we will be successful in reaching or
maintaining profitable operations.
WE MAY NEED TO RAISE ADDITIONAL CAPITAL TO FINANCE OPERATIONS
We have relied on significant external financing to fund our
operations. Such financing has historically come from a combination of
borrowings and sale of common stock from third parties and funds provided by
certain officers and directors. We cannot assure you that financing whether from
external sources or related parties will be available if needed or on favorable
terms. Our inability to obtain adequate financing will result in the need to
curtail business operations. Any of these events would be materially harmful to
our business and may result in a lower stock price. We will need to raise
additional capital to fund our anticipated future expansion. Among other things,
external financing may be required to cover our operating costs.
WE HAVE BEEN THE SUBJECT OF A GOING CONCERN OPINION FROM OUR INDEPENDENT
AUDITORS, WHICH MEANS THAT WE MAY NOT BE ABLE TO CONTINUE OPERATIONS UNLESS WE
OBTAIN ADDITIONAL FUNDING
Our independent auditors have added an explanatory paragraph to their
audit opinions issued in connection with our financial statements for the years
ended December 31, 2001 and 2000, which states that IVP Technology's ability to
continue as a going concern depends upon its ability to secure financing,
increase ownership equity and attain profitable operations. Our ability to
obtain additional funding will determine our ability to continue as a going
concern. Our financial statements do not include any adjustments that might
result from the outcome of this uncertainty. We expect to be able to continue
operations for 12 months with the cash currently on hand and anticipated from
our operations.
WE ARE SUBJECT TO A WORKING CAPITAL DEFICIT, WHICH MEANS THAT OUR CURRENT ASSETS
ON DECEMBER 31, 2001 WERE NOT SUFFICIENT TO SATISFY OUR CURRENT LIABILITIES
We had a working capital deficit of $4,334,448 at December 31, 2001,
which means that our current liabilities exceeded our current assets on December
31, 2001 by $4,334,448. Current assets are assets that are expected to be
converted to cash within one year and, therefore, may be used to pay current
liabilities as they become due. Our working capital deficit means that our
current assets on December 31, 2001 were not sufficient to satisfy all of our
current liabilities on that date.
OUR COMMON STOCK MAY BE AFFECTED BY LIMITED TRADING VOLUME AND MAY FLUCTUATE
SIGNIFICANTLY
Prior to this offering, there has been a limited public market for our
common stock and there can be no assurance that an active trading market for our
common stock will develop. An absence of an active trading market could
adversely affect our shareholders' ability to sell our common stock in short
time periods, or possibly at all. Our common stock has experienced, and is
likely to experience in the future, significant price and volume fluctuations,
which could adversely affect the market price of our common stock without regard
to our operating performance. In addition, we believe that factors such as
quarterly fluctuations in our financial results and changes in the overall
economy or the condition of the financial markets could cause the price of our
common stock to fluctuate substantially.
6
OUR COMMON STOCK IS DEEMED TO BE "PENNY STOCK," WHICH MAY MAKE IT MORE DIFFICULT
FOR INVESTORS TO SELL THEIR SHARES DUE TO SUITABILITY REQUIREMENTS
Our common stock is deemed to be "penny stock" as that term is defined
in Rule 3a51-1 promulgated under the Securities Exchange Act of 1934. These
requirements may reduce the potential market for our common stock by reducing
the number of potential investors. This may make it more difficult for investors
in our common stock to sell shares to third parties or to otherwise dispose of
them. This could cause our stock price to decline. Penny stocks are stock:
o With a price of less than $5.00 per share;
o That are not traded on a "recognized" national exchange;
o Whose prices are not quoted on the Nasdaq automated quotation
system (Nasdaq listed stock must still have a price of not less
than $5.00 per share); or
o In issuers with net tangible assets less than $2.0 million (if the
issuer has been in continuous operation for at least three years)
or $10.0 million (if in continuous operation for less than three
years), or with average revenues of less than $6.0 million for the
last three years.
Broker/dealers dealing in penny stocks are required to provide
potential investors with a document disclosing the risks of penny stocks.
Moreover, broker/dealers are required to determine whether an investment in a
penny stock is a suitable investment for a prospective investor.
WE COULD FAIL TO ATTRACT OR RETAIN KEY PERSONNEL
Our success largely depends on the efforts and abilities of key
executives and consultants, including Brian MacDonald, our Chief Executive
Officer and President. The loss of the services of Mr. MacDonald could
materially harm our business because of the cost and time necessary to replace
and train a replacement. Such a loss would also divert management attention away
from operational issues. We do not presently maintain a key-man life insurance
policy on Mr. MacDonald.
OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT OR IMPOSSIBLE TO EVALUATE OUR
PERFORMANCE AND MAKE PREDICTIONS ABOUT OUR FUTURE
IVP Technology commenced its current operations in March 1999 when it
obtained an agreement to distribute the PowerAudit software product and is in
its development stage. This limited operating history makes an evaluation of its
future prospects very difficult. As a development stage company, IVP Technology
will encounter the types of risks, uncertainties and difficulties frequently
encountered by early-stage companies. Many of these risks and uncertainties are
described in more detail elsewhere in this "Risk Factors" section. If IVP
Technology does not successfully address these risks, then its future business
prospects will be significantly limited.
OUR CURRENT ENTERPRISE BUSINESS DEPENDS TO A LARGE EXTENT UPON THE CONTINUED
GROWTH OF AND DEMAND FOR HANDHELD PERSONAL COMPUTERS
Handheld personal computers were introduced in 1995 and represent a
relatively new technology. Our business plan for the enterprise software area
depends upon the continued growth in the use of handheld personal computers,
personal digital assistants, mobile phones and other devices which are portable
and are capable of transmitting and storing data on software operating systems
including Microsoft Windows CE and Palm operating systems. In the event the use
of handheld personal computers wanes or other hardware or operating systems are
developed, then a market for the mobile enterprise applications may not develop.
IF WE FAIL TO KEEP PACE WITH RAPID TECHNOLOGICAL CHANGE AND EVOLVING INDUSTRY
STANDARDS, OUR PRODUCTS COULD BECOME LESS COMPETITIVE OR OBSOLETE
The market for mobile devices and the software applications that run on
them, such as PowerAudit, is characterized by rapidly changing technology,
evolving industry standards, changes in customer needs, intense competition and
frequent new product introductions. If we, fail to modify or improve our
7
products in response to changes in technology or industry standards, our
products could rapidly become less competitive or obsolete. Our future success
will depend, in part, on our ability to:
o enhance and adapt current software products and develop new
products that meet changing customer needs;
o adjust the prices of mobile software applications to increase
customer demand;
o successfully advertise and market our products; and
o influence and respond to emerging industry standards and other
technological changes.
We must respond to changing technology and industry standards in a
timely and cost-effective manner. We may not be successful in effectively using
new technologies, developing new products or enhancing our existing product on a
timely basis. Our pursuit of necessary technology may require substantial time
and expense. We may need to license new technologies to respond to technological
change. These licenses may not be available to us on terms that we can accept.
Finally, we may not succeed in adapting various products to new technologies as
they emerge.
WE COULD BE SUBJECT TO CLAIMS OF INFRINGEMENT OF THIRD-PARTY INTELLECTUAL
PROPERTY, WHICH COULD RESULT IN SIGNIFICANT EXPENSE AND LOSS OF INTELLECTUAL
PROPERTY RIGHTS
The software industry is characterized by uncertain and conflicting
intellectual property claims and frequent intellectual property litigation,
especially regarding copyright and patent rights. From time to time, third
parties may assert patent, copyright, trademark and other intellectual property
rights to technologies that are important to our business. We may receive
notices of claims that our products infringe or may infringe these rights. Any
litigation to determine the validity of these claims, including claims arising
through our contractual indemnification of our clients, regardless of their
merit or resolution, would likely be costly and time consuming and divert the
efforts and attention of our management and technical personnel. We cannot
provide any assurances that we would prevail in any such litigation given the
complex technical issues and inherent uncertainties in intellectual property
litigation. If this litigation resulted in an adverse ruling, we could be
required to:
o pay substantial damages;
o cease the manufacture, use or sale of infringing products;
o discontinue the use of certain technology; or
o obtain a license under the intellectual property rights of the
third party claiming infringement, which license may not be
available on reasonable terms, or at all.
Although software developers that we contract with as distributors
agree to indemnify us against infringement by developers of the intellectual
property rights of others, it is unlikely that all suppliers will have
sufficient funds to indemnify us if such a need should arise. Consequently, if
it is determined that the software that we distribute infringes upon the
intellectual property rights of others, we may be required to spend significant
resources to satisfy any such claims, which may not be available at the time of
any such determination. Any determination software suppliers products infringe
upon another's proprietary intellectual property rights will have a material
negative impact on our business and results of operations.
RISKS RELATED TO THIS OFFERING
FUTURE SALES BY OUR STOCKHOLDERS MAY ADVERSELY AFFECT OUR STOCK PRICE AND OUR
ABILITY TO RAISE FUNDS IN NEW STOCK OFFERINGS
Sales of our common stock in the public market following this offering
could lower the market price of our common stock. Sales may also make it more
difficult for us to sell equity securities or equity-related securities in the
future at a time and price that our management deems acceptable or at all. Of
the 119,526,975 shares of common stock outstanding as of May 7, 2002 (assuming
no exercise of options), 42,681,206 shares are, or will be, freely tradable
without restriction, unless held by our "affiliates." The remaining 76,845,769
shares of common stock held by existing stockholders are "restricted securities"
and may be resold in the public market only if registered or pursuant to an
8
exemption from registration. Some of these shares may be resold under Rule 144.
In addition, we have issued warrants to purchase a total of 265,000
shares of our common stock, of which 15,000 shares have an exercise price of
$0.50 per share and 250,000 shares have an exercise price of $0.099.
EXISTING SHAREHOLDERS WILL EXPERIENCE SIGNIFICANT DILUTION FROM OUR SALE OF
SHARES UNDER THE EQUITY LINE OF CREDIT
The sale of shares pursuant to the Equity Line of Credit will have a
dilutive impact on our stockholders. As a result, our net income per share could
decrease in future periods, and the market price of our common stock could
decline. In addition, the lower our stock price is the more shares of common
stock we will have to issue under the Equity Line of Credit to draw down the
full amount. If our stock price is lower, then our existing stockholders would
experience greater dilution.
THE INVESTOR UNDER THE LINE OF CREDIT WILL PAY LESS THAN THE THEN-PREVAILING
MARKET PRICE OF OUR COMMON STOCK
The common stock to be issued under the Equity Line of Credit will be
issued at a 8% discount to the lowest closing bid price for the 5 days
immediately following the notice date of an advance. These discounted sales
could cause the price of our common stock to decline.
THE SELLING STOCKHOLDERS INTEND TO SELL THEIR SHARES OF COMMON STOCK IN THE
MARKET, WHICH SALES MAY CAUSE OUR STOCK PRICE TO DECLINE
The selling stockholders intend to sell in the public market the shares
of common stock being registered in this offering. That means that up to
81,455,473 shares of common stock, the number of shares being registered in this
offering may be sold. Such sales may cause our stock price to decline.
THE SALE OF OUR STOCK UNDER OUR EQUITY LINE OF CREDIT COULD ENCOURAGE SHORT
SALES BY THIRD PARTIES, WHICH COULD CONTRIBUTE TO THE FUTURE DECLINE OF OUR
STOCK PRICE
The significant downward pressure on the price of our common stock
caused by the sale of material amounts of common stock under the Equity Line of
Credit could encourage short sales by third parties. Such an event could place
further downward pressure on the price of our common stock.
THE PRICE YOU PAY IN THIS OFFERING WILL FLUCTUATE AND MAY BE HIGHER OR LOWER
THAN THE PRICES PAID BY OTHER PEOPLE PARTICIPATING IN THIS OFFERING
The price in this offering will fluctuate based on the prevailing
market price of the common stock on the Over-the-Counter Bulletin Board.
Accordingly, the price you pay in this offering may be higher or lower than the
prices paid by other people participating in this offering.
WE MAY NOT BE ABLE TO ACCESS SUFFICIENT FUNDS UNDER THE EQUITY LINE OF CREDIT
WHEN NEEDED
We are dependent on external financing to fund our operations. Our
financing needs are expected to be provided from the Equity Line of Credit, in
large part. No assurances can be given that such financing will be available in
sufficient amounts or at all when needed, in part, because we are limited to a
maximum draw down of $425,000 in any thirty day period.
9
FORWARD-LOOKING STATEMENTS
Information included or incorporated by reference in this prospectus
may contain forward-looking statements. This information may involve known and
unknown risks, uncertainties and other factors which may cause our actual
results, performance or achievements to be materially different from the future
results, performance or achievements expressed or implied by any forward-looking
statements. Forward-looking statements, which involve assumptions and describe
our future plans, strategies and expectations, are generally identifiable by use
of the words "may," "will," "should," "expect," "anticipate," "estimate,"
"believe," "intend" or "project" or the negative of these words or other
variations on these words or comparable terminology.
This prospectus contains forward-looking statements, including
statements regarding, among other things, (a) our projected sales and
profitability, (b) our growth strategies, (c) anticipated trends in our
industry, (d) our future financing plans and (e) our anticipated needs for
working capital. These statements may be found under "Management's Discussion
and Analysis or Plan of Operations" and "Business," as well as in this
prospectus generally. Actual events or results may differ materially from those
discussed in forward-looking statements as a result of various factors,
including, without limitation, the risks outlined under "Risk Factors" and
matters described in this prospectus generally. In light of these risks and
uncertainties, there can be no assurance that the forward-looking statements
contained in this prospectus will in fact occur.
10
SELLING STOCKHOLDERS
The following table presents information regarding the selling
stockholders. None of the selling stockholders have held a position or office,
or had any other material relationship, with IVP Technology, except as follows:
o Cornell Capital Partners, L.P. is the investor under the Equity
Line of Credit and a holder of convertible debentures. All
investment decisions of Cornell Capital Partners are made by its
general partner, Yorkville Advisors, LLC. Mark Angelo, the managing
member of Yorkville Advisors, makes the investment decisions on
behalf of Yorkville Advisors.
o Westrock Advisors, Inc. is a registered broker/dealer that has been
retained by us. Greg Martino, Westrock Advisors, Inc.'s President,
makes the investment decisions on behalf of Westrock Advisors. It
has provided advice to us in connection with the Equity Line of
Credit. For its services, Westrock Advisors, Inc. received a fee of
100,000 shares of IVP Technology's common stock. These shares are
being registered in this offering.
o IVP Technology has engaged Danson Partners LLC to advise it in
connection with various financial and accounting matters. Danson
Partners LLC was paid a fee of $200,000. Of this fee, $75,000 was
paid in cash with the balance paid in 1,040,000 shares of common
stock. Wayne Danson makes the investment decisions on behalf of
Danson Partners LLC.
o DCD Holdings Limited completed an interim financing agreement for a
bridge loan of (pound)600,000 (U.S. $864,180) with IVP Technology.
On May 1, 2002, IVP Technology received written notice from the
lender, DCD Holdings Limited, that it agreed to convert the loan
into 4,000,000 shares of common stock at a conversion rate of
approximately $0.19 per share. Shabir Randeree makes the investment
decisions on behalf of DCD Holdings Limited.
o Messrs. MacDonald and Hamilton are officers and directors of our
company. Mr. Birch is an officer of our company. Mr. Villella and
Ms. Bullock are employees of our company. All of the shares being
registered in this offering on behalf of Messrs. MacDonald,
Hamilton, Birch, Villella and Bullock were issued in connection
with the acquisition of International Technology Marketing. These
shares are issued and being held in escrow pending satisfaction
certain performance goals.
o Danson Partners is a consultant to our company, Wayne Danson makes
the investment decisions on behalf of Danson Partners.
The table follows:
PERCENTAGE OF PERCENTAGE OF
OUTSTANDING SHARES TO BE OUTSTANDING PERCENTAGE OF
SHARES SHARES ACQUIRED SHARES TO BE SHARES
BENEFICIALLY BENEFICIALLY UNDER THE ACQUIRED UNDER SHARES TO BE BENEFICIALLY
OWNED BEFORE OWNED BEFORE EQUITY LINE THE EQUITY LINE SOLD IN THE OWNED AFTER
SELLING STOCKHOLDER OFFERING OFFERING(1) OF CREDIT(2) OF CREDIT OFFERING OFFERING(1)
- ------------------------- --------------- --------------- ---------------- ------------------ ------------- ----------------
Cornell Capital 9,249,380(3) 7.4% 13,690,493 10.3% 22,939,873 0%
Partners, L.P.
Westrock Advisors, 100,000 * -- -- 100,000 0%
Inc.
Brian MacDonald 14,000,000 11.7% -- -- 14,000,000 0%
Peter Hamilton 14,000,000 11.7% -- -- 14,000,000 0%
Kevin Birch 14,000,000 11.7% -- -- 14,000,000 0%
Geno Villella 4,000,000 3.3% -- -- 4,000,000 0%
Sherry Bullock 4,000,000 3.3% -- -- 4,000,000 0%
Steve Smith 1,000,000 * -- -- 1,000,000 0%
DCD Holdings Limited 4,000,000 3.3% -- -- 4,000,000 0%
Spiaggia Holdings, Ltd. 1,200,000 1.0% -- -- 1,200,000 0%
St. Albans TCI Ltd. 1,000,000 * -- -- 1,000,000 0%
Thomas Chown 175,600 * -- -- 175,600 0%
11
PERCENTAGE OF PERCENTAGE OF
OUTSTANDING SHARES TO BE OUTSTANDING PERCENTAGE OF
SHARES SHARES ACQUIRED SHARES TO BE SHARES
BENEFICIALLY BENEFICIALLY UNDER THE ACQUIRED UNDER SHARES TO BE BENEFICIALLY
OWNED BEFORE OWNED BEFORE EQUITY LINE THE EQUITY LINE SOLD IN THE OWNED AFTER
SELLING STOCKHOLDER OFFERING OFFERING(1) OF CREDIT(2) OF CREDIT OFFERING OFFERING(1)
- ------------------------- --------------- --------------- ---------------- ------------------ ------------- ----------------
Danson Partners LLC 1,040,000 * -- -- 1,040,000 0%
------------- -------------- -------------- --------------- ------------ --------
TOTAL 67,764,980 53.9% 13,690,493 10.3% 81,455,473 0%
============= ============== ============== =============== ============ ========
- -----------------------------------------
* Less than 1%.
(1) Applicable percentage of ownership is based on 119,526,975 shares of
common stock outstanding as of May 7, 2002, together with securities
exercisable or convertible into shares of common stock within 60 days
of May 7, 2002, for each stockholder. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and generally includes voting or investment power with
respect to securities. Shares of common stock subject to securities
exercisable or convertible into shares of common stock that are
currently exercisable or exercisable within 60 days of May 7, 2002, are
deemed to be beneficially owned by the person holding such securities
for the purpose of computing the percentage of ownership of such
person, but are not treated as outstanding for the purpose of computing
the percentage ownership of any other person. The common stock is the
only outstanding class of equity securities of IVP Technology.
(2) The number of shares of common stock available under the Equity Line of
Credit may be increased to 19,642,873 shares of common stock if none of
the outstanding debentures are converted into shares of common stock.
(3) Consists of 3,032,000 shares of common stock, up to 5,952,380 shares of
common stock underlying convertible debentures and 265,000 shares of
common stock underlying a warrant with 15,000 shares having an exercise
price of $0.50 per share and 250,000 shares having an exercise price of
$0.099 per share. The debentures are convertible at the holder's option
any time up to maturity at a conversion price equal to the lower of (i)
120% of the closing bid price of the common stock as of the closing
date (ii) 80% of the average closing bid price of the common stock for
the 4 lowest trading days of the 5 trading days immediately preceding
the conversion date. At maturity, IVP Technology has the option to
either pay the holder the outstanding principal balance and accrued
interest or to convert the debentures into shares of common stock at a
conversion price equal to the lower of (i) 120% of the closing bid
price of the common stock as of the closing date or (ii) 80% of the
average closing bid price of the common stock for the 4 lowest trading
days of the 5 trading days immediately preceding the conversion date.
12
USE OF PROCEEDS
This prospectus relates to shares of our common stock that may be
offered and sold from time to time by certain selling stockholders. There will
be no proceeds to us from the sale of shares of common stock in this offering.
However, we will receive the proceeds from the sale of shares of common stock to
Cornell Capital Partners, L.P. under the Equity Line of Credit. The purchase
price of the shares purchased under the Equity Line of Credit will be equal to
92% of the lowest closing bid price of our common stock on the Over-the-Counter
Bulletin Board for the 5 days immediately following the notice date.
For illustrative purposes, we have set forth below our intended use of
proceeds for the range of net proceeds indicated below to be received under the
Equity Line of Credit. The table assumes estimated offering expenses of $85,000
and 3% retention of the gross proceeds raised under the Equity Line of Credit.
GROSS PROCEEDS $1,000,000 $5,000,000 $10,000,000
NET PROCEEDS $885,000 $4,765,000 $ 9,615,000
USE OF PROCEEDS: AMOUNT AMOUNT AMOUNT
- ----------------------------------------------------------------------------------------
Repayment of Affiliated Loan $ 129,000 $ 129,000 $ 129,000
Sales and Marketing 100,000 500,000 1,000,000
Administrative Expenses, Including Salaries 300,000 300,000 400,000
Accounts Payable 200,000 200,000 200,000
Future Acquisitions -- 3,136,000 6,886,000
General Working Capital 156,000 500,000 1,000,000
----------- ------------- --------------
TOTAL $ 885,000 $4,765,000 $ 9,615,000
=========== ============= ==============
Any proceeds received upon issuancerants will be used for general working capital purposes.
13
DILUTION
The net tangible book value of our company as of December 31, 2001 was
($4,462,596) or ($0.0915) per share of common stock. Net tangible book value per
share is determined by dividing the tangible book value of our company (total
tangible assets less total liabilities) by the number of outstanding shares of
our common stock. Since this offering is being made solely by the selling
stockholders and none of the proceeds will be paid to our company, our net
tangible book value will be unaffected by this offering. Our net tangible book
value, however, will be impacted by the common stock to be issued under the
Equity Line of Credit. The amount of dilution will depend on the offering price
and number of shares to be issued under the Equity Line of Credit. The following
example shows the dilution to new investors at an offering price of $0.19 per
share.
If we assume that our company had issued 19,642,873 shares of common
stock under the Equity Line of Credit at an assumed offering price of $0.19 per
share (I.E., the number of shares registered in this offering under the Equity
Line of Credit, which number of shares assumes none of the debentures will be
converted into shares of common stock), less retention fees of $111,964 and
offering expenses of $85,000, our net tangible book value as of December 31,
2001 would have been ($927,415) or (0.0136) per share. Note that at an offering
price of $0.19 per share, IVP Technology would receive gross proceeds of
$3,732,146 or $6,267,854 less than is available under the Equity Line of Credit.
Such an offering would represent an immediate increase in net tangible book
value to existing stockholders of $0.0779 per share and an immediate dilution to
new stockholders of $0.2036 per share. The following table illustrates the per
share dilution:
Assumed public offering price per share $0.1900
Net tangible book value per share before this offering (0.0915)
Increase attributable to new investors $0.0779
------------
Net tangible book value per share after this offering ($0.0136)
---------
Dilution per share to new stockholders $0.2036
=========
The offering price of our common stock is based on the then-existing
market price. In order to give prospective investors an idea of the dilution per
share they may experience, we have prepared the following table showing the
dilution per share at various assumed offering prices:
DILUTION PER
ASSUMED NO. OF SHARES SHARE TO NEW
OFFERING PRICE TO BE ISSUED INVESTORS
---------------- --------------------- ----------------
$0.1900 19,642,873 $0.2036
$0.1425 19,642,873 $0.1693
$0.0950 19,642,873 $0.1350
$0.0475 19,642,873 $0.1008
14
EQUITY LINE OF CREDIT
SUMMARY. In April 2002, we entered into an Equity Line of Credit with
Cornell Capital Partners, L.P. Pursuant to the Equity Line of Credit, we may, at
our discretion, periodically sell to Cornell Capital Partners shares of common
stock for a total purchase price of up to $10.0 million. For each share of
common stock purchased under the Equity Line of Credit, Cornell Capital Partners
will pay 92% of the lowest closing bid price of our common stock on the
Over-the-Counter Bulletin Board or other principal market on which our common
stock is traded for the 5 days immediately following the notice date. Cornell
Capital Partners is a private limited partnership whose business operations are
conducted through its general partner, Yorkville Advisors, LLC. Further, Cornell
Capital Partners will retain a fee of 3% of each advance under the Equity Line
of Credit. In addition, we engaged Westrock Advisors, Inc., a registered
broker-dealer, to advise us in connection with the Equity Line of Credit. For
its services, Westrock Advisors, Inc. received 100,000 shares of our common
stock. The effectiveness of the sale of the shares under the Equity Line of
Credit is conditioned upon us registering the shares of common stock with the
Securities and Exchange Commission. The costs associated with this registration
will be borne by us.
EQUITY LINE OF CREDIT EXPLAINED. Pursuant to the Equity Line of Credit,
we may periodically sell shares of common stock to Cornell Capital Partners,
L.P. to raise capital to fund our working capital needs. The periodic sale of
shares is known as an advance. We may request an advance every 10 trading days.
A closing will be held 7 trading days after such written notice at which time we
will deliver shares of common stock and Cornell Capital Partners, L.P. will pay
the advance amount, less the 3% retention.
We may request advances under the Equity Line of Credit once the
underlying shares are registered with the Securities and Exchange Commission.
Thereafter, we may continue to request advances until Cornell Capital Partners
has advanced $10.0 million or 24 months after the effective date of the
accompanying registration statement, whichever occurs first.
The amount of each advance is limited to a maximum draw down of
$425,000 in any thirty-day period. The amount available under the Equity Line of
Credit is not dependent on the price or volume of our common stock.
We cannot predict the actual number of shares of common stock that will
be issued pursuant to the Equity Line of Credit, in part, because the purchase
price of the shares will fluctuate based on prevailing market conditions and we
have not determined the total amount of advances we intend to draw. Nonetheless,
we can estimate the number of shares of our common stock that will be issued
using certain assumptions. Assuming we issued the number of shares of common
stock being registered in the accompanying registration statement at a recent
price of $0.19 per share, we would issue 19,642,873 shares of common stock to
Cornell Capital Partners, L.P. for gross proceeds of $3,732,146 or $6,267,854
less than is available under the Equity Line of Credit. These shares would
represent 14.1% of our outstanding common stock upon issuance. We are
registering 30,000,000 shares of common stock for the sale under the Equity Line
of Credit and the conversion of debentures. Accordingly, we would need to
register additional shares of common stock in order to fully utilize the $10.0
million available under the Equity Line of Credit at the current price of $0.19
per share.
Proceeds used under the Equity Line of Credit will be used in the
manner set forth in the "Use of Proceeds" section of this prospectus. We cannot
predict the total amount of proceeds to be raised in this transaction because we
have not determined the total amount of the advances we intend to draw.
We expect to incur expenses of approximately $85,000 in connection with
this registration, consisting primarily of professional fees. In connection with
the Equity Line of Credit, we paid Cornell Capital Partners a one-time
commitment fee payable in 3,032,000 shares of common stock and warrants to
purchase 265,000 shares of common stock, of which 15,000 shares have an exercise
price of $0.50 per share and 250,000 shares have an exercise price of $0.099 per
share. In addition, we issued 100,000 shares of common stock to Westrock
Advisors, Inc., a registered broker-dealer, as a placement agent fee and
1,040,000 shares of common stock to Danson Partners, LLC as a consulting fee.
15
PLAN OF DISTRIBUTION
The selling stockholders have advised us that the sale or distribution
of our common stock owned by the selling stockholders may be effected directly
to purchasers by the selling stockholders or by pledgees, donees, transferees or
other successors in interest, as principals or through one or more underwriters,
brokers, dealers or agents from time to time in one or more transactions (which
may involve crosses or block transactions) (i) on the over-the-counter market or
in any other market on which the price of our shares of common stock are quoted
or (ii) in transactions otherwise than on the over-the-counter market or in any
other market on which the price of our shares of common stock are quoted. Any of
such transactions may be effected at market prices prevailing at the time of
sale, at prices related to such prevailing market prices, at varying prices
determined at the time of sale or at negotiated or fixed prices, in each case as
determined by the selling stockholders or by agreement between the selling
stockholders and underwriters, brokers, dealers or agents, or purchasers. If the
selling stockholders effect such transactions by selling their shares of common
stock to or through underwriters, brokers, dealers or agents, such underwriters,
brokers, dealers or agents may receive compensation in the form of discounts,
concessions or commissions from the selling stockholders or commissions from
purchasers of common stock for whom they may act as agent (which discounts,
concessions or commissions as to particular underwriters, brokers, dealers or
agents may be in excess of those customary in the types of transactions
involved). The selling stockholders and any brokers, dealers or agents that
participate in the distribution of the common stock may be deemed to be
underwriters, and any profit on the sale of common stock by them and any
discounts, concessions or commissions received by any such underwriters,
brokers, dealers or agents may be deemed to be underwriting discounts and
commissions under the Securities Act.
Cornell Capital Partners is an "underwriter" within the meaning of the
Securities Act of 1933 in connection with the sale of common stock under the
Equity Line of Credit. Cornell Capital Partners. will pay us 92% of the lowest
closing bid price of our common stock on the Over-the-Counter Bulletin Board or
other principal trading market on which our common stock is traded for the 5
days immediately following the advance date. In addition, Cornell Capital
Partners will retain 3% of the proceeds received by us under the Equity Line of
Credit, a one-time commitment fee of 3,032,000 shares of our common stock and
warrants to purchase 265,000 shares of common stock, of which 15,000 shares have
an exercise price of $0.50 per share and 250,000 shares have an exercise price
of $0.099 per share. The 8% discount, the 3% retention and the one-time
commitment fee are underwriting discounts. In addition, we engaged Westrock
Advisors, Inc., a registered broker-dealer, to advise us in connection with the
Equity Line of Credit. For its services, Westrock Advisors, Inc. received
100,000 shares of our common stock.
Cornell Capital Partners, L.P. was formed in February 2000 as a
Delaware limited partnership. Cornell Capital Partners is a domestic hedge fund
in the business of investing in and financing public companies. Cornell Capital
Partners does not intend to make a market in our stock or to otherwise engage in
stabilizing or other transactions intended to help support the stock price.
Prospective investors should take these factors into consideration before
purchasing our common stock.
Under the securities laws of certain states, the shares of common stock
may be sold in such states only through registered or licensed brokers or
dealers. The selling stockholders are advised to ensure that any underwriters,
brokers, dealers or agents effecting transactions on behalf of the selling
stockholders are registered to sell securities in all fifty states. In addition,
in certain states the shares of common stock may not be sold unless the shares
have been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
We will pay all the expenses incident to the registration, offering and
sale of the shares of common stock to the public hereunder other than
commissions, fees and discounts of underwriters, brokers, dealers and agents. We
have agreed to indemnify Cornell Capital Partners and its controlling persons
against certain liabilities, including liabilities under the Securities Act. We
estimate that the expenses of the offering to be borne by us will be
approximately $85,000. For its services, Westrock Advisors, Inc. received
100,000 shares of our common stock. The offering expenses consist of: a SEC
registration fee of $955, printing expenses of $2,500, accounting fees of
$15,000, legal fees of $50,000 and miscellaneous expenses of $16,545. We will
not receive any proceeds from the sale of any of the shares of common stock by
the selling stockholders. We will, however, receive proceeds from the sale of
common stock under the Equity Line of Credit.
16
The selling stockholders should be aware that the anti-manipulation
provisions of Regulation M under the Exchange Act will apply to purchases and
sales of shares of common stock by the selling stockholders, and that there are
restrictions on market-making activities by persons engaged in the distribution
of the shares. Under Registration M, the selling stockholders or their agents
may not bid for, purchase, or attempt to induce any person to bid for or
purchase, shares of our common stock while such selling stockholders are
distributing shares covered by this prospectus. Accordingly, except as noted
below, the selling stockholders are not permitted to cover short sales by
purchasing shares while the distribution is taking place. Cornell Capital
Partners can cover any short positions only with shares received from us under
the Equity Line of Credit. The selling stockholders are advised that if a
particular offer of common stock is to be made on terms constituting a material
change from the information set forth above with respect to the Plan of
Distribution, then, to the extent required, a post-effective amendment to the
accompanying registration statement must be filed with the Securities and
Exchange Commission.
17
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following information should be read in conjunction with the
consolidated financial statements of IVP Technology and the notes thereto
appearing elsewhere in this filing. Statements in this Management's Discussion
and Analysis or Plan of Operation and elsewhere in this prospectus that are not
statements of historical or current fact constitute "forward-looking
statements."
Our company was incorporated in the State of Nevada on February 11,
1994 under the name Mountain Chef, Inc. On November 16, 1994, the corporation
changed its name to IVP Technology Corporation for the purpose of identifying
and acquiring private companies and/or their technologies in the high technology
field. Prior to 1998, IVP Technology was involved with various unsuccessful
activities relating to the sale of technology products and then became inactive
in 1997. On March 30, 1999, IVP Technology entered into a 14-month software
distribution agreement with Orchestral Corporation for the exclusive right to
market and distribute the PowerAudit software in the United States. This
agreement was extended in September 1999 and again in May 2000 until May 2003.
On or about March 17, 2000, IVP Technology acquired all of the
outstanding shares of common stock of Erebus Corporation, an inactive reporting
shell company, in exchange for 350,000 shares of common stock. As a result,
Erebus is a wholly owned subsidiary of IVP Technology. Pursuant to Rule 12g-3(a)
promulgated under the Securities Act of 1934, IVP Technology elected to become
the successor issuer to Erebus for reporting purposes under the Securities
Exchange Act of 1934, and is required to file reports with the Securities and
Exchange Commission. Erebus became a reporting company on or about August 17,
1999.
Erebus was incorporated on June 7, 1999 under the laws of the State of
Delaware to engage in any lawful corporate undertaking, including, but not
limited to, selected mergers and acquisitions. Erebus had been in the
developmental stage since its inception and, at December 31, 1999 and at the
date of the acquisition, had no operations, no operating history, no revenues or
earnings from operations, nor any significant assets or financial resources,
other than having issued shares to its original shareholder.
ACQUISITION OF INTERNATIONAL TECHNOLOGY MARKETING
On September 17, 2001, IVP Technology entered into a stock purchase
agreement with International Technology Marketing, Inc. Pursuant to this
agreement, IVP Technology agreed to issue 50 million shares of restricted common
stock to the shareholders of International Technology Marketing, who include
Messrs. MacDonald, Hamilton, Birch, Villella and Ms. Bullock, the members of our
current management team, in exchange for all of International Technology
Marketing's common stock. On March 25, 2002, we issued the 50 million shares of
common stock to the former shareholders of International Technology Marketing.
Pending execution of an escrow agreement, IVP Technology is holding these shares
for the benefit of the former shareholders of International Technology
Marketing. These shares will be held pending satisfaction of certain performance
related goals. As these goals are achieved, the shares will be disbursed from
the escrow to the former shareholders of International Technology Marketing. The
former shareholders are entitled to vote the shares held in escrow pending
satisfaction of the performance goals.
The performance goals are as follows:
o 10,000,000 shares will be disbursed upon aggregate sales of
$500,000.
o 10,000,000 shares will be disbursed upon aggregate sales of
$1,000,000.
o 10,000,000 shares will be disbursed upon aggregate sales of
$2,000,000.
o 10,000,000 shares will be disbursed upon aggregate sales of
$6,000,000.
o 10,000,000 shares will be disbursed upon aggregate sales of
$16,200,000.
On November 16, 2001, IVP Technology held its annual stockholders'
meeting. At the meeting, a majority of IVP Technology's outstanding capital
stock voted in favor of the acquisition of International Technology Marketing,
18
as well as the increase in the authorized common stock to 150 million shares.
Also at the meeting, the shareholders elected two members of the new management
team together with three independent board members to the Board of Directors.
CHANGES IN NUMBER OF EMPLOYEES
We do not anticipate any significant changes in the number of
employees.
RESEARCH AND DEVELOPMENT
We do not anticipate any significant research and development expenses
over the next 12 months except to mitigate some of the technology risks
indicated under the heading section entitled Risks.
PLANT AND EQUIPMENT
We do not anticipate significant plant and equipment expenses over the
next 12 months.
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our
financial statements and the related notes and the other financial information
appearing elsewhere in this report.
GOING CONCERN
As reflected in the accompanying financial statements, IVP Technology's
recurring losses during the development stage of $12,883,106, and its working
capital deficiency of $4,334,680 and stockholders' deficiency of $862,165, raise
substantial doubt about its ability to continue as a going concern. The ability
of IVP Technology to continue as a going concern is dependent on IVP
Technology's ability to raise additional capital and implement its business
plan. The financial statements do not include any adjustments that might be
necessary if IVP Technology is unable to continue as a going concern.
IVP Technology has entered into a software distribution agreement and a
licensing agreement and intends on raising additional equity capital in order to
implement its business plan and marketing efforts. Management believes that
actions presently being taken to obtain additional funding and implement its
strategic plans provide the opportunity for IVP Technology to continue as a
going concern.
YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000
For the calendar year ended December 31, 2001, we incurred an overall
loss of $(1,211,148) or $(0.03) per share, which was 56% less than the
$(2,765,609), or $(0.08) per share, loss we incurred for the comparative 12
month period ended December 31, 2000.
REVENUES. We generated nominal revenue during the calendar year ended
December 31, 2001 in the amount of $67,358 from sales of the PowerAudit product.
Sales increased 68% from the comparative period ended December 31, 2000.
OPERATING EXPENSES. Total operating expenses for the calendar years
ended December 31, 2001 and December 31, 2000 were $1,278,506 and $2,805,611,
respectively, and represents a 54% decrease from the prior calendar year. The
reduction in operating expenses resulted primarily from the reduction in
consulting expenses from $1,637,279 in the year ended December 31, 2000 to
$387,086 in the comparable period in the current year. For the year ended
December 31, 2001, operating expenses consisted of $19,837 in amortization
expenses, $22,341 in interest expense, $125,715 in professional fees, $723,527
in development and licensing fees and software support and $387,086 in
consulting expenses. In the year ended December 31, 2000, operating expenses
consisted of $114,000 in amortization expense, $12,501 in interest expense,
$215,569 in professional fees, $308,841 in management fees, $355,109 in
development and licensing fees and software support, $1,637,279 in consulting
fees and $162,312 in other miscellaneous expenses.
Amortization expense for the year ending December 31, 2001 was $19,837
compared with $114,000 for year ending December 31, 2000. Amortization in the
calendar year 2001 was directly attributable to a software licensing agreement
entered into by IVP Technology on December 28, 2001. The agreement is valid for
19
two years and enables IVP Technology to sell software in North America and
Mexico and cost IVP Technology $3,620,268 and will be amortized over a two year
period.
Consulting fees, for the year ending December 31, 2001 and December 31,
2000, were $387,086 and $1,637,279, respectively. The decrease of 76% was
directly related to the fact that shares issued during the current calendar year
in exchange for consulting fees were issued at a lower price per share than the
prior calendar year.
Development and licensing fees and software support increased by
$368,418 to $723,527 for year ending December 31, 2001 compared to $355,109 for
December 31, 2000.
Interest expense increased $9,840 from the calendar year ended December
31, 2000 to $22,341 for calendar year ending December 31, 2001 due principally
to financing entered into with Berra Holdings Inc. on July 30, 2001 for $187,500
over two years at 6% per annum of which IVP Technology borrowed $129,020.
YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999
For the calendar year ended December 31, 2000, we incurred an overall
loss of $(2,765,609) or $(0.08) per share, which was a 52% increase from the
$(1,820,255) loss we incurred for the comparative 12 month period ended December
31, 1999. Loss per share for the 12 months ended December 31, 1999 was $(0.08).
REVENUES. We generated nominal revenue during the calendar year ended
December 31, 2000 in the amount of $40,002 from sales of the PowerAudit product.
We generated no revenue for the calendar year ended December 31, 1999.
OPERATING EXPENSES. Total operating expenses for the calendar years
ended December 31, 2000 and December 31, 1999 were $2,805,611 and $1,088,085
respectively and represents a 158% increase from the prior calendar year. Of
these amounts, $215,569 and $191,850 or 8% and 18% respectively, were for
professional services rendered.
Amortization expense for the year ending December 31, 2000 was $114,000
compared with $106,000 for the year ending December 31, 1999 and represents the
amortization of licensing fees.
Consulting fees for the year ending December 31, 2000 and December 31,
1999 were $1,637,279 and $221,078, respectively. The decrease of $1,416,201 was
directly related to the fact that shares issued during the current calendar year
in exchange for consulting fees were issued at a higher price per share than the
prior calendar year.
Interest expense decreased from $13,126 for the calendar year ended
December 31, 1999 to $12,501 for the calendar year ending December 31, 2000.
During the calendar year ended December 31, 1999, we incurred an
extraordinary loss of $732,170 on the extinguishment of debt.
LIQUIDITY AND CAPITAL RESOURCES
In the past we have financed our operations through a combination of
convertible securities and the private placement of our stock. Our cash position
continues to be uncertain. Our primary need for cash is to fund our ongoing
operations until such time that the sale of our licensed products generates
enough revenue to fund operations. In addition, our need for cash includes
satisfying $4,334,680 in current liabilities, including software license fees of
$3,620,268 due by December 31, 2002 and a convertible note of $200,000, plus
accrued interest of $34,841 as of December 31, 2001. Our independent accountants
have issued a going concern opinion on our financial statements that raise
substantial doubt about our ability to continue as a going concern. Our ability
to continue as a going concern is dependent on our ability to raise additional
capital and implement our business plan to market and sell PowerAudit,
Classifier, Viper and other software products.
At December 31, 2001, IVP Technology's cash and cash equivalents
balance was $232, a decrease of $1,192 from the balance of $1,424 at December
31, 2000. During the calendar year ended December 31, 2001, cash used in
operations and investing activities amounted to ($130,212) and ($0),
respectively. Cash used in operating activities consisted primarily of a net
loss of $1,211,148, which was partially offset by stock issued for services and
licensing fees of $983,126. Cash provided by financing activities during the
calendar year amounted to $129,020, which was financed through a two-year note
20
with Berra Holdings Inc. Under the terms of the financing IVP Technology is able
to draw down $187,500 over a two-year period with interest payable of 6% per
annum on all funds received.
On January 31, 2002, IVP Technology entered into an interim financing
agreement for (pound)600,000 (U.S. $864,180) on an unsecured basis with the
European based venture capital and merchant banking firm DcD Limited. The loan
bears an interest rate equal to the HSBC Bank base rate, minus 5% if that figure
is positive, and interest is payable monthly. The loan was due on April 30,
2002. On May 1, 2002, IVP Technology received written notice that the lender,
DCD Limited, agreed to convert the loan into 4,000,000 shares of common stock.
This equates to a conversion price of approximately $0.19 per share.
In April 2002, IVP Technology raised $200,000 of gross proceeds from
the issuance of convertible debentures. These debentures accrue interest at a
rate of 5% per year and mature two years from the issuance date. The debentures
are convertible at the holder's option any time up to maturity at a conversion
price equal to the lower of (i) 120% of the closing bid price of the common
stock as of the closing date (ii) 80% of the average closing bid price of the
common stock for the 4 lowest trading days of the 5 trading days immediately
preceding the conversion date. At maturity, IVP Technology has the option to
either pay the holder the outstanding principal balance and accrued interest or
to convert the debentures into shares of common stock at a conversion price
equal to the lower of (i) 120% of the closing bid price of the common stock as
of the closing date or (ii) 80% of the average closing bid price of the common
stock for the 4 lowest trading days of the 5 trading days immediately preceding
the conversion date. IVP Technology has the right to redeem the debentures upon
30 days notice for 120% of the amount redeemed. Upon such redemption, IVP
Technology will issue the investor a warrant to purchase 10,000 shares of common
stock at an exercise price of $0.50 per share for every $100,000 of debentures
that are redeemed.
In April 2002, IVP Technology entered into an Equity Line of Credit
Agreement with Cornell Capital Partners, L.P. Under this agreement, IVP
Technology may issue and sell to Cornell Capital Partners common stock for a
total purchase price of up to $10.0 million. Subject to certain conditions, IVP
Technology will be entitled to commence drawing down on the Equity Line of
Credit when the common stock under the Equity Line of Credit is registered with
the Securities and Exchange Commission and the registration statement is
declared effective. The purchase price for the shares will be equal to 92% of
the market price, which is defined as the lowest closing bid price of the common
stock during the five trading days following the notice date. The amount of each
advance is subject to an aggregate maximum advance amount of $425,000 in any
thirty-day period. IVP Technology paid Cornell a one-time fee equal to $340,000,
payable in 3,032,000 shares of common stock. The investor also received warrants
to purchase up to 265,000 shares of common stock, 250,000 shares at an exercise
price equal to $0.50 per share and 15,000 shares of common stock equal to $0.099
per share. Cornell Capital Partners is entitled to retain 3.0% of each advance.
In addition, IVP Technology entered into a placement agent agreement with
Westrock Advisors, Inc., a registered broker-dealer. Pursuant to the placement
agent agreement, IVP Technology paid a one-time placement agent fee of 100,000
shares of common stock. IVP Technology agreed to pay Danson Partners, LLC a
consultant, a one-time fee of $200,000 for its work in connection with
consulting the company on various matters. Of that fee, $75,000 of this fee was
paid in cash with the balance payable in 1,040,000 shares of common stock.
ACQUISITION OF INTERNATIONAL TECHNOLOGY MARKETING
On September 17, 2001, IVP Technology entered into a stock purchase
agreement with International Technology Marketing, Inc. whereby IVP Technology
is obligated to issue 50 million shares of restricted common stock to the
shareholders of International Technology Marketing, who include Messrs.
MacDonald, Hamilton, Birch, Villella and Ms. Bullock, the members of our current
management team, in exchange for all of International Technology Marketing's
common stock. On March 25, 2002, we issued the 50 million shares of common stock
to be held by IVP Technology until the escrow agreement is executed to hold the
shares. These shares will be held pending satisfaction of certain performance
related goals. As these goals are achieved, the shares will be disbursed from
the escrow to the former shareholders of International Technology Marketing. The
former shareholders are entitled to vote the shares held in escrow pending
satisfaction of the performance goals.
The performance goals are as follows:
o 10,000,000 shares will be disbursed upon aggregate sales of
$500,000.
o 10,000,000 shares will be disbursed upon aggregate sales of
$1,000,000.
o 10,000,000 shares will be disbursed upon aggregate sales of
$2,000,000.
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o 10,000,000 shares will be disbursed upon aggregate sales of
$6,000,000.
o 10,000,000 shares will be disbursed upon aggregate sales of
$16,200,000.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On November 16, 2001, IVP Technology held its annual stockholders'
meeting in Las Vegas, Nevada. At the meeting, the stockholder approved the
following changes to our Articles of Incorporation:
o To increase IVP Technology's authorized shares of common stock from
50,000,000 shares to 150,000,000; and
o To provide for a class of 50,000,000 shares of preferred stock
that will have such terms as the Board of Directors shall
determine from time to time.
In addition, the stockholders approved the acquisition of International
Technology Marketing, and elected five directors, Messrs. MacDonald, Hamilton,
Sidrow, King and Smith.
EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has recently issued several
new Statements of Financial Accounting Standards. Statement No. 141, "Business
Combinations" supersedes APB Opinion 16 and various related pronouncements.
Pursuant to the new guidance in Statement No. 141, all business combinations
must be accounted for under the purchase method of accounting; the
pooling-of-interests method is no longer permitted. SFAS 141 also establishes
new rules concerning the recognition of goodwill and other intangible assets
arising in a purchase business combination and requires disclosure of more
information concerning a business combination in the period in which it is
completed. This statement is generally effective for business combinations
initiated on or after July 1, 2001.
Statement No. 142, "Goodwill and Other Intangible Assets" supercedes
APB Opinion 17 and related interpretations. Statement No. 142 establishes new
rules on accounting for the acquisition of intangible assets not acquired in a
business combination and the manner in which goodwill and all other intangibles
should be accounted for subsequent to their initial recognition in a business
combination accounted for under SFAS No. 141. Under SFAS No. 142, intangible
assets should be recorded at fair value. Intangible assets with finite useful
lives should be amortized over such period and those with indefinite lives
should not be amortized. All intangible assets being amortized as well as those
that are not, are both subject to review for potential impairment under SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of". SFAS No. 142 also requires that goodwill arising in a
business combination should not be amortized but is subject to impairment
testing at the reporting unit level to which the goodwill was assigned to at the
date of the business combination.
SFAS No. 142 is effective for fiscal years beginning after December 15,
2001 and must be applied as of the beginning of such year to all goodwill and
other intangible assets that have already been recorded in the balance sheet as
of the first day in which SFAS No. 142 is initially applied, regardless of when
such assets were acquired. Goodwill acquired in a business combination whose
acquisition date is on or after July 1, 2001, should not be amortized, but
should be reviewed for impairment pursuant to SFAS No. 121, even though SFAS No.
142 has not yet been adopted. However, previously acquired goodwill should
continue to be amortized until SFAS No. 142 is first adopted.
Statement No. 143 "Accounting for Asset Retirement Obligations"
establishes standards for the initial measurement and subsequent accounting for
obligations associated with the sale, abandonment, or other type of disposal of
long-lived tangible assets arising from the acquisition, construction, or
development and/or normal operation of such assets. SFAS No. 143 is effective
for fiscal years beginning after June 15, 2002, with earlier application
encouraged.
We believe that the adoption of these pronouncements will not have a
material effect on IVP Technology's financial position or results of operations.
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DESCRIPTION OF BUSINESS
OVERVIEW
IVP Technology Corporation is currently a Toronto-based business
software marketer and distributor, and was until December 31, 2001 engaged
solely in distributing a software product marketed under the name PowerAudit.
Since January 1, 2002, IVP Technology has been in the process of expanding its
business towards enterprise software development and implementation, in addition
to adding additional products for marketing and distribution. This expansion is
based on our management's experience in operating other companies and divisions,
and in selling and distributing both enterprise and consumer software products.
LICENSED PRODUCTS
IVP Technology markets data solutions made up of separate software
products that can operate on a stand-alone basis or integrate with other
enterprise level software. We believe that these products provide enterprises
with increased economy, efficiency and effectiveness when enterprises are faced
with the necessity of obtaining data from the field and moving it into processes
that take place in the front and back office environment up to the business
decision making level. A description of IVP Technology's software products is
described below.
POWERAUDIT. IVP Technology is a party to a license and distribution
agreement that provides it with the exclusive rights in the United States, the
European Economic Community and Switzerland to market and distribute PowerAudit
software. PowerAudit, developed by Orchestral Corporation, is a software
application designed for handheld personal computers that provides a platform
for real-time, remote data capture and market survey purposes. PowerAudit is a
field automation and enterprise integration tool that allows field personnel to:
i) collect a variety of different forms of data; ii) verify the data at the time
of entering; and iii) transmit the data on a wireless basis via the Internet to
a central server where IVP Technology will have access to the data. PowerAudit
runs on handheld personal computers employing Microsoft's Windows CE operating
system and allows the software to interface with other Microsoft platforms. Our
marketing and distribution license is valid through May 31, 2003.
PowerAudit was developed for use by organizations that require
immediate and qualified data from the field. These include companies that
market, distribute and track many products in the retail market place, including
consumer goods distributors and pharmaceutical and healthcare companies. In
addition, we believe that companies involved in surveying sales reporting and
merchandising, retail and industrial auditing, agriculture research can benefit
from PowerAudit's ability to gather data quickly and make that data available to
customers in real time.
DESCRIPTION OF THE LICENSE. Pursuant to the license and distribution
agreement, IVP Technology has the exclusive rights and license to copy,
distribute, market and sub-license PowerAudit in the United States, European
Economic Community and Switzerland through May 31, 2003. In connection with the
license, IVP Technology paid $50,000 to facilitate the development and delivery
of PowerAudit and issued 1,500,000 shares of IVP Technology's common stock
valued at $220,000 on the date of grant. IVP Technology is also required to
issue an additional 1,000,000 shares of common stock for an extension of the
license and to raise at least $2,000,000 in capital, a portion of which will be
used to contract services or to develop technical support and marketing groups
for IVP Technology. IVP Technology has agreed to use its best efforts to
register the sale of all shares issued under the license. IVP Technology is also
required to pay the licensor a royalty equal to 20% of the first $500,000 of
sales, 12.5% for the next $500,000 of sales and 7.5% for any additional sales.
IVP Technology will also pay the licensor $4,200 per month for support and
maintenance services. In addition, IVP Technology is required to purchase at
least 12 products prior to June 30, 2002 or, if it fails to do so, then to pay
the licensor $45,000 in cash, plus issue the licensor 100,000 shares of common
stock.
23
CLASSIFIER. On December 28, 2001, we entered into a two-year,
non-exclusive licensing agreement to distribute the Classifier software program,
developed by The Innovation Group, PLC, throughout the insurance industry. The
Innovation Group is one of the leading developers of software and systems for
financial services. IVP Technology received a non-exclusive right to sell such
software in the United States, Mexican and Canadian markets.
Pursuant to the terms of this agreement, IVP Technology is less
obligated to purchase from The Innovation Group $3,620,268 worth of Classifier
software by December 31, 2001. IVP Technology paid The Innovation Group
(pound)500,000 or approximately $724,000 in connection with the license. IVP
Technology is obligated to pay an additional (pound)500,000 or approximately
$724,000 by September 30, 2002 and (pound)1.5 million or approximately
$2,172,268 by DecembEr 31, 2002. On February 16, 2002, IVP Technology borrowed
$864,180 from DcD Limited that was used, in part, to pay the March 31, 2002
installment to the Innovation Group.
DESCRIPTION OF CLASSIFIER. The Classifier is a sophisticated business
intelligence solution that provides data analysis benchmarking which can monitor
on-going improvements on business activities, such as specific products, lines
of business or other information of a business operation. The Classifier was
designed to create and broadcast business intelligence knowledge views direct to
decision makers over corporate Intranets and the Internet. The Classifier turns
a database into a web site, enabling more people to access data with a
web-browser. The Classifier incorporates a high-performance and powerful data
analysis server, a web-report publishing facility, versatile data transformation
features and the ability to connect and extract data from multiple back office
data sources.
MARKET FOR CLASSIFIER. The market for Classifier is almost exclusively
centered on larger corporations where polling databases for changes in volumes,
makeup and conditions in various components of sales, cost of sales and
components could have a material impact on the way the business is managed. The
product can be adapted to various industry sectors.
VIPER. On February 20, 2002, we entered into an agreement with
SmartFocus Limited, to resell its Viper(R) suite of products which consists of
Viper Analyze and Visualize, Viper Data Mining, Viper CRM, Viper Campaign
Planner and Smart Campaigner. Pursuant to the license, IVP Technology will be
entitled to a 15% commission on sales of Viper through customer opportunities
created by IVP Technology. SmartFocus will make sales representatives available
to assist in sales presentations.
DESCRIPTION OF VIPER. We believe that Viper is a powerful, fast and
easy-to-use analysis and visualization application designed for company
marketing departments and those decision makers concerned with gross data from
voluminous rows of customer information. Viper harnesses customer and
transactional data from any touch-point or channel across any organization to
create, build and maintain customer insight and customer intelligence. Viper is
designed to empower enterprises to better understand, predict, manage and
influence customer behavior.
OTHER. IVP Technology intends to seek to broaden its product offerings
and its range of business activities by seeking to license other enterprise and
consumer software products and acquiring other product development and
distribution companies.
PRODUCT AND MARKET ANALYSIS
Handheld personal computers or personal digital assistant computers may
be defined as small, pocket-sized devices that feature pen-based input and allow
users to automatically copy and conform, or synchronize, information between the
device and a personal computer. The introduction of the handheld personal
computers in 1995 ushered in a new era in mobile computing that offered users a
combination of simplicity and functionality. Innovations in design,
synchronization technology, user interface, programmability, functionality and
battery power management transformed these devices into convenient productivity
tools.
24
We believe that the emergence of technologies enabling wireless access
to the Internet, consumer entertainment and enterprise data provides an
opportunity in this market. The Internet has become an important way for
corporations to communicate with field employees and for professionals to access
personal and business information, download new applications, access new
services and interface with organizational data and information. We believe that
inter-party interface over the Internet, as well as wireless access to Internet
content and enterprise data will make handheld personal computers increasingly
valuable to users.
We believe that continued technological innovations that address
end-user needs are an important component of industry growth. Technological
advances have led to significant reductions in size and weight, as well as
improvements in battery life, computing speed, reliability and storage capacity
of handheld personal computers. Third party developers, who create software
applications and complementary hardware peripherals and accessories supplement
manufacturers' innovations and allow users to customize and enhance their
devices. These feature enhancements and performance improvements, driven by both
manufacturers and third party developers, are intended to attract new users and
encourage device upgrades.
Handheld personal computers are nearing laptop and notebook
capabilities at a fraction of the cost, thereby making these devices more
attractive. As more software applications are developed to meet end-user needs,
handheld personal computers may become the preferable option for certain field
workers, given their reduced size and weight as compared to notebook and laptop
computers.
COMPETITION
IVP Technology competes within the global market for software
applications. These applications are developed for both handheld devices and
client server/networked installations. The market for these products is evolving
rapidly and is highly competitive. Our competitors include (i) Microsoft, as the
developer of handheld personal computers' Windows CE operating system, which
also develops software applications for devices that run on Windows CE, and (ii)
the community of developers that has developed products for the palm operating
systems; and (iii) the community of developers that has emerged since the
introduction of these devices that creates applications for Linux, Sun, and
other operating system platforms and iv) the host of developers that are
developing entertainment and enterprise applications on other handheld devices
including telephones, personal entertainment devices and other communication
devices. Nearly all of our competitors or potential competitors have
significantly greater financial, technical and marketing resources than we do.
These competitors may be able to respond more rapidly than us to new or emerging
technologies or changes in customer requirements. They may also devote greater
resources to the development, promotion and sale of their products than we do.
EMPLOYEES AND CONSULTANTS
As of May 15, 2002, we have 5 full-time employees and consultants. None
of our employees are covered by any collective bargaining agreement.
25
MANAGEMENT
The following table sets forth the names and ages of our current
directors and executive officers, their principal offices and positions and the
date each such person became a director or executive officer. The Board of
Directors elects our executive officers annually. Our directors serve one-year
terms or until their successors are elected and accept their positions. The
executive officers serve terms of one year or until their death, resignation or
removal by the Board of Directors. There are no family relationships or
understandings between any of the directors and executive officers. In addition,
there was no arrangement or understanding between any executive officer and any
other person pursuant to which any person was selected as an executive officer.
Our directors and officers are as follows:
NAME AND ADDRESS AGE POSITION
- -------------------------------- ------ --------------------------------------
Brian Macdonald 53 President, CEO & Chairman of the Board
16 Wetherfield Place
Toronto, Ontario M3B 2E1
Canada
Peter Hamilton 55 Senior VP Sales & Director
2250 Rockingham Drive
Oakville, Ontario L6H 6J3
Canada
Kevin Birch 30 Senior VP & Chief Technology Officer
6860 Meadowvale Town Centre Ci.
Mississauga, Ontario L5N7T4
Canada
Sherry Bullock 40 Vice President Marketing
20 The Greenery
Oakville, Ontario L6H 6J6
Canada
Geno Villella 43 VP Implementation
3 Sawmill Road
Toronto, Ontario M3L2L6
Canada
J. Stephen Smith 64 Director
11614 Holly Briar Lane
Great Falls, VA 22066
United States
Below are biographies of our officers and directors:
BRIAN MACDONALD, PRESIDENT, CEO & CHAIRMAN OF THE BOARD. Brian
MacDonald, IVP's President & CEO was appointed to the board in November 2001 and
elected Chairman of the Board in December 2001. Prior to his position with IVP,
Mr. MacDonald co-founded Springboard Technology Solutions Inc., a Toronto-based
network solutions web and software application developer, that creates processes
that enhance business productivity and profitability. In 1995 he co-founded
(with Mr. Peter Hamilton) and served as the Executive VP Corporate Development
and CFO of Lava Systems Inc. ("Lava"), a multinational software company that
provided document management, imaging and work flow software services, based in
Toronto, Chicago, London, and Australia. During this time, he assisted Lava in
raising over Cdn. $36 million, and co-led the company to public status with a
listing on the Toronto Stock Exchange. Mr. MacDonald graduated with honors from
the University of Alberta in 1974 with a BA in Political Science, and received
his Masters of Arts in Public Policy and Political Science from the University
of British Columbia in 1979. He holds a Fellow of the Institute of Canadian
Bankers designation. Mr. MacDonald has served in managerial capacities with The
Toronto Dominion Bank, Banque Nationale de Paris, Confederation Life Insurance
Company and ABN Amro Bank.
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PETER HAMILTON, SENIOR VP SALES AND DIRECTOR. Peter Hamilton, IVP's
Senior VP Sales was appointed a Director in November 2001. Mr. Hamilton oversees
product distribution activities and sales for IVP Technology. In 1999, he served
as the VP Sales and Consulting of Springboard Technology Solutions Inc.
("Springboard"), a Toronto-based network solutions web and software application
developer, that creates processes that enhance business productivity and
profitability. Prior to his position with Springboard, in 1995, Mr. Hamilton
co-founded (with Mr. MacDonald) and served as President and CEO of Lava Systems
Inc. ("Lava"), a multinational software company that provided document
management, imaging and work flow software services, based in Toronto, Chicago,
London, and Australia. During this time, Mr. Hamilton was responsible for
overseeing Lava's expansion of its operations into Europe, Australia, U.S. and
Canada and developed business partners in South America, South Africa, the
Middle East and Scandinavia. He also assisted Lava in raising over Cdn. $36
million, and co-led the company to public status with a listing on the Toronto
Stock Exchange. Prior to this, Mr. Hamilton served as Senior VP of Operations
for SoftKey Software International ("SoftKey"), a publicly traded company on the
New York Stock Exchange. He was responsible for SoftKey's day-to-day operations,
including manufacturing, product distribution, information systems, finance,
customer support, technical support and product data management and marketing.
In addition, Mr. Hamilton integrated 18 new businesses into SoftKey's
operations, during his tenure.
KEVIN BIRCH, SENIOR VP AND CHIEF TECHNOLOGY OFFICER. Kevin Birch has
served as IVP's Senior VP and Chief Technology Officer since November 2001. Mr.
Birch manages IVP Technology's integration of new products into IVP's new thrust
as a developer, distributor and reseller of data solutions software. His
background includes architecting, developing and managing many complex software
development projects in sectors as diverse as financial services, leisure
products, health care and non-profit organizations in Canada and the United
States. In 1999, Mr. Birch was the VP of Multimedia and Software Development for
Springboard Technology Solutions Inc, a Toronto-based network solutions web and
software application developer, that creates processes that enhance business
productivity and profitability. Prior to this, he spent several years as an
Interface Architect with HealthLink Clinical Data Network, Inc., where he was
responsible for the development and support of information system interfaces in
and between major health care facilities across Canada.
SHERRY BULLOCK, VP MARKETING. Sherry Bullock IVP's VP Marketing manages
IVP Technology's marketing team and creates sales and marketing strategies and
tools. Ms. Bullock is an experienced project manager, marketing strategist and
program manager with over 20 years experience in developing North American
marketing campaigns from direct mail and email to web-based programs designed to
increase traffic and customer access. Prior to her position with IVP, in 1999
Ms. Bullock was the Manager of Marketing at Springboard Technology Solutions
Inc.
GENO VILLELLA, VP IMPLEMENTATION. Geno Villella, IVP's VP
Implementation manages IVP Technology's IT service team and assists in the
development of applications to enhance client productivity and profitability.
Mr. Villella has over 20 years experience in mainframe and distributed systems
infrastructure deployment, and is highly skilled in designing and implementing
all types of communications and computer networks. Prior to this, in 1999, Mr.
Villella was the Vice President IT and Network Solutions at Springboard
Technology Solutions Inc. He has also held executive positions with James River
Corporation, Insight Business Consultants and Lava Systems Inc.
J. STEPHEN SMITH, DIRECTOR. J. Stephen Smith has served as a Director
of IVP Technology since November 2001. Mr. Smith has over 30 years experience in
planning, directing and managing major projects in such diverse fields as radar
system development, electronic intelligence system design, installation and
operation, ship design and acquisition and Document Management System ("DMS")
development and applied solutions. He has served as Vice President Operations
for CDI Marine, the nation's largest marine engineering firm and has held the
positions of Director of Engineering, Vice President and President of ROH, a
diverse professional services company specializing in DMS solutions, web site
development and applications and a broad range of support for the US Navy ship
acquisition program. Mr. Smith graduated with a BBA from the University of Notre
Dame and received his Masters in Science and Electronics Engineering from the
U.S. Naval Postgraduate School.
COMPENSATION OF NON-EMPLOYEE DIRECTORS. Our non-management directors
are paid 500,000 shares of common stock for each year of service on the board.
There is no separate compensation for directors who are also a part of
management for their services as a director of IVP Technology, but all directors
are reimbursed for all of their out-of-pocket expenses incurred in connection
with the rendering of services as a director.
COMMITTEES OF THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD OF DIRECTORS. During a Board of Directors
meeting held on March 19, 2002, an audit committee was established. The audit
committee will report to the Board of Directors regarding the appointment of our
independent public accountants, the scope and results of our annual audits,
27
compliance with our accounting and financial policies and management's
procedures and policies relative to the adequacy of our internal accounting
controls. The audit committee is comprised of Messrs. MacDonald and Smith.
Resignations of Members of the Board of Directors
Dr. Michael Sidrow and Robert M. King resigned as members of our Board
of Directors on May 13, 2002.
28
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following summary compensation table
shows certain compensation information for services rendered in all capabilities
for the calendar years ended December 31, 2001 and 2000. Other than as set forth
herein, no executive officer's cash salary and bonus exceeded $50,000 in any of
the applicable years. The following information includes the dollar value of
base salaries, bonus awards, the value of restricted shares issued in lieu of
cash compensation and certain other compensation, if any, whether paid or
deferred:
ANNUAL COMPENSATION LONG-TERM COMPENSATION
OTHER RESTRICTED
NAME & ACCRUED STOCK AWARDS LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION IN US$ OPTIONS/SARS PAYOUTS COMPENSATION
- --------------------- ------------ -------- -------- ------------ ------------ ------------ -------- ------------
Brian MacDonald(4) 2001 $7,440 -- -- -- -- -- --
John Maxwell 2001 -- -- -- -- (3) -- -- --
Pres. (2) 2000 -- -- -- 150,000 (1) -- -- --
John Trainor, 2001 -- -- -- -- (3) -- -- --
Sec'y.(2) 2000 -- -- -- 144,000 (1) -- -- --
- -------------------
(1) Messrs. Maxwell and Trainor each received 200,000 shares of restricted
common stock valued at $.75 and $.72 per share, respectively, in lieu
of cash compensation.
(2) Effective December 15, 2001, Messrs. Maxwell and Trainor resigned as
officers and directors of IVP Technology.
(3) In March 2002, Messrs. Maxwell and Trainor each received 500,000 shares
of restricted common stock valued at $.05 per share, in lieu of cash
compensation.
(4) Mr. MacDonald became Chief Executive Officer on November 16, 2001.
IVP Technology has no deferred compensation, stock options, SAR or
other bonus arrangements for its employees and/or directors. During the calendar
year ended December 31, 2001, all decisions concerning executive compensation
were made by the Board of Directors.
EMPLOYMENT AGREEMENTS. In September 2001, International Technology
Marketing entered into employment agreements with Brian MacDonald and Peter J.
Hamilton. Mr. MacDonald is employed as President and Treasurer and Mr. Hamilton
is employed as Vice President, Sales. Each of these agreements has a term of
three years and thereafter will continue for one year terms unless either party
terminates the agreement at least 90 days prior to the end of any term. Each of
Mr. MacDonald and Mr. Hamilton has a salary of Cdn. $96,000 per year, plus 6% of
sales revenue. IVP Technology guarantees the payments under these employment
contracts. Neither Mr. MacDonald nor Mr. Hamilton receives any further
compensation for service as an officer or director of IVP Technology.
In September 2001, International Technology Marketing entered into
employment agreements with Geno Villella, Kevin Birch and Sherry Bullock. Mr.
Villella is employed as Vice President Implementation, Mr. Birch is employed as
Senior Vice President and Chief Technology Officer and MS. Bullock is employed
as Vice President Marketing. Each of these agreements has a term of three years
and thereafter will continue for one year terms unless either party terminates
the agreement at least 90 days prior to the end of any term. Mr. Villella is
paid a base salary of Cdn. $36,000 per year, Mr. Birch is paid a base salary of
Cdn. $60,000 per year and Ms. Bullock is paid a base salary of Cdn. $48,000 per
year. IVP Technology guarantees the payments under these employment contracts.
None Mr. Villella, Mr. Birch and Mr. Bullock receives any further compensation
for service as an officer or director of IVP Technology. IVP Technology assumes
these contracts effective April 1, 2002.
Our company has no deferred compensation, stock options, SAR or other
bonus arrangements for its employees and/or directors. All decisions concerning
executive compensation were made by the Board of Directors.
EMPLOYEES AND CONSULTANTS
As of December 31, 2001, IVP Technology had five full time employees.
None of our employees are covered by any collective bargaining agreement.
29
On March 1, 2002, IVP Technology also entered into a one-year
consulting agreement with Danson Partners, LLC. Pursuant to this agreement,
Danson Partners will provide financial and accounting services to IVP
Technology. Danson Partners, LLC will be paid $10,000 per month for these
services, $7,500 payable in cash and $2,500 payable in stock.
DESCRIPTION OF PROPERTY
IVP Technology's principal executive office is located at 2275
Lakeshore Blvd. West Suite 401, Toronto Ontario M8V 3Y3 Canada, which are also
the premises occupied by Springboard Technology Solutions Inc. IVP Technology
has an oral agreement which commenced January 1, 2002, with Springboard
Technology Solutions, Inc., a corporation owned by Messrs. MacDonald, Hamilton,
Birch, Villella and Ms. Bullock, whereby IVP Technology is obligated to pay
Springboard approximately $30,000 per month for rent, utilities, network
infrastructure, equipment leases and all office administrative services. Messrs.
MacDonald and Hamilton are officers and directors of IVP Technology. Messrs.
Birch and Villella and Ms. Bullock are officers of IVP Technology.
LEGAL PROCEEDINGS
IVP Technology is not presently a party to any material legal
proceedings, nor is it aware of any material threatened litigation.
30
PRINCIPAL STOCKHOLDERS
The following table contains information about the beneficial ownership
of our common stock as of May 7, 2002, for:
o each person who beneficially owns more than five percent of the
common stock;
o each of our directors;
o the named executive officers; and
o all directors and executive officers as a group.
Unless otherwise indicated, the address for each person or entity named
below is c/o IVP Technology Corporation, 2275 Lakeshore Blvd. West, Suite 401,
Toronto, Ontario M8V 3Y3 Canada.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Except as indicated by footnote, and subject
to community property laws where applicable, the persons named in the table
below have sole voting and investment power with respect to all shares of common
stock shown as beneficially owned by them. The percentage of beneficial
ownership is based on 119,526,975 shares of common stock outstanding as of May
7, 2002:
COMMON STOCK BENEFICIALLY OWNED
-----------------------------------
AMOUNT PERCENTAGE
--------------------- ------------
Brian MacDonald 14,000,000 (1) 12.6%
Peter Hamilton 14,000,000 (1) 12.2%
Kevin Birch 14,000,000 (1) 12.6%
Sherry Bullock 4,000,000 (1) 3.49%
Geno Villella 4,000,000 (1) 3.6%
Stephen Smith 1,000,000 (2) 1.0%
---------- --- ----
All Officer and Directors as a Group 51,000,000 44.4%
================ ============
(1) These shares are being held in escrow until satisfaction of certain
performance goals established in connection with the purchase of
International Technology Marketing. These people are entitled to vote
the escrowed shares while being held in escrow.
(2) Shares held in escrow with 500,000 shares to be released each on
November 16, 2002 and November 16, 2003.
31
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
IVP Technology's principal executive office is located at 2275
Lakeshore Blvd. West Suite 401, Toronto Ontario M8V 3Y3 Canada, which are also
the premises occupied by Springboard Technology Solutions Inc. IVP Technology
has an oral agreement which commenced January 1, 2002, with Springboard
Technology Solutions, Inc., a corporation owned by Messrs. MacDonald, Hamilton,
Birch, Villella and Ms. Bullock, whereby IVP Technology is obligated to pay
Springboard approximately $30,000 per month for rent, utilities, network
infrastructure, equipment leases and all office administrative services. Messrs.
MacDonald and Hamilton are officers and directors of IVP Technology. Messrs.
Birch and Villella and Ms. Bullock are officers of IVP Technology.
On September 17, 2001, IVP Technology entered into a stock purchase
agreement with International Technology Marketing, Inc. whereby IVP Technology
is obligated to issue 50 million shares of restricted common stock to the
shareholders of International Technology Marketing, who include Messrs.
MacDonald, Hamilton, Birch, Villella and Ms. Bullock, the members of our current
management team, in exchange for all of International Technology Marketing's
common stock. On March 25, 2002, we issued the 50 million shares of common stock
to be held by IVP Technology until the escrow agreement is executed to hold the
shares. These shares will be held pending satisfaction of certain performance
related goals. As these goals are achieved, the shares will be disbursed from
the escrow to the former shareholders of International Technology Marketing. The
former shareholders are entitled to vote the shares held in escrow pending
satisfaction of the performance goals.
The performance goals are as follows:
o 10,000,000 shares will be disbursed upon aggregate sales of
$500,000.
o 10,000,000 shares will be disbursed upon aggregate sales of
$1,000,000.
o 10,000,000 shares will be disbursed upon aggregate sales of
$2,000,000.
o 10,000,000 shares will be disbursed upon aggregate sales of
$6,000,000.
o 10,000,000 shares will be disbursed upon aggregate sales of
$16,200,000.
32
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS
MARKET INFORMATION. IVP Technology's common stock is traded on the
Over-the-Counter Bulletin Board under the symbol "TALL". As of May 7, 2002,
there were 119,526,975 shares of common stock outstanding and approximately 330
holders of record.
The following table sets forth, for the periods indicated, the high and
low bid prices of a share of common stock for the last two years, as well as the
first quarter of 2002. Such quotations reflect inter-dealer prices, without
retain mark-up, mark-down or commission and may not necessarily represent actual
transactions.
HIGH BID LOW BID
--------------- -------------
2000
Quarter Ended March 31, 2000 $3.69 $0.13
Quarter Ended June 30, 2000 1.41 0.56
Quarter Ended September 30, 2000 0.91 0.57
Quarter Ended December 31, 2000 0.67 0.14
2001
Quarter Ended March 31, 2001 $0.22 $0.12
Quarter Ended June 30, 2001 0.14 0.05
Quarter Ended September 30, 2001 0.17 0.04
Quarter Ended December 31, 2001 0.09 0.03
2002
Quarter Ended March 31, 2002 $0.11 $0.03
- -
IVP Technology did not pay any dividends during calendar 2001 and has
never paid any dividends on its capital stock. IVP Technology currently expects
that it will retain future earnings for use in the operation and expansion of
its business and does not anticipate paying any cash dividends in the
foreseeable future. Any decision on the future payment of dividends will depend
on our earnings and financial position at that time and such other factors as
the Board of Directors deems relevant.
33
DESCRIPTION OF SECURITIES
GENERAL
IVP Technology's authorized capital consists of 150,000,000 shares of
common stock, par value $0.001 per share and 50,000,000 shares of preferred
stock, par value $0.001 per share. At May 1, 2002, there were 119,526,975
outstanding shares of common stock and no outstanding shares of preferred stock.
Set forth below is a summary description of certain provisions relating to IVP
Technology's capital stock contained in its Articles of Incorporation and
By-Laws and under the Nevada Revised Statutes. The summary is qualified in its
entirety by reference to IVP Technology's Articles of Incorporation and By-Laws
and the Nevada law.
COMMON STOCK
Each outstanding share of common stock has one vote on all matters
requiring a vote of the stockholders. There is no right to cumulative voting;
thus, the holder of fifty percent or more of the shares outstanding can, if they
choose to do so, elect all of the directors. In the event of a voluntary of
involuntary liquidation, all stockholders are entitled to a pro rata
distribution after payment of liabilities and after provision has been made for
each class of stock, if any, having preference over the common stock. The
holders of the common stock have no preemptive rights with respect to future
offerings of shares of common stock. Holders of common stock are entitled to
dividends if, as and when declared by the Board out of the funds legally
available therefor. It is IVP Technology's present intention to retain earnings,
if any, for use in its business. The payment of dividends on the common stock
are, therefore, unlikely in the foreseeable future.
PREFERRED STOCK
Currently there are no outstanding shares of preferred stock. The Board
of Directors is authorized, within the limitations and restrictions prescribed
by law or stated in the Articles of Incorporation, and by filing a certificate
pursuant to applicable law of the State of Nevada, to provide for the issuance
of preferred stock in series and (i) to establish from time to time the number
of shares to be included in each series; (ii) to fix the voting powers,
designations, powers, preferences and relative, participating, optional or other
rights of the shares of each such series and the qualifications, limitations or
restrictions thereof, including but not limited to the fixing and alteration of
the dividend rights, dividend rate, conversion rights, conversion rates, voting
rights, rights and terms of redemption (including sinking fund provisions), the
redemption price or prices, and the liquidation preferences of any wholly
unissued series of shares of preferred stock; and (iii) to increase or decrease
the number of shares of any series subsequent to the issue of shares of that
series, but not below the number of shares of any series shall be so decreased,
the shares constituting such decrease shall resume the status, which they had
prior to the adoption of the resolution originally fixing the number of shares
of such series.
WARRANTS
IVP Technology has outstanding warrants to purchase 265,000 shares of
common stock, of which 15,000 shares have an exercise price of $0.50 per share
and 250,000 shares have an exercise price of $0.099 per share. These warrants
expire on the fifth anniversary of issuance and were issued in connection with
the Equity Line of Credit.
DEBENTURES
IVP Technology has outstanding convertible debentures, which were
issued in the original principal amount of $200,000. These debentures accrue
interest at a rate of 5% per year and mature two years from the issuance date.
The debentures are convertible at the holder's option any time up to maturity at
a conversion price equal to the lower of (i) 120% of the closing bid price of
the common stock as of the closing date (ii) 80% of the average closing bid
price of the common stock for the 4 lowest trading days of the 5 trading days
immediately preceding the conversion date. At maturity, IVP Technology has the
option to either pay the holder the outstanding principal balance and accrued
interest or to convert the debentures into shares of common stock at a
conversion price equal to the lower of (i) 120% of the closing bid price of the
common stock as of the closing date or (ii) 80% of the average closing bid price
of the common stock for the 4 lowest trading days of the 5 trading days
immediately preceding the conversion date. IVP Technology has the right to
redeem the debentures upon 30 days notice for 120% of the amount redeemed. Upon
such redemption, IVP Technology will issue the investor a warrant to purchase
10,000 shares of common stock at an exercise price of $0.50 per share for every
$100,000 of debentures that are redeemed.
34
TRANSFER AGENT
The Transfer Agent for the common stock is Pacific Stock Transfer
Company located at P.O. Box 93385, Las Vegas, Nevada 89193-3385.
ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE ARTICLES OF INCORPORATION
AUTHORIZED AND UNISSUED STOCK. The authorized but unissued shares of
our common are available for future issuance without our stockholders' approval.
These additional shares may be utilized for a variety of corporate purposes
including but not limited to future public or direct offerings to raise
additional capital, corporate acquisitions and employee incentive plans. The
issuance of such shares may also be used to deter a potential takeover of IVP
Technology that may otherwise be beneficial to stockholders by diluting the
shares held by a potential suitor or issuing shares to a stockholder that will
vote in accordance with IVP Technology's Board of Directors' desires. A takeover
may be beneficial to stockholders because, among other reasons, a potential
suitor may offer stockholders a premium for their shares of stock compared to
the then-existing market price.
The existence of authorized but unissued and unreserved shares of
preferred stock may enable the Board of Directors to issue shares to persons
friendly to current management which would render more difficult or discourage
an attempt to obtain control of our company by means of a proxy contest, tender
offer, merger or otherwise, and thereby protect the continuity of our company's
management.
35
EXPERTS
The financial statements for the year ended December 31, 2001 included
in the Prospectus have been audited by Weinberg & Company, P.A., independent
certified public accountants, to the extent and for the periods set forth in
their report (which contains an explanatory paragraph regarding IVP Technology's
ability to continue as a going concern) appearing elsewhere herein and are
included in reliance upon such report given upon the authority of said firm as
experts in auditing and accounting.
LEGAL MATTERS
Kirkpatrick & Lockhart LLP, Miami, Florida, will pass upon the validity
of the shares of common stock offered hereby for us.
HOW TO GET MORE INFORMATION
We have filed with the Securities and Exchange Commission a
registration statement on Form SB-2 under the Securities Act with respect to the
securities offered by this prospectus. This prospectus, which forms a part of
the registration statement, does not contain all the information set forth in
the registration statement, as permitted by the rules and regulations of the
Commission. For further information with respect to us and the securities
offered by this prospectus, reference is made to the registration statement.
Statements contained in this prospectus as to the contents of any contract or
other document that we have filed as an exhibit to the registration statement
are qualified in their entirety by reference to the to the exhibits for a
complete statement of their terms and conditions. The registration statement and
other information may be read and copied at the Commission's Public Reference
Room at 450 Fifth Street N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. The Commission maintains a web site at
http://www.sec.gov that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the
Commission.
36
IVP TECHNOLOGY CORPORATION
AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
PAGE F-1 INDEPENDENT AUDITORS' REPORT
PAGE F-2 CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2001
PAGE F-3 CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED
DECEMBER 31, 2001 AND 2000 AND FOR THE PERIOD FROM JANUARY
1, 1998 (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31,
2001
PAGE F-4 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'
DEFICIENCY FOR THE PERIOD FROM JANUARY 1, 1998 (INCEPTION OF
DEVELOPMENT STAGE) TO DECEMBER 31, 2001
PAGE F-5 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
DECEMBER 31, 2001 AND 2000 AND FOR THE PERIOD FROM JANUARY
1, 1998 (INCEPTION OF DEVELOPMENT STAGE) TO DECEMBER 31,
2001
PAGES F-6 - F-12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER
31, 2001
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of:
IVP Technology Corporation
(A development stage company)
We have audited the accompanying consolidated balance sheet of IVP Technology
Corporation and Subsidiaries (a development stage company) as of December 31,
2001 and the related consolidated statements of operations, changes in
stockholders' deficiency and cash flows for each of the two years then ended and
for the period from January 1, 1998 (inception of development stage) to December
31, 2001. These consolidated financial statements are the responsibility of IVP
Technology's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. These standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of IVP Technology
Corporation and Subsidiaries as of December 31, 2001 and the results of their
operations and their cash flows for each of the two years then ended and for the
period from January 1, 1998 (inception of development stage) to December 31,
2001 in conformity with accounting principles generally accepted in the United
States of America.
The accompanying consolidated financial statements have been prepared assuming
that IVP Technology will continue as a going concern. As discussed in Note 7 to
the consolidated financial statements, IVP Technology's recurring losses during
the development stage of $12,883,106, working capital deficiency of $4,334,448
and stockholders' deficiency of $862,165, raise substantial doubt about its
ability to continue as a going concern. Management's Plan in regards to these
matters is also described in Note 7. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
/S/ WEINBERG & COMPANY, P.A.
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
March 8, 2002
F-1
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
ASSETS
- ------
Current ASSETS
Cash $ 232
----------------
Total Current Assets 232
----------------
OTHER ASSETS
Miscellaneous receivable 872
Deferred licensing fee, net of amortization 3,600,431
----------------
Total Other Assets 3,601,303
----------------
TOTAL ASSETS $ 3,601,535
================
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 479,571
Accounts payable - license agreement 3,620,268
Note payable 200,000
Interest payable 34,841
----------------
Total Current Liabilities 4,334,680
----------------
NOTE PAYABLE - LONG-TERM 129,020
----------------
STOCKHOLDERS' DEFICIENCY
Preferred stock, $.001 par value, 50,000,000 shares authorized,
none issued and outstanding -
Common stock, $.001 par value 150,000,000 shares authorized, 48,752,848 issued
and outstanding 48,753
Common stock to be issued 50,000
Additional paid-in capital 13,238,354
Accumulated deficit (accumulated in development stage $12,883,106 in 2001) (13,859,272)
----------------
(522,165)
Less deferred compensation and licensing fee (340,000)
----------------
TOTAL STOCKHOLDERS' DEFICIENCY (862,165)
----------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 3,601,535
- ----------------------------------------------
See accompanying notes to consolidated financial statements.
F-2
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS
Cumulative
from January 1,
For the Year For the Year 1998
Ended Ended (Inception) to
December December 31, December 31,
31, 2001 2000 2001
----------------- ------------------- ---------------------
REVENUE $ 67,358 $ 40,002 $ 107,360
----------------- ------------------- ---------------------
OPERATING EXPENSES
Amortization 19,837 114,000 239,837
Interest 22,341 12,501 62,303
Legal and accounting 125,715 215,569 551,964
Management fees - 308,841 758,841
Development and licensing fees and software support 723,527 355,109 655,414
Consulting fees 387,086 1,637,279 5,421,351
Other - 162,312 568,586
----------------- ------------------- ---------------------
Total Operating Expenses 1,278,506 2,805,611 8,258,296
----------------- ------------------- ---------------------
LOSS FROM OPERATIONS (1,211,148) (2,765,609) (8,150,936)
OTHER EXPENSE
Write-off of goodwill and other costs - - (4,000,000)
----------------- ------------------- ---------------------
LOSS BEFORE EXTRAORDINARY ITEM (1,211,148) (2,765,609) (12,150,936)
----------------- ------------------- ---------------------
Extraordinary item
Loss on extinguishment of debt - - (732,170)
----------------- ------------------- ---------------------
NET LOSS $ (1,211,148) $ (2,765,609) $ (12,883,106)
- --------
================= =================== =====================
LOSS PER SHARE $ (0.03) $ (0.08) $ (0.48)
================= =================== =====================
WEIGHTED AVERAGE NUMBER OF OUTSTANDING COMMON SHARES 44,855,321 33,449,427 26,975,568
================= =================== =====================
See accompanying notes to consolidated financial statements.
F-3
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIENCY
FOR THE PERIOD FROM JANUARY 1, 1998 (INCEPTION) TO DECEMBER 31, 2001
Additional
Common Stock Paid-In Accumulated Subscription Common Stock To Be Issued
Shares Amount Capital Deficit Receivable Shares Amount
---------- --------- ------------- -------------- ---------------- ------------ ----------
Balance,
December 31,
1997 5,990,848 $ 5,991 $ 4,407,725 $ (976,166) $ - - $ -
Stock issued
for cash and
subscriptions 8,363,000 8,363 390,247 - (359,000) - -
Stock issued
for services 2,000,000 2,000 2,998,000 - - - -
Net loss 1998 - - - (7,086,094) - - -
---------- ------- ---------- ----------- ----------- --------- --------
Balance,
December 31,
1998 16,353,848 16,354 7,795,972 (8,062,260) (359,000) - -
Stock issued
for cash 3,650,000 3,650 189,360 - (136,350) - -
Cash collected - - - - 359,000 - -
Stock issued
for services 200,000 200 9,800 - - - -
Stock issued
for debt 5,787,000 5,787 1,209,483 - - - -
Stock issued
for license 1,500,000 1,500 218,500 - - - -
Net loss 1999 - - - (1,820,255) - - -
---------- ------- ---------- ----------- ----------- --------- --------
Balance,
December 31,
1999 27,490,848 27,491 9,423,115 (9,882,515) (136,350) - -
Stock issued
for cash and
offering
costs 8,000,000 8,000 667,000 - - - -
Cash collected - - - - 136,350 - -
Stock issued
for services 2,670,000 2,670 1,611,991 - -
Stock issued
for shell
corporation 350,000 350 (350) - - - -
Stock issued
for debt 600,000 600 449,400 - -
Stock to be
issued - - - - - 1,000,000 720,000
Stock issued
for
licensing fee - - - - -
Net loss, 2000 - - - (2,765,609) - - -
---------- ------- ---------- ----------- ----------- --------- --------
Balance,
December 31,
2000 39,110,848 $ 39,111 $ 12,151,156 $ (12,648,124) $ - $ 1,000,000 $ 720,000
Stock issued
for services 9,512,000 9,512 883,488 - - - -
Stock issued 1,000,000 1,000 719,000 - - (1,000,000) (720,000)
Stock
rescission (870,000) (870) (515,290) - - - -
Deferred cost
recognized - - - - - - -
Stock to be
issued for
services - - - - - 1,000,000 50,000
Net loss, 2001 - - - (1,211,148) - - -
---------- ------- ---------- ----------- ----------- --------- --------
BALANCE,
--------
DECEMBER 31,
2001 48,752,848 $ 48,753 $ 13,238,354 $ (13,859,272) $ - $ 1,000,000 $ 50,000
========== ======= ========== =========== =========== ========= ========
F-4
Deferred
Compensation
and Services Total
--------------- ----------
Balance,
December 31,
1997 $ - $ 3,437,550
Stock issued
for cash and
subscriptions - 39,610
Stock issued
for services - 3,000,000
Net loss 1998 - (7,086,094)
------------ ----------
Balance,
December 31,
1998 1 - (608,934)
Stock issued
for cash - 56,660
Cash collected - 359,000
Stock issued
for services - 10,000
Stock issued
for debt - 1,215,270
Stock issued
for license - 220,000
Net loss 1999 - (1,820,255)
------------ ----------
Balance,
December 31,
1999 - (568,259)
Stock issued
for cash and
offering
costs - 675,000
Cash collected - 136,350
Stock issued
for services (316,286) 1,298,375
Stock issued
for shell
corporation - -
Stock issued
for debt - 450,000
Stock to be
issued 720,000
Stock issued
for
licensing fee (580,000) (580,000)
Net loss, 2000 - (2,765,609)
------------ ----------
Balance,
December 31,
2000 $ (896,286) $ (634,143)
Stock issued
for services - 893,000
Stock issued - -
Stock
rescission - (516,160)
Deferred cost
recognized 556,286 556,286
Stock to be
issued for
services - 50,000
- -
Net loss, 2001 - (1,211,148)
------------ ----------
BALANCE,
--------
DECEMBER 31,
2001 $ (340,000) $ (862,165)
============ ==========
See accompanying notes to consolidated financial statements.
F-4a
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
Cumulative From
Year Ended Year Ended January 1, 1998
December 31, December 31, (Inception) To
2001 2000 December 31, 2001
---------------- --------------- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,211,148) $ (2,765,609) $ (12,883,106)
Adjustments to reconcile net loss to net cash used in
operating activities:
Loss on extinguishment of debt - - 732,170
Write-off of goodwill and other costs - - 4,000,000
Stock issued for services 743,126 1,298,375 5,051,501
Stock issued for licensing fee 240,000 140,000 380,000
Amortization 19,837 114,000 239,837
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable 6,452 (6,452) -
Increase (decrease) in:
Accounts payable and accrued expenses 49,181 196,977 408,442
Management fees payable - - 450,000
Interest payable 22,340 12,501 34,841
---------------- --------------- -------------------
Net Cash Used In Operating Activities (130,212) (1,010,208) (1,586,315)
---------------- --------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Minority interest - - 400
Other - - 400
---------------- --------------- -------------------
Net Cash Provided By Investing Activities - - 800
---------------- --------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net of subscriptions - 811,351 1,235,321
Proceeds from loans and notes 129,020 200,000 343,355
Proceeds from stockholders - - 6,618
---------------- --------------- -------------------
Net Cash Provided By Financing Activities 129,020 1,011,351 1,585,294
---------------- --------------- -------------------
NET INCREASE (DECREASE) IN CASH (1,192) 1,143 (221)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,424 281 453
---------------- --------------- -------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 232 $ 1,424 $ 232
- ------------------------------------------
================ =============== ===================
F-5
SUPPLEMENTAL DISCLOSURE OF NON - CASH FINANCING ACTIVITIES:
Acquisition of license agreement for short-term payable $ 3,620,268 $ - $ 3,620,268
================ =============== ===================
Issuance of 600,000 shares of common stock to settle $ - $ 450,000 $ 450,000
management fee payable ================ =============== ===================
See accompanying notes to consolidated financial statements.
F-6
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
- --------------------------------------------------------------------
(A) ORGANIZATION
----------------
Mountain Chief, Inc. was incorporated in the State of Nevada on February
11, 1994. This name was subsequently changed by Articles of Amendment
dated November 16, 1994 to IVP Technology Corporation (the "Company").
IVP Technology was granted an extra-provincial license by the Province of
Ontario on June 20, 1995 to carry on business in Ontario, Canada. Prior
to 1998, IVP Technology was involved with various unsuccessful activities
relating to the sale of technology products and then became inactive in
1997. IVP Technology began negotiations with a third party in 1998 to
become an exclusive distributor of software and therefore is considered
to have re-entered the development stage on January 1, 1998. Activities
from inception of development stage included raising of capital and
negotiations and acquisition of software distribution licenses (SEE NOTE
6).
(B) ACQUISITION
---------------
Effective March 2000, IVP Technology acquired all the outstanding shares
of common stock of Erebus Corporation, an inactive reporting shell
company with no assets or liabilities, from the stockholders thereof in
an exchange for an aggregate of 350,000 shares of IVP Technology's common
stock and paid $200,000 of consulting expenses in connection with the
acquisition. Pursuant to Rule 12-g-3(a) of the General Rules and
Regulations of the Securities and Exchange Commission, IVP Technology
elected to become the successor issuer to Erebus Corporation for
reporting purposes under the Securities Exchange Act of 1934. For
financial reporting purposes, the acquisition was treated as a
recapitalization of IVP Technology with the par value of the common stock
charged to additional-paid-in capital.
(C) BASIS OF PRESENTATION
-------------------------
IVP Technology maintains its original records in United States dollars.
The consolidated financial statements are expressed in United States
dollars and have been prepared in accordance with generally accepted
accounting principles (GAAP) in the United States.
(D) PRINCIPLES OF CONSOLIDATION
-------------------------------
The consolidated financial statements include the accounts of IVP
Technology and its inactive subsidiaries, Lanvoice Corporation and Erebus
Corporation. All significant inter-company transactions and balances have
been eliminated.
(E) FOREIGN CURRENCY TRANSACTIONS
---------------------------------
Transactions conducted in Canadian dollars have been translated into
United States dollars using the average exchange rate for the month in
which the transactions occurred. Gains or losses are recognized in the
statement of operations.
(F) USE OF ESTIMATES
--------------------
In preparing financial statements in conformity with accounting
principles generally accepted in the United States of America, management
is required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the financial statements and revenues and
expenses during the reported period. Actual results could differ from
those estimates.
See accompanying notes to consolidated financial statements.
F-7
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2001
(G) CASH AND CASH EQUIVALENTS
-----------------------------
For purposes of the cash flow statements, IVP Technology considers all
highly liquid investments with original maturities of three months or
less at the time of purchase to be cash equivalents.
(H) FAIR VALUE OF FINANCIAL INSTRUMENTS
---------------------------------------
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instruments", requires disclosure of information
about the fair value of certain financial instruments for which it is
practicable to estimate the value. For purposes of this disclosure, the
fair value of a financial instrument is the amount at which the
instrument could be exchanged in a current transaction between willing
parties other than in a forced sale or liquidation.
The carrying amounts of IVP Technology's accounts receivable, accounts
payable and accrued liabilities, and note and interest payable thereon
approximates fair value due to the relatively short period to maturity
for these instruments.
(I) INCOME TAXES
----------------
IVP Technology accounts for income taxes under the Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes" ("Statement 109"). Under Statement 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes
the enactment date.
(J) CONCENTRATION OF CREDIT RISK
--------------------------------
IVP Technology maintains its cash in bank deposit accounts, which, at
times, may exceed federally insured limits. IVP Technology has not
experienced any losses in such accounts and believes it is not exposed to
any significant credit risk on cash and cash equivalents.
(K) LOSS PER SHARE
------------------
Basic and diluted net loss per common share for all periods presented is
computed based upon the weighted average common shares outstanding as
defined by Financial Accounting Standards No. 128, "Earnings Per Share".
There were no common stock equivalents at December 31, 2000 and 1999.
(L) BUSINESS SEGMENTS
---------------------
IVP Technology applies Statement of Financial Accounting Standards No.
131 "Disclosures about Segments of an Enterprise and Related
Information". IVP Technology operates in one segment and therefore
segment information is not presented.
(M) REVENUE RECOGNITION
-----------------------
IVP Technology records revenue associated with the sale of software
licenses on a pro-rata basis over the license term.
(N) NEW ACCOUNTING PRONOUNCEMENTS
---------------------------------
The Financial Accounting Standards Board has recently issued several new
Statements of Financial Accounting Standards. Statement No. 141,
"Business Combinations" supersedes APB Opinion 16 and various related
pronouncements. Pursuant to the new guidance in Statement No. 141, all
business combinations must be accounted for under the purchase method of
F-8
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2001
accounting; the pooling-of-interests method is no longer permitted. SFAS
141 also establishes new rules concerning the recognition of goodwill and
other intangible assets arising in a purchase business combination and
requires disclosure of more information concerning a business combination
in the period in which it is completed. This statement is generally
effective for business combinations initiated on or after July 1, 2001.
Statement No. 142, "Goodwill and Other Intangible Assets" supercedes APB
Opinion 17 and related interpretations. Statement No. 142 establishes new
rules on accounting for the acquisition of intangible assets not acquired
in a business combination and the manner in which goodwill and all other
intangibles should be accounted for subsequent to their initial
recognition in a business combination accounted for under SFAS No. 141.
Under SFAS No. 142, intangible assets should be recorded at fair value.
Intangible assets with finite useful lives should be amortized over such
period and those with indefinite lives should not be amortized. All
intangible assets being amortized as well as those that are not, are both
subject to review for potential impairment under SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of". SFAS No. 142 also requires that goodwill
arising in a business combination should not be amortized but is subject
to impairment testing at the reporting unit level to which the goodwill
was assigned to at the date of the business combination.
SFAS No. 142 is effective for fiscal years beginning after December 15,
2001 and must be applied as of the beginning of such year to all goodwill
and other intangible assets that have already been recorded in the
balance sheet as of the first day in which SFAS No. 142 is initially
applied, regardless of when such assets were acquired. Goodwill acquired
in a business combination whose acquisition date is on or after July 1,
2001, should not be amortized, but should be reviewed for impairment
pursuant to SFAS No. 121, even though SFAS No. 142 has not yet been
adopted. However, previously acquired goodwill should continue to be
amortized until SFAS No. 142 is first adopted.
Statement No. 143 "Accounting for Asset Retirement Obligations"
establishes standards for the initial measurement and subsequent
accounting for obligations associated with the sale, abandonment, or
other type of disposal of long-lived tangible assets arising from the
acquisition, construction, or development and/or normal operation of such
assets. SFAS No. 143 is effective for fiscal years beginning after June
15, 2002, with earlier application encouraged.
The adoption of these pronouncements will not have a material effect on
IVP Technology's financial position or results of operations.
NOTE 2 MANAGEMENT FEES PAYABLE
- --------------------------------
During 2000, IVP Technology settled disputes with three former directors
relating to services performed through December 31, 1999 by issuing
600,000 common shares valued at $450,000. The stock was valued at its
quoted trading price on the settlement date and the resulting management
fees had been expensed and accrued through December 31, 1999.
NOTE 3 NOTES PAYABLE
- ----------------------
(A) NOTE PAYABLE - SHORT-TERM
-----------------------------
IVP Technology has a convertible note payable with Rainbow Investments
International Limited ("RII") for $200,000 which is outstanding at
December 31, 2001. The note bears interest at 10% per annum and was due
May 2001. As of December 31, 2001, accrued interest on the note amounted
to $34,841. The debt and accrued interest is convertible to common stock
at a conversion price equal to 80% of the average closing bid price per
share during the ten trading days immediately prior to any such
conversion. On July 16, 2001, IVP Technology received notice from RII of
their intent to convert the note and accrued interest to common stock.
IVP Technology intends to convert such note payable, however, as of
December 31, 2001 the conversion has not taken place.
F-9
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2001
(B) NOTE PAYABLE - LONG-TERM
----------------------------
On July 30, 2001, IVP Technology entered into a two-year note with Berra
Holdings, Ltd. to borrow up to $187,500 at 6% interest. As of December
31, 2001, IVP Technology has borrowed $129,020. The note is
collateralized by 2,500,000 shares of common stock held in the name of
Clarino Investment International, Ltd.
NOTE 4 EQUITY
- ---------------
During 1998 IVP Technology issued 8,363,000 common shares for cash of
$39,610 and a related subscription receivable of $359,000 which was
satisfied in 1999 with cash of $327,700 and an offset of $31,300 to due
to stockholder.
During 1998 IVP Technology issued 2,000,000 common shares for past
services. For financial reporting purposes, the stock was valued at its
quoted trading price on the grant date resulting in an aggregate
consulting expense of $3,000,000 recorded in 1998.
During 1999 IVP Technology issued 3,650,000 common shares for cash of
$56,660 and a related subscription receivable of $136,350 which was
collected in March 2000.
During 1999 IVP Technology issued 200,000 common shares for services. For
financial reporting purposes the stock was valued at its quoted trading
price on the grant dates resulting in expense of $10,000.
During 1999 IVP Technology issued 5,787,000 common shares valued at
$1,215,270 in exchange for $483,100 of debt, customer deposits and
accounts payable to unrelated parties. For financial reporting purposes
the stock was valued at its quoted trading price on the settlement date.
IVP Technology recognized a $732,170 loss on extinguishment.
During 1999 IVP Technology issued 1,500,000 common shares for the
extension of a licensing agreement. For financial statement purposes the
stock was valued at its quoted trading price.
During 2000, IVP Technology issued 4,500,000 common shares for cash of
$675,000 and 3,500,000 common shares for costs in connection with the
offering, which were valued at $350,000. The value of the 3,500,000
shares of common stock is a direct offering cost and accordingly has been
charged to equity in 2000 (SEE NOTE 6(B)).
During 2000, 2,670,000 common shares were issued for services in the
amount of $1,614,661. These shares were valued at the quoted trading
price on the grant date. Deferred compensation in the amount of $316,286
was recorded during the year for unearned consulting services.
In March 2000, IVP Technology acquired all the outstanding shares of
common stock of Erebus Corporation from the stockholders thereof in
exchange for an aggregate of 350,000 shares of IVP Technology's common
stock at par value (SEE NOTE 1(B)).
During 2000, IVP Technology issued 600,000 common shares valued at its
quoted trading price. The stock was issued for payment of debt (SEE NOTE
2).
F-10
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2001
In May 2000, IVP Technology amended and extended its software
distribution agreement. The agreement was extended to May 31, 2003 and
the territory expanded to Switzerland. In consideration of the above IVP
Technology issued 1,000,000 common shares in August 2001 and increased
the royalty fee from 5% to 7.5%. The shares were valued at $0.72 based
upon the closing pricing at May 31, 2000. The $720,000 was originally
recorded as common stock to be issued in the equity section of the
balance sheet at December 31, 2000 and the cost of the agreement is being
amortized over the remaining term of the agreement (SEE NOTE 8(A)).
As of December 31, 2000, IVP Technology recognized $140,000 as licensing
fee expense and recorded $580,000 for unearned licensing fee. The balance
is deferred licensing fee and will be amortized on a pro-rata basis over
the remaining life of the agreement.
During 2001, IVP Technology issued 9,512,000 common shares for services
valued at the quoted trading price at the time of issuance. The total
value of such issuances amounted to $893,000. IVP Technology also
incurred and recorded $50,000 of expenses for services rendered in 2001
for which it will issue 1,000,000 shares in 2002.
During 2001, IVP Technology rescinded 870,000 shares previously issued to
consultants for non-performance of services. Such shares were valued at
the original issued value that reflected market prices at the time of
issuance.
NOTE 5 INCOME TAXES
- ---------------------
Income tax expense (benefit) for the years ended December 31, 2001 and
2000 is summarized as follows:
2001 2000
------------- --------------
Current:
Federal
State - -
Deferred-Federal and State - -
- -
Income tax expense (benefit) ------------- --------------
============= ==============
IVP Technology's tax expense differs from the "expected" tax expense for
the years ended December 31, 2001 and 2000, as follows:
2001 2000
-------------- -------------
U.S. Federal income tax provision (benefit) (411,800) (940,300)
Effect of net operating loss carryforward 411,800 940,300
-------------- -------------
- -
============== =============
The tax effects of temporary differences that gave rise to significant
portions of deferred tax assets and liabilities at December 31 are as
follows:
F-11
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2001
2001 2000
------------ ---------------
Deferred tax assets:
Net operating loss carryforward 4,712,200 4,300,400
------------ ---------------
Total gross deferred tax assets 4,712,200 4,300,400
Less valuation allowance 4,712,200 4,300,400
------------ ---------------
Net deferred tax assets - -
============ ===============
At December 31, 2001, IVP Technology had net operating loss carryforwards
of approximately $13,859,300, for U.S. federal income tax purposes
available to offset future taxable income expiring on various dates
beginning in 2016 through 2021.
The valuation allowance at January 1, 2001 was approximately $4,300,400.
The net change in the valuation allowance during the year ended December
31, 2000 was an increase of approximately $411,800.
NOTE 6 AGREEMENTS
- -------------------
(A) SOFTWARE DISTRIBUTION AGREEMENTS
------------------------------------
On March 30, 1999, IVP Technology entered into a software distributing
agreement, granting IVP Technology an exclusive right to distribute a
software product known as "Power Audit" throughout the United States of
America. (See below for subsequent amendments and extensions.) The
significant terms and conditions governing the agreement are as follows:
o Payment by IVP Technology of $50,000 in development funds.
o Issuance of 500,000 in common shares of IVP Technology to the owners
and developers of the software upon its delivery, which was in October
1999.
o IVP Technology is to pay royalties at 20% on the first $500,000 of
sales. Between $500,000 and $1,000,000 IVP Technology will pay 12.5%
on sales and 5% on sales over $1,000,000.
The agreement has a term of fourteen (14) months and could be terminated
on six-month notice by either party. It can be extended on a year to year
basis, provided the gross annual sales exceed $1,000,000 and all other
terms are observed by the parties.
In September 1999, for a consideration of IVP Technology's issuance of an
additional 1,000,000 common shares, the agreement was amended to include
the European Economic Community in its distribution territory and payment
of $4,200 per month for software support and services. The 1,500,000
common shares were issued in 1999 and were valued on the agreement and
amendment dates based on the quoted trading price. The resulting $220,000
value was presented as license fees, net of $106,000 accumulated
amortization, as of December 31, 1999. During the year ended December 31,
2000, the remaining license fees of $114,000 have been charged to
operations as amortization expense. The license fees are amortized over
the contract life.
In May 2000, the parties agreed to amend and extend the software
agreement for three years to May 31, 2003. The amended agreement expanded
the territory to include the Country of Switzerland, required IVP
Technology to issue 1,000,000 common shares (SEE NOTE 4) and complete a
financing of a minimum of $2,000,000 with a portion of the proceeds to be
used to contract services or to develop its own technical support and
internal marketing group. In connection with the issuance of the common
shares, IVP Technology may be obligated to absorb costs relating to the
registration of those shares. As of the date of these financial
statements, the cost to register those shares has not been determined. In
addition, IVP Technology is required to secure a minimum of twelve (12)
purchases of the software product prior to the expiration of the
twelve-month period ending June 1, 2002. In the event that the minimum
sales requirement is not met, IVP Technology is required to compensate
the licensor for unearned royalties at the rate of $3,750 per unrealized
sale up to the maximum of twelve (12) or $45,000 and issue 100,000 common
shares. Lastly, the royalty fee for sales over $1,000,000 has been
changed from 5% to 7.5%.
F-12
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2001
(B) CONSULTING AGREEMENTS
-------------------------
On November 1, 1999, IVP Technology entered into a consulting agreement
whereby the consultant agreed to assist IVP Technology in raising
stipulated minimum equity capital and perform other consulting services.
Payment of 3,500,000 common shares has been placed in escrow and the
issuance was contingent on raising the equity capital. In accordance with
generally accepted accounting principles, the escrowed shares were not
considered outstanding until released and therefore no value had been
assigned to them. In 2000 these shares were released and were valued at
the quoted trading price on the contract date and charged to equity as an
offering cost (SEE NOTE 4).
On March 17, 2000, IVP Technology entered into a consulting agreement
with the former stockholder of the acquired inactive reporting shell
company (SEE NOTE 1(B)). The consulting agreement states that one year
after the execution of the agreement ("reset date"), the 350,000 common
shares issued by IVP Technology to the former stockholder shall be
increased or decreased based upon the average closing price of IVP
Technology's stock 30 days prior to the reset date, so the value of the
350,000 shares will equal $500,000. The average closing price of the
stock was $0.1487 cents per share. IVP Technology is obligated to issue
an additional 3,012,475 common shares to the consultant. As of the date
of this report, IVP Technology has not received a request for the
additional shares.
(C) LICENSING AGREEMENT
-----------------------
On December 28, 2001, IVP Technology entered into a two-year licensing
agreement to distribute software, which is used in the insurance
industry. The company received a non-exclusive right to sell such
software to clients in North America, Mexico, Canada, and their overseas
territories. The cost of such agreement was (pound)2,500,000 (U.S.
$3,620,268) and is being amortized over the two-year period. Amortization
for 2001 was $19,837.
NOTE 7 GOING CONCERN
- ----------------------
As reflected in the accompanying financial statements, IVP Technology's
recurring losses during the development stage of $12,883,106, and its
working capital deficiency of $4,334,680 and stockholders' deficiency of
$862,165, raise substantial doubt about its ability to continue as a
going concern. The ability of IVP Technology to continue as a going
concern is dependent on IVP Technology's ability to raise additional
capital and implement its business plan. The financial statements do not
include any adjustments that might be necessary if IVP Technology is
unable to continue as a going concern.
IVP Technology has entered into a software distribution agreement (SEE
NOTE 6(A)) and a licensing agreement (SEE NOTE 6(C),) has raised equity
capital and intends on raising additional equity capital in order to
implement its business plan and marketing efforts. Management believes
that actions presently being taken to obtain additional funding and
implement its strategic plans provide the opportunity for IVP Technology
to continue as a going concern.
F-13
IVP TECHNOLOGY CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2001
NOTE 8 SUBSEQUENT EVENTS
- --------------------------
(A) STOCK PURCHASE AGREEMENT
----------------------------
On September 17, 2001, IVP Technology entered into a stock purchase
agreement to acquire 100% of the outstanding stock of International
Technology Marketing, Inc. ("International Technology Marketing"). The
agreement calls for IVP Technology to issue 50,000,000 shares, which will
be held in escrow subject to IVP Technology reaching certain sales
milestones. The agreement also calls for IVP Technology to reimburse the
shareholders of International Technology Marketing in their efforts to
meet the sales milestones.
The sales milestones reached after the closing are as follows:
o Upon achieving revenues of $500,000 the escrow agent will release
10,000,000 shares.
o Upon achieving an additional $500,000 of revenues the escrow agent will
release another 10,000,000 shares.
o Upon achieving $2,000,000 in cumulative revenues the escrow agent will
release another 10,000,000 shares.
o Upon achieving $6,000,000 in cumulative revenues the escrow agent will
release another 10,000,000 shares.
o Upon reaching $16,200,000 in cumulative revenues the final 10,000,000
shares will be released.
As of December 31, 2001, IVP Technology has not closed the escrow
agreement nor issued the shares.
(B) LOAN AGREEMENT
------------------
On February 16, 2002, IVP Technology entered into a short-term loan
agreement that calls for repayment on April 30, 2002. The loan was for
(pound)600,000 (US $864,180) and carries a rate of 4% above HSBC Bank
base rate. Interest is payable monthly.
(C) MARKETING AGREEMENT
-----------------------
On January 18, 2002, IVP Technology entered into a marketing agreement
with a consultant who will provide marketing services for IVP Technology
in Europe for one year. IVP Technology will issue 5,000,000 shares within
60 days of the contract date.
F-14
WE HAVE NOT AUTHORIZED ANY DEALER,
SALESPERSON OR OTHER PERSON TO
PROVIDE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS ABOUT IVP
TECHNOLOGY CORPORATION EXCEPT THE
INFORMATION OR REPRESENTATIONS
CONTAINED IN THIS PROSPECTUS. YOU
SHOULD NOT RELY ON ANY ADDITIONAL
INFORMATION OR REPRESENTATIONS IF
MADE.
-----------------------
This prospectus does not constitute ----------------------
an offer to sell, or a solicitation
of an offer to buy any securities: PROSPECTUS
/ / except the common stock ---------------------
offered by this prospectus;
/ / in any jurisdiction in which
the offer or solicitation is
not authorized; 81,455,473 SHARES OF COMMON STOCK
/ / in any jurisdiction where the
dealer or other salesperson
is not qualified to make the IVP TECHNOLOGY CORPORATION
offer or solicitation;
/ / to any person to whom it is
unlawful to make the offer or
solicitation; or
____ __, 2002
/ / to any person who is not a
United States resident or who
is outside the jurisdiction
of the United States.
The delivery of this prospectus or
any accompanying sale does not
imply that:
/ / there have been no changes in
the affairs of IVP Technology
Corporation after the date of
this prospectus; or
/ / the information contained in
this prospectus is correct
after the date of this
prospectus.
-----------------------
Until ____ ____, 2002, all dealers
effecting transactions in the
registered securities, whether or
not participating in this
distribution, may be required to
deliver a prospectus. This is in
addition to the obligation of
dealers to deliver a prospectus
when acting as underwriters.
37
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Articles of Incorporation include an indemnification provision
under which we have agreed to indemnify directors and officers of IVP Technology
to fullest extent possible from and against any and all claims of any type
arising from or related to future acts or omissions as a director or officer of
IVP Technology. In addition, the liability of our officers and directors for
breaches of their fiduciary duty as a director or officer other than: (a) acts
or omissions which involve intentional misconduct, fraud, or a knowing violation
of the law; or (b) the payment of dividends in violation of Nevada Revised
Statutes Section 78.300.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
IVP Technology pursuant to the foregoing, or otherwise, IVP Technology has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth estimated expenses expected to be
incurred in connection with the issuance and distribution of the securities
being registered. IVP Technology will pay all expenses in connection with this
offering.
Securities and Exchange Commission Registration Fee $ 955
Printing and Engraving Expenses $ 2,500
Accounting Fees and Expenses $ 15,000
Legal Fees and Expenses $ 50,000
Miscellaneous $ 16,545
TOTAL $ 85,000
RECENT SALES OF UNREGISTERED SECURITIES
In May, 2002, IVP Technology entered into an agreement with Vanessa
Land for marketing and advisory services connected with product marketing in the
European Economic Community and North America. In relation with this agreement,
IVP Technology issued 5,000,000 shares of common stock to Ms. Vanessa Land.
These shares were registered on a Form S-8 filed on May 3, 2002. These shares
were valued at $0.05 per share, or an aggregate of $250,000, on the date of
issuance.
In April 2002, IVP Technology raised $200,000 of gross proceeds from
the issuance of convertible debentures. These debentures accrue interest at a
rate of 5% per year and mature two years from the issuance date. The debentures
are convertible at the holder's option any time up to maturity at a conversion
price equal to the lower of (i) 120% of the closing bid price of the common
stock as of the closing date (ii) 80% of the average closing bid price of the
common stock for the 4 lowest trading days of the 5 trading days immediately
preceding the conversion date. At maturity, IVP Technology has the option to
either pay the holder the outstanding principal balance and accrued interest or
to convert the debentures into shares of common stock at a conversion price
equal to the lower of (i) 120% of the closing bid price of the common stock as
of the closing date or (ii) 80% of the average closing bid price of the common
stock for the 4 lowest trading days of the 5 trading days immediately preceding
the conversion date. IVP Technology has the right to redeem the debentures upon
30 days notice for 120% of the amount redeemed. Upon such redemption, IVP
Technology will issue the investor a warrant to purchase 10,000 shares of common
stock at an exercise price of $0.50 per share for every $100,000 of debentures
that are redeemed.
In April 2002, IVP Technology entered into an Equity Line of Credit
Agreement with Cornell Capital Partners, L.P. Under this agreement, IVP
Technology may issue and sell to Cornell Capital Partners common stock for a
total purchase price of up to $10.0 million. Subject to certain conditions, IVP
Technology will be entitled to commence drawing down on the Equity Line of
Credit when the common stock to be issued under the Equity Line of Credit is
registered with the Securities and Exchange Commission and the registration
statement is declared effective and will continue for two years thereafter. The
purchase price for the shares will be equal to 92% of the market price, which is
defined as the lowest closing bid price of the common stock during the five
trading days following the notice date. The amount of each advance is subject to
II-1
an aggregate maximum advance amount of $425,000 in any thirty-day period. IVP
Technology paid Cornell a one-time fee equal to $340,000, payable in 3,032,000
shares of common stock. Cornell Capital Partners is entitled to retain 3.0% of
each advance. In addition, IVP Technology entered into a placement agent
agreement with Westrock Advisors, Inc., a registered broker-dealer. Pursuant to
the placement agent agreement, IVP Technology paid a one-time placement agent
fee of 100,000 shares of common stock, which were valued at $0.10 per share, or
an aggregate of $10,000, on the date of issuance. IVP Technology agreed to pay
Danson Partners, LLC, a consultant, a one-time fee of $200,000 for its work in
connection with the Equity Line of Credit. Of the fee, $75,000 was paid in cash
with the balance paid in 1,040,000 shares of common stock.
On or about April 26, 2001, IVP Technology issued 1,200,000 shares of
common stock to Gross Capital Associates for marketing and promotion consulting
services. These shares were valued at $0.14 per share, or an aggregate of
$168,000, on the date of issuance.
On or about April 26, 2001, IVP Technology issued 1,000,000 shares of
common stock to John Coady for financial advisory services. These shares were
valued at $0.14 per share, or an aggregate of $140,000, on the date of issuance.
On or about March 25, 2002, IVP Technology issued 100,000 shares of
common stock to Barry Gross that was earned pursuant to a consulting contract
signed in 2000. These shares were valued at $0.09 per share, or an aggregate of
$9,000, on the date of issuance.
On or about March 25, 2002, IVP Technology issued 14,000,000 shares of
common stock to Brian MacDonald to be held in escrow pending achievement of the
performance clauses related to the September 17, 2001 agreement with
International Technology Marketing.
On or about March 25, 2002, IVP Technology issued 14,000,000 shares of
common stock to Peter Hamilton to be held in escrow pending achievement of the
performance clauses related to the September 17, 2001 agreement with
International Technology Marketing.
On or about March 25, 2002, IVP Technology issued 14,000,000 shares of
common stock to Kevin Birch to be held in escrow pending achievement of the
performance clauses related to the September 17, 2001 agreement with
International Technology Marketing.
On or about March 25, 2002, IVP Technology issued 4,000,000 shares of
common stock to Geno Villella to be held in escrow pending achievement of the
performance clauses related to the September 17, 2001 agreement with
International Technology Marketing.
On or about March 25, 2002, IVP Technology issued 4,000,000 shares of
common stock to Sherry Bullock to be held in escrow pending achievement of the
performance clauses related to the September 17, 2001 agreement with
International Technology Marketing.
On or about March 25, 2002, IVP Technology issued 500,000 shares of
common stock to John Maxwell in lieu of compensation for services performed in
2001 as President of IVP Technology. These shares were valued at $0.09 per
share, or an aggregate of $9,000, on the date of issuance.
On or about March 25, 2002, IVP Technology issued 500,000 shares of
common stock to John Trainor in lieu of compensation for services performed in
2001 as Secretary of IVP Technology. These shares were valued at $0.09 per
share, or an aggregate of $9,000, on the date of issuance.
On or about March 25, 2002, IVP Technology issued 2,375,600 shares of
common stock to Thomas Chown as conversion of debts owed by the corporation for
services performed in 2001.
On or about March 25, 2002, IVP Technology issued 1,000,000 shares of
common stock to Buford Industries as conversion of a fee of $50,000 earned for
introducing IVP to International Technology Marketing. These shares were valued
at $0.05 per share, or an aggregate of $50,000, on the date of issuance.
On or about March 25, 2002, IVP Technology issued 50,000 shares of
common stock to Ruffa and Ruffa, P.A. for payment of interest on outstanding
legal bills for the year 2001 - 2002. These shares were valued at $0.10 per
share, or an aggregate of $5,000, on the date of issuance.
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On or about March 25, 2002, IVP Technology issued 1,000,000 shares of
common stock to J. Stephen Smith to be held in escrow for services as a board
member for the period from 2001 to 2003 to be accrued at the rate of 500,000 per
year.
On or about March 25, 2002, IVP Technology issued 1,000,000 shares of
common stock to Michael Sidrow to be held in escrow for services as a board
member for the period from 2001 to 2003 to be accrued at the rate of 500,000 per
year.
On or about March 25, 2002, IVP Technology issued 1,000,000 shares of
common stock to Robert King to be held in escrow for services as a board member
for the period from 2001 to 2003 to be accrued at the rate of 500,000 per year.
On February 16, 2002, IVP Technology completed an interim financing
agreement for a bridge loan of (pound)600,000 (U.S. $864,180) on an unsecured
basis with the European based venture capital and merchant banking firm DcD
Limited. The loan was due April 30, 2002 and accrues interest at a rate of 4%
per year above the HSBC Bank base rate. Interest is payable monthly. On May 1,
2002, IVP Technology received written notice from the lender, DCD Limited, that
it agreed to convert the loan into 4,000,000 shares of common stock at a
conversion rate of approximately $0.19 per share.
On or about August 17, 2001, IVP Technology issued 1,000,000 shares of
common stock to Orchestral Corporation for extension of the licensing contract
and to obtain market distribution to Switzerland. These shares were valued at
$0.12 per share, or an aggregate of $120,000, on the date of issuance.
On July 30, 2001, IVP Technology entered into a two-year note with
Berra Holdings, Ltd. to borrow up to $187,500 at 6% interest. As of December 31,
2001, IVP Technology had borrowed $129,020. The note is collateralized by
2,500,000 shares of common stock held in the name of Clarino Investment
International, Ltd.
On or about July 30, 2001, IVP Technology rescinded the issuance of
870,000 shares of common stock previously issued to Koplan Consulting Corp. and
Mr. Peter Kertes for services not performed.
With respect to the sale of unregistered securities referenced above,
all transactions were exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933 (the "1933 ACT"), and Regulation D promulgated under the
1933 Act. In each instance, the purchaser had access to sufficient information
regarding IVP Technology so as to make an informed investment decision. More
specifically, IVP Technology had a reasonable basis to believe that each
purchaser was an "accredited investor" as defined in Regulation D of the 1933
Act and otherwise had the requisite sophistication to make an investment in IVP
Technology's securities.
II-3
EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM SB-2.
EXHIBIT NO. DESCRIPTION LOCATION
- -------------------- ------------------------------------------------------- ---------------------------------------------
2.1 Agreement and Plan of Reorganization dated March 21, Incorporated by reference to Exhibit 4.1 to
2000 between IVP Technology Corporation and Erebus IVP Technology's Form 8-K12G3 filed on April
Corporation. 19, 2000
3.1 Certificate of Amendment of Articles of Incorporation Incorporated by reference to Exhibit 3.1 to
IVP Technology's Form 10-KSB filed on April
15, 2002
4.4 Description of Securities Incorporated by reference to Exhibit 4.4 to
IVP Technology's Form S-8 filed on July 23,
2001
5.1 Opinion of Kirkpatrick & Lockhart LLP re: Legality Provided herewith
10.4 Second Amending Agreement to Software Distribution Incorporated by reference to Exhibit 10.4 to
Agreement dated as of May 31, 2000 between the IVP Technology's Form 10-QSB filed on
Registrant and Orchestral Corporation September 24, 2000
10.5 Service Bureau Arrangement Agreement dated September Incorporated by reference to Exhibit 10.5 to
28, 2000 between the Registrant and E-RESPONSES.COM IVP Technology's Form 10-QSB filed on November
14, 2000
10.6 Stock Purchase Agreement dated September 17, 2001 Incorporated by reference to Exhibit 10.6 to
among the Registrant, International Technology IVP Technology's Form 10-KSB filed on April
Marketing, Inc., Brian MacDonald, Peter Hamilton, 15, 2002
Kevin Birch, Sherry Bullock, and Geno Villella
10.7 Agreement dated May 15, 2000 between the Registrant Incorporated by reference to Exhibit 10.7 to
and Rainbow Investments International Limited IVP Technology's Form 10-KSB filed on April
15, 2002
10.8 Employment Agreement dated August 30, 2001 between Incorporated by reference to Exhibit 10.8 to
International Technology Marketing, Inc. and Brian J. IVP Technology's Form 10-KSB filed on April
MacDonald 15, 2002
10.9 Agreement dated February 12, 2002 between the Incorporated by reference to Exhibit 10.9 to
Registrant and SmartFOCUS Limited IVP Technology's Form 10-KSB filed on April
15, 2002
10.10 Warrant Agreement dated May 15, 2000 between the Incorporated by reference to Exhibit 10.10 to
Registrant and Rainbow Investments International IVP Technology's Form 10-KSB filed on April
Limited 15, 2002
10.11 Convertible Promissory Note dated May 2000 between the Incorporated by reference to Exhibit 10.11 to
Registrant and Rainbow Investments International IVP Technology's Form 10-KSB filed on April
Limited 15, 2002
II-4
EXHIBIT NO. DESCRIPTION LOCATION
- -------------------- ------------------------------------------------------- ---------------------------------------------
10.12 Software Distribution Agreement dated December 28, Incorporated by reference to Exhibit 10.12 to
2001 between the Registrant and TIG Acquisition IVP Technology's Form 10-KSB filed on April
Corporation 15, 2002
10.13 Loan Agreement dated January 16, 2002 between the Incorporated by reference to Exhibit 10.13 to
Registrant and DCD Holdings Limited IVP Technology's Form 10-KSB filed on April
15, 2002
10.14 Agreement for the Provision of Marketing Services Incorporated by reference to Exhibit 10.1 to
dated May 3, 2002 between the Registrant and Vanessa IVP Technology's Form S-8 filed with the SEC
Land on May 3, 2002
10.15 Reserved
10.16 Employment Agreement dated August 30, 2001 between Incorporated by reference to Exhibit 10.16 to
International Technology Marketing, Inc. and Geno IVP Technology's Form 10-KSB filed on April
Villella 15, 2002
10.17 Employment Agreement dated August 30, 2001 between Incorporated by reference to Exhibit 10.17 to
International Technology Marketing, Inc. and Kevin IVP Technology's Form 10-KSB filed on April
Birch 15, 2002
10.18 Employment Agreement dated August 30, 2001 between Incorporated by reference to Exhibit 10.18 to
International Technology Marketing, Inc. and Peter J. IVP Technology's Form 10-KSB filed on April
Hamilton 15, 2002
10.19 Employment Agreement dated August 30, 2001 between Incorporated by reference to Exhibit 10.19 to
International Technology Marketing, Inc. and Sherry IVP Technology's Form 10-KSB filed on April
Bullock 15, 2002
10.20 Loan and Security Agreement dated July 30, 2001 among Incorporated by reference to Exhibit 10.20 to
the Registrant, Clarino Investments International IVP Technology's Form 10-KSB filed on April
Ltd., and Berra Holdings Ltd. 15, 2002
10.21 Consulting and Advisory Extension Agreement dated Incorporated by reference to the Exhibit to
February 14, 2001 between the Registrant and Barry IVP Technology's Form 10-QSB filed on May 21,
Gross D/B/A Gross Capital Associates 2001
10.22 Letter Agreement dated June 28, 2001, between the Incorporated by reference to Exhibit 4.1 to
Registrant and Andris Gravitis IVP Technology's Form S-8 filed on July 23,
2001
10.23 Letter Agreement dated June 28, 2001, between the Incorporated by reference to Exhibit 4.2 to
Registrant and Thomas Chown. IVP Technology's Form S-8 filed on July 23,
2001
10.24 Letter Agreement dated May 30, 2001, between the Incorporated by reference to Exhibit 4.3 to
Registrant and Ruffa & Ruffa, P.C. for Modification of IVP Technology's Form S-8 filed on July 23,
Retainer Agreement 2001
10.25 Consulting Agreement dated September 1, 2000 between Incorporated by reference to Exhibit 13.1 to
the Registrant and Barry Gross d/b/a Gross Capital IVP Technology's Form 10-KSB filed on July 5,
Associates 2001
10.26 Consulting and Advisory Agreement dated September 25, Incorporated by reference to Exhibit 13.2 to
2000 between the Registrant and Koplan Consulting IVP Technology's Form 10-KSB filed on July 5,
Corporation 2001
II-5
EXHIBIT NO. DESCRIPTION LOCATION
- -------------------- ------------------------------------------------------- ---------------------------------------------
10.27 Warrant Agreement dated April 3, 2002 between the Incorporated by reference to Exhibit 10.27 to
Registrant and Cornell Capital Partners LP IVP Technology's Form 10-KSB filed on April
15, 2002
10.28 Equity Line of Credit Agreement dated April 3, 2002 Incorporated by reference to Exhibit 10.28 to
between the Registrant and Cornell Capital Partners LP IVP Technology's Form 10-KSB filed on April
15, 2002
10.29 Registration Rights Agreement dated April 3, 2002 Incorporated by reference to Exhibit 10.29 to
between the Registrant and Cornell Capital Partners, LP IVP Technology's Form 10-KSB filed on April
15, 2002
10.30 Escrow Agreement dated April 3, 2002 among the Incorporated by reference to Exhibit 10.30 to
Registrant, Cornell Capital Partners, LP, Butler IVP Technology's Form 10-KSB filed on April
Gonzalez, and First Union National Bank 15, 2002
10.31 Securities Purchase Agreement dated April 3, 2002 Incorporated by reference to Exhibit 10.31 to
among the Registrant and the Buyers IVP Technology's Form 10-KSB filed on April
15, 2002
10.32 Escrow Agreement dated April 3, 2002 among the Incorporated by reference to Exhibit 10.32 to
Registrant, the Buyers, and First Union National Bank IVP Technology's Form 10-KSB filed on April
15, 2002
10.33 Debenture Agreement Dated April 3, 2002 between the Incorporated by reference to Exhibit 10.33 to
Registrant and Cornell Capital Partners LP IVP Technology's Form 10-KSB filed on April
15, 2002
10.34 Investor Registration Rights Agreement dated April 3, Incorporated by reference to Exhibit 10.34 to
2002 between the Registrant and the Investors IVP Technology's Form 10-KSB filed on April
15, 2002
10.35 Placement Agent Agreement dated April 3, 2002 among Incorporated by reference to Exhibit 10.35 to
the Registrant, Westrock Advisors, Inc. and Cornell IVP Technology's Form 10-KSB filed on April
Capital Partners LP 15, 2002
10.36 Letter Agreement dated February 20, 2002 between the Incorporated by reference to Exhibit 10.36 to
Registrant and Buford Industries Inc. IVP Technology's Form 10-KSB filed on April
15, 2002
10.37 Letter Confirmation Agreement dated July 21, 2001 Incorporated by reference to Exhibit 10.37 to
between the Registrant and Buford Industries Inc. IVP Technology's Form 10-KSB filed on April
15, 2002
10.38 Consulting Agreement dated March 1, 2002 between the Provided herewith
Registrant and Danson Partners LLC
10.39 Term Sheet between the Registrant and Cornell Capital Provided herewith
Partners, LP Increasing the Commitment under the Equity
Line of Credit to $10 million
10.40 Consulting Agreement dated February 12, 2002 between Provided herewith
the Registrant and Danson Partners LLC
10.41 Escrow Agreement dated as of May 15, 2002 among the Provided herewith
Registrant, Brian MacDonald, Peter Hamilton, Kevin
Birch, Sherry Bullock, and Gino Villella
23.1 Consent of Kirkpatrick & Lockhart LLP Incorporated by reference to Exhibit 5.1 to
this Form SB-2
23.2 Consent of Weinberg & Company, P.A. Provided herewith
II-6
(B) REPORTS ON FORM 8-K.
IVP Technology filed a report on Form 8-K on February 20, 2002
disclosing that on January 18, 2002, IVP Technology entered into an agreement
for the provision of marketing advisory services by Vanessa Land, president of
Devonshire Marketing Limited of London, UK. Additionally, IVP Technology also
disclosed that it also signed a reseller distribution agreement with SmartFocus
Company Limited of Bristol UK.
IVP Technology filed a report on Form 8-K on January 31, 2002
disclosing that on December 28, 2001, IVP Technology executed a distribution
agreement with The Innovation Group through TIG Acquisition Corporation whereby
IVP Technology Corporation was grated a license on a non-exclusive basis to
market TiG plc's Classifier (R) Information System software product and solution
to companies in North America.
IVP Technology filed a report on Form 8-K on May 6, 2002 disclosing
that on May 1, 2002, IVP Technology received written notice that the lender, DCD
Limited, agreed to convert the loan for $864,180 due on April 30, 2002 to
4,000,000 shares of common stock. This equates to a conversion price of
approximately $0.19 per share.
II-7
UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by Sections
10(a)(3) of the Securities Act of 1933 (the "ACT");
(ii) Reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(iii) Include any additional or changed material
information on the plan of distribution;
(2) That, for the purpose of determining any liability under
the Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the small business
issuer pursuant to the foregoing provisions, or otherwise, the small business
issuer has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the small business issuer of
expenses incurred or paid by a director, officer or controlling person of the
small business issuer in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the small business issuer will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-8
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on our behalf by the undersigned, on May 15, 2002.
IVP TECHNOLOGY CORPORATION
By: /s/ Brian MacDonald
------------------------------------------
Name: Brian MacDonald
Title: President, Chief Executive Officer
and Chairman of the Board of
Directors
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ J. Stephen Smith
- --------------------------
J. Stephen Smith Director May 15, 2002
/s/ Peter Hamilton
- --------------------------
Peter Hamilton Director May 15, 2002
II-9