UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MIV THERAPEUTICS, INC.
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(Exact name of registrant as specified in charter)
NEVADA 3841 01-0809204
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(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
UNIT 1, 8765 ASH STREET, VANCOUVER, BRITISH COLUMBIA, CANADA, V6P 6T3
TELEPHONE: (604) 301-9545 AND FACSIMILE: (604) 301-9546
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(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
ALAN P. LINDSAY
CHAIRMAN, CHIEF EXECUTIVE OFFICER, PRINCIPAL EXECUTIVE OFFICER AND A DIRECTOR
UNIT 1, 8765 ASH STREET, VANCOUVER, BRITISH COLUMBIA, CANADA, V6P 6T3
TELEPHONE: (604) 301-9545 AND FACSIMILE: (604) 301-9546
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(Name, address, including zip code, and telephone number, including area code,
of agent for service)
WITH A COPY TO:
THOMAS J. DEUTSCH, ESQ.
LANG MICHENER LLP
1500 ROYAL CENTRE, 1055 WEST GEORGIA STREET, VANCOUVER, BRITISH COLUMBIA,
CANADA, V6E 4N7
TELEPHONE: (604) 689-9111 AND FACSIMILE: (604) 685-7084
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO
TIME AFTER THIS REGISTRATION STATEMENT IS DECLARED EFFECTIVE.
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If any 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. [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
registrations 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(d) 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. [ ]
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CALCULATION OF REGISTRATION FEE
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Title of Each Class of Proposed Maximum Proposed Maximum Amount of
Securities to be Amount to be Offering Price Per Aggregate Offering Registration
Registered(1) Registered(2) Share(3) Price(3) Fee(4)
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Common stock offered for 7,684,995(5) $0.64 $4,918,396.80 $526.27
resale by certain Selling
Shareholders
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Common stock issuable 3,842,498(5)(6) $0.65 $2,497,623.70 $267.25
upon the exercise of
August 2005 Series A
Warrants
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Common stock issuable 3,842,498(5)(6) $1.00 $3,842,498.00 $411.15
upon the exercise of the
August 2005 Series B
Warrants
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Common stock issuable 62,500(7) $0.65 $40,625.00 $4.35
upon the exercise of
August 2005 Series A
finder's warrants
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Common stock issuable 62,500(8) $1.00 $62,500.00 $6.69
upon the exercise of
August 2005 Series B
finder's warrants
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Common stock issued 3,158,920(9) $0.64 $2,021,708.80 $216.32
upon the conversion of
senior secured convertible
debentures to be offered for
resale by certain
Selling Shareholders
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March 2005 Placement 1,851,500(10) $0.64 $1,184,960.00 $126.79
Warrants
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Common stock issuable 1,851,500(10) $0.64 $1,184,960.00 $126.79
upon the exercise of the
March 2005 Placement
Warrants
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Common stock issuable 400,000(11) $0.64 $256,000.00 $27.39
upon the exercise of May
2003 share purchase
warrants
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Common stock issuable 500,000(12) $0.64 $320,000.00 $34.24
upon the exercise of
October 2003 share
purchase warrants
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Common stock issuable 500,000(12) $0.75 $375,000.00 $40.13
upon the exercise of
October 2003 share
purchase warrants
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Common stock issuable 2,750,000(13) $0.64 $1,760,000.00 $188.32
upon the exercise of July
2005 share purchase
warrants
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Common stock offered for 5,152,773(14) $0.64 $3,297,774.72 $352.86
resale by certain Selling
Shareholders
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March 2004 Series A 2,815,444(14)(15) $0.66 $1,858,193.04 $198.83
Warrants
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Common stock issuable 2,815,444(14)(15) $0.66 $1,858,193.04 $198.83
upon the exercise of
March 2004 Series A
Warrants
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March 2004 Series C 674,997(16) $0.66 $445,498.02 $47.67
Warrants
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Common stock issuable 674,997(16) $0.66 $445,498.02 $47.67
upon the exercise of
March 2004 Series C
finder's warrants
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Common stock issuable 71,429(17) $0.75 $53,571.75 $5.73
upon the exercise of
share purchase warrants
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Common stock issuable 150,000(18) $0.64 $96,000.00 $10.27
upon the exercise of
share purchase warrants
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Common stock issuable 150,000(19) $0.64 $96,000.00 $10.27
upon the exercise of
share purchase warrants
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Common stock issuable 200,000(20) $0.64 $128,000.00 $13.70
upon the exercise of
share purchase warrants
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Common stock issuable 500,000(21) $0.64 $320,000.00 $34.24
upon the exercise of
share purchase warrants
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Common stock offered for 95,238(22) $0.64 $60,952.32 $6.52
resale by certain Selling
Shareholders
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Common stock issuable 95,238(22)(23) $1.55 $147,618.90 $15.80
upon the exercise of
October 2005 Warrants
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Common stock offered for 9,524(24) $0.64 $6,095.36 $0.65
resale by certain Selling
Shareholders
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Common stock issuable 9,524(25) $1.55 $14,762.20 $1.58
upon the exercise of
October 2005 finder's
warrants
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Common stock issuable 400,000(26) $0.64 $256,000.00 $27.39
upon the exercise of
share purchase warrants
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Common stock issuable 400,000(27) $0.64 $256,000.00 $27.39
upon the exercise of
share purchase warrants
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Common stock offered for 620,000(28) $0.64 $396,800.00 $42.56
resale by certain Selling
Shareholders
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Common stock issuable 620,000(28)(29) $0.75 $465,000.00 $49.76
upon the exercise of July
2006 Warrants
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July 2006 Warrants 300,000(30) $0.75 $225,000.00 $24.08
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Total Registration Fee: $28,891.227.67 $3,091.49
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(1) In the event of a stock split, stock dividend or similar transaction
involving the common shares of the Registrant in order to prevent dilution,
the number of shares of common stock registered shall be automatically
increased to cover additional shares in accordance with Rule 416(a) under
the United States SECURITIES ACT OF 1933, as amended (the "Securities
Act").
(2) Includes shares of our common stock, par value $0.001 per share, which may
be offered pursuant to this registration statement, which shares which are
issuable upon the exercise of the warrants held by the selling shareholders
(each a "Selling Shareholder"). In addition to the shares set forth in the
table, the amount to be registered includes an indeterminate number of
shares issuable upon the exercise of the warrants as such number may be
adjusted as a result of stock splits, stock dividends and similar
transactions in accordance with Rule 416 of the Securities Act. The number
of shares of common stock registered hereunder represents a good faith
estimate by us of the number of shares of common stock issuable upon the
exercise of the warrants. For purposes of estimating the number of shares
of common stock to be included in this registration statement, we
calculated a good faith estimate of the number of shares of our common
stock that we believe will be issuable upon the exercise of the warrants to
account for market fluctuations and for anti-dilution and price protection
adjustments. Should a decrease in the exercise price of the warrants as a
result of an issuance or sale of shares below the then current market price
result in our having insufficient shares, we will not rely upon Rule 416,
but will file a new registration statement to cover the resale of such
additional shares should that become necessary.
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(3) Estimated solely for the purpose of determining the registration fee.
Unless otherwise stated, we have based the fee calculation on the average
of the last reported bid and ask price for our common stock on the OTC
Bulletin Board on July 7, 2006. The Proposed Maximum Offering Price per
Share is calculated in accordance with Rule 457(g) of the Securities Act,
based upon the last reported bid and ask price for our common stock on the
OTC Bulletin Board on July 7, 2006. The Proposed Aggregate Maximum
Aggregate Offering Price is based on the Proposed Maximum Offering Price
Per Shares times the total number of shares of common stock to be
registered. These amounts are calculated solely for the purpose of
calculating the registration fee pursuant to Rule 457(g) of the Securities
Act.
(4) The fee is calculated in accordance with Rule 457(c) of the Securities Act.
Estimated for the sole purpose of calculating the registration fee. We have
based the fee calculation on the average of the last reported bid and ask
price for our common stock on the OTC Bulletin Board on July 7, 2006.
(5) On August 11, 2005, the Company issued 7,684,995 units (each a "August 2005
Unit") at a price of $0.45 per August 2005 Unit, with each August 2005 Unit
consisting of one common share, one-half of one non-transferable Series A
common stock share purchase warrant (each an "August 2005 Series A
Warrant") and one-half of one non-transferable Series B common stock share
purchase warrant (each an "August 2005 Series B Warrant"; and,
collectively, the "August 2005 Private Placement"). The Company had agreed
to file a registration statement with the United States Securities and
Exchange Commission (the "SEC") in accordance with the requirements of the
Securities Act in order to register the resale by the investors of the
shares and the shares issuable upon exercise of the warrants in the August
2005 Private Placement, completed pursuant to Rule 903 of Regulation S and
Rule 506 of Regulation D. We agreed to use our reasonable commercial
efforts to file a registration statement within 120 days from the date of
completion of the August 2005 Private Placement. Included with the August
2005 Private Placement was the issuance of 100,000 August 2005 Units
pursuant to a settlement proposal reached by us on August 9, 2005 and
relating to a previous right of first refusal under the March 2005 Private
Placement.
(6) Each whole August 2005 Series A Warrant entitles the holder to purchase one
share of common stock at an exercise price of $0.65 per share during the
period commencing August 11, 2005 and ending at 5:00 p.m. (Vancouver time)
on the day which is the earlier of (i) August 11, 2006 and (ii) six months
commencing from the effective date of the Company's proposed registration
statement related to the August 2005 Private Placement. Each whole August
2005 Series B Warrant entitles the holder to purchase one share of common
stock at an exercise price of between $0.70 and $1.00 per share during the
period commencing August 11, 2005 and ending at 5:00 p.m. (Vancouver time)
on the day which is the earlier of (i) February 11, 2008 and (ii) 24 months
commencing from the effective date of the Company's proposed registration
statement related to August 2005 Private Placement. Each whole August 2005
Series B Warrant is exercisable at an exercise price of $0.70 per August
2005 Series B Warrant share during the first 12 months of the warrant
exercise period (months one to 12), at an exercise price of $0.85 per
warrant share during the next six months of the warrant exercise period
(months 13 to 18) and at an exercise price of $1.00 per warrant share
during the final six months of the warrant exercise period (months 19 to
24).
(7) These non-transferable August 2005 Series A finder's warrants were issued
in relation to the August 2005 Private Placement and are exercisable upon
the same terms and conditions as the August 2005 Series A Warrants.
(8) These non-transferable August 2005 Series B finder's warrants were issued
in relation to the August 2005 Private Placement and are exercisable upon
the same terms and conditions as the August 2005 Series B Warrants.
(9) These shares of common stock were issued at a deemed price of $0.25 per
share on October 4, 2005 upon the conversion of senior secured convertible
debentures (each a "Convertible Debenture") issued by us on March 15, 2005
pursuant to a private placement (the "March 2005 Private Placement").
(10) These transferable "March 2005 Placement Warrants" were issued in
connection with the issuance of the Convertible Debentures by us pursuant
to the March 2005 Private Placement. Each March 2005 Placement Warrant is
exercisable at a price of $0.25 per share until March 15, 2010.
(11) These non-transferable common stock purchase warrants were issued pursuant
to a February 2003 consulting agreement and are exercisable at a price of
$0.50 per share until May 20, 2008.
(12) These non-transferable common stock purchase warrants were issued in
October of 2003 pursuant to a consulting agreement and 500,000 warrants are
exercisable at $0.50 per share and 500,000 warrants are exercisable at
$0.75 per share until October 24, 2006 in each such instance.
(13) These non-transferable common stock share purchase warrants were issued
under the terms of a letter of engagement, as amended, entered into by us
on July 1, 2005, and are exercisable at a price of $0.50 per share until
July 1, 2008.
(14) On March 29, 2004, the Company issued 6,749,995 units (each a "March 2004
Unit") at a price of $0.45 per March 2004 Unit, with each March 2004 Unit
consisting of one common share, one-half of one transferable Series A
common stock purchase warrant (each a "March 2004 Series A Warrant") and
one-half of one transferable Series B common stock purchase warrant (each a
"March 2004 Series B Warrant"; and, collectively, the "March 2004 Private
Placement"). The Company had agreed to file a registration statement with
the SEC in accordance with the requirements of the Securities Act in order
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to register the resale by the investors of the shares and the shares
issuable upon exercise of the warrants in the March 2004 Private Placement,
completed pursuant to Rule 903 of Regulation S and Rule 506 of Regulation
D.
(15) Each whole March 2004 Series A Warrant entitles the holder to purchase one
share of common stock at an exercise price of $0.66 per share during the
period commencing March 29, 2004 and ending on March 18, 2009. The March
2004 Series B Warrants have now expired with no such warrants were
exercised prior to expiry.
(16) These transferable finder's stock share purchase warrants were issued in
relation to the March 2004 Private Placement and are exercisable upon the
same terms and conditions as the March 2004 Series A Warrants.
(17) These non-transferable common stock purchase warrants were issued pursuant
to a September 2003 private placement and are exercisable at a price of
$0.75 per share until September 8, 2006.
(18) These non-transferable common stock purchase warrants were issued on
February 2, 2006 pursuant to a consulting agreement and are exercisable at
a price of $0.50 per share until February 2, 2011.
(19) These non-transferable common stock purchase warrants were issued on
February 2, 2006 pursuant to a consulting agreement and are exercisable at
a price of $0.50 per share until February 2, 2011.
(20) These non-transferable common stock purchase warrants were issued on May
21, 2004 pursuant to a consulting agreement and are exercisable at a price
of $0.45 per share until May 21, 2007.
(21) These non-transferable common stock purchase warrants were issued on June
7, 2005 pursuant to a consulting agreement and are exercisable at a price
of $0.50 per share until June 7, 2008.
(22) On October 6, 2005, the Company issued 95,238 units (each an "October 2005
Unit") at a price of $1.05 per October 2005 Unit, with each October 2005
Unit consisting of one common share and one non-transferable common stock
purchase warrant (each an "October 2005 Warrant"; and, collectively, the
"October 2005 Private Placement"). The Company had agreed to file a
registration statement with the SEC in accordance with the requirements of
the Securities Act in order to register the resale by the investors of the
shares and the shares issuable upon exercise of the warrants in the October
2005 Private Placement, completed pursuant to Rule 903 of Regulation S.
(23) Each October 2005 Warrant entitles the holder to purchase one share of
common stock at an exercise price of $1.55 per share during the period
commencing October 6, 2005 and ending on October 6, 2007.
(24) These finder's shares of common stock were issued in relation to the
October 2005 Private Placement.
(25) These non-transferable finder's common stock purchase warrants were issued
in relation to the October 2005 Private Placement and are exercisable upon
the same terms and conditions as the October 2005 Warrants.
(26) These non-transferable common stock share purchase warrants were issued on
September 24, 2004 under the terms of a consulting agreement and are
exercisable at a price of $0.30 per share until September 24, 2009.
(27) These non-transferable common stock share purchase warrants were issued on
March 4, 2005 under the terms of an amended consulting agreement and are
exercisable at a price of $0.30 per share until March 4, 2010.
(28) On July 10, 2006, the Company issued 620,000 units (each a "July 2006
Unit") at a price of $0.50 per July 2006 Unit, with each March 2004 Unit
consisting of one common share and one common stock purchase warrant (each
a "July 2006 Warrant" and, collectively, the "July 2006 Private
Placement"). The Company had agreed to file a registration statement with
the SEC in accordance with the requirements of the Securities Act in order
to register the resale by the investors of the shares and the shares
issuable upon exercise of the July 2006 Warrants in the July 2006 Private
Placement, completed pursuant to Rule 903 of Regulation S and Rule 506 of
Regulation D.
(29) Each July 2006 Warrant entitles the holder to purchase one share of common
stock at an exercise price of $0.75 per share during the period commencing
July 10, 2006 and ending on the earlier of (i) January 10, 2008 and (ii) 12
months commencing from the effective date of the Company's proposed
registration statement related to the July 2006 Private Placement.
(30) These July 2006 Warrants are transferable.
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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, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED JULY 12, 2006
MIV THERAPEUTICS, INC.
(A NEVADA CORPORATION)
OFFERING OF UP TO 36,619,578 SHARES OF COMMON STOCK AND
5,641,941 TRANSFERABLE COMMON STOCK PURCHASE WARRANTS
This prospectus relates to the resale of up to 36,619,578 common shares of
common stock and 5,641,941 transferable common stock purchase warrants of MIV
Therapeutics, Inc. (the "Company" or "MIV") that may be offered and sold, from
time to time, by the Selling Shareholders identified in this prospectus. These
shares include the following shares, all as described in this prospectus under
"Selling Shareholders":
1. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of 7,684,995 shares of our common
stock issued on August 11, 2005 pursuant to a private placement (the
"August 2005 Private Placement");
2. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of 3,842,498 shares of our common
stock issuable upon the exercise of 3,842,498 non-transferable Series A
common stock purchase warrants issued pursuant to the August 2005
Private Placement;
3. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of 3,842,498 shares of our common
stock issuable upon the exercise of 3,842,498 non-transferable Series B
common stock purchase warrants issued pursuant to the August 2005
Private Placement;
4. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 62,500 shares of our common stock issuable
upon the exercise of 62,500 non-transferable Series A finder's common
stock purchase warrants which relate to a finder's fee for the August
2005 Private Placement;
5. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 62,500 shares of our common stock issuable
upon the exercise of 62,500 non-transferable Series B finder's common
stock purchase warrants which relate to a finder's fee for the August
2005 Private Placement;
6. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of 3,158,920 shares of our common
stock issued on October 4, 2005 upon the conversion of the Convertible
Debentures issued on March 15, 2005 pursuant to a private placement
(the "March 2005 Private Placement");
7. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of the 1,851,500 transferable
March 2005 Private Placement common stock purchase warrants to purchase
shares of our common stock which were issued pursuant to the March 2005
Private Placement;
8. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of 1,851,500 shares of our common
stock issuable upon the exercise of the 1,851,500 March 2005 Private
Placement common stock purchase warrants;
9. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 400,000 shares of our common stock issuable
upon the exercise of the 400,000 non-transferable common stock purchase
warrants to purchase shares of our common stock which were issued in
February of 2003 pursuant to a consulting agreement;
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10. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 1,000,000 shares of our common stock issuable
upon the exercise of 1,000,000 non-transferable common stock purchase
warrants to purchase shares of our common stock which were issued on
October 24, 2003, pursuant to a consulting agreement;
11. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 2,750,000 shares of our common stock issuable
upon the exercise of 2,750,000 non-transferable common stock purchase
warrants to purchase shares of our common stock which were issued on
July 1, 2005, pursuant to a letter of engagement, as amended;
12. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of 5,152,733 shares of our common
stock issued on March 29, 2004 pursuant to a private placement (the
"March 2004 Private Placement");
13. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of the 2,815,444 transferable
Series A common stock purchase warrants to purchase shares of our
common stock which were issued pursuant to the March 2004 Private
Placement;
14. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of 2,815,444 shares of our common
stock issuable upon the exercise of 2,815,444 Series A common stock
purchase warrants issued pursuant to the March 2004 Private Placement;
15. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of the 674,997 transferable
Series C common stock purchase warrants to purchase shares of our
common stock which were issued as a finder's fee pursuant to the March
2004 Private Placement;
16. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of 674,997 shares of our common
stock issuable upon the exercise of 674,997 Series C finder's common
stock purchase warrants which relate to a finder's fee for the March
2004 Private Placement;
17. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 71,429 shares of our common stock issuable
upon the exercise of the 71,429 non-transferable common stock purchase
warrants to purchase shares of our common stock which were issued in
September of 2003 pursuant to a private placement;
18. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 150,000 shares of our common stock issuable
upon the exercise of 150,000 non-transferable common stock purchase
warrants to purchase shares of our common stock which were issued on
February 2, 2006, pursuant to a consulting agreement;
19. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 150,000 shares of our common stock issuable
upon the exercise of 150,000 non-transferable common stock purchase
warrants to purchase shares of our common stock which were issued on
February 2, 2006, pursuant to a consulting agreement;
20. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 200,000 shares of our common stock issuable
upon the exercise of 200,000 non-transferable common stock purchase
warrants to purchase shares of our common stock which were issued on
May 21, 2004, pursuant to a consulting agreement;
21. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 500,000 shares of our common stock issuable
upon the exercise of 500,000 non-transferable common stock purchase
warrants to purchase shares of our common stock which were issued on
June 7, 2005, pursuant to a consulting agreement;
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22. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 95,238 shares of our common stock issued on
October 6, 2005 pursuant to a private placement (the "October 2005
Private Placement");
23. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 95,238 shares of our common stock issuable
upon the exercise of 95,238 October 2005 non-transferable common stock
purchase warrants issued pursuant to the October 2005 Private
Placement;
24. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 9,524 shares of our common stock which relate
to a finder's fee for the October 2005 Private Placement;
25. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 9,524 shares of our common stock issuable upon
the exercise of 9,524 non-transferable finder's common stock purchase
warrants which relate to a finder's fee for the October 2005 Private
Placement;
26. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 400,000 shares of our common stock issuable
upon the exercise of 400,000 non-transferable common stock purchase
warrants to purchase shares of our common stock which were issued on
September 24, 2004, pursuant to a consulting agreement;
27. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 400,000 shares of our common stock issuable
upon the exercise of 400,000 non-transferable common stock purchase
warrants to purchase shares of our common stock which were issued on
March 4, 2005, pursuant to a consulting agreement, as amended;
28. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of 620,000 shares of our common
stock issued on July 10, 2006 pursuant to a private placement (the
"July 2006 Private Placement");
29. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of 620,000 shares of our common
stock issuable upon the exercise of 620,000 common stock purchase
warrants issued pursuant to the July 2006 Private Placement; and
30. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of an aggregate of 300,000 transferable July 2006
Private Placement common stock purchase warrants to purchase shares of
our common stock which were issued pursuant to the July 2006 Private
Placement.
We will not receive any of the proceeds from the sale of shares by the Selling
Shareholders. However, we will receive proceeds upon the exercise of any common
stock purchase warrants that may be exercised by the Selling Shareholders. The
proceeds, if any, would be used for general corporate purposes including, in
order of priority, working capital, research and development and clinical
trials.
The Selling Shareholders may sell their shares through private transactions or
in public sales through the over-the-counter markets or on any exchanges on
which our shares are traded at the time of sale. These sales may occur at
prevailing market prices or at privately negotiated prices. The shares may be
sold directly or through agents or broker-dealers acting as agents on behalf of
the Selling Shareholders. The Selling Shareholders may engage brokers, dealers
or agents, who may receive commissions or discounts from the Selling
Shareholders. We will pay substantially all the expenses incident to the
registration of the shares, except for sales commissions and other sellers'
compensation applicable to sales of the shares.
Our common stock is registered under Section 12(g) of the United States
SECURITIES EXCHANGE ACT OF 1934, as amended (the "Exchange Act"), and is quoted
on the NASD Over-the-Counter Bulletin Board (the "OTCBB") under the symbol
"MIVT". Our common stock is also quoted on each of the Munich and Frankfurt
stock exchanges under symbols "MIV.MU" and "MIV.F", respectively. The last
reported sales price per share of our common stock as reported by the OTCBB on
July 7, 2006, was $0.64.
-8-
Our principal offices are located at Unit 1, 8765 Ash Street, Vancouver, British
Columbia, Canada, V6P 6T3. Our telephone number is (604) 301-9545 and our
facsimile number is (604) 301-9546.
THE PURCHASE OF THE SECURITIES OFFERED THROUGH THIS PROSPECTUS INVOLVES A HIGH
DEGREE OF RISK. YOU SHOULD CAREFULLY READ AND CONSIDER THE SECTION OF THIS
PROSPECTUS ENTITLED "RISK FACTORS" ON PAGES 23 THROUGH 28 BEFORE BUYING ANY OF
OUR SECURITIES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is _______, 2006.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
-9-
THE FOLLOWING TABLE OF CONTENTS HAS BEEN DESIGNED TO HELP YOU FIND IMPORTANT
INFORMATION CONTAINED IN THIS PROSPECTUS. WE ENCOURAGE YOU TO READ THE ENTIRE
PROSPECTUS.
TABLE OF CONTENTS
Heading Page No.
PROSPECTUS SUMMARY...............................................................................................14
OUR BUSINESS..................................................................................................14
THE OFFERING..................................................................................................15
SUMMARY OF FINANCIAL DATA.....................................................................................22
Balance Sheets.............................................................................................22
Statements of Operations...................................................................................23
RISK FACTORS.....................................................................................................23
BECAUSE WE ARE CURRENTLY A DEVELOPMENT STAGE COMPANY, WE HAVE NO PRODUCTS AVAILABLE FOR SALE OR USE AND MAY
LACK THE FINANCIAL RESOURCES NEEDED TO BRING PRODUCTS TO MARKET...............................................23
BECAUSE WE HAVE A LIMITED OPERATING HISTORY ON WHICH AN EVALUATION OF OUR PROSPECTS CAN BE MADE, WE MAY NOT BE
ABLE TO EFFECTIVELY MANAGE THE DEMANDS REQUIRED OF A NEW BUSINESS IN THE MEDICAL DEVICE INDUSTRY..............23
BECAUSE WE HAVE A HISTORY OF LOSSES AND ANTICIPATE CONTINUED LOSSES THROUGH OUR DEVELOPMENT STAGE, WE MAY LACK
THE FINANCIAL STABILITY REQUIRED TO CONTINUE OPERATIONS.......................................................24
BECAUSE THE LIFE CYCLE OF MEDICAL PRODUCTS ARE DIFFICULT TO PREDICT, EVEN IF WE WERE TO INTRODUCE A PRODUCT TO
THE MARKET WE MAY NOT BE ABLE TO GAIN MARKET ACCEPTANCE OF THE PRODUCT........................................24
BECAUSE WE ARE SIGNIFICANTLY SMALLER THAN THE MAJORITY OF OUR NATIONAL COMPETITORS WE MAY LACK THE FINANCIAL
RESOURCES NEEDED TO CAPTURE MARKET SHARE......................................................................24
BECAUSE WE HAVE NOT EARNED ANY REVENUES FROM OPERATIONS, ALL OUR CAPITAL REQUIREMENTS HAVE BEEN MET THROUGH
FINANCING AND IT IS NOT CERTAIN WE WILL BE ABLE TO CONTINUE TO FIND FINANCING TO MEET OUR OPERATING
REQUIREMENTS..................................................................................................24
BECAUSE WE ARE IN THE DEVELOPMENT STAGE AND HAVE NOT YET PRODUCED A MARKETABLE PRODUCT, WE MAY LACK THE
ABILITY TO RECRUIT SUITABLE CANDIDATES FOR EMPLOYMENT, OR TO ATTRACT THEM TO THE COMPANY SHOULD THEY BE
IDENTIFIED....................................................................................................25
BECAUSE WE MAY NOT BE ABLE TO OBTAIN PATENTS FOR THE DEVICES WE ARE CURRENTLY RESEARCHING, WE MAY NOT BE ABLE
TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS...................................................................25
BECAUSE PRODUCT LIABILITY IS INHERENT IN THE MEDICAL DEVICES INDUSTRY AND INSURANCE IS EXPENSIVE AND DIFFICULT
TO OBTAIN, THE COMPANY MAY BE EXPOSED TO LARGE LAWSUITS.......................................................25
BECAUSE THE HEALTHCARE INDUSTRY IS SUBJECT TO CHANGING POLICIES AND PROCEDURES, WE MAY FIND IT DIFFICULT TO
CONTINUE TO COMPETE IN AN UNCERTAIN ENVIRONMENT...............................................................26
THERE IS SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A GOING CONCERN BASED ON OUR PAST OPERATING LOSSES
AND PREDICTED FUTURE OPERATING LOSSES.........................................................................26
WE WILL REQUIRE ADDITIONAL FUNDING IN THE FUTURE..............................................................26
OUR ACQUISITIONS MAY NOT BE SUCCESSFUL........................................................................26
A DECLINE IN THE PRICE OF OUR COMMON STOCK COULD AFFECT OUR ABILITY TO RAISE FURTHER WORKING CAPITAL AND
ADVERSELY IMPACT OUR OPERATIONS...............................................................................26
SALES OF A SUBSTANTIAL NUMBER OF SHARES OF OUR COMMON STOCK INTO THE PUBLIC MARKET BY THE SELLING SHAREHOLDERS
MAY RESULT IN SIGNIFICANT DOWNWARD PRESSURE ON THE PRICE OF OUR COMMON STOCK AND COULD AFFECT THE ABILITY OF
OUR STOCKHOLDERS TO REALIZE ANY CURRENT TRADING PRICE OF OUR COMMON STOCK.....................................27
BECAUSE OUR STOCK IS LISTED ON THE OTCBB AND NOT A LARGER OR MORE RECOGNIZED EXCHANGE, INVESTORS MAY FIND IT
DIFFICULT TO SELL THEIR SHARES OR OBTAIN ACCURATE QUOTATIONS FOR SHARE PRICES.................................27
A MAJORITY OF OUR DIRECTORS AND OFFICERS ARE OUTSIDE THE UNITED STATES, WITH THE RESULT THAT IT MAY BE
DIFFICULT FOR INVESTORS TO ENFORCE WITHIN THE UNITED STATES ANY JUDGMENTS OBTAINED AGAINST US OR ANY OF OUR
DIRECTORS OR OFFICERS.........................................................................................27
NEVADA LAW AND OUR ARTICLES OF INCORPORATION MAY PROTECT OUR DIRECTORS FROM CERTAIN TYPES OF LAWSUITS.........28
FORWARD-LOOKING STATEMENTS.......................................................................................28
-10-
USE OF PROCEEDS..................................................................................................28
SELLING SHAREHOLDERS.............................................................................................29
PLAN OF DISTRIBUTION.............................................................................................39
TIMING OF SALES...............................................................................................39
NO KNOWN AGREEMENTS TO RESELL THE SHARES......................................................................40
OFFERING PRICE................................................................................................40
MANNER OF SALE................................................................................................40
SALES PURSUANT TO RULE 144....................................................................................41
REGULATION M..................................................................................................41
STATE SECURITIES LAWS.........................................................................................41
EXPENSES OF REGISTRATION......................................................................................41
LEGAL PROCEEDINGS................................................................................................41
MR. MA........................................................................................................41
BARRY MIGLIORINI AND JACK NAVENTI DOING BUSINESS AS NATIONAL CAPITAL..........................................42
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.....................................................42
DIRECTORS AND OFFICERS........................................................................................42
SIGNIFICANT EMPLOYEES OR CONSULTANTS..........................................................................46
TERMS OF OFFICE...............................................................................................46
FAMILY RELATIONSHIPS..........................................................................................46
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS......................................................................46
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...................................................46
SECURITY OWNERSHIP............................................................................................46
CHANGES IN CONTROL............................................................................................48
DESCRIPTION OF SECURITIES........................................................................................48
GENERAL.......................................................................................................48
VOTING RIGHTS.................................................................................................48
DIVIDEND POLICY...............................................................................................49
STOCK TRANSFER AGENT..........................................................................................49
LEGAL MATTERS....................................................................................................49
EXPERTS..........................................................................................................49
INTERESTS OF NAMED EXPERTS AND COUNSEL...........................................................................49
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES..............................50
DESCRIPTION OF BUSINESS..........................................................................................50
INCORPORATION AND BACKGROUND..................................................................................50
BUSINESS OVERVIEW.............................................................................................51
OUR PRODUCTS..................................................................................................51
Hap Nano-Film Stent Coating Technology.....................................................................51
Drug-Eluting Stents........................................................................................52
INDUSTRY BACKGROUND...........................................................................................53
THE DRUG-ELUTING STENT MARKET.................................................................................53
COMPETITION...................................................................................................53
Johnson & Johnson..........................................................................................54
Guidant Corporation........................................................................................54
Boston Scientific Corporation..............................................................................54
Medtronic, Inc.............................................................................................55
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Abbott Laboratories........................................................................................55
Jomed N.v..................................................................................................55
Implant Sciences Corporation...............................................................................55
EMPLOYEES.....................................................................................................55
INTELLECTUAL PROPERTY AND INTANGIBLES.........................................................................56
Patents....................................................................................................56
Trademarks.................................................................................................57
RESEARCH AND DEVELOPMENT PROGRAMS AND ACTIVITIES..............................................................57
WHERE YOU CAN FIND MORE INFORMATION...........................................................................58
MANAGEMENT'S DISCUSSION AND ANALYSIS.............................................................................58
PLAN OF OPERATIONS............................................................................................58
Acquisition of Sagax, Inc..................................................................................59
Termination of Acquisition of Smt..........................................................................59
Product Development........................................................................................59
Business Expansion.........................................................................................60
Intellectual Property......................................................................................61
Cash Requirements and Need for Additional Funds............................................................61
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION................................................................61
General & Administrative Expenses..........................................................................61
Research & Development Expenses............................................................................62
Depreciation Expense.......................................................................................62
Liquidity and Capital Resources............................................................................62
Financing..................................................................................................62
Warrants...................................................................................................62
Stock-based Compensation...................................................................................63
Cash Position..............................................................................................65
Accounts Payable & Accrued Liabilities.....................................................................65
OFF-BALANCE SHEET ARRANGEMENTS................................................................................65
DESCRIPTION OF PROPERTY..........................................................................................65
REAL PROPERTY.................................................................................................65
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................................................................66
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.........................................................66
MARKET INFORMATION............................................................................................66
OTCBB......................................................................................................66
Penny Stock................................................................................................66
HOLDERS OF COMMON SHARES......................................................................................67
DIVIDENDS.....................................................................................................67
EXECUTIVE COMPENSATION...........................................................................................67
SUMMARY COMPENSATION TABLE....................................................................................67
STOCK OPTION GRANTS...........................................................................................68
EXERCISES OF STOCK OPTIONS AND YEAR-END OPTION VALUES.........................................................69
LONG-TERM INCENTIVE PLANS.....................................................................................69
EMPLOYMENT CONTRACTS..........................................................................................70
FINANCIAL STATEMENTS.............................................................................................70
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS....................................................................71
PART II INFORMATION NOT REQUIRED IN PROSPECTUS...................................................................75
INDEMNIFICATION OF OFFICERS AND DIRECTORS.....................................................................75
Nevada Revised Statutes....................................................................................75
Our Articles of Incorporation..............................................................................77
Our Bylaws.................................................................................................77
Opinion of the Sec.........................................................................................78
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION......................................................................78
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RECENT SALES OF UNREGISTERED SECURITIES..........................................................................78
PRIVATE PLACEMENTS............................................................................................78
ISSUE OF SHARES FOR SERVICES..................................................................................84
EXHIBITS.........................................................................................................86
UNDERTAKINGS.....................................................................................................87
SIGNATURES.......................................................................................................89
POWER OF ATTORNEY................................................................................................90
-13-
PROSPECTUS SUMMARY
This prospectus is part of a resale registration statement. The selling
shareholders (the "Selling Shareholders") may sell some or all of their shares
in transactions from time to time.
You should rely only on the information contained or incorporated by reference
in this prospectus. We have not authorized anyone else to provide you with
different information. If anyone provides you with different information, you
should not rely upon it. You should assume that the information appearing in
this prospectus, as well as the information we file with the United States
Securities and Exchange Commission ("SEC") and incorporate by reference in this
prospectus is accurate only as of the date of the documents containing the
information. As used in this prospectus, the terms "we", "us", "our", the
"Company", and "MIV" mean MIV Therapeutics, Inc. All dollar amounts refer to
United States dollars unless otherwise indicated.
The following summary highlights selected information contained in this
prospectus. This summary does not contain all the information you should
consider before investing in the securities. Before making an investment
decision, you should read the entire prospectus carefully, including the "Risk
Factors" section, the financial statements and the notes to the financial
statements.
OUR BUSINESS
MIV Therapeutics, Inc. (the "Company" or "MIV") is involved in the design,
manufacture and development a new generation of implantable medical devices that
will utilize its advanced biocompatible stent coating and drug-delivery
technologies. The Company's business objective is to be a leader in coating
technologies and drug-delivery devices for both cardiovascular and non-vascular
disorders.
The Company was incorporated as DBS Holdings, Inc. under the laws of the State
of Nevada on March 19, 1999. On April 25, 2000, the Company filed a registration
statement on Form 10SB to register its common stock under the United States
SECURITIES EXCHANGE ACT OF 1934, as amended (the "Exchange Act"), and thereby
became a reporting company, and also became eligible for listing its common
stock on the NASD Over-the-Counter Bulletin Board (the "OTCBB"). The Company's
common stock was qualified and listed for trading on the OTCBB on July 13, 2000.
In April 2001 the Company signed a Share Exchange and Finance Agreement (the
"Share Exchange") with M-I Vascular Innovations, Inc. ("M-I Vascular"), a stent
medical device development company, and the Company exchanged, on a one for one
basis, 58% of the shares outstanding of M-I Vascular for shares in the Company.
Pursuant to the terms of the Share Agreement the Company completed the share
exchange with the remaining shareholders of M-I Vascular on May 31, 2003.
In May 2001 the Company announced a change of business and control, elected and
appointed new officers and directors and began to engage in the business of
developing medical stents. On March 5, 2002, following shareholder approval to
amend the Company's Articles of Incorporation, the Company changed its name to
MIV Therapeutics, Inc. The Company's shares are currently trading under the
symbol "MIVT" on the OTCBB and are quoted on each of the Munich and Frankfurt
stock exchanges under symbols "MIV.MU" and "MIV.F", respectively.
In December 2004, MIVI Technologies, Inc., our wholly-owned and operating
subsidiary, received a Government of Canada grant for the research program
titled "Development of Novel Drug Eluting Composite Coatings for Cardiovascular
Stents". The Canadian National Research Council approved MIVI Technologies,
Inc.'s application following an in depth familiarization with the advanced
concept of novel technologies proposed by MIVI Technologies, Inc. and a review
of our organizational and fiscal capability to carry on with the program.
Our company is an advanced stage research and development company pursuing the
commercialization of the next generation of fully biocompatible coatings for
stents and other medical devices with the intent of providing healing solutions
for cardiovascular disease and other conditions. In collaboration with UBC, the
Company has developed unique coating technologies that utilize Hydroxyapatite
-14-
(HAp) for application on medical devices and drug delivery systems. Coronary
stents are used to treat cardiovascular disorder caused by the narrowing or
blockage of coronary arteries. Stents are compressible tubular devices that are
mounted on a balloon catheter, inserted into the circulatory system by a team of
cardiologists, and directed to the location of a blocked coronary artery. During
the angioplasty procedure, which involves unclogging the artery, the balloon is
expanded to clear the obstruction, allowing normal blood flow. With this
procedure, the stent is deployed and remains in place to reinforce the artery
wall. This procedure is the leading alternative to costly and highly invasive
open-heart surgery. Stents have eliminated many of the complications that
previously accompanied simple balloon angioplasty. Approximately 80% of heart
disease can be treated effectively with stenting.
The Company, in collaboration with UBC, has developed unique coating
technologies that utilize Hydroxyapatite ("HAp") for application on medical
devices and drug delivery systems. HAp is naturally found in bone and tooth
enamel and is rapidly integrated into the human body. As such, it may inhibit a
variety of adverse and inflammatory reactions and potentially help reduce
restenosis, a recurrence of coronary artery disease following angioplasty. It is
also believed that HAp-coated cardiovascular stents will not trigger late
adverse thrombogenic reactions.
Over the next several years the Company intends to expand its technologies to
include several promising drug delivery platforms. Drug delivery is a system or
technology that enables the introduction of a therapeutic agent into the body
and improves its efficacy by controlling the rate, time or site of release.
Commercially, drug delivery provides the ability to develop a new route of
administration for an existing drug and can substantially improve the efficacy
of a drug, while also reducing its side effects.
The Company expects to enter the drug-eluting stent market by using a thicker
coating of HAp loaded with a suitable drug, i.e. anti-inflammatory. The
technology has applications in cardiovascular and non-cardiovascular drug/device
combination products, including peripheral stents, biodegradable implants, gene
therapy, and delivery systems for release of chemotherapeutic agents. The
Company's lead product in development is a passive, nano-film HAp coating. In
parallel, the Company is developing multi-layer and composite film coatings with
drug-eluting capabilities to facilitate therapeutics and treatments for
localized drug delivery systems.
THE OFFERING
The Company: MIV Therapeutics, Inc.
The Selling Shareholders: The selling shareholders (the "Selling Shareholders")
are comprised of existing shareholders of MIV who
acquired convertible securities, shares and common
stock purchase warrants from us in various private
placement transactions completed and pursuant to
various service agreements entered into between 2003
to 2006. The common stock purchase warrants entitle
the Selling Shareholders to purchase additional
shares from us. The offer and sale of the convertible
securities, the shares and the common stock purchase
warrants by us to the Selling Shareholders was exempt
in each such instance from the registration
requirements of the United States SECURITIES ACT OF
1933, as amended (the "Securities Act") in accordance
with Regulation S, Rule 506 of Regulation D and
Section 4(2) of the Securities Act.
-15-
Shares offered by the The shares of common stock offered by the Selling
Selling Shareholders and Shareholders include the following, as described
offering price: under the section of this prospectus entitled
"Selling Shareholders":
1. the resale by certain Selling Shareholders,
and their transferees, donees or successors,
of an aggregate of 7,684,995 shares of our
common stock issued on August 11, 2005
pursuant to a private placement (the "August
2005 Private Placement");
2. the resale by certain Selling Shareholders,
and their transferees, donees or successors,
of an aggregate of 3,842,498 shares of our
common stock issuable upon the exercise of
3,842,498 non-transferable Series A Warrants
issued pursuant to the August 2005 Private
Placement;
3. the resale by certain Selling Shareholders,
and their transferees, donees or successors,
of an aggregate of 3,842,498 shares of our
common stock issuable upon the exercise of
3,842,498 non-transferable Series B Warrants
issued pursuant to the August 2005 Private
Placement;
4. the resale by a certain Selling Shareholder,
and its transferees, donees or successors,
of 62,500 shares of our common stock
issuable upon the exercise of 62,500
non-transferable Series A finder's common
stock purchase warrants which relate to a
finder's fee for the August 2005 Private
Placement;
5. the resale by a certain Selling Shareholder,
and its transferees, donees or successors,
of 62,500 shares of our common stock
issuable upon the exercise of 62,500
non-transferable Series B finder's common
stock purchase warrants which relate to a
finder's fee for the August 2005 Private
Placement;
6. the resale by certain Selling Shareholders,
and their transferees, donees or successors,
of an aggregate of 3,158,920 shares of our
common stock issued on October 4, 2005 upon
the conversion of senior secured convertible
debentures issued on March 15, 2005 pursuant
to a private placement (the "March 2005
Private Placement);
7. the resale by certain Selling Shareholders,
and their transferees, donees or successors,
of an aggregate of the 1,851,500
transferable "March 2005 Placement Warrants"
to purchase shares of our common stock
pursuant to the March 2005 Private
Placement;
8. the resale by certain Selling Shareholders,
and their transferees, donees or successors,
of an aggregate of 1,851,500 shares of our
common stock issuable upon the exercise of
the 1,851,500 March 2005 Placement Warrants;
-16-
Shares offered by the 9. the resale by a certain Selling Shareholder,
Selling Shareholders and its transferees, donees or successors,
and offering price of 400,000 shares of our common stock
(cont.): issuable upon the exercise of the 400,000
non-transferable common stock purchase
warrants to purchase shares of our common
stock which were issued in February of 2003
pursuant to a consulting agreement;
10. the resale by a certain Selling Shareholder,
and its transferees, donees or successors,
of 1,000,000 shares of our common stock
issuable upon the exercise of 1,000,000
non-transferable common stock purchase
warrants to purchase shares of our common
stock which were issued on October 24, 2003,
pursuant to a consulting agreement;
11. the resale by a certain Selling Shareholder,
and its transferees, donees or successors,
of 2,750,000 shares of our common stock
issuable upon the exercise of 2,750,000
non-transferable common stock purchase
warrants to purchase shares of our common
stock which were issued on July 1, 2005,
pursuant to a letter of engagement, as
amended;
12. the resale by certain Selling Shareholders,
and their transferees, donees or successors,
of an aggregate of 5,152,773 shares of our
common stock issued on March 29, 2004
pursuant to a private placement (the "March
2004 Private Placement");
13. the resale by certain Selling Shareholders,
and their transferees, donees or successors,
of an aggregate of the 2,815,444
transferable Series A common stock purchase
warrants to purchase shares of our common
stock which were issued pursuant to the
March 2004 Private Placement;
14. the resale by certain Selling Shareholders,
and their transferees, donees or successors,
of an aggregate of 2,815,444 shares of our
common stock issuable upon the exercise of
2,815,444 Series A common stock purchase
warrants issued pursuant to the March 2004
Private Placement;
15. the resale by certain Selling Shareholders,
and their transferees, donees or successors,
of an aggregate of the 674,997 transferable
Series C common stock purchase warrants to
purchase shares of our common stock which
were issued as a finder's fee pursuant to
the March 2004 Private Placement;
16. the resale by certain Selling Shareholders,
and their transferees, donees or successors,
of an aggregate of 674,997 shares of our
common stock issuable upon the exercise of
674,997 Series C finder's common stock
purchase warrants which relate to a finder's
fee for the March 2004 Private Placement;
-17-
Shares offered by the 17. the resale by a certain Selling Shareholder,
Selling Shareholders and its transferees, donees or successors,
and offering price of 71,429 shares of our common stock
(cont.): issuable upon the exercise of the 71,429
non-transferable common stock purchase
warrants to purchase shares of our common
stock which were issued in September of 2003
pursuant to a private placement;
18. the resale by a certain Selling Shareholder,
and its transferees, donees or successors,
of 150,000 shares of our common stock
issuable upon the exercise of 150,000
non-transferable common stock purchase
warrants to purchase shares of our common
stock which were issued on February 2, 2006,
pursuant to a consulting agreement;
19. the resale by a certain Selling Shareholder,
and its transferees, donees or successors,
of 150,000 shares of our common stock
issuable upon the exercise of 150,000
non-transferable common stock purchase
warrants to purchase shares of our common
stock which were issued on February 2, 2006,
pursuant to a consulting agreement;
20. the resale by a certain Selling Shareholder,
and its transferees, donees or successors,
of 200,000 shares of our common stock
issuable upon the exercise of 200,000
non-transferable common stock purchase
warrants to purchase shares of our common
stock which were issued on May 21, 2004,
pursuant to a consulting agreement;
21. the resale by a certain Selling Shareholder,
and its transferees, donees or successors,
of 500,000 shares of our common stock
issuable upon the exercise of 500,000
non-transferable common stock purchase
warrants to purchase shares of our common
stock which were issued on June 7, 2005,
pursuant to a consulting agreement;
22. the resale by a certain Selling Shareholder,
and its transferees, donees or successors,
of 95,238 shares of our common stock issued
on October 6, 2005 pursuant to a private
placement (the "October 2005 Private
Placement");
23. the resale by a certain Selling Shareholder,
and its transferees, donees or successors,
of 95,238 shares of our common stock
issuable upon the exercise of 95,238 October
2005 non-transferable common stock purchase
warrants issued pursuant to the October 2005
Private Placement;
24. the resale by a certain Selling Shareholder,
and its transferees, donees or successors,
of 9,524 shares of our common stock which
relate to a finder's fee for the October
2005 Private Placement;
25. the resale by a certain Selling Shareholder,
and its transferees, donees or successors,
of 9,524 shares of our common stock issuable
upon the exercise of 9,524 non-transferable
finder's common stock purchase warrants
which relate to a finder's fee for the
October 2005 Private Placement;
-18-
Shares offered by the 26. the resale by a certain Selling Shareholder,
Selling Shareholders and its transferees, donees or successors,
and offering price of 400,000 shares of our common stock
(cont.): issuable upon the exercise of 400,000
non-transferable common stock purchase
warrants to purchase shares of our common
stock which were issued on September 24,
2004, pursuant to a consulting agreement;
27. the resale by a certain Selling Shareholder,
and its transferees, donees or successors,
of 400,000 shares of our common stock
issuable upon the exercise of 400,000
non-transferable common stock purchase
warrants to purchase shares of our common
stock which were issued on March 4, 2005,
pursuant to a consulting agreement, as
amended;
28. the resale by certain Selling Shareholders,
and their transferees, donees or successors,
of an aggregate of 620,000 shares of our
common stock issued on July 10, 2006
pursuant to a private placement (the "July
2006 Private Placement");
29. the resale by certain Selling Shareholders,
and their transferees, donees or successors,
of an aggregate of 620,000 shares of our
common stock issuable upon the exercise of
620,000 common stock purchase warrants
issued pursuant to the July 2006 Private
Placement; and
30. the resale by a certain Selling Shareholder,
and its transferees, donees or successors,
of an aggregate of 300,000 transferable July
2006 Private Placement common stock purchase
warrants to purchase shares of our common
stock which were issued pursuant to the July
2006 Private Placement.
The Selling Shareholders can sell the shares and
warrants at any price.
Registration rights: We have agreed to register the securities that are
the subject of this prospectus pursuant to agreements
with the Selling Shareholders.
Terms of the offering: The Selling Shareholders will determine when and how
they will sell the common stock offered in this
prospectus. We will cover the expenses associated
with the offering which we estimate to be
approximately $74,094.80. Refer to "Plan of
Distribution".
Use of proceeds: We will not receive any proceeds from this offering.
However, we will receive proceeds upon the exercise
of any common stock purchase warrants that may be
exercised by the Selling Shareholders. The proceeds,
if any, would be used for general corporate purposes
including, but not limited to, working capital,
research and development, equipment purchase and
modification, and pre-clinical and clinical trials.
We will incur all costs associated with the filing of
this registration statement and prospectus.
-19-
Market for our common Our common stock is presently traded on the OTCBB
stock: under the symbol "MIVT" and is quoted on each of the
Munich and Frankfurt stock exchanges under symbols
"MIV.MU" and "MIV.F", respectively. The market for
our common stock is highly volatile. We can provide
no assurance that there will be a market in the
future for our common stock.
Outstanding shares of There were 71,622,489 shares of our common stock
common stock: issued and outstanding as at July 10, 2006.
Risk factors: See "Risk Factors" and the other information in this
prospectus for a discussion of the factors you should
consider before deciding to invest in our securities.
The above information regarding common stock to be outstanding after the
offering is based on 71,622,489 shares of common stock outstanding as at July
10, 2006 and assumes the subsequent exercise of each common stock purchase
warrant by the Selling Shareholders.
On August 11, 2005, the Company issued 7,684,995 units (each an "August 2005
Unit") at a price of $0.45 per August 2005 Unit, with each August 2005 Unit
consisting of one common share, one-half of one non-transferable Series A common
stock purchase warrant (each an "August 2005 Series A Warrant") and one-half of
one non-transferable Series B common stock share purchase warrant (each an
"August 2005 Series B Warrant"; and, collectively, the "August 2005 Private
Placement"). The Company had agreed to file a registration statement with the
SEC in accordance with the requirements of the Securities Act in order to
register the resale by the investors of the shares and the shares issuable upon
exercise of the common stock purchase warrants in the August 2005 Private
Placement, completed pursuant to Rule 903 of Regulation S and Rule 506 of
Regulation D. We agreed to use our reasonable commercial efforts to file a
registration statement within 120 days from the date of completion of the August
2005 Private Placement. Each whole August 2005 Series A Warrant entitles the
holder to purchase one share of common stock at an exercise price of $0.65 per
share during the period commencing August 11, 2005 and ending at 5:00 p.m.
(Vancouver time) on the day which is the earlier of (i) August 11, 2006 and (ii)
six months commencing from the effective date of the Company's proposed
registration statement related to the August 2005 Private Placement. Each whole
August 2005 Series B Warrant entitles the holder to purchase one share of common
stock at an exercise price of between $0.70 and $1.00 per share during the
period commencing August 11, 2005 and ending at 5:00 p.m. (Vancouver time) on
the day which is the earlier of (i) February 11, 2008 and (ii) 24 months
commencing from the effective date of the Company's proposed registration
statement related to August 2005 Private Placement. Each whole August 2005
Series B Warrant is exercisable at an exercise price of $0.70 per August 2005
Series B Warrant share during the first 12 months of the warrant exercise period
(months one to 12), at an exercise price of $0.85 per warrant share during the
next six months of the warrant exercise period (months 13 to 18) and at an
exercise price of $1.00 per warrant share during the final six months of the
warrant exercise period (months 19 to 24). There were also 62,500
non-transferable August 2005 Series A finder's common stock share purchase
warrants and 62,500 non-transferable August 2005 Series B finder's common stock
purchase warrants issued in relation to the August 2005 Private Placement and
are exercisable upon the same terms and conditions as the August 2005 Series A
Warrants and the August 2005 Series B Warrants, respectively (collectively, the
"August 2005 Finder's Fee Warrants"). Included with the August 2005 Private
Placement was the issuance of 100,000 August 2005 Units pursuant to a settlement
proposal reached by us on August 9, 2005, with Casimir Capital L.P. ("Casimir")
and relating to a previous right of refusal granted to Casimir under the March
2005 Private Placement.
On October 4, 2005, the Company issued an aggregate of 3,158,920 shares of
common stock, at a deemed price of $0.25 per share, in consideration of then
conversion of an aggregate of $789,730 of principal and interest due under
certain senior secured convertible debentures (each a "Convertible Debenture")
issued by us on March 15, 2005 pursuant to a private placement (the "March 2005
Private Placement"). As part of the March 2005 Private Placement each $0.25 of
the principal indebtedness which was convertible under the Convertible
Debentures entitled the holder thereof to acquire one-half of one transferable
common stock purchase warrant (each a "March 2005 Placement Warrant")
exercisable at a price of $0.25 per share until March 15, 2010.
-20-
In May of 2003 the Company issued 400,000 non-transferable common stock purchase
warrants pursuant to a February 2003 consulting agreement exercisable at an
exercise price of at $0.50 per share until May 20, 2008 (collectively, the "May
2003 Warrants").
In October of 2003 the Company issued 1,000,000 non-transferable common stock
purchase warrants pursuant to a consulting agreement, with 500,000 of such
warrants being exercisable at an exercise price of $0.50 per share, and with
500,000 of such warrants being exercisable at an exercise price of $0.75 per
share, until October 24, 2006, in each such instance (collectively, the "October
2003 Warrants").
On July 1, 2005, the Company issued 2,750,000 non-transferable common stock
purchase warrants pursuant to a letter of engagement, as amended, to purchase
2,750,000 shares of our common stock at an, exercise price of $0.50 per share
until July 1, 2008 (collectively, the "July 2005 Warrants").
On March 29, 2004, the Company issued 6,749,995 units (each a "March 2004 Unit")
at a price of $0.45 per March 2004 Unit, with each March 2004 Unit consisting of
one common share, one-half of one transferable Series A common stock purchase
warrant (each a "March 2004 Series A Warrant") and one-half of one transferable
Series B common stock purchase warrant (each a "March 2004 Series B Warrant";
and, collectively, the "March 2004 Private Placement"). The Company had agreed
to file a registration statement with the SEC in accordance with the
requirements of the Securities Act in order to register the resale by the
investors of the shares and the shares issuable upon exercise of the warrants in
the March 2004 Private Placement, completed pursuant to Rule 903 of Regulation S
and Rule 506 of Regulation D. Each whole March 2004 Series A Warrant entitles
the holder to purchase one share of common stock at an exercise price of $0.66
per share during the period commencing March 29, 2004 and ending on March 18,
2009. The March 2004 Series B Warrants have now expired with no such warrants
were exercised prior to expiry. There were also 674,997 transferable March 2004
Series C finder's common stock purchase warrants issued in relation to the March
2004 Private Placement which are exercisable upon the same terms and conditions
as the March 2004 Series A Warrants (collectively, the "March 2004 Finder's Fee
Warrants").
On September 8, 2003, the Company issued 71,429 non-transferable common stock
purchase warrants pursuant to a private placement to purchase 71,429 shares of
our common stock at an exercise price of $0.75 per share until September 8, 2006
(collectively, the "September 2003 Warrants").
On February 2, 2006, the Company issued 150,000 non-transferable common stock
purchase warrants pursuant to a consulting agreement to purchase 150,000 shares
of our common stock at an exercise price of $0.50 per share until February 2,
2011. On February 2, 2006, the Company also issued a further 150,000
non-transferable common stock purchase warrants pursuant to a further consulting
agreement to purchase 150,000 shares of our common stock at an exercise price of
$0.50 per share until February 2, 2011 (collectively, the "February 2006
Warrants").
On May 21, 2004, the Company issued 200,000 non-transferable common stock
purchase warrants pursuant to a consulting agreement to purchase 200,000 shares
of our common stock at an exercise price of $0.45 per share until May 21,
2007(collectively, the "May 2004 Warrants").
On June 7, 2005, the Company issued 500,000 non-transferable common stock
purchase warrants pursuant to a consulting agreement to purchase 500,000 shares
of our common stock at an exercise price of $0.50 per share until June 7, 2008
(collectively, the "June 2005 Warrants").
On October 6, 2005, the Company issued 95,238 units (each an "October 2005
Unit") at a price of $1.05 per October 2005 Unit, with each October 2005 Unit
consisting of one common share and one non-transferable common stock purchase
warrant (each an "October 2005 Warrant"; and, collectively, the "October 2005
Private Placement"). The Company had agreed to file a registration statement
with the SEC in accordance with the requirements of the Securities Act in order
to register the resale by the investors of the shares and the shares issuable
upon exercise of the warrants in the October 2005 Private Placement, completed
pursuant to Rule 903 of Regulation S. Each October 2005 Warrant entitles the
holder to purchase one share of common stock at an exercise price of $1.55 per
share during the period commencing on October 6, 2005 and ending on October 6,
2007. There were also 9,524 common shares and 9,524 non-transferable October
2005 finder's common stock purchase warrants issued in relation to the October
2005 Private Placement which are exercisable upon the same terms and conditions
as the October 2005 Warrants (collectively, the "October 2006 Finder's Fee
Warrants").
-21-
On September 24, 2004, the Company issued 400,000 non-transferable common stock
purchase warrants pursuant to a consulting agreement to purchase 400,000 shares
of our common stock at an exercise price of $0.30 per share until September 24,
2009 (collectively, the "September 2004 Warrants").
On March 4, 2005, the Company issued 400,000 non-transferable common stock
purchase warrants pursuant to an amended consulting agreement to purchase
400,000 shares of our common stock at an exercise price of $0.30 per share until
March 4, 2010 (collectively, the "March 2005 Warrants").
On July 10, 2006, the Company issued 620,000 units (each a "July 2006 Unit") at
a price of $0.50 per July 2006 Unit, with each July 2006 Unit consisting of one
common share and one common stock purchase warrant (each a "July 2006 Warrant";
and, collectively, the "July 2006 Private Placement"). The Company had agreed to
file a registration statement with the SEC in accordance with the requirements
of the Securities Act in order to register the resale by the investors of the
shares and the shares issuable upon exercise of the July 2006 Warrants in the
July 2006 Private Placement, completed pursuant to Rule 903 of Regulation S and
Rule 506 of Regulation D. Each July 2006 Warrant entitles the holder to purchase
one share of common stock at an exercise price of $0.75 per share during the
period commencing July 10, 2006 and ending on the earlier of (i) January 10,
2008 and (ii) 12 months commencing from the effective date of the Company's
proposed registration statement related to the July 2006 Private Placement. An
aggregate of 300,000 of the July 2006 Warrants issued to one Selling Shareholder
are transferable.
See "Recent Sales of Unregistered Securities for a further description of the
securities being offered under this prospectus by the Selling Shareholders.
SUMMARY OF FINANCIAL DATA
The following consolidated financial data has been derived from and should be
read in conjunction with (i) our unaudited interim consolidated financial
statements for the nine months ended February 28, 2006, and for the periods from
inception (January 20, 1999) to February 28, 2006, and (ii) our audited
consolidated financial statements for the year ended May 31, 2005, and for the
periods from inception (January 20, 1999) to May 31, 2005, together with the
notes to our consolidated financial statements and the section of this
prospectus entitled "Management's Discussion and Analysis".
BALANCE SHEETS
Nine Months Ended Year Ended May 31, Year Ended May 31,
February 28, 2006 2005 2004
---------------------- ---------------------- -----------------------
Cash and cash equivalents $2,650,073 $492,709 $2,034,530
Total assets $3,117,048 $861,205 $2,480,074
Total current liabilities $181,000 $1,063,449 $184,456
Total stockholders' equity
(deficit) $2,906,418 ($202,244) $2,295,618
-22-
STATEMENTS OF OPERATIONS
Nine Months Nine Months From From
Ended Ended Year Ended Year Ended Inception to Inception to
February 28, February 28, May 31, May 31, February 28, May 31,
2006 2005 2005 2004 2006 2005
----------- ----------- --------- --------- ----------- ---------
Revenue $Nil $Nil $Nil $Nil $Nil $Nil
Expenses 5,808,061 3,521,653 $6,559,013 $4,013,845 30,097,547 $24,289,488
Net Loss for the
Period 5,750,040 3,539,429 $6,608,882 $3,471,891 $28,627,324 $22,877,286
RISK FACTORS
An investment in our common stock involves a number of very significant risks.
You should carefully consider the following risks and uncertainties in addition
to other information in this prospectus in evaluating our company and its
business before purchasing shares of our common stock. Our business, operating
results and financial condition could be seriously harmed due to any of the
following risks. The risks described below are all of the material risks that we
are currently aware of that are facing our company. Additional risks not
presently known to us may also impair our business operations. You may lose all
or part of your investment due to any of these risks. The trading price of our
common stock, when and if we trade at a later date, could decline due to any of
these risks, and you may lose all or part of your investment.
BECAUSE WE ARE CURRENTLY A DEVELOPMENT STAGE COMPANY, WE HAVE NO PRODUCTS
AVAILABLE FOR SALE OR USE AND MAY LACK THE FINANCIAL RESOURCES NEEDED TO BRING
PRODUCTS TO MARKET.
The Company is in the development stage and currently has no products approved
for sale or use. The Company will not be able to sell significant quantities of
its products until such time, if ever, as it receives regulatory approval to
commercially market such products. Thus, the Company's long-term viability,
growth and profitability will depend upon successful testing, approval and
commercialization of the coating technology resulting from its research and
development activities. Adverse or inconclusive results in clinical trials of
these products could significantly delay or ultimately preclude any regulatory
approvals and, even if obtained, there can be no assurance that any product
approval would lead to the successful commercialization of the product approved.
Furthermore, the Company does not expect to begin the regulatory approval
process in the United States for at least the next three years and, prior to
this, will only pursue approval and marketing of its products in the countries
recognizing the CE Mark; such as most European and Asian countries.
BECAUSE WE HAVE A LIMITED OPERATING HISTORY ON WHICH AN EVALUATION OF OUR
PROSPECTS CAN BE MADE, WE MAY NOT BE ABLE TO EFFECTIVELY MANAGE THE DEMANDS
REQUIRED OF A NEW BUSINESS IN THE MEDICAL DEVICE INDUSTRY.
The Company has a limited operating history upon which an evaluation of its
prospects can be made. There can be no assurance that the Company will
effectively execute MIV's business plan or manage any growth of the MIV
business, or that the Company's future operating and financial forecast will be
met. Future development and operating results will depend on many factors,
including access to adequate capital, the completion and regulatory approval of
marketable products, the demand for the Company's products, the level of product
and price competition, the Company's success in setting up and expanding
distribution channels and whether the Company can control costs. Many of these
factors are beyond the control of the Company. In addition, the Company's future
prospects must be considered in light of the risks, expenses and difficulties
frequently encountered in establishing a new business in the medical device
-23-
industry, which is characterized by intense competition, rapid technological
change, highly litigious competitors, potential product liability and
significant regulation.
BECAUSE WE HAVE A HISTORY OF LOSSES AND ANTICIPATE CONTINUED LOSSES THROUGH OUR
DEVELOPMENT STAGE, WE MAY LACK THE FINANCIAL STABILITY REQUIRED TO CONTINUE
OPERATIONS.
Since inception the Company has suffered recurring losses totalling $28,627,324
as of February 28, 2006. The Company has funded its operations through the
issuance of common stock, and through related party loans since inception, in
order to meet its strategic objectives. The Company anticipates that losses will
continue until such time, if ever, as the Company is able to generate sufficient
revenues to support its operations. The Company's ability to generate revenue
primarily depends on its success in completing development and obtaining
regulatory approvals for the commercial sale of the products under development.
There are no assurances that any such events will occur, that the Company will
attain revenues from commercialization of its products or that the Company will
ever achieve profitable operations.
BECAUSE THE LIFE CYCLE OF MEDICAL PRODUCTS ARE DIFFICULT TO PREDICT, EVEN IF WE
WERE TO INTRODUCE A PRODUCT TO THE MARKET WE MAY NOT BE ABLE TO GAIN MARKET
ACCEPTANCE OF THE PRODUCT.
The life cycle of the products that the Company plans to develop is difficult to
predict. Failure to gain timely market acceptance of its products would have a
material adverse effect on the Company's ability to generate revenue, and would
have a material adverse effect on the Company's business, financial condition
and results of operations. To successfully gain market acceptance, the Company
must develop the ability to manufacture its products in large quantities in
compliance with regulatory requirements and at an acceptable cost. The Company
has no long-term experience in manufacturing stent products, and could
experience difficulties in development or manufacturing that may have a material
adverse effect on the Company's ability to market its product. Moreover, there
can be no assurance that the Company will be successful in scaling up
manufacturing operations sufficient to produce its products in sufficient volume
to generate market acceptance.
BECAUSE WE ARE SIGNIFICANTLY SMALLER THAN THE MAJORITY OF OUR NATIONAL
COMPETITORS WE MAY LACK THE FINANCIAL RESOURCES NEEDED TO CAPTURE MARKET SHARE.
The market in which the Company intends to operate is dominated by several large
firms with established products, and the Company's success is dependant upon
acceptance of its products by the medical community as reliable, safe and
cost-effective. It may be difficult or impossible for the Company to achieve
such acceptance of its products in view of these market conditions. In addition,
the Company's competitors are more financially stable than the Company and have
significant resources for research and development available to them. Thus it is
likely that they will be quicker to market than the Company, with products that
will compete with its products, should it be successfully approved and
commercialized. Moreover, even if the Company successfully brings its products
to market ahead of its projected competitors, established competitors could
quickly bring products to market that would compete. In addition, the medical
device market is subject to constant introduction of new products and designs.
Market acceptance of the Company's products may be influenced by new products or
technologies that come to market, which could render the Company's products
obsolete or prohibitively expensive.
BECAUSE WE HAVE NOT EARNED ANY REVENUES FROM OPERATIONS, ALL OUR CAPITAL
REQUIREMENTS HAVE BEEN MET THROUGH FINANCING AND IT IS NOT CERTAIN WE WILL BE
ABLE TO CONTINUE TO FIND FINANCING TO MEET OUR OPERATING REQUIREMENTS.
The Company's capital requirements have been and will continue to be
significant. The Company will be dependant on future financing to fund its
research and development as well as other working capital requirements. The
Company estimates that its current working capital will support its activities
for no more than 18 months. After that time the Company will need additional
financing. The Company is currently anticipating further subscriptions for its
-24-
common stock, but there is no assurance that these subscriptions will be
forthcoming or that they will result in sufficient capital for the Company to
meet its current and expected working capital needs. It is not anticipated that
any of the officers, directors or current shareholders of the Company will
provide any significant portion of the Company's future financing requirements.
Furthermore, in the event that the Company's plans change, its assumptions
change or prove inaccurate, or its capital resources prove to be insufficient to
fund operations, the Company could be required to seek additional financing
sooner than currently anticipated, or in greater amounts than is currently
anticipated. Any inability to obtain additional financing when needed would have
a material adverse effect on the Company, including possibly requiring the
Company to significantly curtail or possibly cease its operations. In addition,
any future equity financing may involve substantial dilution to the Company's
existing shareholders.
BECAUSE WE ARE IN THE DEVELOPMENT STAGE AND HAVE NOT YET PRODUCED A MARKETABLE
PRODUCT, WE MAY LACK THE ABILITY TO RECRUIT SUITABLE CANDIDATES FOR EMPLOYMENT,
OR TO ATTRACT THEM TO THE COMPANY SHOULD THEY BE IDENTIFIED.
Our Company currently has nine full time employees and only four full-time
officers and directors. We have entered into consulting agreements with two
individuals, who are also directors, to provide management services to the
Company. The remainder of the Company's management has been undertaken by
independent consultants. This may make it difficult for the Company to attract
capital investment sufficient to meet its capital needs.
Because the Company is in the development stage and has not yet produced a
marketable product, it will be reliant upon its ability to attract skilled
members of the stent or medical products' industries. There can be no assurance
that the Company will be able to identify suitable candidates for employment, or
to attract them to the Company should they be identified. In addition, the
Company will be heavily dependent upon creative design and engineering skills of
individuals with whom it has little familiarity, and who may not perform as
expected.
BECAUSE WE MAY NOT BE ABLE TO OBTAIN PATENTS FOR THE DEVICES WE ARE CURRENTLY
RESEARCHING, WE MAY NOT BE ABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS.
The Company's success will depend in part on whether the Company can obtain
patent protection for its products and processes, preserve trade secrets and
proprietary technology and operate without infringing upon patent or other
proprietary rights of third parties. The Company has patent applications pending
in the United States and in several foreign markets, and is in the process of
filing additional patent applications, but there can be no assurance that any of
these patents will be issued or that patents will not be challenged. A
significant number of medical device companies, other companies, universities
and research institutions have filed patent applications or have been issued
patents relating to stents and stent delivery systems, and there has been
substantial litigation in this area. Established companies in the medical
products industry generally, and the stent industry in particular, are
aggressive in attempts to block new entrants to their markets, and the Company's
products, if successfully developed, may interfere with the intellectual
property rights of these companies. The Company's success will depend on its
products not infringing patents that the Company expects would be vigorously
defended. Furthermore, the validity and breadth of claims in medical technology
patents involve complex legal and factual questions and, therefore, are highly
uncertain. Even if the Company successfully patents the MIV laser-cut stent,
there can be no assurance that it would be able to successfully assert its
patents against competing products. In addition, infringement claims against the
MIV laser-cut stent could be sufficiently expensive to have a material adverse
effect on the Company's results or ability to continue marketing its products.
BECAUSE PRODUCT LIABILITY IS INHERENT IN THE MEDICAL DEVICES INDUSTRY AND
INSURANCE IS EXPENSIVE AND DIFFICULT TO OBTAIN, THE COMPANY MAY BE EXPOSED TO
LARGE LAWSUITS.
The Company's business exposes it to potential product liability risks, which
are inherent in the testing, manufacturing, marketing and sale of medical
products. While the Company will take precautions it deems to be appropriate to
avoid product liability suits against it, there can be no assurance that it will
be able to avoid significant product liability exposure. Product liability
insurance for the medical products industry is generally expensive, to the
extent it is available at all. The Company has not yet sought to obtain product
-25-
liability coverage. The Company intends to obtain such coverage when it is
apparent that the MIV Stent or other products developed by the Company will be
marketable. There can be no assurance that it will be able to obtain such
coverage on acceptable terms, or that any insurance policy will provide adequate
protection against potential claims. A successful product liability claim
brought against the Company may exceed any insurance coverage secured by the
Company and could have a material adverse effect on the Company's results or
ability to continue marketing its products.
BECAUSE THE HEALTHCARE INDUSTRY IS SUBJECT TO CHANGING POLICIES AND PROCEDURES,
WE MAY FIND IT DIFFICULT TO CONTINUE TO COMPETE IN AN UNCERTAIN ENVIRONMENT.
The health care industry is subject to changing political, economic and
regulatory influences that may affect the procurement practices and operations
of healthcare industry participants. During the past several years government
regulation of the healthcare industry has changed significantly in several
countries. Healthcare industry participants may react to new policies by
curtailing or deferring use of new treatments for disease, including treatments
that would use the products that the Company intends to develop. This could
substantially impair the Company's ability to successfully commercialize the MIV
Stent, which would have a material adverse effect on the Company's performance.
THERE IS SUBSTANTIAL DOUBT AS TO OUR ABILITY TO CONTINUE AS A GOING CONCERN
BASED ON OUR PAST OPERATING LOSSES AND PREDICTED FUTURE OPERATING LOSSES.
Our auditor has issued a going concern opinion on our financial statements
expressing substantial doubt that we can continue as a going concern for a
reasonable period of time unless sufficient equity financing can be secured or
sufficient revenues to support its operations be generated.
There are no assurances that the company will be successful in achieving these
goals.
WE WILL REQUIRE ADDITIONAL FUNDING IN THE FUTURE.
Based upon our historical losses from operations, we will require additional
funding in the future. If we cannot obtain capital through financings or
otherwise, our ability to execute our research and development plans will be
greatly limited. Historically, we have funded our operations through the
issuance of equity and short-term debt financing arrangements. We may not be
able to obtain additional financing on favorable terms, if at all. Further, debt
financing could lead to a diversion of cash flow to satisfy debt-servicing
obligations and create restrictions on business operations. If we are unable to
raise additional funds, it would have a material adverse effect upon our
operations.
OUR ACQUISITIONS MAY NOT BE SUCCESSFUL.
As part of our growth strategy, we intend to acquire additional companies and
assets. Such acquisitions may pose substantial risks to our business, financial
condition, and results of operations. In pursuing acquisitions, we will compete
with other companies, many of which have greater financial and other resources
to acquire attractive companies and assets. Even if we are successful in
acquiring additional companies and assets, some of the companies and assets may
not produce revenues at anticipated levels or within specified time periods.
There is no assurance that we will be able to successfully integrate acquired
companies and assets, which could result in substantial costs and delays or
other operational, technical or financial problems. Further, acquisitions could
disrupt ongoing business operations. If any of these events occur, it would have
a material adverse effect upon our operations and results from operations.
A DECLINE IN THE PRICE OF OUR COMMON STOCK COULD AFFECT OUR ABILITY TO RAISE
FURTHER WORKING CAPITAL AND ADVERSELY IMPACT OUR OPERATIONS.
A decline in the price of our common stock could result in a reduction in the
liquidity of our common stock and a reduction in our ability to raise additional
capital for our operations. Because our operations to date have been principally
financed through the sale of equity securities, a decline in the price of our
common stock could have an adverse effect upon our liquidity and our continued
operations. A reduction in our ability to raise equity capital in the future
would have a material adverse effect upon our business plan and operations,
including our ability to continue our current operations. If our stock price
declines, we may not be able to raise additional capital or generate funds from
operations sufficient to meet our obligations.
-26-
SALES OF A SUBSTANTIAL NUMBER OF SHARES OF OUR COMMON STOCK INTO THE PUBLIC
MARKET BY THE SELLING SHAREHOLDERS MAY RESULT IN SIGNIFICANT DOWNWARD PRESSURE
ON THE PRICE OF OUR COMMON STOCK AND COULD AFFECT THE ABILITY OF OUR
STOCKHOLDERS TO REALIZE ANY CURRENT TRADING PRICE OF OUR COMMON STOCK.
Sales of a substantial number of shares of our common stock in the public market
could cause a reduction in the market price of our common stock. We had
71,622,489 shares of common stock outstanding as at July 10, 2006. When this
registration statement is declared effective, the Selling Shareholders will be
able to resell up to 36,619,578 shares of our common stock. As a result, a
substantial number of our shares of common stock may be issued and may be
available for immediate resale, which could have an adverse effect on the price
of our common stock. As a result of any such decreases in price of our common
stock, purchasers who acquire shares from the Selling Stockholders may lose some
or all of their investment.
Further, to the extent any of the Selling Shareholders exercise any of the
common stock purchase warrants, and then resell the shares of common stock
issued to them upon such exercise (subject to applicable securities law
restrictions), the price of our common stock may decrease due to the additional
shares of common stock in the market.
Any significant downward pressure on the price of our common stock as the
Selling Shareholders sell their shares of our common stock could encourage short
sales by the Selling Stockholders or others. Any such short sales could place
further downward pressure on the price of our common stock.
In addition, stock markets have experienced extreme price and volume
fluctuations and the market prices of securities have been highly volatile.
These fluctuations are often unrelated to operating performance and may
adversely affect the market price of our common stock. As a result, investors
may be unable to resell their shares at a fair price and may lose all or part of
their investment.
BECAUSE OUR STOCK IS LISTED ON THE OTCBB AND NOT A LARGER OR MORE RECOGNIZED
EXCHANGE, INVESTORS MAY FIND IT DIFFICULT TO SELL THEIR SHARES OR OBTAIN
ACCURATE QUOTATIONS FOR SHARE PRICES.
The Company's common stock is listed on the NASD Over-the-Counter Bulletin Board
(the "OTCBB"). Investors may find it more difficult to dispose of, or to obtain
accurate quotations as to the market value of, the Company's common stock than
would otherwise be the case were the Company's common stock listed on a more
recognized stock exchange or quotation service. In addition, trading in the
Company's common stock is currently subject to certain rules under the
SECURITIES EXCHANGE ACT OF 1934, as amended (the "Exchange Act"), which require
additional disclosure by broker-dealers in connection with any trades involving
a stock defined as a "penny stock." Penny stocks are generally non-NASDAQ equity
securities with a market price less than $5.00 per share. The penny stock rules
require broker-dealers selling penny stocks to make certain disclosures about
such stocks to purchasers thereof, and impose sales practice restrictions on
broker-dealers in certain penny stock transactions. The additional burdens
imposed upon broker-dealers by these rules may discourage them from effecting
transactions in the Company's common stock, which could limit the liquidity of
the common stock and the ability of the Company's stockholders to sell their
stock in the secondary market.
A MAJORITY OF OUR DIRECTORS AND OFFICERS ARE OUTSIDE THE UNITED STATES, WITH THE
RESULT THAT IT MAY BE DIFFICULT FOR INVESTORS TO ENFORCE WITHIN THE UNITED
STATES ANY JUDGMENTS OBTAINED AGAINST US OR ANY OF OUR DIRECTORS OR OFFICERS.
A majority of our directors and officers are nationals and/or residents of
countries other than the United States, and all or a substantial portion of such
persons' assets are located outside the United States. As a result, it may be
difficult for investors to effect service of process on our directors or
officers, or enforce within the United States or Canada any judgments obtained
against us or our officers or directors, including judgments predicated upon the
civil liability provisions of the securities laws of the United States or any
state thereof. Consequently, investors may be effectively prevented from
pursuing remedies under U.S. federal securities laws against them. In addition,
investors may not be able to commence an action in a Canadian court predicated
upon the civil liability provisions of the securities laws of the United States.
The foregoing risks also apply to those experts identified in this prospectus
who are not residents of the United States.
-27-
NEVADA LAW AND OUR ARTICLES OF INCORPORATION MAY PROTECT OUR DIRECTORS FROM
CERTAIN TYPES OF LAWSUITS.
Nevada law provides that our officers and directors will not be liable to us or
our stockholders for monetary damages for all but certain types of conduct as
officers and directors. Our Bylaws permit us broad indemnification powers to all
persons against all damages incurred in connection with our business to the
fullest extent provided or allowed by law. The exculpation provisions may have
the effect of preventing stockholders from recovering damages against our
officers and directors caused by their negligence, poor judgment or other
circumstances. The indemnification provisions may require us to use our limited
assets to defend our officers and directors against claims, including claims
arising out of their negligence, poor judgment, or other circumstances.
PLEASE READ THIS PROSPECTUS CAREFULLY. YOU SHOULD RELY ONLY ON THE INFORMATION
CONTAINED IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. YOU SHOULD NOT ASSUME THAT THE INFORMATION PROVIDED BY
THE PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF
THIS PROSPECTUS.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and
uncertainties. Such forward-looking statements involve risks and uncertainties
regarding the availability of funds, government regulations, operating costs,
outcomes of research programs and other factors. Forward-looking statements are
made, without limitation, in relation to operating plans, business research and
development, availability of funds and operating costs. Any statements contained
herein that are not statements of historical facts may be deemed to be
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may", "will", "should", "expect", "plan",
"intend", "anticipate", "believe", "estimate", "predict", "potential" or
"continue", the negative of such terms or other comparable terminology. Actual
events or results may differ materially. In evaluating these statements, you
should consider various factors, including the risks outlined in this
prospectus. These factors may cause our actual results to differ materially from
any forward-looking statement. While these forward-looking statements, and any
assumptions upon which they are based, are made in good faith and reflect our
current judgment regarding our business plans, our actual results will almost
always vary, sometimes materially, from any estimates, predictions, projections,
assumptions or other future performance suggested herein. We do not intend to
update any of the forward-looking statements to conform these statements to
actual results, except as required by applicable law, including the securities
laws of the United States.
The safe harbour for forward-looking statements provided in the PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995 does not apply to the offering made in
this prospectus.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of common stock
offered through this prospectus by the Selling Shareholders. All proceeds from
the sale of the shares will be for the account of the Selling Shareholders, as
described below in the sections of this prospectus entitled "Selling
Shareholders" and "Plan of Distribution". However, we may receive up to
approximately $11,649,264.04 from the exercise of the August 2005 Series A
Warrants, the August 2005 Series B Warrants, the August 2005 Finder's Fee
Warrants, the March 2005 Placement Warrants, the May 2003 Warrants, the October
2003 Warrants, the July 2005 Warrants, the March 2004 Series A Warrants, the
March 2004 Finder's Fee Warrants, the September 2003 Warrants, the February 2006
Warrants, the May 2004 Warrants, the June 2005 Warrants, the October 2005
Warrants, the October 2005 Finder's Fee Warrants, the September 2003 Warrants,
the March 2005 Warrants and the July 2006 Warrants, respectively (collectively,
the "Warrants"), held by the Selling Shareholders. This figure assumes that all
of the Warrants are exercised. There is no guarantee that any Warrants will be
exercised or that the Company will receive any proceeds. The proceeds, if any,
would be used for general corporate purposes including, but not limited to,
working capital, research and development, equipment purchase and modification,
and pre-clinical and clinical trials. We will however incur all costs associated
with this registration statement and prospectus.
-28-
The foregoing represents the Company's intentions based upon its present plans
and business conditions. The occurrence of unforeseen events or changes in
business conditions, however, could result in applying the proceeds from the
exercise of the warrants in a manner other than as described in this prospectus.
SELLING SHAREHOLDERS
The Selling Shareholders named in this prospectus are offering all of the
36,619,578 shares of common stock and 5,641,941 transferable common stock
purchase warrants to purchase shares of common stock offered through this
prospectus. The securities are comprised of:
1. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of 7,684,995 shares of our common
stock issued on August 11, 2005 pursuant to the August 2005 Private
Placement;
2. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of 3,842,498 shares of our common
stock issuable upon the exercise of the 3,842,498 non-transferable
August 2005 Series A Warrants issued pursuant to the August 2005
Private Placement;
3. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of 3,842,498 shares of our common
stock issuable upon the exercise of the 3,842,498 non-transferable
August 2005 Series B Warrants issued pursuant to the August 2005
Private Placement;
4. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 62,500 shares of our common stock issuable
upon the exercise of the 62,500 non-transferable Series A August 2005
Finder's Fee Warrants which relate to a finder's fee for the August
2005 Private Placement;
5. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 62,500 shares of our common stock issuable
upon the exercise of the 62,500 non-transferable Series B August 2005
Finder's Fee Warrants which relate to a finder's fee for the August
2005 Private Placement;
6. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of 3,158,920 shares of our common
stock issued on October 4, 2005 upon the conversion of the Convertible
Debentures issued on March 15, 2005 pursuant to the March 2005 Private
Placement;
7. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of the 1,851,500 transferable
March 2005 Placement Warrants to purchase shares of our common stock
which issued pursuant to the March 2005 Private Placement;
8. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of 1,851,500 shares of our common
stock issuable upon the exercise of the 1,851,500 March 2005 Placement
Warrants;
9. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 400,000 shares of our common stock issuable
upon the exercise of the 400,000 non-transferable February 2003
Warrants to purchase shares of our common stock which were issued in
February of 2003 pursuant to a consulting agreement;
10. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 1,000,000 shares of our common stock issuable
upon the exercise of the 1,000,000 non-transferable October 2003
Warrants to purchase shares of our common stock which were issued on
October 24, 2003, pursuant to a consulting agreement;
-29-
11. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 2,750,000 shares of our common stock issuable
upon the exercise of the 2,750,000 non-transferable July 2005 Warrants
to purchase shares of our common stock which were issued on July 1,
2005, pursuant to a letter of engagement, as amended;
12. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of 5,152,773 shares of our common
stock issued on March 29, 2004 pursuant to the March 2004 Private
Placement;
13. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of the 2,815,444 transferable
Series A common stock purchase warrants to purchase shares of our
common stock which were issued pursuant to the March 2004 Private
Placement;
14. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of 2,815,444 shares of our common
stock issuable upon the exercise of 2,815,444 Series A common stock
purchase warrants issued pursuant to the March 2004 Private Placement;
15. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of the 674,997 transferable
Series C common stock purchase warrants to purchase shares of our
common stock which were issued as a finder's fee pursuant to the March
2004 Private Placement;
16. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of 674,997 shares of our common
stock issuable upon the exercise of 674,997 Series C finder's common
stock purchase warrants which relate to a finder's fee for the March
2004 Private Placement;
17. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 71,429 shares of our common stock issuable
upon the exercise of the 71,429 non-transferable common stock purchase
warrants to purchase shares of our common stock which were issued in
September of 2003 pursuant to a private placement;
18. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 150,000 shares of our common stock issuable
upon the exercise of 150,000 non-transferable common stock purchase
warrants to purchase shares of our common stock which were issued on
February 2, 2006, pursuant to a consulting agreement;
19. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 150,000 shares of our common stock issuable
upon the exercise of 150,000 non-transferable common stock purchase
warrants to purchase shares of our common stock which were issued on
February 2, 2006, pursuant to a consulting agreement;
20. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 200,000 shares of our common stock issuable
upon the exercise of 200,000 non-transferable common stock purchase
warrants to purchase shares of our common stock which were issued on
May 21, 2004, pursuant to a consulting agreement;
21. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 500,000 shares of our common stock issuable
upon the exercise of 500,000 non-transferable common stock purchase
warrants to purchase shares of our common stock which were issued on
June 7, 2005, pursuant to a consulting agreement;
22. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 95,238 shares of our common stock issued on
October 6, 2005 pursuant to a private placement (the "October 2005
Private Placement");
-30-
23. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 95,238 shares of our common stock issuable
upon the exercise of 95,238 October 2005 non-transferable common stock
purchase warrants issued pursuant to the October 2005 Private
Placement;
24. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 9,524 shares of our common stock which relate
to a finder's fee for the October 2005 Private Placement;
25. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 9,524 shares of our common stock issuable upon
the exercise of 9,524 non-transferable finder's common stock purchase
warrants which relate to a finder's fee for the October 2005 Private
Placement;
26. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 400,000 shares of our common stock issuable
upon the exercise of 400,000 non-transferable common stock purchase
warrants to purchase shares of our common stock which were issued on
September 24, 2004, pursuant to a consulting agreement;
27. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of 400,000 shares of our common stock issuable
upon the exercise of 400,000 non-transferable common stock purchase
warrants to purchase shares of our common stock which were issued on
March 4, 2005, pursuant to a consulting agreement, as amended;
28. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of 620,000 shares of our common
stock issued on July 10, 2006 pursuant to the July 2006 Private
Placement;
29. the resale by certain Selling Shareholders, and their transferees,
donees or successors, of an aggregate of 620,000 shares of our common
stock issuable upon the exercise of the 620,000 July 2006 Warrants
issued pursuant to the July 2006 Private Placement; and
30. the resale by a certain Selling Shareholder, and its transferees,
donees or successors, of an aggregate of 300,000 transferable July 2006
Warrants to purchase shares of our common stock which were issued
pursuant to the July 2006 Private Placement.
On August 11, 2005, the Company issued 7,684,995 August 2005 Units at a price of
$0.45 per August 2005 Unit, with each August 2005 Unit consisting of one common
share, one-half of one non-transferable August 2005 Series A Warrant and
one-half of one non-transferable August 2005 Series B Warrant. The Company had
agreed to file a registration statement with the SEC in accordance with the
requirements of the Securities Act in order to register the resale by the
investors of the shares and the shares issuable upon exercise of the common
stock purchase warrants in the August 2005 Private Placement, completed pursuant
to Rule 903 of Regulation S and Rule 506 of Regulation D. We agreed to use our
reasonable commercial efforts to file a registration statement within 120 days
from the date of completion of the August 2005 Private Placement. Each whole
August 2005 Series A Warrant entitles the holder to purchase one share of common
stock at an exercise price of $0.65 per share during the period commencing
August 11, 2005 and ending at 5:00 p.m. (Vancouver time) on the day which is the
earlier of (i) August 11, 2006 and (ii) six months commencing from the effective
date of the Company's proposed registration statement related to the August 2005
Private Placement. Each whole August 2005 Series B Warrant entitles the holder
to purchase one share of common stock at an exercise price of between $0.70 and
$1.00 per share during the period commencing August 11, 2005 and ending at 5:00
p.m. (Vancouver time) on the day which is the earlier of (i) February 11, 2008
and (ii) 24 months commencing from the effective date of the Company's proposed
registration statement related to August 2005 Private Placement. Each whole
August 2005 Series B Warrant is exercisable at an exercise price of $0.70 per
August 2005 Series B Warrant share during the first 12 months of the warrant
exercise period (months one to 12), at an exercise price of $0.85 per warrant
share during the next six months of the warrant exercise period (months 13 to
18) and at an exercise price of $1.00 per warrant share during the final six
months of the warrant exercise period (months 19 to 24). There were also 62,500
non-transferable Series A August 2005 Finder's Fee Warrants and 62,500
-31-
non-transferable Series B August 2005 Finder's Fee Warrants issued in relation
to the August 2005 Private Placement and are exercisable upon the same terms and
conditions as the August 2005 Series A Warrants and the August 2005 Series B
Warrants, respectively. Included with the August 2005 Private Placement was the
issuance of 100,000 August 2005 Units pursuant to a settlement proposal reached
by us on August 9, 2005, with Casimir and relating to a previous right of
refusal granted to Casimir under the March 2005 Private Placement.
On October 4, 2005, the Company issued an aggregate of 3,158,920 shares of
common stock, at a deemed price of $0.25 per share, in consideration of then
conversion of an aggregate of $789,730 of principal and interest due under
certain senior secured Convertible Debentures issued by us on March 15, 2005
pursuant to the March 2005 Private Placement. As part of the March 2005 Private
Placement each $0.25 of the principal indebtedness which was convertible under
the Convertible Debentures entitled the holder thereof to acquire one-half of
one transferable March 2005 Placement Warrant exercisable at a price of $0.25
per share until March 15, 2010.
In October of 2003 the Company issued 1,000,000 non-transferable October 2003
Warrants pursuant to a consulting agreement, with 500,000 of such October 2003
Warrants being exercisable at an exercise price of $0.50 per share, and with
500,000 of such October 2003 Warrants being exercisable at an exercise price of
$0.75 per share, until October 24, 2006, in each such instance.
On July 1, 2005, the Company issued 2,750,000 non-transferable July 2005
Warrants pursuant to a letter of engagement, as amended, to purchase 2,750,000
shares of our common stock at an, exercise price of $0.50 per share until July
1, 2008.
On March 29, 2004, the Company issued 6,749,995 March 2004 Units at a price of
$0.45 per March 2004 Unit, with each March 2004 Unit consisting of one common
share, one-half of one transferable March 2004 Series A Warrant and one-half of
one transferable March 2004 Series B Warrant. The Company had agreed to file a
registration statement with the SEC in accordance with the requirements of the
Securities Act in order to register the resale by the investors of the shares
and the shares issuable upon exercise of the warrants in the March 2004 Private
Placement, completed pursuant to Rule 903 of Regulation S and Rule 506 of
Regulation D. Each whole March 2004 Series A Warrant entitles the holder to
purchase one share of common stock at an exercise price of $0.66 per share
during the period commencing March 29, 2004 and ending on March 18, 2009. The
March 2004 Series B Warrants have now expired with no such warrants were
exercised prior to expiry. There were also 674,997 transferable March 2004
Finder's Fee Warrants issued in relation to the March 2004 Private Placement
which are exercisable upon the same terms and conditions as the March 2004
Series A Warrants.
On September 8, 2003, the Company issued 71,429 non-transferable September 2003
Warrants pursuant to a private placement to purchase 71,429 shares of our common
stock at an exercise price of $0.75 per share until September 8, 2006.
In May of 2003 the Company issued 400,000 non-transferable May 2003 Warrants
pursuant to a February 2003 consulting agreement exercisable at an exercise
price of at $0.50 per share until May 20, 2008.
On February 2, 2006, the Company issued 150,000 non-transferable February 2006
Warrants pursuant to a consulting agreement to purchase 150,000 shares of our
common stock at an exercise price of $0.50 per share until February 2, 2011. On
February 2, 2006, the Company also issued a further 150,000 non-transferable
February 2006 Warrants pursuant to a further consulting agreement to purchase
150,000 shares of our common stock at an exercise price of $0.50 per share until
February 2, 2011.
On May 21, 2004, the Company issued 200,000 non-transferable May 2004 Warrants
pursuant to a consulting agreement to purchase 200,000 shares of our common
stock at an exercise price of $0.45 per share until May 21, 2007.
On June 7, 2005, the Company issued 500,000 non-transferable June 2005 Warrants
pursuant to a consulting agreement to purchase 500,000 shares of our common
stock at an exercise price of $0.50 per share until June 7, 2008.
-32-
On October 6, 2005, the Company issued 95,238 October 2005 Units at a price of
$1.05 per October 2005 Unit, with each October 2005 Unit consisting of one
common share and one non-transferable October 2005 Warrant. The Company had
agreed to file a registration statement with the SEC in accordance with the
requirements of the Securities Act in order to register the resale by the
investors of the shares and the shares issuable upon exercise of the warrants in
the October 2005 Private Placement, completed pursuant to Rule 903 of Regulation
S. Each October 2005 Warrant entitles the holder to purchase one share of common
stock at an exercise price of $1.55 per share during the period commencing on
October 6, 2005 and ending on October 6, 2007. There were also 9,524 common
shares and 9,524 non-transferable October 2005 Finder's Fee Warrants issued in
relation to the October 2005 Private Placement which are exercisable upon the
same terms and conditions as the October 2005 Warrants.
On September 24, 2004, the Company issued 400,000 non-transferable September
2004 Warrants pursuant to a consulting agreement to purchase 400,000 shares of
our common stock at an exercise price of $0.30 per share until September 24,
2009.
On March 4, 2005, the Company issued 400,000 non-transferable March 2005
Warrants pursuant to an amended consulting agreement to purchase 400,000 shares
of our common stock at an exercise price of $0.30 per share until March 4, 2010.
On July 10, 2006, the Company issued 620,000 July 2006 Units at a price of $0.50
per July 2006 Unit, with each July 2006 Unit consisting of one common share and
one July 2006 Warrant. The Company had agreed to file a registration statement
with the SEC in accordance with the requirements of the Securities Act in order
to register the resale by the investors of the shares and the shares issuable
upon exercise of the July 2006 Warrants in the July 2006 Private Placement,
completed pursuant to Rule 903 of Regulation S and Rule 506 of Regulation D.
Each July 2006 Warrant entitles the holder to purchase one share of common stock
at an exercise price of $0.75 per share during the period commencing July 10,
2006 and ending on the earlier of (i) January 10, 2008 and (ii) 12 months
commencing from the effective date of the Company's proposed registration
statement related to the July 2006 Private Placement. An aggregate of 300,000 of
the July 2006 Warrants issued to one Selling Shareholder are transferable.
See "Recent Sales of Unregistered Securities for a further description of the
securities being offered under this prospectus by the Selling Shareholders.
The following table provides, as of July 10, 2006, information regarding the
beneficial ownership of our common shares held by each of the Selling
Shareholders, including:
1. the number of shares owned by each Selling Shareholder prior to this
offering;
2. the total number of shares that are to be offered by each Selling
Shareholder;
3. the total number of shares that will be owned by each Selling
Shareholder upon completion of the offering;
4. the percentage owned by each Selling Shareholder; and
5. the identity of the beneficial holder of any entity that owns the
shares.
Information with respect to beneficial ownership is based upon information
obtained from the Selling Shareholders. Information with respect to "Shares
Beneficially Owned Prior to this Offering" includes the shares issuable upon
exercise of the Warrants held by the Selling Shareholders as these Warrants are
exercisable within 60 days of July 10, 2006. The "Number of Shares Being
Offered" includes the shares acquired by the Selling Shareholders in the private
placement transactions described above and the shares that are issuable upon
exercise of the Warrants acquired by the Selling Shareholders. Information with
respect to "Shares Beneficially Owned After this Offering" assumes the sale of
all of the shares offered by this prospectus and no other purchases or sales of
our common shares by the Selling Shareholders. Except as described below and to
our knowledge, the named Selling Shareholder beneficially owns and has sole
voting and investment power over all shares or rights to these shares. TO OUR
KNOWLEDGE NONE OF THE SELLING SHAREHOLDERS IS EITHER AN UNDERWRITER, A
BROKER-DEALER OR AN AFFILIATE OF AN UNDERWRITER OR A BROKER-DEALER.
-33-
- ---------------------------------------- ---------------------------------- ----------------- ---------------------------------
NUMBER OF
SHARES BENEFICIALLY OWNED PRIOR SHARES BEING SHARES BENEFICIALLY OWNED AFTER
TO THIS OFFERING(1) OFFERED THIS OFFERING(1)
- ---------------------------------------- ---------------------------------- ----------------- ---------------------------------
NAME OF SELLING SHAREHOLDER(1) NUMBER PERCENTAGE(2) NUMBER NUMBER PERCENTAGE(2)
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
MARCH 2004 PRIVATE PLACEMENT SHARES
AND MARCH 2004 SERIES A WARRANT AND
FINDER'S FEE WARRANT SHARES(3)
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
TCMP(3) Partners(4) 166,667 0.23% 166,667 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Michael R. Hamblett 450,000 0.62% 450,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Alpha Capital AG(5) 1,666,666 2.27% 1,666,666 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
SRG Capital LLC(6) 675,000 0.93% 675,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Stonestreet LP(7) 1,250,000 1.72% 1,250,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Whalehaven(8) 333,333 0.46% 333,333 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Bridges and Pipes LLC(9) 361,111 0.50% 361,111 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Bristol Investment Fund(10) 1,333,332 1.83% 1,333,332 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Alki Partners, L.P.(11) 200,000 0.28% 200,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Alki Fund, Ltd.(12) 133,333 0.19% 133,333 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
David I. Goodfriend 11,000 0.02% 11,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Amnon Mandelbaum 110,000 0.15% 110,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Ellis International Limited Inc.(13) 333,333 0.46% 333,333 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Rockwood Group, LLC(14) 277,777 0.39% 277,777 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
DKR Soundshore Oasis Holding Fund
Ltd.(15) 666,666 0.92% 666,666 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Robert MacGregor 67,500 0.09% 67,500 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
MW Crow Family LP(16) 371,247 0.52% 371,247 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Richard Smithline 67,500 0.09% 67,500 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
David Fuchs 67,500 0.09% 67,500 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Bradford Monks 16,875 0.03% 16,875 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Robert Yingling 16,875 0.03% 16,875 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
David Filer 67,500 0.09% 67,500 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
AUGUST 2005 PRIVATE PLACEMENT SHARES
AND AUGUST 2005 SERIES A WARRANT AND
SERIES B WARRANT SHARES(17)
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Dharmesh B. Shingala and Gita D. 3,033,334 4.10% 3,033,334 Nil Nil
Shingala
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Rahul C. Vaghasia and Ghanshyam C.
Vaghasia 300,000 0.42% 300,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
-34-
- ---------------------------------------- ---------------------------------- ----------------- ---------------------------------
NUMBER OF
SHARES BENEFICIALLY OWNED PRIOR SHARES BEING SHARES BENEFICIALLY OWNED AFTER
TO THIS OFFERING(1) OFFERED THIS OFFERING(1)
- ---------------------------------------- ---------------------------------- ----------------- ---------------------------------
NAME OF SELLING SHAREHOLDER(1) NUMBER PERCENTAGE(2) NUMBER NUMBER PERCENTAGE(2)
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Kunal Dobariya 200,000 0.28% 200,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Santilal V. Dobaria 100,000 0.14% 100,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Peter Rothschild 220,000 0.31% 220,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Arjun N. Malavia 220,000 0.31% 220,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Paresh S. Patel 444,444 0.63% 444,444 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Khodubhai S. Patel 100,000 0.14% 100,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Rajnikant P. Amin 100,000 0.14% 100,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Ramesh Savani 200,000 0.28% 200,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Bharat D. Bhakta 900,000 1.24% 900,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Richard L. Gerson 200,000 0.28% 200,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Parthiv V Shah 50,000 0.07% 50,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Daniel J. Ready 100,000 0.14% 100,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Rasik Gondalia 200,000 0.28% 200,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Parag Karmarkar and Rashmi Sohoni 100,000 0.14% 100,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Mihir V. Shah 100,000 0.14% 100,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Harshad V. Shah 400,000 0.56% 400,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Aspi Variava 400,000 0.56% 400,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Sudha Bhakta 1,600,000 2.19% 1,600,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Ravi Bhakta 1,600,000 2.19% 1,600,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Indira Bhakta 800,000 1.11% 800,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Bharti S. Bhakta 200,000 0.28% 200,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
0730506 B.C. Ltd.(18) 1,111,112 1.53% 1,111,112 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Manish Kothari and Preeti Kothari 100,000 0.14% 100,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Pravin N. Sheladia 100,000 0.14% 100,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Urmi Dhirajlal Kotadia 1,811,112 2.47% 1,811,112 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Hitesh H. Zinzuwadia & Rina H.
Zinzuwadia 100,000 0.14% 100,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Kiritkumar V. Viradiya & Manisha K.
Viradiya 100,000 0.14% 100,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Hiren B. Shingala & Shaila H. Shingala 100,000 0.14% 100,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Thomas J. Deutsch Law Corporation(19) 79,988 0.11% 79,988 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
-35-
- ---------------------------------------- ---------------------------------- ----------------- ---------------------------------
NUMBER OF
SHARES BENEFICIALLY OWNED PRIOR SHARES BEING SHARES BENEFICIALLY OWNED AFTER
TO THIS OFFERING(1) OFFERED THIS OFFERING(1)
- ---------------------------------------- ---------------------------------- ----------------- ---------------------------------
NAME OF SELLING SHAREHOLDER(1) NUMBER PERCENTAGE(2) NUMBER NUMBER PERCENTAGE(2)
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Lata R. Shah 50,000 0.07% 50,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Rajesh C. Shah 50,000 0.07% 50,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Casimir Capital L.P.(20) 200,000 0.28% 200,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
AUGUST 2005 FINDER'S FEE WARRANTS(21)
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Systems Management LLC(22) 125,000 0.17% 125,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
MARCH 2005 PRIVATE PLACEMENT SHARES
AND MARCH 2005 PLACEMENT WARRANT
SHARES(23)
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Nite Capital LP(24) 1,236,800 1.70% 1,236,800 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Camofi Master LDC(25) 1,236,800 1.70% 1,236,800 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Rocco J. Brescia, Jr. 154,600 0.21% 154,600 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Perry Jacobson 154,600 0.21% 154,600 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Jeffrey L. Spotz 185,520 0.26% 185,520 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Mark Kalimian 618,400 0.86% 618,400 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Heller Family Investments, LLC(26) 154,600 0.21% 154,600 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Philippi Trading, Inc.(27) 154,600 0.21% 154,600 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
William M. Haskell 309,200 0.43% 309,200 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Richard Steinberg 154,600 0.21% 154,600 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Jonathan Leifer 154,600 0.21% 154,600 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Scott Swix 154,600 0.21% 154,600 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Donald Massey 100,000 0.14% 100,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Casimir Capital L.P.(20) 241,500 0.34% 241,500 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
MAY 2003, OCTOBER 2003, NOVEMBER 2003
AND JULY 2005 PRIVATE PLACEMENT AND
CONSULTING WARRANT SHARES
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Capital Athea Ltd.(28) 400,000 0.56% 400,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Michael Baybak and Company, Inc.(29) 500,000 0.69% 400,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
George Duggan(29) 500,000 0.69% 500,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Trilogy Capital Partners, Inc.(30) 2,750,000 3.70% 2,750,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
David Fuchs(31) 150,000 0.21% 150,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Robert MacGregor(32) 150,000 0.21% 150,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
-36-
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Leigh Ivancoe(33) 200,000 0.28% 200,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Derrick Townsend(34) 71,429 0.10% 71,429 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
International Settlements Associates
Ltd.(35) 500,000 0.69% 500,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
David Young(36) 190,476 0.27% 190,476 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Stephen Smart(37) 19,048 0.03% 19,048 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Simba Enterprises LLC(38) 400,000 0.56% 400,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Simba Enterprises LLC(39) 400,000 0.56% 400,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
JULY 2006 PRIVATE PLACEMENT PRIVATE
PLACEMENT SHARES AND JULY 2006
WARRANTS(40)
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
RAB American Opportunities 600,000 0.83% 600,000 Nil Nil
Fund Limited(41)
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Dr. Niccolo Caderni 400,000 0.56% 400,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Ron Saperstein 200,000 0.28% 200,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Sheila Heller 40,000 0.06% 400,000 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
Totals 36,619,578 33.83% 36,619,578 Nil Nil
- ---------------------------------------- ---------------- ----------------- ----------------- -------------- ------------------
(1) Under Rule 13d-3, a beneficial owner of a security includes any person
who, directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise has or shares: (i) voting
power, which includes the power to vote, or to direct the voting of
shares; and (ii) investment power, which includes the power to dispose
or direct the disposition of shares. Certain shares may be deemed to be
beneficially owned by more than one person (if, for example, persons
share the power to vote or the power to dispose of the shares). In
addition, shares are deemed to be beneficially owned by a person if the
person has the right to acquire the shares (for example, upon exercise
of an option) within 60 days of the date as of which the information is
provided. In computing the percentage ownership of any person, the
amount of shares outstanding is deemed to include the amount of shares
beneficially owned by such person (and only such person) by reason of
these acquisition rights. As a result, the percentage of outstanding
shares of any person as shown in this table does not necessarily
reflect the person's actual ownership or voting power with respect to
the number of shares of common stock actually outstanding on July 10,
2006. Unless otherwise indicated hereinbelow, we are informed that each
Selling Shareholder has sole dispositive and voting power with respect
to their shares of common stock owned.
(2) The applicable percentage of ownership is based on 71,622,489 shares of
common stock outstanding as of July 10, 2006.
(3) Consists of the shares issued to the Selling Shareholder upon
completion of the March 2004 Private Placement plus an equivalent
number of shares that can be acquired by the Selling Shareholder upon
exercise of the March 2004 Series A Warrants issued to the Selling
Shareholder in the March 2004 Private Placement within 60 days of the
date hereof. On March 29, 2004, the Company issued 6,749,995 March 2004
Units at a price of $0.45 per March 2004 Unit, with each March 2004
Unit consisting of one common share, one-half of one transferable March
2004 Series A Warrant and one-half of one transferable March 2004
Series B Warrant. The Company had agreed to file a registration
statement with the SEC in accordance with the requirements of the
Securities Act in order to register the resale by the investors of the
shares and the shares issuable upon exercise of the warrants in the
March 2004 Private Placement, completed pursuant to Rule 903 of
Regulation S and Rule 506 of Regulation D. Each whole March 2004 Series
A Warrant entitles the holder to purchase one share of common stock at
an exercise price of $0.66 per share during the period commencing March
29, 2004 and ending on March 18, 2009. The March 2004 Series B Warrants
have now expired with no such warrants were exercised prior to expiry.
There were also 674,997 transferable March 2004 Finder's Fee Warrants
issued in relation to the March 2004 Private Placement which are
exercisable upon the same terms and conditions as the March 2004 Series
A Warrants.
(4) We are informed that Messrs. Steven Slawson and Walter Schenker
exercise dispositive and voting power with respect to the shares of
common stock owned by TCMP(3) Partners.
(5) We are not aware who presently exercises dispositive and voting power
with respect to the shares of common stock owned by Alpha Capital AG.
(6) We are not aware who presently exercises dispositive and voting power
with respect to the shares of common stock owned by SRG Capital LLC.
(7) We are not aware who presently exercises dispositive and voting power
with respect to the shares of common stock owned by Stonestreet LP.
(8) We are not aware who presently exercises dispositive and voting power
with respect to the shares of common stock owned by Whalehaven.
(9) We are informed that David Fuchs presently exercises dispositive and
voting power with respect to the shares of common stock owned by
Bridges and Pipes LLC.
(10) We are not aware who presently exercises dispositive and voting power
with respect to the shares of common stock owned by Bristol Investment
Fund.
-37-
(11) We are informed that Scott Wilfong presently exercises dispositive and
voting power with respect to the shares of common stock owned by Alki
Partners, L.P.
(12) We are informed that Scott Wilfong presently exercises dispositive and
voting power with respect to the shares of common stock owned by Alki
Fund, Ltd.
(13) We are not aware who presently exercises dispositive and voting power
with respect to the shares of common stock owned by Ellis International
Limited Inc.
(14) We are informed that Dan Purjes presently exercises dispositive and
voting power with respect to the shares of common stock owned by
Rockwood Group, LLC.
(15) We are not aware who presently exercises dispositive and voting power
with respect to the shares of common stock owned by DKR Soundshore
Oasis Holding Fund Ltd.
(16) We are not aware who presently exercises dispositive and voting power
with respect to the shares of common stock owned by MW Crow Family LP.
(17) Consists of the shares issued to the Selling Shareholders upon
completion of the August 2005 Private Placement plus an equivalent
number of shares that can be acquired by the Selling Shareholders upon
exercise of the Series A Warrants and the Series B Warrants issued to
the Selling Shareholders in the August 2005 Private Placement within 60
days of the date hereof. On August 11, 2005, the Company issued
7,684,995 August 2005 Units at a price of $0.45 per August 2005 Unit,
with each August 2005 Unit consisting of one common share, one-half of
one non-transferable August 2005 Series A Warrant and one-half of one
non-transferable August 2005 Series B Warrant. The Company had agreed
to file a registration statement with the SEC in accordance with the
requirements of the Securities Act in order to register the resale by
the investors of the shares and the shares issuable upon exercise of
the common stock purchase warrants in the August 2005 Private
Placement, completed pursuant to Rule 903 of Regulation S and Rule 506
of Regulation D. We agreed to use our reasonable commercial efforts to
file a registration statement within 120 days from the date of
completion of the August 2005 Private Placement. Each whole August 2005
Series A Warrant entitles the holder to purchase one share of common
stock at an exercise price of $0.65 per share during the period
commencing August 11, 2005 and ending at 5:00 p.m. (Vancouver time) on
the day which is the earlier of (i) August 11, 2006 and (ii) six months
commencing from the effective date of the Company's proposed
registration statement related to the August 2005 Private Placement.
Each whole August 2005 Series B Warrant entitles the holder to purchase
one share of common stock at an exercise price of between $0.70 and
$1.00 per share during the period commencing August 11, 2005 and ending
at 5:00 p.m. (Vancouver time) on the day which is the earlier of (i)
February 11, 2008 and (ii) 24 months commencing from the effective date
of the Company's proposed registration statement related to August 2005
Private Placement. Each whole August 2005 Series B Warrant is
exercisable at an exercise price of $0.70 per August 2005 Series B
Warrant share during the first 12 months of the warrant exercise period
(months one to 12), at an exercise price of $0.85 per warrant share
during the next six months of the warrant exercise period (months 13 to
18) and at an exercise price of $1.00 per warrant share during the
final six months of the warrant exercise period (months 19 to 24).
There were also 62,500 non-transferable Series A August 2005 Finder's
Fee Warrants and 62,500 non-transferable Series B August 2005 Finder's
Fee Warrants issued in relation to the August 2005 Private Placement
and are exercisable upon the same terms and conditions as the August
2005 Series A Warrants and the August 2005 Series B Warrants,
respectively. Included with the August 2005 Private Placement was the
issuance of 100,000 August 2005 Units pursuant to a settlement proposal
reached by us on August 9, 2005, with Casimir and relating to a
previous right of refusal granted to Casimir under the March 2005
Private Placement.
(18) We are informed that Alain Ruel exercises dispositive and voting power
with respect to the shares of common stock owned by 0730506 B.C. Ltd.
(19) We are informed that Thomas J. Deutsch exercises dispositive and voting
power with respect to the shares of common stock owned by Thomas J.
Deutsch Law Corporation.
(20) We are not aware who presently exercises dispositive and voting power
with respect to the shares of common stock owned by Casimir Capital,
L.P.
(21) The Series A August 2005 Finder's Fee Warrants and the Series B August
2005 Finder's Fee Warrants were issued in relation to the August 2005
Private Placement and are exercisable upon the same terms and
conditions as the August 2005 Series A Warrants and the August 2005
Series B Warrants, respectively.
(22) We are not aware who presently exercises dispositive and voting power
with respect to the warrants for common stock owned by Systems
Management LLC.
(23) Consists of the shares issued to the Selling Shareholders upon
completion of the March 2005 Private Placement plus an equivalent
number of shares that can be acquired by the Selling Shareholders upon
exercise of the March 2005 Placement Warrants issued to the Selling
Shareholders in the March 2005 Private Placement within 60 days of the
date hereof. On October 4, 2005, the Company issued an aggregate of
3,158,920 shares of common stock, at a deemed price of $0.25 per share,
in consideration of then conversion of an aggregate of $789,730 of
principal and interest due under certain senior secured Convertible
Debentures issued by us on March 15, 2005 pursuant to the March 2005
Private Placement. As part of the March 2005 Private Placement each
$0.25 of the principal indebtedness which was convertible under the
Convertible Debentures entitled the holder thereof to acquire one-half
of one transferable March 2005 Placement Warrant exercisable at a price
of $0.25 per share until March 15, 2010.
(24) We are not aware who presently exercises dispositive and voting power
with respect to the shares of common stock owned by Nite Capital LP.
(25) We are informed that Richard Smithline presently exercises dispositive
and voting power with respect to the shares of common stock owned by
Camofi Master LDC.
(26) We are not aware who presently exercises dispositive and voting power
with respect to the shares of common stock owned by Heller Family
Investments, LLC.
(27) We are not aware who presently exercises dispositive and voting power
with respect to the shares of common stock owned by Philippi Trading,
Inc.
(28) In May of 2003 the Company issued 400,000 non-transferable May 2003
Warrants pursuant to a February 2003 consulting agreement exercisable
at an exercise price of at $0.50 per share until May 20, 2008. We are
not aware who presently exercises dispositive and voting power with
respect to the warrants for common stock owned by Capital Athea Ltd.
(29) In October of 2003 the Company issued 1,000,000 non-transferable
October 2003 Warrants pursuant to a consulting agreement, with 500,000
of such October 2003 Warrants being exercisable at an exercise price of
-38-
$0.50 per share, and with 500,000 of such October 2003 Warrants being
exercisable at an exercise price of $0.75 per share, until October 24,
2006, in each such instance. We are informed that Michael Baybak
exercises dispositive and voting power with respect to the warrants for
common stock owned by Michael Baybak and Company, Inc.
(30) On July 1, 2005, the Company issued 2,750,000 non-transferable July
2005 Warrants pursuant to a letter of engagement, as amended, to
purchase 2,750,000 shares of our common stock at an, exercise price of
$0.50 per share until November 18, 2007. We are not aware who presently
exercises dispositive and voting power with respect to the warrants for
common stock owned by Trilogy Capital Partners, Inc.
(31) On February 2, 2006, the Company issued 150,000 non-transferable
February 2006 Warrants pursuant to a consulting agreement to purchase
150,000 shares of our common stock at an exercise price of $0.50 per
share until February 2, 2011.
(32) On February 2, 2006, the Company also issued a further 150,000
non-transferable February 2006 Warrants pursuant to a further
consulting agreement to purchase 150,000 shares of our common stock at
an exercise price of $0.50 per share until February 2, 2011.
(33) On May 21, 2004, the Company issued 200,000 non-transferable May 2004
Warrants pursuant to a consulting agreement to purchase 200,000 shares
of our common stock at an exercise price of $0.45 per share until May
21, 2007.
(34) On September 8, 2003, the Company issued 71,429 non-transferable
September 2003 Warrants pursuant to a private placement to purchase
71,429 shares of our common stock at an exercise price of $0.75 per
share until September 8, 2006.
(35) On June 7, 2005, the Company issued 500,000 non-transferable June 2005
Warrants pursuant to a consulting agreement to purchase 500,000 shares
of our common stock at an exercise price of $0.50 per share until June
7, 2008. We are not aware who presently exercises dispositive and
voting power with respect to the warrants for common stock owned by
International Settlements Associates Ltd.
(36) On October 6, 2005, the Company issued 95,238 October 2005 Units to Mr.
Young at a price of $1.05 per October 2005 Unit, with each October 2005
Unit consisting of one common share and one non-transferable October
2005 Warrant. The Company had agreed to file a registration statement
with the SEC in accordance with the requirements of the Securities Act
in order to register the resale by the investors of the shares and the
shares issuable upon exercise of the warrants in the October 2005
Private Placement, completed pursuant to Rule 903 of Regulation S. Each
October 2005 Warrant entitles the holder to purchase one share of
common stock at an exercise price of $1.55 per share during the period
commencing on October 6, 2005 and ending on October 6, 2007.
(37) There were also 9,524 common shares and 9,524 non-transferable October
2005 Finder's Fee Warrants issued in relation to the October 2005
Private Placement which are exercisable upon the same terms and
conditions as the October 2005 Warrants.
(38) On September 24, 2004, the Company issued 400,000 non-transferable
September 2004 Warrants pursuant to a consulting agreement to purchase
400,000 shares of our common stock at an exercise price of $0.30 per
share until September 24, 2009. We are not aware who presently
exercises dispositive and voting power with respect to the warrants for
common stock owned by Simba Enterprises LLC.
(39) On March 4, 2005, the Company issued 400,000 non-transferable March
2005 Warrants pursuant to an amended consulting agreement to purchase
400,000 shares of our common stock at an exercise price of $0.30 per
share until March 4, 2010.
(40) Consists of the shares issued to the Selling Shareholders upon
completion of the July 2006 Private Placement plus an equivalent number
of shares that can be acquired by the Selling Shareholders upon
exercise of the July 2006 Warrants issued to the Selling Shareholders
in the July 2006 Private Placement within 60 days of the date hereof.
On July 10, 2006, the Company issued 620,000 July 2006 Units at a price
of $0.50 per July 2006 Unit, with each July 2006 Unit consisting of one
common share and one July 2006 Warrant. The Company had agreed to file
a registration statement with the SEC in accordance with the
requirements of the Securities Act in order to register the resale by
the investors of the shares and the shares issuable upon exercise of
the July 2006 Warrants in the July 2006 Private Placement, completed
pursuant to Rule 903 of Regulation S and Rule 506 of Regulation D. We
agreed to use our reasonable commercial efforts to file a registration
statement within 120 days from the date of completion of the July 10,
2006 Private Placement. Each July 2006 Warrant entitles the holder to
purchase one share of common stock at an exercise price of $0.75 per
share during the period commencing July 10, 2006 and ending at 5:00
p.m. (Vancouver time) on the day which is the earlier of (i) January
10, 2008 (ii) 12 months commencing from the effective date of the
Company's proposed registration statement related to the July 2006
Private Placement. An aggregate of 300,000 of the July 2006 Warrants
issued to one Selling Shareholder are transferable.
(41) We are informed that Benjamin Hill and Fraser Mcgee exercise
dispositive and voting power with respect to the shares of common stock
owned by RAB American Opportunities Fund Limited.
Because a Selling Shareholder may offer by this prospectus all or some part of
the common shares which it holds, no estimate can be given as of the date hereof
as to the number of common shares actually to be offered for sale by a Selling
Shareholder or as to the number of common shares that will be held by a Selling
Shareholder upon the termination of such offering.
PLAN OF DISTRIBUTION
TIMING OF SALES
The Selling Shareholders may offer and sell the shares covered by this
prospectus at various times. The Selling Shareholders will act independently of
MIV in making decisions with respect to the timing, manner and size of each
sale.
-39-
NO KNOWN AGREEMENTS TO RESELL THE SHARES
To our knowledge, no Selling Shareholder has any agreement or understanding,
directly or indirectly, with any person to resell the shares covered by this
prospectus.
OFFERING PRICE
The Selling Shareholders will sell their shares to the public at:
1. the market price prevailing at the time of sale;
2. a price related to such prevailing market price; or
3. such other price as the selling shareholders determine from time to time.
The sales price to the public will vary according to the selling decisions of
each Selling Shareholder and the market for our stock at the time of resale.
MANNER OF SALE
The shares may be sold by means of one or more of the following methods:
1. a block trade in which the broker-dealer so engaged will attempt to sell
the shares as agent, but may position and resell a portion of the block as
principal to facilitate the transaction;
2. purchases by a broker-dealer as principal and resale by that broker-dealer
for its account pursuant to this prospectus;
3. ordinary brokerage transactions in which the broker solicits purchasers;
4. through options, swaps or derivative;
5. in transactions to cover short sales;
6. privately negotiated transactions; or
7. in a combination of any of the above methods.
The Selling Shareholders may sell their shares directly to purchasers or may use
brokers, dealers, underwriters or agents to sell their shares. Brokers or
dealers engaged by the Selling Shareholders may arrange for other brokers or
dealers to participate. Brokers or dealers may receive commissions, discounts or
concessions from the selling shareholders, or, if any such broker-dealer acts as
agent for the purchaser of shares, from the purchaser in amounts to be
negotiated immediately prior to the sale. The compensation received by brokers
or dealers may, but is not expected to, exceed that which is customary for the
types of transactions involved. Broker-dealers may agree with a Selling
Shareholder to sell a specified number of shares at a stipulated price per
share, and, to the extent the broker-dealer is unable to do so acting as agent
for a Selling Shareholder, to purchase as principal any unsold shares at the
price required to fulfill the broker-dealer commitment to the Selling
Shareholder. Broker-dealers who acquire shares as principal may thereafter
resell the shares from time to time in transactions, which may involve block
transactions and sales to and through other broker-dealers, including
transactions of the nature described above, in the over-the-counter market or
otherwise at prices and on terms then prevailing at the time of sale, at prices
then related to the then-current market price or in negotiated transactions. In
connection with resales of the shares, broker-dealers may pay to or receive from
the purchasers of shares commissions as described above.
If our Selling Shareholders enter into arrangements with brokers or dealers, as
described above, we are obligated to file a post-effective amendment to this
registration statement disclosing such arrangements, including the names of any
broker dealers acting as underwriters.
-40-
The Selling Shareholders and any broker-dealers or agents that participate with
the Selling Shareholders in the sale of the shares may be deemed to be
"underwriters" within the meaning of the Securities Act. In that event, any
commissions received by broker-dealers or agents and any profit on the resale of
the shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
SALES PURSUANT TO RULE 144
Any shares of common stock covered by this prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act, as amended, may be sold under
Rule 144 rather than pursuant to this prospectus.
REGULATION M
We have advised the Selling Shareholders that the anti-manipulation rules of
Regulation M under the Exchange Act may apply to sales of shares in the market
and to the activities of the Selling Shareholders and their affiliates.
Regulation M under the Exchange Act prohibits, with certain exceptions,
participants in a distribution from bidding for, or purchasing for an account in
which the participant has a beneficial interest, any of the securities that are
the subject of the distribution. Accordingly, the Selling Shareholder is not
permitted to cover short sales by purchasing shares while the distribution is
taking place. Regulation M also governs bids and purchases made in order to
stabilize the price of a security in connection with a distribution of the
security. In addition, we will make copies of this prospectus available to the
Selling Shareholders for the purpose of satisfying the prospectus delivery
requirements of the Securities Act.
STATE SECURITIES LAWS
Under the securities laws of some states, the common shares may be sold in such
states only through registered or licensed brokers or dealers. In addition, in
some states the common shares may not be sold unless the shares have been
registered or qualified for sale in the state or an exemption from registration
or qualification is available and is complied with.
EXPENSES OF REGISTRATION
We are bearing all costs relating to the registration of the common stock. These
expenses are estimated to be $74,094.80, including, but not limited to, legal,
accounting, printing and mailing fees. The Selling Shareholders, however, will
pay any commissions or other fees payable to brokers or dealers in connection
with any sale of the common stock.
LEGAL PROCEEDINGS
MR. MA
As disclosed in the Company's prior filings, the Company was the Appellate in an
action in the British Columbia Court of Appeal.
On September 22, 2004, the British Columbia Court of Appeal dismissed with costs
two appeals of the Company seeking to set aside the Order of the Honourable Mr.
Justice Lowry pronounced on May 20, 2003 whereby the British Columbia Supreme
Court ordered the Company and its majority owned subsidiary, M-I Vascular
Innovations, Inc. ("M-I Vascular"), to take all necessary steps to exchange
3,192,399 shares of M-I Vascular owned by John Ma for 3,192,399 shares of the
Company. On December 29, 2004, the Company issued 3,192,399 common shares to
exchange for Mr. Ma's 3,192,399 common shares of M-I Vascular. The share
exchange took place on January 14, 2005.
By counterclaim in the British Columbia Supreme Court, the Company continues to
dispute John Ma's entitlement to his M-I Vascular shares (and to any Company
shares he receives in exchange for his M-I Vascular shares), and the Company is
suing Mr. Ma for damages for fraudulent misrepresentation. In a further action
in the Supreme Court of British Columbia, the Company is suing Mr. Ma for
defamation.
-41-
At present the outcome of this legal proceeding is uncertain.
BARRY MIGLIORINI AND JACK NAVENTI DOING BUSINESS AS NATIONAL CAPITAL
On November 12, 2003, the Company commenced an action in the Supreme Court of
British Columbia against Barry Migliorini and Jack Naventi, both doing business
as National Capital (the "Defendants"). The Company claimed that the Defendants
were misrepresenting themselves as being affiliated with a registered broker
dealer in good standing as a member of the National Association of Securities
Dealers, Inc., and on that basis obtained the Company's authorized signatures on
several documents authorizing the issuance of shares and warrants to the
Defendants in exchange for certain financial advice. In its claim the Company
sought the following relief:
1. a declaration that there is no valid and binding agreement between the
Company and the Defendants;
2. a declaration that the Company is not obligated to issue any warrants to
purchase the Company's common stock or any shares in the Company's common
stock to the Defendants;
3. an Order cancelling 65,217 shares of the Company's common stock that were
issued to National Capital; and
4. restitution and damages for misrepresentation.
On July 9, 2004, the Company entered into a settlement agreement with Barry
Migliorini and Jack Naventi whereby the parties agreed to the following:
1. the 65,217 shares of the Company registered in the name of the Defendants
would be cancelled;
2. all warrants issued by the Company to the Defendants are cancelled;
3. the service agreement and warrant agreement entered into between the
Defendants and the Company are terminated in their entirety; and
4. other than obligations created by the settlement agreement, each party
releases the other from any and all claims and liabilities.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
DIRECTORS AND OFFICERS
Our current executive officers and directors are:
CURRENT ANNUAL
NAME AGE POSITION WITH THE COMPANY TERM SALARY
- ------------------------------------------------------------------------------------------------------------------
Alan P. Lindsay 55 Chairman, Chief Executive Officer, Annual $250,470
Principal Executive Officer and
a Director
Dr. I. Mark Landy 38 President and a director Annual $228,000
Patrick A. McGowan 65 Executive Vice President, Secretary, Annual CAD$140,000
Chief Financial Officer, Principal
Accounting Officer and a Director
Dr. Daniel Savard 54 A director Annual None
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CURRENT ANNUAL
NAME AGE POSITION WITH THE COMPANY TERM SALARY
- ------------------------------------------------------------------------------------------------------------------
Dr. Dov Shimon 55 Chief Medical Officer and a director Annual $132,000
Dr. Tom Troczynski 51 Vice President, Coatings N/A CAD$84,000
Arc Rajtar 57 Vice President, Operations, and N/A CAD$120,000
Chief Technology Officer for MIVI
Technologies, Inc.
The following table sets forth the portion of their time the executive officers
and directors of our company devote to the Company:
Alan P. Lindsay 100% Dr. Tom Troczynski 35%
Dr. I. Mark Landy 50% Dr. Dov Shimon 100%
Patrick A. McGowan 100% Arc Rajtar 100%
Dr. Daniel Savard 10%
The term of office for each director is one year, or until his/her successor is
elected at the Company's annual meeting and is qualified. The term of office for
each officer of the Company is at the determination of our Board of Directors.
The Board of Directors does not have a nominating committee or audit committee.
Therefore, the selection of persons or election to the board of directors was
neither independently made nor negotiated at arm's length.
Set forth below is a brief description of the background and business experience
of each of our executive officers and directors for the past five years:
ALAN P. LINDSAY, CHAIRMAN, CHIEF EXECUTIVE OFFICER, PRINCIPAL EXECUTIVE OFFICER
AND A DIRECTOR; AGE 55
Alan P. Lindsay has been MIV's Chairman and CEO since October 2001 and its
President until recently with the appointment of Dr. Landy. Mr. Lindsay has
extensive experience in building companies and taking them public on recognized
stock exchanges. Before coming to MIV Mr. Lindsay was the Chairman, President
and CEO of Azco Mining, Inc., a base metals exploration company he co-founded
and took public on the Toronto and AMEX exchanges. Mr. Lindsay served as Azco
Mining, Inc.'s CEO and President from 1991 to 1994, its Chairman and CEO from
1994 to 1997 and its President, Chairman and CEO from 1997 to 2000. Azco Mining,
Inc. was listed on the Toronto Stock Exchange in 1993 and on AMEX in 1994.
Mr. Lindsay was recently reappointed as a director of GeneMax Pharmaceuticals
Inc., a company he co-founded 1999 and assisted with its financing. Mr. Lindsay
initially resigned as Chairman prior to the company going public. In 2002 this
company was taken public through a reverse take over and was listed on the OTCBB
under the name GeneMax Corp. It currently trades under the stock symbol "GMXX".
GeneMax Corp., through GeneMax Pharmaceuticals, is a product-focused
biotechnology company specializing in the application of the latest discoveries
in cellular immunology and cancer biology to the development of proprietary
therapeutics aimed at the treatment and eradication of cancer and therapies for
infectious diseases, autoimmune disorders and transplant tissue rejection.
-43-
Prior to becoming an entrepreneur, Mr. Lindsay was responsible for building a
significant business and marketing organization in Vancouver, Canada, for
Manulife Financial, a major international financial services corporation. Mr.
Lindsay has not been involved in the past five years in any legal proceedings
described in Item 401(d) of Regulation S-B.
DR. I. MARK LANDY, PRESIDENT AND A DIRECTOR; AGE 38
Dr. Landy had been MIV's President since April 1, 2006; replacing Mr. Lindsay
who continues as MIV's Chairman and CEO, and is a recently appointed director.
Dr. Landy's mission is to strengthen and accelerate the company's internal
procedures as the company continues to move its medical technologies to market.
He is a recognized medical device analyst and industry authority who brings a
wealth of industry and physician relationships to the company that will be used
to raise the company's corporate profile, to optimize and accelerate the
development of the company's key strategic partnerships and to assist the
company in bringing to market its technologies.
Dr. Landy most recently distinguished himself as the Senior Research Analyst of
Medical Supplies and Devices at the Susquehanna Research Group where he was
voted the firm's top-ranked healthcare analyst by institutional clients in both
2004 and 2005. He is a familiar financial pundit who has made frequent
appearances on CNBC, Reuters, Dow Jones, Bloomberg, The Wall Street Journal and
Business Week, among other outlets.
Dr. Landy holds a degree in business from the Wharton School of Business at the
University of Pennsylvania, and also holds the degree equivalent of Doctor of
Dental Surgery from the University of Witwatersrand, in Johannesburg, South
Africa. He spent three years in London, U.K., in private practice focusing on
post-traumatic facial reconstructive surgery, and he has had articles published
in both business and health care journals. Dr. Landy has not been involved in
the past five years in any legal proceedings described in Item 401(d) of
Regulation S-B.
PATRICK A. MCGOWAN, EXECUTIVE VICE PRESIDENT, SECRETARY, CHIEF FINANCIAL
OFFICER, PRINCIPAL ACCOUNTING OFFICER AND A DIRECTOR; AGE 65
Patrick A. McGowan is a management consultant specializing in assisting public
companies with financing, regulatory filings, administration and business plans.
>From November 1, 2001 to the present, Mr. McGowan has been engaged by the
Company to serve as its Executive Vice President and Chief Financial Officer, to
assume responsibility for negotiations with attorneys, auditors and financial
institutions and the day to day business operations of the Company. From
September 1997 to the time Mr. McGowan joined MIV, he served as CEO of American
Petro-Hunter, Inc., an oil exploration company with duties including reviewing
business proposals, writing business plans and approving corporate filings. Mr.
McGowan was also responsible for all legal matters and functional areas of
business for American Petro-Hunter including administration, accounting,
contract negotiations, banking, writing press releases and overseeing regulatory
filings. American Petro-Hunter is currently listed on the OTCBB under the stock
symbol AAPH.
Mr. McGowan obtained his Masters of Business Administration from the University
of Western Ontario in 1965, and his Bachelors of Science from the University of
Oregon in 1963. Mr. McGowan has not been involved in the past five years in any
legal proceedings described in Item 401(d) of Regulation S-B.
DR. DANIEL SAVARD, A DIRECTOR; AGE 54
Dr. Daniel Savard brings to MIV more than 20 years of clinical practice and
clinical research in cardiology. From 1997 to the present, Dr. Savard has been
President of Medi-Recherche Inc. and Assistant-Medical Director of the Quebec
Blue Cross (Canassistance, Inc.). In 2001 Dr. Savard became a member of the
Board of Governors of the Quebec Blue Cross. He is also member of La Societe des
Medecins Experts du Quebec. Since 2000, he has been a consultant for La Regie
des Rentes du Quebec. Recently, he joined Biomundis, a Canadian venture capital
company in biotechnology, as medical Director.
-44-
Dr. Savard holds a doctorate degree in medicine from the Faculty of Medicine of
Montreal University (1971-1976) and a license from the Medical Council of
Canada. Dr. Savard completed postdoctoral training in Internal Medicine and
Cardiology at Montreal University (1976 to 1980) and a one year fellowship in
clinical and research echocardiography at the Quebec Heart Institute of Laval
University. Dr. Savard has been certified in Cardiology by the Corporation des
Medecins du Quebec and by the Royal College of Physicians and Surgeons of
Canada. Dr. Savard is assistant professor of Medicine at the University of
Montreal and practices at the Centre Hospitalier Universitaire de Montreal and
Notre-Dame Hospital in Montreal. Dr. Savard's research interests are coronary
heart disease, congestive heart failure, arterial hypertension, hyperlipidemia,
angiogenesis therapy in coronary heart disease, circadian cycle and ambulatory
blood pressure monitoring.
Dr. Savard is highly involved in clinical research. He has participated in 65
clinical trials, several of which were international multicenter studies. Dr.
Savard has served on several pharmaceuticals clinical advisory boards for
companies such as Pfizer, Hoechst Marion Roussel, Biovail Corp, Crystal Corp.
and Aventis Pharma Inc. He is currently consulting for Biovail Corp. and for
Medisys, an important Canadian health care management company.
Dr. Savard is an active member of several associations including L'Association
des Cardiologues du Quebec, L'Association des Medecins Specialistes du Quebec
and of La Societe des Medecins Experts du Quebec. He has published more than 40
papers and articles relating to his research. Dr. Savard has not been involved
in the past five years in any legal proceedings described in Item 401(d) of
Regulation S-B.
DR. DOV SHIMON, CHIEF MEDICAL OFFICER AND A DIRECTOR; AGE 55
Dr. Dov Shimon is a renowned cardiac and thoracic surgeon. He graduated with
honors from Hadassah Hebrew University Medical School in 1977 and trained from
1978 to 1984 as a general and cardiothoracic surgeon at Hadassah University
Hospital in Israel. From 1984 to 1986 Dr. Shimon was the chief resident in
cardiovascular surgery at the University of Toronto, Canada, and in 1986 he
became the heart transplantation fellow at the Medical College of Virginia in
Richmond, Virginia. Dr. Shimon was appointed as senior Cardiothoracic Surgeon at
Hadassah in 1987 and tenured in 1989. He was head of the Israel Transplant
Program from 1987 to 1992. Dr. Shimon pioneered heart transplantation in Israel
(1987), lung transplantation (1989) and heart-lung transplantation (1993). He
has performed more than 8,000 open-heart operations and thousands of other
thoracic operations. Dr. Shimon also has more than 17 years of experience in
animal and clinical testing of medical devices.
In addition to his clinical duties as head of cardiovascular surgery, Dr. Shimon
was a director at the Artificial Heart Institute in Salt Lake City, Utah. Dr.
Shimon is a member of numerous medical and scientific societies and has authored
many peer reviewed publications. Dr. Shimon retired as a Major from the IDF
Medical Corps reserves (Paratroopers Battalion) where he had been decorated. Dr.
Shimon gained wide experience and has served as a senior military surgeon during
the war in Lebanon in 1982-3 and during multiple smaller scale collisions. Dr.
Shimon completed Senior Business Management Studies at Tel-Aviv University,
School of management, in 1996. He has been working since 1999 with medical
device companies in the design and implementation of preclinical and clinical
studies. Dr. Shimon founded and has been serving as CEO of SagaX Technologies
for Medicine Inc. since inception. Dr. Shimon has not been involved in the past
five years in any legal proceedings described in Item 401(d) of Regulation S-B.
DR. TOM TROCZYNSKI, VICE PRESIDENT OF COATINGS; AGE 51
Dr. Tom Troczynski joined the Company in February 2002 to assist in the
development of its proprietary coating technologies and in the supervision of
the Research and Development team at the University of British Columbia ("UBC").
Since 2001, Dr. Troczynski has been a Professor in Metals and Materials
Engineering Dept. at the UBC and leads UBCeram, the largest ceramics research
group in Canada. Dr. Troczynski's bio-ceramics development program is focused on
biocompatible hydroxyapatite coatings for metallic substrates, such as implants
and stents. From 1997 to 2001 Dr. Troczynski was an assistant professor at UBC.
Dr. Troczynski graduated from McMaster University in Hamilton, Ontario in
Materials Science and Engineering in 1987. Dr. Troczynski has published many
journal articles and other publications, as well as filed a number of patents.
Dr. Troczynski has not been involved in the past five years in any legal
proceedings described in Item 401(d) of Regulation S-B.
-45-
ARC RAJTAR, VICE PRESIDENT, OPERATIONS (MIVI TECHNOLOGIES, INC.); AGE 57
Arc Rajtar joined MIVI Technologies, Inc. ("MIVI Technologies"), the operating
subsidiary of the Company, in February 2002. From 1999 to 2002 Mr. Rajar served
as Vice President of Logistics of Netlogix Information Technologies, Inc. From
1998 to 2001 Mr. Rajtar was Corporate Quality Assurance Manager at Spectrum
Signal Processing, Inc. From 1991 to 1998 Mr. Rajar was the President of Quexx
International Ltd., a management consulting company that specializes in business
process engineering, business development and quality management systems for
medical and electronics industries. Mr. Rajtar received a Master in Mechanical
Engineering from the Technical University of Gdansk, Poland and is a Chartered
Engineer with The Institution of Engineers, Australia and a member of the
American Society for Quality. Mr. Rajtar has not been involved in the past five
years in any legal proceedings described in Item 401(d) of Regulation S-B.
SIGNIFICANT EMPLOYEES OR CONSULTANTS
Strategic matters and critical decisions are handled by the directors and
executive officers of the Company.
TERMS OF OFFICE
Our directors are elected to hold office until the next annual meeting of our
shareholders and until their respective successors have been elected and
qualified. Our executive officers are appointed by our Board of Directors to
hold office until their successors are appointed.
FAMILY RELATIONSHIPS
There are no family relationships among our directors or officers.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
Our directors, executive officers and control persons have not been involved in
any of the following events during the past five years:
1. any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time;
2. any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offences);
3. being subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or banking activities; or
4. being found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not
been reversed, suspended, or vacated.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP
The following table sets forth certain information concerning the number of our
common shares owned beneficially as of July 10, 2006 by: (i) each person
(including any group) known to us to own more than 5% of our common stock, (ii)
each of our directors and by each of our executive officers, and (iii) our
executive officers and directors as a group. Unless otherwise indicated, the
shareholders listed possess sole voting and investment power with respect to the
shares shown.
-46-
NUMBER OF SHARES OF PERCENTAGE OF COMMON
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER COMMON STOCK STOCK(1)
- -------------------------- --------------------------------------- -------------------------- -----------------------
DIRECTORS AND EXECUTIVE
OFFICERS
- -------------------------- --------------------------------------- -------------------------- -----------------------
Alan P. Lindsay
Suite 1, 8765 Ash Street
Vancouver, B.C., Canada,
Common stock V6P 3T3 3,600,001(2) 4.81%
- -------------------------- --------------------------------------- -------------------------- -----------------------
Dr. I. Mark Landy 880 Glengate Place,
Atlanta, Georgia,
Common stock U.S.A., 30328 2,700,000(3) 3.63
- -------------------------- --------------------------------------- -------------------------- -----------------------
Patrick A. McGowan
Suite 1, 8765 Ash Street
Vancouver, B.C., Canada,
Common stock V6P 3T3 1,215,094(4) 1.67%
- -------------------------- --------------------------------------- -------------------------- -----------------------
Dr. Daniel Savard
Suite 1, 8765 Ash Street
Vancouver, B.C., Canada,
Common stock V6P 3T3 400,000(5) 0.56%
- -------------------------- --------------------------------------- -------------------------- -----------------------
Dr. Dov Shimon
Suite 1, 8765 Ash Street
Vancouver, B.C., Canada,
Common stock V6P 3T3 2,900,000(6) 4.00%
- -------------------------- --------------------------------------- -------------------------- -----------------------
Dr. Tom Troczynski
Suite 1, 8765 Ash Street
Vancouver, B.C., Canada,
Common stock V6P 3T3 1,415,811(7) 1.96%
- -------------------------- --------------------------------------- -------------------------- -----------------------
Arc Rajtar
Suite 1, 8765 Ash Street
Vancouver, B.C., Canada,
Common stock V6P 3T3 515,000(8) 0.71%
- -------------------------- --------------------------------------- -------------------------- -----------------------
ALL DIRECTORS AND EXECUTIVE OFFICERS
COMMON STOCK AS A GROUP 12,745,906(9) 15.69%
- -------------------------- --------------------------------------- -------------------------- -----------------------
5% STOCKHOLDERS
- -------------------------- --------------------------------------- -------------------------- -----------------------
Common stock None Nil 0%
- -------------------------- --------------------------------------- -------------------------- -----------------------
(1) Under Rule 13d-3, a beneficial owner of a security includes any person
who, directly or indirectly, through any contract, arrangement,
understanding, relationship, or otherwise has or shares: (i) voting
power, which includes the power to vote, or to direct the voting of
shares; and (ii) investment power, which includes the power to dispose
or direct the disposition of shares. Certain shares may be deemed to be
beneficially owned by more than one person (if, for example, persons
share the power to vote or the power to dispose of the shares). In
addition, shares are deemed to be beneficially owned by a person if the
person has the right to acquire the shares (for example, upon exercise
of an option) within 60 days of the date as of which the information is
provided. In computing the percentage ownership of any person, the
amount of shares outstanding is deemed to include the amount of shares
beneficially owned by such person (and only such person) by reason of
these acquisition rights. As a result, the percentage of outstanding
shares of any person as shown in this table does not necessarily
reflect the person's actual ownership or voting power with respect to
the number of shares of common stock actually outstanding on July 10,
2006. Unless otherwise indicated hereinbelow, we are informed that each
person has sole dispositive and voting power with respect to their
shares of common stock owned. The applicable percentage of ownership is
based on 71,622,489 shares of common stock outstanding as of July 10,
2006.
-47-
(2) Consists of 400,001 shares held by Mr. Lindsay and 3,200,000 shares
that can be acquired by Mr. Lindsay upon exercise of options to
purchase shares held by Mr. Lindsay within 60 days of the date hereof.
(3) Consists of 200,000 shares that can be acquired by Mr. Landy directly,
and 2,500,000 shares that can be acquired indirectly through Simba
Biomed, a company which is controlled by Mr. Landy, upon exercise of
options to purchase shares held by the same within 60 days of the date
hereof.
(4) Consists of 15,094 shares held by Mr. McGowan and 1,200,000 shares that
can be acquired by Mr. McGowan upon exercise of options to purchase
shares held by Mr. McGowan within 60 days of the date hereof.
(5) Consists of 400,000 shares that can be acquired by Dr. Savard upon
exercise of options to purchase shares held by Mr. Savard within 60
days of the date hereof.
(6) Consists of 2,000,000 shares held by Shimoco LLC (a corporation over
which Mr. Shimon has 86.2% voting and dispositive power) and 900,000
shares that can be acquired by Mr. Shimon upon exercise of options to
purchase shares held by Mr. Shimon within 60 days of the date hereof.
(7) Consists of 715,881 shares held by Mr. Troczynski and 700,000 shares
that can be acquired by Mr. Troczynski upon exercise of options and
warrants to purchase shares held by Mr. Troczynski within 60 days of
the date hereof.
(8) Consists of 15,000 shares held by Mr. Rajtar and 500,000 shares that
can be acquired by Mr. Rajtar upon exercise of options to purchase
shares held by Mr. Rajtar within 60 days of the date hereof.
(9) Consists of 3,498,231 shares held by our directors and executive
officers and 3,600,000 shares that can be acquired by our directors and
executive officers upon exercise of options to purchase shares held by
our directors and executive officers within 60 days of the date hereof.
CHANGES IN CONTROL
We are unaware of any contract, or other arrangement or provision of our
Articles or Bylaws, the operation of which may at a subsequent date result in a
change of control of our company.
DESCRIPTION OF SECURITIES
GENERAL
As at July 10, 2006, there were 71,622,489 shares of the common stock issued and
outstanding. The authorized capital stock of the Company consists of 140 million
common shares and 20 million preferred shares at $0.001 par value. Inclusive of
this amount are 2,500,000 shares which are outstanding and which are being
returned to treasury for cancellation by the company resulting from the
company's previous Regulation S offering. The shares were being held as part of
a previous offering of the Company's special class Regulation S shares on the
Berlin Stock Exchange. Upon liquidation, dissolution or winding up of the
corporation, whether voluntary or involuntary, the holders of common stock are
entitled to share pro-rata in all net assets available for distribution to
stockholders after payment to creditors. The common stock is not convertible or
redeemable and has no pre-emptive, subscription or conversion rights. There are
no conversion, redemption, sinking fund or similar provisions regarding the
common stock. Each outstanding share of common stock is entitled to one vote on
all matters submitted to a vote of stockholders. There are no cumulative voting
rights. All outstanding shares of Common Stock are validly authorized and
issued, fully paid and non-assessable. The Board of Directors is authorized to
issue additional shares of common stock not to exceed the amount authorized by
the Company's Articles of Incorporation, on such terms and conditions and for
such consideration as the Board may deem appropriate without further stockholder
action.
There are no provisions in the Company's Articles or By-laws that would delay,
defer or prevent a change in control of the Company.
The above description concerning the capital stock of the Company does not
purport to be complete. Reference is made to the Company's Articles of
Incorporation and Bylaws which are available for inspection upon proper notice
at the Company's offices and are available on the Internet as an exhibit to the
Company's Form 10SB12G as filed on April 26, 2000. As well, the applicable
statutes of the State of Nevada also provide a more complete description
concerning the rights and liabilities of stockholders.
VOTING RIGHTS
Each holder of common stock is entitled to one vote per share on all matters on
which such stockholders are entitled to vote. Since the shares of common stock
do not have cumulative voting rights, the holders of more than 50% of the shares
voting for the election of directors can elect all the directors if they choose
to do so and, in such event, the holders of the remaining shares will not be
able to elect any person to the Board of Directors.
-48-
DIVIDEND POLICY
Holders of the Company's common stock are entitled to dividends if declared by
the Board of Directors out of funds legally available therefore. The Company
does not anticipate the declaration or payment of any dividends in the
foreseeable future. We intend to retain earnings, if any, to finance the
development and expansion of the Company's business. Future dividend policy will
be subject to the discretion of the Board of Directors and will be contingent
upon future earnings, if any, the Company's financial condition, capital
requirements, general business conditions and other factors. Therefore, there
can be no assurance that any dividends of any kind will ever be paid.
STOCK TRANSFER AGENT
The Company's Transfer Agent is Interwest Transfer Company, Inc. of 1981 East
Murray Holladay Road, Suite 100, P.O. Box 17136, Salt Lake City, Utah, U.S.A.,
84117.
LEGAL MATTERS
Braun & Company, our independent legal counsel, has provided an opinion on the
validity of the shares of our common stock that are the subject of this
prospectus.
EXPERTS
The consolidated financial statements of the company as at and for the year
ended May 31, 2005 included in this prospectus and registration statement have
been audited by Ernst & Young LLP, Chartered Accountants, an independent
registered public accounting firm, as set forth in their report thereon which
contain an explanatory paragraph describing conditions that raise substantial
doubt about the Company's ability to continue as a going concern as described in
Note 1 to the consolidated financial statements appearing elsewhere herein and
in the registration statement and are included in reliance upon such report
given on the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of the company as at and for the year
ended May 31, 2004 included in this prospectus and registration statement have
been audited by Moore Stephens Ellis Foster Ltd., Chartered Accountants, an
independent registered public accounting firm, as set forth in their report
thereon which contain an explanatory paragraph describing conditions that raise
substantial doubt about the Company's ability to continue as a going concern as
described in Note 1 to the consolidated financial statements appearing elsewhere
herein and in the registration statement and are included in reliance upon such
report given on the authority of such firm as experts in accounting and
auditing. Moore Stephens Ellis Foster Ltd. was reappointed as our principal
independent accountant for the fiscal year ended May 31, 2005. However, on May
3, 2005, Moore Stephens Ellis Foster Ltd. entered into a transaction with Ernst
& Young LLP (Canada) pursuant to which certain assets of Moore Stephens Ellis
Foster Ltd. were sold to Ernst & Young LLP and the professional staff and
partners of Moore Stephens Ellis Foster Ltd. joined Ernst & Young LLP either as
employees or partners of Ernst & Young LLP and carried on their practice as
members of Ernst & Young LLP.
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a contingency
basis, or had, or is to receive, in connection with the offering, a substantial
interest, direct or indirect, in the Registrant, nor was any such person
connected with the Registrant as a promoter, managing or principal underwriter,
voting trustee, director, officer or employee.
-49-
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Our directors and officers are indemnified as provided by the NEVADA REVISED
STATUTES, our Articles of Incorporation and our Bylaws.
We have been advised that, in the opinion of the SEC, indemnification for
liabilities arising under the Securities Act is against public policy as
expressed in the Securities Act, and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities is asserted by one of
our directors, officers, or controlling persons in connection with the
securities being registered, we will, unless in the opinion of our legal counsel
the matter has been settled by controlling precedent, submit the question of
whether such indemnification is against public policy to a court of appropriate
jurisdiction. We will then be governed by the court's decision.
DESCRIPTION OF BUSINESS
INCORPORATION AND BACKGROUND
Our company is an advanced stage research and development company pursuing the
commercialization of the next generation of fully biocompatible coatings for
stents and other medical devices with the intent of providing healing solutions
for cardiovascular disease and other conditions. In collaboration with UBC, the
Company has developed unique coating technologies that utilize Hydroxyapatite
(HAp) for application on medical devices and drug delivery systems.
The Company was incorporated as DBS Holdings, Inc. under the laws of the State
of Nevada on March 19, 1999. On June 23, 1999, the Company acquired a 19%
interest in "investorservice.com", an Internet domain name, paying for this
acquisition with $2,500 in cash and by issuing 2,500 restricted shares of its
common stock. On September 15, 2000, the Company exercised its option to acquire
the remaining 81% interest in investorservice.com for an additional issuance of
10,000 restricted shares of the Company's common stock. Each issuance of common
stock was exempt from registration under the Securities Act pursuant to
Regulation D thereunder. Subsequently, the Company completed offerings of
10,268,000 shares of common stock to certain investors under the exemption from
registration provided by Rule 504 of Regulation D under the Securities Act.
On April 25, 2000, the Company filed a registration statement on Form 10SB to
register its common stock under the Exchange Act and thereby became a reporting
company, and also became eligible for listing its common stock on the OTCBB. The
Company's common stock was qualified and listed for trading on the OTCBB on July
13, 2000.
In March 2001 the Company announced it had concluded negotiations for the
acquisition and control of M-I Vascular, a stent medical device development
company, and in April 2001, the Company signed a Share Exchange and Finance
Agreement (the "Share Exchange Agreement") with M-I Vascular. The Company
exchanged, on a one for one basis, 58% of the shares outstanding of M-I Vascular
for shares in the Company. Pursuant to the terms of the Share Exchange Agreement
the Company completed the share exchange with the remaining shareholders of M-I
Vascular on May 31, 2003.
In May of 2001, and in connection with the Share Exchange Agreement, the Company
announced a change of business and control. The Company elected and appointed
new officers and directors and began to engage in the business of developing
medical stents. On March 5, 2002, following shareholder approval to amend the
Company's Articles of Incorporation, the Company changed its name to MIV
Therapeutics, Inc. The Company's shares are currently trading under the symbol
"MIVT" on the OTCBB.
-50-
BUSINESS OVERVIEW
The Company was initially focussed on the development of minimally invasive
medical devices for use in cardiovascular and other medical procedures. We
completed the development of a proprietary coronary stent for use in angioplasty
procedures but have since shifted our focus to the development of technologies
used to manufacture a range of biocompatible coatings for stents and other
medical devices.
Coronary stents are used to treat cardiovascular disorder caused by the
narrowing or blockage of coronary arteries. Stents are compressible tubular
devices that are mounted on a balloon catheter, inserted into the circulatory
system by a team of cardiologists, and directed to the location of a blocked
coronary artery. During the angioplasty procedure, which involves unclogging the
artery, the balloon is expanded to clear the obstruction, allowing normal blood
flow. With this procedure, the stent is deployed and remains in place to
reinforce the artery wall. This procedure is the leading alternative to costly
and highly invasive open-heart surgery. Stents have eliminated many of the
complications that previously accompanied simple balloon angioplasty.
Approximately 80% of heart disease can be treated effectively with stenting.
The Company, in collaboration with UBC, has developed unique coating
technologies that utilize Hydroxyapatite ("HAp") for application on medical
devices and drug delivery systems. HAp is naturally found in bone and tooth
enamel and is rapidly integrated into the human body. As such, it may inhibit a
variety of adverse and inflammatory reactions and potentially help reduce
restenosis, a recurrence of coronary artery disease following angioplasty. It is
also believed that HAp-coated cardiovascular stents will not trigger late
adverse thrombogenic reactions.
The Company has a strategic alliance with UBC, whereby it has licensed from UBC
the worldwide rights to technologies for coating stents and other medical
devices with HAp. The Company's lead product in development is an HAp-coated
coronary stent with a nano-film coating.
Over the next several years the Company intends to expand its technologies to
include several promising drug delivery platforms. Drug delivery is a system or
technology that enables the introduction of a therapeutic agent into the body
and improves its efficacy by controlling the rate, time or site of release.
Commercially, drug delivery provides the ability to develop a new route of
administration for an existing drug and can substantially improve the efficacy
of a drug, while also reducing its side effects.
The Company expects to enter the drug-eluting stent market by using a thicker
coating of HAp loaded with a suitable drug, i.e. anti-inflammatory. The
technology has applications in cardiovascular and non-cardiovascular drug/device
combination products, including peripheral stents, biodegradable implants, gene
therapy, and delivery systems for release of chemotherapeutic agents.
Our technology is considered to be suitable for broad applications in
cardiovascular and non-vascular drug/device combination products. The Company's
goal is to continue to diversify its portfolio to capitalize on these potential
applications, accessing the approximately $160 billion market of combination
drug/device products.
OUR PRODUCTS
The Company's lead product in development is a passive, nano-film HAp coating.
In parallel, the Company is developing multi-layer and composite film coatings
with drug-eluting capabilities to facilitate therapeutics and treatments for
localized drug delivery systems.
HAP NANO-FILM STENT COATING TECHNOLOGY
HAp is naturally found in bone and tooth enamel and is rapidly integrated into
the human body. Numerous results from clinical tests and surgical practice have
shown that in addition to its demonstrated biocompatibility, this new generation
of advanced biocompatible coatings is non-toxic and does not induce
thrombogenicity, allergic or inflammatory reactions, therefore making it a
potentially solid candidate as a coating for coronary stents and other
implantable medical devices.
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Our HAp coating technology has successfully progressed through a comprehensive
range of animal and mechanical trials required for CE Mark and FDA approvals in
both Europe and the US. These include thrombogenicity (blood clotting),
cytotoxicity, and demanding fatigue life testing for its nano-film HAp-coated
coronary stent. The results support the expectation that the HAp-coated stent
may be considerably safer than currently available stents.
Preclinical results support the expectation that the HAp-coated stent may be
considerably safer than currently available stents. We are currently conducting
a full range of biocompatibility and histopathology tests on these products,
with the potential to reach human clinical trials in early 2007.
DRUG-ELUTING STENTS
Since patients receiving stents remain at risk for complications, doctors
continue to explore more efficient and longer-lasting stenting solutions. One of
the more effective methods involves employing stents that are covered with
medicines that can be released once inside the body. These are called
drug-eluting stents.
Drug-eluting stents countermeasure post-deployment inflammatory reactions and
considerably reduce the incidence of restenosis. Drug-eluting stents have
become, after approximately one year on the market, the most widely used
modality for coronary revascularization. This has resulted in a shift in
clinical practice that has quickly become the standard of care, despite the fact
that drug-eluting stents cost approximately three to four times the price of a
bare metal stent.
We intend to enter the drug-eluting stent market using two product development
approaches:
Porous HAp Coating
- ------------------
Porous HAp coating is in an advanced development stage and can be loaded with a
considerable quantity of drugs, including anti-inflammatory, immune system
depressants, or with the new generation of antithrombotic or antirestenotic
drugs. This technology has applications in cardiovascular and non-cardiovascular
drug/device combination products, including peripheral stents, biodegradable
implants, gene therapy, and delivery systems for release of chemotherapeutic
agents.
Composite HAp-Based Coatings
- ----------------------------
In December 2004, MIVI Technologies, our wholly-owned subsidiary, received a
Government of Canada grant for the research program titled "Development of Novel
Drug Eluting Composite Coatings for Cardiovascular Stents". The Canadian
National Research Council approved MIVI Technologies' application following an
in depth familiarization with the advanced concept of novel technologies
proposed by MIVI Technologies, and a review of our organizational and fiscal
capability to carry on with the program.
The overall objective of this program is to develop calcium phosphate
ceramic/biopolymer composites suitable for deposition as coatings for
cardiovascular stents and other medical devices, in particular:
1. to define and validate the composite coating characteristics;
2. to develop coating process that will be suitable for volume manufacturing
environment;
3. to develop suitable process for incorporation of drugs into the composite
coatings;
4. to characterize in-vitro and in-vivo chemical, mechanical and biological
properties of the drug-containing composite coatings based on HAp;
5. to define drug eluting characteristics for the composite coatings; validate
the values in-vitro and in-vivo; and
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6. to modify manufacturing processes for optimum performance of the
drug-eluting calcium phosphate ceramic/biopolymer composite coatings on
cardiovascular stents.
In November 2004 we initiated an in-house research and development program for
proprietary composite non-HAp-based drug eluting coatings which resulted in a
number of patent applications for intellectual property which are fully owned
(do not require licensing from third parties) by the Company. These novel
coating technologies are designed for use in conjunction with HAp coating
technologies under exclusive license from UBC, and may be also used as
self-standing technologies for specific applications in implantable medical
devices.
INDUSTRY BACKGROUND
The global medical technology marketplace is expanding at double-digit rates,
driven by an ageing population, increasing affluence in the developing world and
continuing medical innovation. The medical device sector includes nearly 3,000
companies worldwide, with a wide range of devices designed either for treatment
or diagnosis. The worldwide annual sales of all types of medical devices are
estimated at $160 billion. The cardiovascular device market remains one of the
most attractive sectors of the medical device industry, continuing to exhibit
above-average revenue growth and attracting significant attention from the
investment community.
The worldwide cardiovascular device market is estimated to generate in excess of
$10 billion in annual sales and is growing at nearly 10% per year. The leading
segments in this market by sales volume are products designed for percutaneous
intervention (i.e. medical devices that are inserted through the skin), such as
those used in angioplasty procedures to unblock clogged arteries. The Company
currently specializes in minimally invasive medical devices for cardiovascular
disease, with a focus on coronary stents. The stent market alone is estimated to
generate nearly $2.5 billion in worldwide annual sales in 2002 and is
anticipated to exceed $6 billion in annual sales by 2007.
The market for new drug delivery systems is now growing faster than the overall
pharmaceutical market, increasing the annual sales in the US for products that
utilize drug delivery technologies from $15 billion in 2000 to a projected $30
billion by 2007. Drug delivery systems are a strategic tool for expanding
markets, as they permit the patenting of generic therapeutics with novel
delivery systems as a new formulation, as well as create new and improved
treatments for patients.
The segment of the drug delivery market associated with medical devices has
developed very recently, driven primarily by the need for improved coronary
stents and other implanted medical devices that do not trigger inflammatory
responses.
THE DRUG-ELUTING STENT MARKET
Stents are estimated to be used in approximately 60-80% of angioplasty
procedures worldwide. The worldwide coronary stent market currently generates
over $2.5 billion in revenues and is projected to grow to nearly $6 billion by
2007. Within the next five years, coated and drug-eluting stents are anticipated
to comprise 86% of this market. We are targeting this large and growing market
with our coatings for medical devices.
Rapid introduction of new stent designs and the rapid pace of innovations in the
last ten years has resulted in dramatic shifts in market share, but also have
opened up tremendous opportunities for entrepreneurial market entrants. The
Company believes that the development of effective procedures, devices, and
therapies for restenosis is the primary challenge that will shape the industry
and define the industry leaders in the next decade.
COMPETITION
Based on its current stage of product development, the Company can best be
compared to other medical device companies with coated stent products. Although
there are a number of companies currently selling coronary stents and developing
drug-eluting stents, there are a relatively small number of international
companies that control the majority of this market segment.
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The following is a summary of the companies with the largest current share of
the coronary stent market that are also developing coated and/or drug-eluting
stents:
JOHNSON & JOHNSON
Johnson & Johnson's Cypher(TM) polymer-coated stent is designed to release the
drug Sirolimus to inhibit the cell proliferation that is an underlying cause of
restenosis. The company obtained a CE mark in Europe in April 2002 for its
Cypher(TM) Sirolimus-eluting stent following a 400-patient trial that
demonstrated zero restenosis after a one-year follow-up on patients and a low
incidence of MACE (Major Adverse Cardiac Events). The Cypher(TM) stent has now
been tested in nearly 1,600 patients and enrollment was recently completed in a
large 1100-patient SIRIUS trial in the US to provide the data required for FDA
marketing approval.
Sirolimus is an antibiotic licensed from Wyeth Pharmaceuticals that is also
marketed under the name Rapamune(TM) for prevention of organ rejection after
kidney transplantation. Sirolimus was chosen for its "cytostatic" properties, as
it inhibits rather than kills the proliferating cells that normally cause
restenosis.
Johnson & Johnson currently controls 11% of the bare stent market (annual
revenues of approximately $350 million) and by 2006 is projected to hold
approximately 40% of the drug-eluting stent market (projected annual revenues of
approximately $3.5 billion).
GUIDANT CORPORATION
Guidant has completed a 180-patient ELUTES European clinical trial and recently
received a CE mark for the product.
Guidant has also recently completed enrollment of patients in a large
1024-patient DELIVER II clinical trial in the US to expand the use of the stent
for high-risk and difficult-to-treat patients. Guidant currently has an
estimated 33% of the bare stent market and by 2007 is projected to hold about
18% of the drug coated stent market.
BOSTON SCIENTIFIC CORPORATION
Boston Scientific has developed the Taxus Express(TM) (paclitaxel-coated) stent
and has had excellent results in two European clinical trials (61-patient TAXUS
and 538-patient TAXUS II). In May 2002 Boston Scientific received approval to
market the Express(TM) stent in a limited commercial launch. Boston Scientific
previously conducted a 30-patient TAXUS III study for expanded use of the stent
and has recently completed a global clinical trial and a major 2000-patient
TAXUS IV clinical trial in the US.
The Boston Scientific stent was developed by Medinol Inc. (Israel) and the
paclitaxel formulation is licensed from Angiotech Pharmaceuticals, Inc.
(Canada). Boston Scientific currently has 17% of the bare stent market and by
2007 is projected to capture about 16% of the drug coated stent market.
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MEDTRONIC, INC.
Medtronic is developing a number of drug-delivery devices, including coronary
stents, using the NeuGene(R) anti-sense compounds licensed from AVI BioPharma.
This family of therapeutic agents, known as Resten-NG, are designed to address
the underlying genetic mechanism that leads to restenosis. Resten-NG is
currently in Phase II human clinical trials.
Medtronic also has a Nitric Oxide coated stent in preclinical development and
other anti-restenosis technologies in earlier stage development. While Medtronic
is behind the other major stent companies in developing a coated drug stent,
they remain a significant company in implanted medical devices, including
stents. Medtronic currently has an estimated 29% of the bare stent market, but
by 2007 is projected to hold less than 10% of the drug coated stent market.
ABBOTT LABORATORIES
In May 2002 Abbott acquired the cardiovascular stent business of Biocompatabiles
(UK) for approximately $235 million. This company has been developing the
BioDIVYSIO biocompatible drug-eluting coronary stents, which are coated with PC
(Phosphorylcholine). The BioDIVYSIO stent utilizes the anti-clotting properties
of this natural protein to provide biocompatibility. The PC stent also permits
drugs to be absorbed into the coating and released slowly after the device has
been implanted. Abbott's cardiovascular products have received a CE mark in
Europe and three models of the BioDIVYSIO stents are in clinical trials in the
US.
The above represent the major companies with advanced coronary stent products
and indicates the market trend towards development of drug-eluting stents. In
addition to these major players in the drug-eluting stent market, there are also
a number of smaller companies developing these types of products, including:
JOMED N.V.
Jomed is a European developer of products for minimally-invasive vascular
intervention. The company has developed a biocompatible coated stent that
releases low doses of tacrolimus. JOMED previously licensed Elast-Eon, a
proprietary biocompatible material from AorTech Biomaterials to improve the
performance of its stent products.
IMPLANT SCIENCES CORPORATION
Implant Sciences has developed a thin-coating technology based on a micro-porous
polymer. The company is utilizing CardioTech's endothelial "cell seeding
technology" to promote more effective healing of the blood vessels. The
micro-porous polymer can also be impregnated with more than one drug, allowing
enhanced anti-restenosis therapy.
EMPLOYEES
The Company currently has nine full time employees.
In addition, the Company has entered into consulting agreements with five
individuals to provide management services to the Company. The Company's
Chairman and Chief Executive Officer, Alan P. Lindsay, was hired and has been
responsible for the acquisition of the Company's technology, for financing,
corporate development and the strategic vision of the company. Dr. Mark Landy,
through his holding company, was recently hired as the Company's President with
the primary mission of strengthening and accelerating the company's internal
procedures as the company continues to move its medical technologies to market.
Patrick A. McGowan, Executive Vice President and Chief Financial Officer, has
been hired to assist the Company with its financing, regulatory filings,
administration and business plan. Mr. McGowan's responsibilities also include
liaison with attorneys, auditors and financial consultants and the day to day
business operations of the Company. Dr. Dov Shimon is the Company's Chief
Medical Officer, oversees the Company's pre-clinical trials, and is also
President of the Company's subsidiary, SagaX. The Company hired Arc Rajtar as
the Vice President of Operations for its subsidiary, MIVI Technologies, Inc. Mr.
Rajtar's responsibilities include operations, logistics, engineering, quality
assurance and regulatory affairs.
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INTELLECTUAL PROPERTY AND INTANGIBLES
PATENTS
The Company has exclusive worldwide rights to the HAp coating technology from
UBC for use on stents and other medical devices, including the rights to
manufacture and market coated products using these technologies. To date, UBC
has two patents granted and one patent pending on novel coating technologies
that we intend to use for its stent coating and for additional medical devices.
The portfolio of issued and pending patents is described below.
Patents 100% Owned by the Company
- ---------------------------------
1. Expandable Stent and Method for Manufacturing Same - Patent #125740.
Inventor(s): Zhi-Yong Ma (patent acquired 100% by - MIV Therapeutics Inc.).
Abstract / Non-confidential Description:
An implantable intravascular stent comprising of plurality of expandable
stent modules made of medical grade stainless steel wire and connected
together along a common longitudinal axis by fastening one of the
connectors on one of the modules to an adjacent module. The patent
describes the design and the method of manufacturing of the wire
intravascular stent.
Patents Owned by UBC and Licensed Exclusively to the Company
- ------------------------------------------------------------
1. Novel Sol-Gel Calcium Phosphate Ceramic Coatings and Method of Making Same
- US Patent 6,426,114, Canadian Patent Application # 2,345,552.
Inventor(s): T. Troczynski, Dean-Mo Liu - UBC/MTRL.
Abstract / Non-confidential Description:
Low-Temperature Sol-Gel Synthesis of Hydroxyapatite Ceramics for
Biomedical.
Applications. This invention relates to novel sol-gel calcium phosphate, in
particular, hydroxyapatite, ceramic coatings and processes of making same
at low temperature. Such coatings are useful, inter alia, for dental
implants and other bone-metal contact appliances.
2. Biofunctional Hydroxyapatite Coatings and Microspheres for In-situ Drug
Encapsulation - US Patent No. 6,730,324, PCT Patent Application No. WO
02/085330 converted to pending applications in Canada; Patent No.
2,444,561), Europe #02721913.8 (Italy, France , Germany, United Kingdom,
Ireland, and The Netherlands), Australia #2002225889, Brazil #PI 0209040-6,
China #02811285.7, India #1357/KONP/2003, Israel #158474, Japan
#2002-582904, and South Africa #2003/8332.
Inventor(s): T. Troczynski, Dean-Mo Liu, Quanzu Yang - UBC/MTRL.
Abstract / Non-confidential Description:
This invention relates to a novel room-temperature process for obtaining
calcium phosphate, in particular hydroxyapatite, microspheres and coatings
with encapsulated drugs, proteins, genes, DNA for therapeutical use. The
coatings and microspheres are designed to perform a defined biological
function related to drug delivery, such as gene therapy through gene
delivery. A novel method for encapsulation and subsequent controlled
release of therapeutically active agents from such biofunctional coatings
and microspheres is disclosed. Such coatings and microspheres are useful
for side effects - free, long-term, targeted, controlled release and
delivery of drugs, proteins, DNA, and other therapeutic agents.
-56-
The Company has eight patent applications which are at various stages of
processing by The Patent Office at the present time. Three of these patents are
under exclusive license from UBC and five belong 100% to the Company.
TRADEMARKS
The Company has applications pending in the United States Patent and Trademark
Office and in Canada for protection of the trade name "MIV Therapeutics".
RESEARCH AND DEVELOPMENT PROGRAMS AND ACTIVITIES
The following is a summary of the Company's research and development programs
and activities:
1. Expandable Stent and Method for Manufacturing Same
Abstract / Non-confidential Description:
An implantable intravascular stent comprising of plurality of expandable
stent modules made of medical grade stainless steel wire and connected
together along a common longitudinal axis by fastening one of the
connectors on one of the modules to an adjacent module. The patent
describes the design and the method of manufacturing of the wire
intravascular stent.
2. Endovascular Device for Entrapment of Particulate Matter and Method of Use
Abstract / Non-confidential Description:
A device and method for protecting a blood vessel, and hence bodily
tissues, against damage caused by particulate such as an embolus. The
device may be a stent, for insertion in a large artery such as the
ascending aorta, and may be combined with a filter. In one embodiment, the
device includes an outer wire frame rather than a stent. The stent may be
made of at least one layer of mesh, which is typically attached or mounted
to the arterial wall. Typically only part of the stent is attached (for
example at a reinforcing ring structure). Typically the size of the
apertures of the mesh at the top portion of the stent is smaller than the
bottom portion of the stent. The device and method are particularly useful
in preventing blockages of flow to the brain.
3. Method of Modifying a Metal Substrate to Improve Surface Coverage of a
Coating
Abstract / Non-confidential Description:
A method of modifying a metal substrate at low temperature to enhance the
hydrophilicity of the substrate.
4. Smart I: Mult-layer Drug Delivery Device and Method of Manufacturing same
Abstract / Non-confidential Description:
A Multi-Layer Drug Delivery Device, the device includes a substrate, a
biocompatible layer on said substrate, at least one first layer of drug
formulation and one second layer.
5. Smart II: Thin Foam Coating Comprising discrete, Closed-Cell Capsules
Abstract / Non-confidential Description:
A drug delivery device, the device includes a substrate, at least one layer
of drug-containing emulsified foam applied to said substrate, wherein said
foam comprises a plurality of discrete closed-cell capsules each having an
outer polymeric shell and an inner core containing said drug.
-57-
6. Smart III: Microdevice comprising Nanocapsules for Controlled delivery of
Drugs and Method of Manufacturing same
Abstract / Non-confidential Description:
A drug delivery micro device is provided comprising a plurality of
nanocapsule assembled together.
WHERE YOU CAN FIND MORE INFORMATION
We are a reporting company under the Exchange Act and we file annual, quarterly
and current reports, proxy statements and other information with the SEC. You
may read and copy any material that we file with the SEC at the public reference
room of the SEC at 100 F Street, NE, Washington, D.C., U.S.A., 20549. Please
call the SEC at 1-800-SEC-0330 for further information on the operation of the
public reference room. The SEC also maintains a web site at http://www.sec.gov
that contains reports, proxy statements and information regarding issuers that
file electronically with the SEC. This prospectus is part of a registration
statement on Form SB-2 that we filed with the SEC. The registration statement
contains more information than this prospectus regarding us and the securities
offered, including certain exhibits. You can obtain a copy of the registration
statement from the SEC at any address listed above or from the SEC's Internet
site.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion contains forward-looking statements that are subject to
significant risks and uncertainties. There are several important factors that
could cause actual results to differ materially from historical results and
percentages and results anticipated by the forward-looking statements. The
Company has sought to identify the most significant risks to its business, but
cannot predict whether or to what extent any of such risks may be realized nor
can there be any assurance that the Company has identified all possible risks
that might arise. Investors should carefully consider all of such risks before
making an investment decision with respect to the Company's stock. In
particular, investors should refer to the section entitled "Risk Factors".
PLAN OF OPERATIONS
We are developing the next generation of biocompatible coatings utilizing HAp
nano-film technology. The Company's growth strategy is focused on developing
biocompatible device coatings, therapeutic stent technologies, and drug delivery
systems for drug eluting applications.
We intend to enter the drug-eluting stent market with:
1. passive nano-film HAp coating with optional capacity to carry adequate
quantity of anti-inflammatory drugs, which can reduce post-procedural
trauma;
2. multi-layer porous HAp coating, which is in an advanced development stage
and can be loaded with a considerable quantity of drugs, including
anti-inflammatory, immune system depressants, or with the new generation of
antithrombotic and/or antirestenotic drugs;
3. composite, polymer-free drug eluting coatings, which can use variety of
drugs in a biodegradable single-drug or multiple-drug configuration that
offers unique drug-eluting characteristics. Composite coating technologies
may combine advantages of HAp passive coatings with those of biodegradable
polymers, for improved biocompatibility, and enhanced mechanical and drug
eluting characteristics; and
4. multi-layer closed-cell composite drug eluting coating, which can carry
variety of drugs in single-drug or multiple-drug configurations of
encapsulated nano-chambers that can provide more effective and gradual drug
release, allow for flexible engineering of "personalized" drug eluting
characteristics within broad range of parameters, and are expected to elude
drugs over extended period of time with improved efficiency and safety.
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Drugs are contained in "nano-chambers", each of which measures between a
few nanometers and several micrometers in diameter to suit specific drug
release requirements. Multilayer composite coating technologies may combine
advantages of HAp passive coatings with those of biodegradable polymers,
for improved biocompatibility, enhanced mechanical and drug eluting
characteristics.
The Company's first commercial product could be a passive HAp-coated coronary
stent for use in angioplasty procedures followed by additional stent products
for drug-elution and for peripheral arteries.
Drug-eluting stents have gained significant popularity among the professional
medical community and investors alike. Our goal is to clearly position itself
among the leaders in the lucrative drug-eluting stent market.
ACQUISITION OF SAGAX, INC.
On March 14, 2005, the Company acquired 100% of SagaX, Inc. ("SagaX") a Delaware
corporation with operations in Israel from a third party. SagaX is in the
business of researching a neuro-vascular embolic stent filter medical device
through its subsidiary in Israel, which will complement the Company's current
research activities. SagaX has a registered patent entitled Endovascular Device
for Entrapment of Particulate and Method for Use. The technology patented is
still in the research stage. As at the date of acquisition, SagaX did not have
any other assets or activities prior to acquisition, thus no pro-forma statement
of operations has been prepared.
The Company agreed to issue 4,200,000 shares in exchange for all of the issued
and outstanding shares of SagaX. The shares are valued at $0.47, which is the
fair value of the shares at the time of agreement, and will be issued in three
intervals: 2,000,000 of the shares within 30 days of the effective date of this
Agreement (issued); 1,100,000 shares upon successful completion of large animal
trials and the final 1,100,000 shares upon CE Mark approval relating to SagaX's
products. The final 1,100,000 shares have not been accrued as its issuance is
dependent on obtaining CE Mark approval, which can not be determine at this
time. The Company has also agreed to pay $145,000 of the vendor's debt at the
time of acquisition and agreed to finance up to $730,000 for SagaX's research in
2005. If the Company decides to abandon the underlying patented project or is
placed into receivership or fails to fund SagaX in any six month period, then
the vendor or its nominee may repurchase SagaX, including all of its
intellectual property, in exchange for the return of all of the Company's common
shares issued and a cash payment equal to 125% of all cash advanced by the
Company to SagaX.
As at February 28, 2006, the 2,000,000 common shares have been issued for a fair
value of $940,000 and $145,000 ($80,000 in cash and $65,000 in shares of common
stock) has been paid for the vendor's debt.
In accordance with FIN 4: "Applicability of FASB No. 2 to Business Combinations
Accounted for by the Purchase Method", all acquisition costs of $1,085,000 have
been recorded as Purchased in-process Research and Development and expensed in
the statement of operations.
TERMINATION OF ACQUISITION OF SMT
On March 1, 2005, the Company entered into a share acquisition letter of intent
with the shareholders of Sahajanand Medical Technologies Inc. ("SMT") of India
to purchase 100% of the issued and outstanding shares of SMT. The Company
proposed acquisition of SMT was terminated, by mutual agreement, at the end of
January 2006.
PRODUCT DEVELOPMENT
Major product development programs pursued by the Company at the present time
and/or scheduled for development in the foreseeable future are listed below:
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SMART-1 DES
A Multi-Layer Drug Delivery Device, the device includes at least one first layer
of drug formulation and one second layer of topcoat to regulate the first drug
layer releasing. A non-polymeric drug-carrying composition and a new process of
multi-layer coating for controlled delivery of the drug for implantable medical
devices. The proprietary drug-eluting composite coating can be applied at
ambient environment. The coating may be encapsulated in the thin shell of
biodegradable polymer for added durability and when controlled delay of the drug
release process is required.
SMART-2 DES
A drug delivery device that includes at least one layer of drug-containing
emulsified foam that comprises a plurality of discrete closed-cell capsules each
having an outer polymeric shell and an inner core containing drug. A novel
method of coating for controlled delivery of the drug for implantable medical
devices where drug can be delivered in a number of controlled drug release
profiles according to the synthetic parameters. The method is based on synthesis
process that results on increased drug loading capacity and improved drug
encapsulation efficiency and capacity, which can be achieved via processes
performed at ambient temperature.
SMART-3 DES
A drug delivery micro device comprising a plurality of nanocapsules assembled
together. The nanocapsule can be administrated via a number of methods such as
injection, oral, and inhalation for drug delivery purpose with enhanced
bioavailability, and can be used to carry and deliver drugs or any therapeutic
active agents, especially for those poorly water-soluble or water-insoluble
drugs.
Drug-carrying compositions self-assembly into drug delivery nanodevices that
provide a significant capability in both solubility and bioavailability of
drugs, particularly for hydrophobic (water-insoluble) drugs, such as most of
anti-tumor agents and others.
BUSINESS EXPANSION
EQUIPMENT
Major equipment purchases planned for 2006 and 2007 include coating chambers for
use for cardiovascular and orthopaedic applications, specialized laboratory
equipment with focus on drug application and analysis of drug eluting profiles.
PERSONNEL
The addition of the following new R&D personnel is tentatively planned for 2006:
1. Senior Research Scientist, Drug Research and Application;
2. Regulatory Affairs, Animal and Clinical Trials Specialist;
3. Quality and Safety Specialist;
4. R&D Technologist; and
5. Production Operator.
The addition of the following new R&D personnel is tentatively planned for 2007:
6. Research Scientist, Drug Research and Application;
7. Research Scientist, Drug Delivery Technologies;
8. R&D Scientist; and
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9. Administration Assistant to Chief Technology Officer.
FACILITY
To accommodate growth in personnel and research programs the Company plans to
lease and equip another section of its manufacturing facility in late 2006 or
early 2007.
INTELLECTUAL PROPERTY
See also "Description of Business - Intellectual Property and Intangibles".
The Company will continue to expand and to maintain intellectual property
protection over its own technologies. The cost of maintenance of intellectual
property protection, related patents, research and advisory services is
estimated to be $120,000 in 2006 and $180,000 in 2007.
CASH REQUIREMENTS AND NEED FOR ADDITIONAL FUNDS
To date, the Company has invested approximately $7 million in research and
development of its stent products, coatings and operations, and in establishing
a quality manufacturing facility and completing laboratory and preclinical
testing on its stents. The Company also has developed strong research
collaborations with UBC for its proprietary stent coatings and has implemented
an aggressive in-house product development program.
In order to continue effectively the Company's research and development program
and marketing efforts aiming at successful commercialization of its HAp coating
technologies, the Company will require approximately US$5 million in the coming
two years. For research and development, the funds will be used to acquire
additional manufacturing/research and development equipments and the hiring of
additional people to complement its current research and development team. These
funds could be provided through any combination of the exercise of existing
warrants and options and/or through subsequent rounds of financing. There is no
assurance that we will be able to obtain financing on favourable terms or at
all.
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
The Company has incurred annual operating losses since its inception in January
1999 related primarily to the research and clinical development of its
technologies and products, corporate development and general administration
costs. During the nine months ended February 28, 2006, the Company posted a loss
from operations of $5,808,061, compared to a loss of $3,521,653 for the nine
months ended February 28, 2005. The Company posted a loss from operations of
$6,559,013 during the year ended May 31, 2005.
The working capital increased from a surplus of $2,661,575 at February 28, 2006
from a deficiency of $173,441 at February 28, 2005. The increase in the working
capital is due primarily to substantially more cash from financing activities
during the year.
The Company's main focus during the nine months ended February 28, 2006, has
been the continued research and development of new therapeutic technologies and
its biocompatible coating for stent and drug delivery systems. During this
period of time, the Company completed the transfer of technology from UBC to its
company owned premises with focus on the introduction of proper process controls
and volume production. This transition was facilitated through the acquisition
of sophisticated measuring and processing equipment.
GENERAL & ADMINISTRATIVE EXPENSES
General and administrative expenses increased to $3,778,493 during the nine
months ended February 28, 2006, compared to $1,739,836 for the nine months ended
February 28, 2005. General and administrative expenses were $2,619,524 for the
year ended May 31, 2005.
-61-
The following table compares the General and Administrative expenses for the
nine months ended February 28, 2006, the nine months ended February 28, 2005 and
the year ended May 31, 2005.
Nine months Nine months
ended ended
February 28, February 28, Increase / % Increase / Year ended
2006 2005 (Decrease) (Decrease) May 31, 2005
--------------------------------------------------------------------------------------------------------------
Legal $354,815 $157,079 $197,736 126% $195,379
Public Relations,
Financing and
Corporate Development $1,841,068 $405,410 $1,435,658 354% $935,337
Management Fees $406,445 $188,911 $217,534 115% $261,883
Consulting $288,773 $607,331 $(318,558) (52%) $692,690
Audit $230,776 $41,152 $189,624 461% $51,110
Operating Expenses $656,616 $339,953 $316,663 93% $483,125
Totals: $2,038,657 117% $2,619,524
RESEARCH & DEVELOPMENT EXPENSES
Research and developmental costs increased during the nine months ended February
28, 2006, to $1,398,040 compared to $755,590 for the nine months ended February
28, 2005. Research and developmental costs were $1,523,166 for the year ended
May 31, 2005.
DEPRECIATION EXPENSE
Depreciation expenses decreased to $118,885 during the nine months ended
February 28, 2006 compared to $136,721 for the nine months ended February 28,
2005. Depreciation expenses were $176,453 during the year ended May 31, 2005.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed its operations from private financing,
the exercise of warrants and interest income. The company has suffered recurring
losses from operations since inception, and has a working capital surplus of
$2,661,575 (current assets less current liabilities) as of February 28, 2006.
FINANCING
Cash flow from financing activities increased to $5,859,352 for the nine months
ended February 28, 2006, as compared to $53,431 for the nine months ended
February 28, 2005. Cash flow from financing activities was $1,586,277 for the
year ended May 31, 2005.
-62-
WARRANTS
As at February 28, 2006, the Company has outstanding warrants to the following
number of common shares of the Company:
Weighted
Average
Number of Shares Exercise price
----------------- ----------------
Balance, May 31, 2004 9,386,449 0.60
Issued - convertible debentures 1,851,500 0.25
Issued - finders' fees 10,000 0.75
Issued - services rendered 5,270,000 0.32
Exercised (2,310,710) 0.26
Expired (7,043,220) 0.65
----------------- ----------------
Balance, May 31, 2005 - Regular 7,164,019 0.45
Balance, May 31, 2005 - Series "A" 3,374,999 0.66
Balance, May 31, 2005 - Series "C" 674,997 0.66
----------------- ----------------
Balance, May 31, 2005 11,214,015 0.53
Regular:
Issued - services rendered 4,075,000 0.52
Issued - private placement 95,238 1.55
Issued - finder's fee 9,524 1.55
Exercised (1,134,290) 0.41
Expired (30,000) 0.30
Series "A":
Issued - private placement 3,842,498 0.65
Issued - finder's fee 62,500 0.65
Exercised (1,921,777) 0.66
Series "B":
Issued - private placement 3,842,498 0.65
Issued - finder's fee 62,500 0.65
Series "C":
Exercised (445,692) 0.66
----------------- ----------------
Balance, February 28, 2006 - Regular 10,179,491 0.49
Balance, February 28, 2006 - Series "A" 5,358,220 0.65
Balance, February 28, 2006 - Series "B" 3,904,998 0.65
Balance, February 28, 2006 - Series "C" 229,305 0.66
----------------- ----------------
Balance, February 28, 2006 19,672,014 0.57
================= ================
STOCK-BASED COMPENSATION
The Company's incentive stock option plan provides for the grant of incentive
stock options for up to 10,000,000 common shares to employees, consultants,
officers and directors of the Company. Incentive benefits granted under the plan
may be either incentive stock options, non-qualified stock options, stock
awards, restricted shares or cash awards. Options are granted for a term not to
exceed five years from the date of grant. Stock options granted generally vest
over a period of two years.
During the year ended May 31, 2005, the company granted an aggregate of 3,900,00
stock options. 2,200,000 of these options were to employees and/or directors of
the Company and the remaining 1,700,000 were to consultants. Each option
entitles the option holder to acquire one share of the Company's common stock at
a price between $0.20 and $0.40 per share, vesting immediately or at a specified
time and expires five years from the date of grant or term of agreement.
During the period ended February 28, 2006, the Company granted 1,710,000 stock
options to directors, employees and a consultant of the Company with an exercise
price ranging from $0.20 to $1.10 per share being vested in accordance with
their agreement and with an expiry date of five years from date of grant.
-63-
The fair value of the option granted is estimated on the grant date using the
Black-Scholes option pricing model assuming no dividend yield and the following
weighted average assumptions:
Nine Months ended Three Months ended Fiscal Year
February 28, 2006 February 28, 2006 May 31, 2005
----------------- ----------------- ------------
Risk-free interest rate 3.50% 3.50% 3.50%
Expected life (in years) 5 years 5 years 3 years
Expected volatility 88.87% 87.29% 78.58%
Option-pricing models require the use of highly subjective estimates and
assumptions including the expected stock price volatility. Changes in the
underlying assumptions can materially affect the fair value estimates and
therefore, in management's opinion, existing models do not necessarily provide
reliable measure of the fair value of the Company's stock options.
The Company had the following stock option activity during the year ended May
31, 2005:
WEIGHTED AVERAGE
NUMBER OF OPTIONS EXERCISE PRICE
----------------- --------------
Balance outstanding, May 31, 2004 4,225,000 $ 0.47
Options granted 3,900,000 0.28
Options exercised (75,000) 0.30
Options expired (300,000) 1.00
Balance outstanding, May 31, 2005 7,780,000 0.35
The following is a summary of employee stock options for the period ended
February 28, 2006:
WEIGHTED AVERAGE
SHARES EXERCISE PRICE
----------------------------------------------- -------------- -----------------------
Options outstanding, May 31, 2005 7,780,000 0.35
Options granted 1,710,000 0.33
Options exercised (125,000) 0.29
Options expired (1,820,000) 0.27
----------------------------------------------- -------------- -----------------------
Options outstanding, February 28, 2006 7,545,000 0.36
=============================================== ============== =======================
-64-
The following summarizes information about the stock options outstanding and
exercisable at February 28, 2006:
Options Outstanding Options Exercisable
Weighted
Average Weighted Weighted
Range of Number of Remaining Average Number of Average
Exercise options Contractual Exercise options Exercise
Prices Outstanding Life (yr) Price Exercisable Price
------------------- ---------------- ---------------- ------------ -------------- -------------
$ 0.17 950,000 1.66 $ 0.17 950,000 $ 0.17
$ 0.20 1,930,000 4.08 $ 0.20 1,930,000 $ 0.20
$ 0.21 500,000 2.15 $ 0.21 500,000 $ 0.21
$ 0.30 1,995,000 3.52 $ 0.30 1,995,000 $ 0.30
$ 0.40 150,000 4.00 $ 0.40 150,000 $ 0.40
$ 0.50 550,000 1.54 $ 0.50 550,000 $ 0.50
$ 0.55 650,000 1.75 $ 0.55 650,000 $ 0.55
$ 0.80 110,000 4.57 $ 0.80 85,000 $ 0.80
$ 0.85 150,000 4.97 $ 0.85 150,000 $ 0.85
$ 1.00 510,000 0.78 $ 1.00 510,000 $ 1.00
$ 1.10 50,000 4.73 $ 1.10 25,000 $ 1.10
------------------- ---------------- ---------------- ------------ -- -------------- -------------
$0.17 - $1.10 7,545,000 2.92 $ 0.36 7,495,000 $ 0.36
=================== ================ ================ ============ == ============== =============
CASH POSITION
At February 28, 2006, the Company had cash and cash equivalents of $2,650,073
compared to a cash position of $492,709 at May 31, 2005. The increase in the
Company's cash position is due primarily to an increase in financing activities.
The working capital increased from a deficiency of $173,441 at February 28, 2005
to a surplus of $2,661,575 at February 28, 2006. The Company had a working
capital deficiency of $478,359 as of May 31, 2005.
The Company intends to continue to raise additional funds through equity
financings via private placements, as it may need to raise additional capital to
fund operations over the long-term. There can be no guarantee that such funds
will be available to the Company.
ACCOUNTS PAYABLE & ACCRUED LIABILITIES
Accounts payable decreased to $172,919 at February 28, 2006 compared to $307,369
at May 31, 2005.
OFF-BALANCE SHEET ARRANGEMENTS
As of the date of this registration statement we do not have any off-balance
sheet arrangements that have or are reasonably like to have a current or future
effect on our financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to investors. The term "off-balance sheet
arrangement" generally means any transaction, agreement or other contractual
arrangement to which an entity unconsolidated with us is a party, under which we
have: (i) any obligation arising under a guarantee contract, derivative
instrument or variable interest; or (ii) a retained or contingent interest in
assets transferred to such entity or similar arrangement that serves as credit,
liquidity or market risk support for such assets.
DESCRIPTION OF PROPERTY
REAL PROPERTY
The Company owns no real property. It conducts all of its business from its
10,296 square foot leased facility in Vancouver, Canada where it conducts its
research and development of coronary stents and stent delivery systems and where
it has its first laser manufacturing facilities and clean rooms for packaging.
-65-
These facilities will be capable of producing 25,000 laser cut stents per annum
once the system is fully operational. These manufacturing facilities are
presently dedicated to production for research and clinical trial purposes, and
can be employed for first commercial production at such time, if ever, as the
Company successfully acquires certification and registration permitting the sale
of the MIV stent. The lease on the manufacturing facility extends to December
31, 2010 at a cost of $8,207(Cdn$9,438) per month.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended May 31, 2005, and the nine month period ended February 28,
2006, the Company paid or accrued $445,904 and $551,522, respectively, in
management and consulting fees to four directors and officers of the Company.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
OTCBB
Shares of our common stock are quoted on the OTCBB under the symbol "MIVT". Our
common stock is also quoted on each of the Munich and Frankfurt stock exchanges
under symbols "MIV.MU" and "MIV.F", respectively. The following table indicates
the high and low bid prices of our common stock during the periods indicated on
the OTCBB:
QUARTER ENDED HIGH BID LOW BID
------------- -------- -------
May 31, 2006 $0.95 $0.62
February 28, 2006 $1.45 $0.66
November 30, 2005 $1.74 $0.97
August 31, 2005 $1.75 $0.48
May 31, 2005 $0.72 $0.28
February 28, 2005 $0.33 $0.18
November 30, 2004 $0.37 $0.16
August 31, 2004 $0.61 $0.16
May 31, 2004 $0.81 $0.29
February 29, 2004 $0.65 $0.28
November 30, 2003 $0.69 $0.39
August 31, 2003 $0.92 $0.30
The source of the high and low bid information is the OTCBB. The market
quotations provided reflect inter-dealer prices, without retail mark-up,
markdown or commission and may not represent actual transactions.
PENNY STOCK
Our common stock is considered "penny stocks" under the rules the SEC under the
Exchange Act. The SEC has adopted rules that regulate broker-dealer practices in
connection with transactions in penny stocks. Penny stocks are generally equity
securities with a price of less than $5.00, other than securities registered on
certain national securities exchanges or quoted on the NASDAQ system, provided
that current price and volume information with respect to transactions in such
securities is provided by the exchange or quotation system. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock, to
deliver a standardized risk disclosure document prepared by the SEC, that: (a)
-66-
contains a description of the nature and level of risk in the market for penny
stocks in both public offerings and secondary trading; (b) contains a
description of the broker's or dealer's duties to the customer and of the rights
and remedies available to the customer with respect to a violation to such
duties or other requirements of securities' laws; (c) contains a brief, clear,
narrative description of a dealer market, including bid and ask prices for penny
stocks and the significance of the spread between the bid and ask price; (d)
contains a toll-free telephone number for inquiries on disciplinary actions; (e)
defines significant terms in the disclosure document or in the conduct of
trading in penny stocks; and (f) contains such other information and is in such
form, including language, type, size and format, as the SEC shall require by
rule or regulation. The broker-dealer also must provide, prior to effecting any
transaction in a penny stock, the customer with: (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and its
salesperson in the transaction; (c) the number of shares to which such bid and
ask prices apply, or other comparable information relating to the depth and
liquidity of the market for such stock; and (d) a monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgement of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitably statement.
These disclosure requirements may have the effect of reducing the trading
activity in the secondary market for our stock if it becomes subject to these
penny stock rules. Therefore, if our common stock becomes subject to the penny
stock rules, stockholders may have difficulty selling those securities.
HOLDERS OF COMMON SHARES
As at July 10, 2006, we had approximately 460 registered holders of our common
stock.
DIVIDENDS
There are no restrictions in our Articles or Bylaws that prevent us from
declaring dividends. The NEVADA REVISED STATUTES, however, do prohibit us from
declaring dividends where, after giving effect to the distribution of the
dividend:
1. we would not be able to pay our debts as they become due in the usual
course of business; or
2. our total assets would be less than the sum of our total liabilities plus
the amount that would be needed to satisfy the rights of shareholders who
have preferential rights superior to those receiving the distribution.
We have not declared any dividends and we do not plan to declare any dividends
in the foreseeable future.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Section 16(a) of the Exchange Act requires the Registrant's officers and
directors, and persons who own more than 10% of a registered class of the
Registrant's equity securities, to file reports of ownership and changes in
ownership of equity securities of the Registrant with the SEC and NASDAQ.
Officers, directors and greater than 10% shareholders are required by the SEC
regulation to furnish the Registrant with copies of all Section 16(a) that they
file.
Some of the officers and directors of the Company will not devote more than a
portion of their time to the affairs of the Company. There will be occasions
when the time requirements of the Company's business conflict with the demands
of their other business and investment activities. Such conflict may require
that the company attempt to employ additional personnel. There is no assurance
that the services of such persons will be available or that they can be obtained
upon terms favorable to the Company.
-67-
The following table sets forth compensation information as to each of our
executive officers for the past three fiscal years. Except for Messrs. Lindsay
and McGowan, none of our executive officers earned more than $100,000 during our
most recently completed fiscal year. No other compensation was paid to any such
officer or directors other than the cash and stock option compensation set forth
below.
SUMMARY COMPENSATION TABLE
- ---------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------ ---------------------------------
AWARDS PAYOUTS
---------------------- ---------
Securities
Restricted Underlying LTIP
Other Annual Stock Options / payouts All Other
Name Title Year Salary Bonus Compensation Awarded SARs (#) ($) Compensation
- ---------------------------------------------------------------------------------------------------------------------------
Alan P. Lindsay Chairman, 2006(1) $170,775 Nil Nil Nil Nil Nil Nil
Chief 2005 $185,244 Nil Nil Nil 500,000 Nil Nil
Executive 2004 $161,051 Nil Nil Nil 200,000 Nil Nil
Officer, 2003 $138,710 Nil $7,700 Nil 400,000 Nil Nil
Principal
Executive
Officer and
a director
- ---------------------------------------------------------------------------------------------------------------------------
Dr. I. Mark Landy President 2006(2) Nil Nil Nil Nil Nil Nil Nil
ans a 2005 Nil Nil Nil Nil Nil Nil Nil
director 2004 Nil Nil Nil Nil Nil Nil Nil
2003 Nil Nil Nil Nil Nil Nil Nil
- ---------------------------------------------------------------------------------------------------------------------------
Patrick A. Executive 2006(1) $103,368 Nil Nil Nil Nil Nil Nil
McGowan Vice 2005 $101,941 Nil Nil Nil 400,000 Nil Nil
President, 2004 $85,920 Nil Nil Nil 100,000 Nil Nil
Secretary 2003 $58,343 Nil $24,000 Nil 250,000 Nil Nil
Chief
Financial
Officer,
Principal
Accounting
Officer and
a director
- ---------------------------------------------------------------------------------------------------------------------------
Dr. Tom Vice 2006(1) $50,257 Nil Nil Nil Nil Nil Nil
Troczynski President 2005 $57,718 Nil Nil Nil 100,000 Nil Nil
of Coatings 2004 $52,967 Nil Nil Nil 100,000 Nil Nil
2003 $43,937 Nil $6,368 Nil Nil Nil Nil
- ---------------------------------------------------------------------------------------------------------------------------
Arc Rajitar Vice 2006(1) $88,594 Nil Nil Nil Nil Nil Nil
President 2005 $82,090 Nil Nil Nil 300,000 Nil Nil
of 2004 $69,122 Nil Nil Nil 200,000 Nil Nil
Operations 2003 $64,166 Nil Nil8 Nil Nil Nil Nil
(MIVI)
- ---------------------------------------------------------------------------------------------------------------------------
Dr. Daniel A director 2006(1) Nil Nil Nil Nil Nil Nil Nil
Savard 2005 Nil Nil Nil Nil Nil Nil Nil
2004 Nil Nil Nil Nil Nil Nil Nil
2003 Nil Nil $17,022 Nil 100,000 Nil Nil
- ---------------------------------------------------------------------------------------------------------------------------
Dr. Dov Shimon Chief 2006(1) $99,000 Nil Nil Nil Nil Nil Nil
Medical 2005 $101,000 Nil Nil Nil 500,000 Nil Nil
Officer and 2004 Nil Nil Nil Nil Nil Nil Nil
a director 2003 Nil Nil Nil Nil Nil Nil Nil
- ---------------------------------------------------------------------------------------------------------------------------
(1) Represents compensation for the period June 1 to February 28, 2006 which
forms part of fiscal year ending May 31, 2006.. Except as disclosed above,
the Company did not pay any compensation to any director or executive in
the fiscal year ended May 31, 2005.
(2) Dr. Landy was appointed the President of our company on April 1, 2006 and
as a director recently.
STOCK OPTION GRANTS
The following table sets forth information with respect to stock options granted
to directors and officers, including our named executive officers, for our
fiscal year ended May 31, 2005.
-68-
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
- ----------------------------------------------------------------------------------------------------------------------
NAME NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS OPTIONS GRANTED EXERCISE PRICE
NAME GRANTED TO EMPLOYEES (PER SHARE) EXPIRATION DATE
- ------------------------------------- --------------- ----------------------- ------------------- --------------------
Alan P. Lindsay 500,000 13% $0.20 2/15/2010
- ------------------------------------- --------------- ----------------------- ------------------- --------------------
Patrick A. McGowan 400,000 10% $0.20 2/15/2010
- ------------------------------------- --------------- ----------------------- ------------------- --------------------
Arc Rajtar 150,000 4% $0.20 2/9/2010
150,000 4% $0.30 3/3/2010
- ------------------------------------- --------------- ----------------------- ------------------- --------------------
Dr. Daniel Savard Nil Nil $Nil Nil
- ------------------------------------- --------------- ----------------------- ------------------- --------------------
Dr. Dov Shimon 200,000 5% $0.30 7/31/2009
300,000 8% $0.30 3/1/2010
- ------------------------------------- --------------- ----------------------- ------------------- --------------------
Dr. Tom Troczynski Nil Nil $Nil Nil
- ------------------------------------- --------------- ----------------------- ------------------- --------------------
EXERCISES OF STOCK OPTIONS AND YEAR-END OPTION VALUES
The following is a summary of the share purchase options exercised by our
directors and officers, including our named executive officers, during our
fiscal year ended May 31, 2005.
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION/SAR EXERCISES DURING THE LAST FINANCIAL YEAR END
AND FINANCIAL YEAR-END OPTION/SAR VALUES
- ----------------------------------------------------------------------------------------------------------------------
VALUE OF
UNEXERCISED UNEXERCISED
COMMON OPTIONS AT IN-THE-MONEY
SHARES FINANCIAL OPTIONS/SARS AT
ACQUIRED YEAR-END (#) FINANCIAL YEAR-END
ON VALUE EXERCISABLE/ ($) EXERCISABLE/
NAME (#) EXERCISE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------------- --------------- ----------------------- ------------------- --------------------
Alan P. Lindsay N/A N/A 1,200,000 Nil
- ------------------------------------- --------------- ----------------------- ------------------- --------------------
Patrick A. McGowan N/A N/A 1,000,000 Nil
- ------------------------------------- --------------- ----------------------- ------------------- --------------------
Dr. Tom Troczynski N/A N/A 200,000 Nil
- ------------------------------------- --------------- ----------------------- ------------------- --------------------
Arc Rajtar N/A N/A 500,000 Nil
- ------------------------------------- --------------- ----------------------- ------------------- --------------------
Dr. Daniel Savard N/A N/A 250,000 Nil
- ------------------------------------- --------------- ----------------------- ------------------- --------------------
Dr. Dov Shimon N/A N/A 500,000 Nil
- ------------------------------------- --------------- ----------------------- ------------------- --------------------
LONG-TERM INCENTIVE PLANS
We do not have any long-term incentive plans, pension plans, or similar
compensatory plans for our directors or executive officers.
-69-
EMPLOYMENT CONTRACTS
The Company entered into a Development Services Agreement with Alan Lindsay and
Associates Ltd. (the "Consultant") dated March 1, 2005. Pursuant to the
Agreement the Company agrees to retain the Consultant, and through the
Consultant Mr. Lindsay, to provide development and financing services as may be
necessary and determined by the Company to both develop and finance the
Company's technology and business. The term of the agreement is five years
commencing March 1, 2005 and expiring on March 1, 2010.
The Company entered into a Management Services Agreement with Simba Biomed
Venture Partners LLC (as a "Consultant") dated March 29, 2006. Pursuant to the
agreement the Company has agreed to retain the Consultant, and through the
Consultant Dr. Landy, to provide management and consulting services as may be
necessary and determined by the Company to both develop and commercialize the
Company's technology and business. The term of the agreement is four years
commencing March 29, 2006 and expiring on March 29, 2010.
The Company entered into an Executive Employment Agreement with Mr. Patrick
McGowan dated January 1, 2005. Pursuant to the Agreement, the Company will
employ Mr. McGowan in an executive capacity, commenced on January 1, 2005 and
will continue until May 1, 2007.
The Company entered into a Consulting Services Agreement with Dr. Dov Shimon
dated May 1, 2005. Pursuant to the Agreement, Dr. Shimon will work as director
and Chief Medical Officer with the Company. The term of the Agreement is 36
months commencing May 1, 2005 and expiring on May 1, 2008.
On November 18, 2004, the Company entered into a Letter of Engagement with
Trilogy Capital Partners, Inc. to develop and implement a proactive marketing
program to increase public awareness of the Company, and to generate a
significant increase in liquidity and market capitalization. Pursuant to the
Agreement, Trilogy will receive a fee of $10,000 per month and the Company will
issue to Trilogy an aggregate of 2,750,000 warrants. The warrants will have a
term of three years with an exercise price of $0.50 per share and include
piggyback and demand rights to the next registration statement filed by the
Company. The term of the agreement was 12 months, commencing November 18, 2004.
On July 1, 2005, the Company entered into an Amendment to the Letter of
Engagement with Trilogy Capital Partners, Inc., extending the term of the
original agreement to June 30, 2006.
On September 22, 2005, the Company entered into an Industrial Lease with
Investors Group Trust Co. Ltd. as Trustee Investors Real Property Fund under
which the Company will lease 10,296 square feet with monthly Minimum rent of
$8,207 for a term of five years commenting on January 1, 2006.
-70-
FINANCIAL STATEMENTS
The following consolidated financial statements of MIV listed below are included
with this prospectus. These consolidated financial statements have been prepared
on the basis of accounting principles generally accepted in the United States
and are expressed in U.S. dollars.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED FEBRUARY 28, 2006 PAGE
- --------------------------------------------------------------------------------------------------------------
Consolidated Balance Sheets, February 28, 2006 and May 31, 2005 F-2
Consolidated Statements of Stockholders' Equity (Deficit) for the period from
inception (January 20, 1999) to February 28, 2006 F-3
Consolidated Statements of Operations for the nine months ended February 28, 2006 and 2005 and for
the periods from inception (January 20, 1999) to February 28, 2006 F-5
Consolidated Statements of Cash Flows for the nine months ended February 28, 2006 and 2005 and for
the periods from inception (January 20, 1999) to February 28, 2006 F-6
Notes to Consolidated Financial Statements F-7
AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MAY 31, 2005 PAGE
- --------------------------------------------------------------------------------------------------------------
Report of Independent Registered Public Accounting Firm F-21
Consolidated Balance Sheets, May 31, 2005 and 2004 F-23
Consolidated Statements of Stockholders' Equity (Deficit) for the period from
inception (January 20, 1999) to May 31, 2005 F-24
Consolidated Statements of Operations for the years ended May 31, 2005 and 2004 and for the period
from inception (January 20, 1999) to May 31, 2005 F-29
Consolidated Statements of Cash Flows for the years ended May 31, 2005 and 2004 and for the period
from inception (January 20, 1999) to May 31, 2005 F-30
Notes to Consolidated Financial Statements F-31
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
On June 6, 2006, our Board of Directors approved the engagement of Dale Matheson
Carr-Hilton LaBonte, Chartered Accountants, of Suite 1500 - 1140 West Pender
Street, Vancouver, B.C., Canada, V6E 4G1, as our principal independent
accountant, and dismissed Ernst & Young LLP, Chartered Accountants, as principal
independent accountants.
The Company decided not to reappoint Ernst & Young LLP as auditors and informed
them of their dismissal on June 5, 2006. The decision to change accountants was
approved by the Company's Board of Directors.
Ernst & Young LLP's report on the Company's consolidated financial statements
for the fiscal year ended May 31, 2005 did not contain an adverse opinion or
disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit
scope, or accounting principles, except as indicated in the following paragraph.
Ernst & Young LLP's report on the consolidated financial statements of the
Company for the fiscal year ended May 31, 2005 contained an explanatory
paragraph with respect to the restatement of certain information and and
regarding uncertainty doubt as to the Company's ability to continue as a going
concern.
In connection with the audit of the most recent fiscal year ended May 31, 2005
and for any subsequent interim period preceding the change, there were no
disagreements with Ernst & Young LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures,
which disagreements if not resolved to the satisfaction of Ernst & Young LLP
would have caused them to make reference thereto in their report on the
financial statements for such year.
In connection with the audits of the most recent fiscal years ended May 31, 2005
and through the subsequent interim period preceding the change, there have been
no reportable events as defined in paragraphs (a)(1)(v)(A) through (D) of Item
304 of Regulation S-B.
At the time of our decision to replace Ernst & Young LLP with Dale Matheson
Carr-Hilton LaBonte, we had not consulted Dale Matheson Carr-Hilton LaBonte on
the application of accounting principles to a specific completed or contemplated
transaction, or on the type of audit opinion that might be rendered on our
financial statements, and neither written nor oral advice was then provided by
Dale Matheson Carr-Hilton LaBonte that was an important factor considered by our
company in reaching any decision as to accounting, auditing or financial
reporting issues.
On May 28, 2004, our Board of Directors approved and authorized the engagement
of Moore Stephens Ellis Foster Ltd., Chartered Accountants, as our principal
independent accountant and replaced Morgan & Company. Moore Stephens Ellis
Foster Ltd. was our principal independent accountant for the fiscal year ended
May 31, 2004.
During the two fiscal years ended May 31, 2003 and any subsequent interim
period, there were no disagreements with Morgan & Company, which were not
resolved on any matter concerning accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of Morgan & Company would have caused Morgan &
Company to make reference to the subject matter of the disagreements in
connection with its reports. Morgan & Company as our principal independent
accountant, did not provide an adverse opinion or disclaimer of opinion to our
financial statements, nor modify its opinion as to uncertainty, audit scope or
accounting principles. The audit opinions were modified to contain a going
concern qualification during our two most recent fiscal years.
Moore Stephens Ellis Foster Ltd. was our principal independent accountant from
May 29, 2004 to May 3, 2005. On May 3, 2005, Moore Stephens Ellis Foster Ltd.
entered into a transaction with Ernst & Young LLP (Canada) under which certain
assets of Moore Stephens Ellis Foster Ltd. were sold to Ernst & Young LLP and
the professional staff and partners of Moore Stephens Ellis Foster Ltd. joined
Ernst & Young LLP either as employees or partners of Ernst & Young LLP and
carried on their practice as members of Ernst & Young LLP. Subsequent to the
transaction, Moore Stephens Ellis Foster Ltd. was dismissed as the auditor and
Ernst & Young LLP was appointed as our independent auditor.
Moore Stephens Ellis Foster Ltd.'s report on the Company's consolidated
financial statements for the year ended May 31, 2004, did not contain an adverse
opinion or a disclaimer of opinion, nor was it qualified or modified as to
uncertainty, audit scope, or accounting principles except Moore Stephen Ellis
Foster Ltd.'s report notes that the Company has incurred significant recurring
net loses which raise substantial doubt about the Company's ability to continue
as a going concern.
During the period covered by the report of Moore Stephens Ellis Foster Ltd. and
up to the effective date of appointment, the Company had no disagreements with
Moore Stephens Ellis Foster Ltd., whether or not resolved, on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Moore Stephens Ellis Foster Ltd., would have cause Moore Stephens Ellis Foster
Ltd. to make reference to the subject matter of the disagreement in connection
with its reports.
During the Company's previous two fiscal years and up to the effective date of
resignation the Company did not consult with Ernst & Young LLP regarding any of
the items described under Item 304(a)(1)(iv)(B), Item 304(a)(2) or Item 304(b)
of Regulation S-B.
MIV THERAPEUTICS INC.
(A development stage company)
Consolidated Financial Statements
February 28, 2006
(Unaudited - Prepared by Management)
Expressed in U.S. Dollars
Index
-----
Consolidated Balance Sheets
Consolidated Statements of Stockholders' Equity (Deficit)
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
F-1
MIV THERAPEUTICS INC.
(A development stage company)
Consolidated Balance Statements
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- ------------------------------------------------------------------------------------------------
February 28 May 31
2006 2005
- ------------------------------------------------------------------------------------------------
Basis of Presentation (Note 1)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,650,073 $ 492,709
Accounts receivable 80,036 33,742
Due from related party (Note 4) -- 17,500
Prepaid expenses and deposits (Note 4) 112,466 41,139
- ------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 2,842,575 585,090
PROJECT ACQUISITION COSTS (Note 5) -- 53,426
PROPERTY AND EQUIPMENT, net (Note 2) 274,473 222,689
- ------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 3,117,048 $ 861,205
================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
CURRENT LIABILITIES
Accounts payable and other payables $ 172,919 $ 307,369
Convertible debentures (Note 3) -- 756,080
Deferred lease inducement - current portion (Note 6) 8,081 --
- ------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 181,000 1,063,449
- ------------------------------------------------------------------------------------------------
DEFERRED LEASE INDUCEMENT (Note 6) 29,630 --
- ------------------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 210,630 $ 1,063,449
- ------------------------------------------------------------------------------------------------
Commitments and contingent liabilities (Note 6)
STOCKHOLDERS' EQUITY (DEFICIT)
COMMON STOCK (Note 3)
Authorized:
140,000,000 common shares with a par value of $0.001
20,000,000 preferred shares with a par value of $0.001
Issued and outstanding:
67,243,726 common shares at February 28, 2006 and
50,517,020 common shares at May 31, 2005 67,245 50,517
ADDITIONAL PAID-IN CAPITAL 31,417,594 22,383,581
DEFERRED COMPENSATION (676,193) (556,138)
COMMON STOCK ISSUABLE 74,000 139,000
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE (27,783,149) (22,033,109)
ACCUMULATED OTHER COMPREHENSIVE LOSS (193,079) (186,095)
- ------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 2,906,418 (202,244)
- ------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,117,048 $ 861,205
================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
F-2
MIV THERAPEUTICS INC.
(A development stage company)
Consolidated Statements of Stockholders' Equity (Deficit)
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- -----------------------------------------------------------------------------------------------------------------------------------
Accumulated Deficit Total
Other Accumulated Stock-
Common Stock Additional Common Compre- During the holders'
----------------------- Paid-in Deferred Stock hensive Development Equity
Shares Amount Capital Compensation Issuable (Loss) Stage (Deficit)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ $ $ $ $ $ $
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE, May 31, 2004 40,092,993 40,093 18,032,242 (190,375) -- (162,115) (15,424,227) 2,295,618
Issuance of common stock:
- - for share subscriptions 904,215 904 217,499 -- -- -- -- 218,403
- - for exercise of warrants 2,320,710 2,321 605,064 -- -- -- -- 607,385
- - for exercise of options 75,000 75 22,425 -- -- -- -- 22,500
- - for services 1,904,703 1,905 543,123 (194,968) 74,000 -- -- 424,060
- - for finder's fee on private
placements completed in
prior year 10,000 10 (10) -- -- -- -- --
- - in exchange of MI shares 3,209,399 3,209 613,376 -- -- -- -- 616,585
- - for acquisition of SagaX 2,000,000 2,000 938,000 -- 65,000 -- -- 1,005,000
Fair value of warrants attached
to Convertible debentures -- -- 48,920 -- -- -- -- 48,920
Warrants issued for services -- -- 917,164 (917,164) -- -- -- --
Stock options granted -- -- 155,978 -- -- -- -- 155,978
Amortization of deferred
compensation -- -- -- 746,369 -- -- -- 746,369
Beneficial conversion feature
of convertible debentures -- -- 289,800 -- -- -- 289,800
Comprehensive income (loss):
Foreign currency translation
adjustment -- -- -- -- -- (23,980) -- (23,980)
Loss for the period -- -- -- -- -- -- (6,608,882) (6,608,882)
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE, May 31, 2005 50,517,020 50,517 22,383,581 (556,138) 139,000 (186,095) (22,033,109) (202,244)
===================================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS
F-3
MIV THERAPEUTICS INC.
(A development stage company)
Consolidated Statements of Stockholders' Equity (Deficit)
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- -----------------------------------------------------------------------------------------------------------------------------------
Accumulated Deficit Total
Other Accumulated Stock-
Common Stock Additional Common Compre- During the holders'
----------------------- Paid-in Deferred Stock hensive Development Equity
Shares Amount Capital Compensation Issuable (Loss) Stage (Deficit)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ $ $ $ $ $ $
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE, May 31, 2005 50,517,020 50,517 22,383,581 (556,138) 139,000 (186,095) (22,033,109) (202,244)
Issuance of common stock:
- - for share subscriptions
- Reg S 1,704,689 1,705 718,390 -- -- -- -- 720,095
- Private Placement 7,649,763 7,650 3,452,600 -- -- -- -- 3,460,250
- - for exercise of warrants 3,289,016 3,289 1,707,719 -- -- -- -- 1,711,008
- - for exercise of options 112,723 113 17,887 -- -- -- -- 18,000
- - for convertible debentures
exercised 3,158,920 3,159 737,651 -- -- -- -- 740,810
- - for services 811,595 812 622,605 (164,842) (65,000) -- -- 393,575
Warrants issued for services -- -- 1,264,518 (1,264,518) -- -- -- --
Stock options granted -- -- 512,643 -- -- -- -- 512,643
Amortization of deferred
compensation -- -- -- 1,309,305 -- -- -- 1,309,305
Comprehensive income (loss):
Foreign currency translation
adjustment -- -- -- -- -- (6,984) -- (6,984)
Loss for the period -- -- -- -- -- -- (5,750,040) (5,750,040)
- -----------------------------------------------------------------------------------------------------------------------------------
BALANCE, February 28, 2006 67,243,726 67,245 31,417,594 (676,193) 74,000 (193,079) (27,783,149) 2,906,418
===================================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS
F-4
MIV THERAPEUTICS INC.
(A development stage company)
Consolidated Statements of Operations
(Unaudited - Prepared by Management)
- ---------------------------------------------------------------------------------------------------------------------------
(EXPRESSED IN U.S. DOLLARS)
- ---------------------------------------------------------------------------------------------------------------------------
Period
from
inception
(January 20
1999) to NINE MONTHS ENDED THREE MONTHS ENDED
February 28 FEBRUARY 28 FEBRUARY 28
2006 2006 2005 2006 2005
- ---------------------------------------------------------------------------------------------------------------------------
EXPENSES
General and administrative (Note 7) $ 14,820,997 $ 3,778,493 $ 1,739,836 $ 1,222,765 $ 499,582
Research and development (Note 8) 6,708,804 1,398,040 755,590 555,723 351,842
Stock-based compensation 3,747,337 512,643 282,951 7,000 282,951
Depreciation 873,626 118,885 136,721 47,872 51,574
Interest expense 879,683 -- -- -- --
Licenses acquired charged to operations 479,780 -- -- -- --
Finance cost on convertible debentures 382,307 -- -- -- --
Purchased in-process research
and development 2,205,013 -- 606,555 -- 606,555
- ---------------------------------------------------------------------------------------------------------------------------
30,097,547 5,808,061 3,521,653 1,833,360 1,792,504
- ---------------------------------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS (30,097,547) (5,808,061) (3,521,653) (1,833,360) (1,792,504)
GAIN ON EXTINGUISHMENT OF DEBT 462,249 -- -- -- --
INTEREST INCOME 116,674 61,746 5,161 28,615 136
GAIN(LOSS) ON FOREIGN EXCHANGE 84,990 (3,725) (22,937) (1,810) (14,319)
- ---------------------------------------------------------------------------------------------------------------------------
LOSS FOR THE PERIOD BEFORE
MINORITY INTEREST (29,433,634) (5,750,040) (3,539,429) (1,806,555) (1,806,687)
MINORITY INTEREST SHARE OF LOSS 806,310 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
NET LOSS FOR THE PERIOD $(28,627,324) $ (5,750,040) $ (3,539,429) $ (1,806,555) $ (1,806,687)
===========================================================================================================================
LOSS PER COMMON SHARE
- basic and diluted $ (1.17) $ (0.09) $ (0.09) $ (0.03) $ (0.04)
===========================================================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
- basic and diluted 24,410,585 62,008,648 41,220,148 66,752,020 41,532,175
===========================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
F-5
MIV THERAPEUTICS INC.
(A development stage company)
Consolidated Statements of Cash Flows
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- ----------------------------------------------------------------------------------------------------------
Period from
inception
(January 20
1999) to NINE MONTHS ENDED
February 28 FEBRUARY 28
2006 2006 2005
- ----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Net loss for the period $(28,627,324) $ (5,750,040) $ (3,539,429)
Adjustments to reconcile loss to
net cash used in operating activities:
- stock-based compensation 6,692,972 1,821,949 756,270
- stock issued for other than cash 4,437,187 393,575 173,259
- interest expense on related party loan 850,000 -- --
- accrued interest expense on convertible debentures 34,730 34,730 --
- depreciation 873,627 118,885 136,721
- leasehold improvements written down 13,300 -- --
- project acquisition costs -- 53,426 --
- purchased in-process research and development 2,275,013 -- 606,555
- gain on extinguishment of debt (462,249) -- --
- provision for bad debt 160,000 -- --
- beneficial conversion feature on convertible debenture 289,800 -- --
- minority interest (806,310) -- --
Changes in non-cash working capital items:
- accounts receivable (240,287) (46,294) 2,245
- due from related party -- 17,500 (19,187)
- prepaid expenses and deposits (113,024) (71,327) (180,115)
- accounts payable and other payables 233,482 (96,739) 194,239
- ----------------------------------------------------------------------------------------------------------
Net cash used in operating activities (14,389,083) (3,524,335) (1,869,442)
- ----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Issuance of common stock,
less share issuance costs 15,289,659 5,909,352 67,016
Due to related parties 850,000 -- (13,585)
Proceeds from (repayment of) convertible debentures 755,000 (50,000) --
Cash acquired in reverse acquisition 13,824 -- --
Subscriptions received 1,357,310 -- --
Common stock redemption (120,000) -- --
Loan payable 500,000 -- --
- ----------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 18,645,793 5,859,352 53,431
- ----------------------------------------------------------------------------------------------------------
CASH FLOWS USED IN INVESTING ACTIVITIES
Acquisition of license (200,000) -- --
Purchase of property and equipment (1,171,242) (170,669) (212,912)
- ----------------------------------------------------------------------------------------------------------
Net cash used in investing activities (1,371,242) (170,669) (212,912)
- ----------------------------------------------------------------------------------------------------------
FOREIGN EXCHANGE EFFECT ON CASH (235,395) (6,984) (5,589)
- ----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,650,073 2,157,364 (2,034,512)
CASH AND CASH EQUIVALENTS, beginning of period -- 492,709 2,034,530
- ----------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,650,073 $ 2,650,073 $ 18
==========================================================================================================
(PLEASE SEE NOTE 9 FOR SUPPLEMENTAL DISCLOSURES)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
F-6
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
February 28, 2006
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION - GOING CONCERN UNCERTAINTIES
Since inception, the Company has suffered recurring losses, totalling
$28,627,324 as of February 28, 2006. Management has been able to, thus far,
finance the operations through the issuance of common stock in order to
meet its strategic objectives. Management plans to continue to seek other
sources of financing on favorable terms; however, there are no assurances
that any such financing can be obtained on favorable terms, if at all.
Management expects to keep its operating costs to a minimum until cash is
available through financing or operating activities. There are no
assurances that the Company will be successful in achieving these goals.
The Company anticipates that losses will continue until such time, if ever,
as the Company is able to generate sufficient revenues to support its
operations. The Company's ability to generate revenue primarily depends on
its success in completing development and obtaining regulatory approvals
for the commercialization of its stent technology. The Company's ability to
obtain sufficient financing to continue the development of, and if
successful, to commence the manufacture and sale of its products under
development, if and when approved by the applicable regulatory agencies is
uncertain. In view of these conditions, the ability of the Company to
continue as a going concern is in substantial doubt and dependent upon
achieving a profitable level of operations and on the ability of the
Company to obtain necessary financing to fund ongoing operations.
Management believes that its current and future plans enable it to continue
as a going concern. These consolidated financial statements do not give
effect to any adjustments which would be necessary should the Company be
unable to continue as a going concern and therefore be required to realize
its assets and discharge its liabilities in other than the normal course of
business and at amounts different from those reflected in the accompanying
consolidated financial statements.
The accompanying unaudited interim consolidated financial statements have
been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC") and, in the opinion of
management, include all adjustments (consisting of normal recurring
accruals) necessary for fair presentation of financial position, results of
operations and cash flows for the interim periods. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the rules and regulations of the SEC. The
Company believes that the disclosures contained herein are adequate to make
the information presented not misleading. The statements of operations for
the nine months ended February 28, 2006 are not necessarily indicative of
the results to be expected for the full year. These unaudited interim
consolidated financial statements should be read in conjunction with the
audited financial statements and accompanying notes included in the
Company's 2005 Annual Report on Form 10-K for the year ended May 31, 2005.
F-7
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
February 28, 2006
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
2. PROPERTY AND EQUIPMENT
February 28, 2006
----------------------------------------
Accumulated Net Book
Cost Amortization Value
----------------------------------------------------------------------------
Furniture and fixtures $ 59,003 $ 44,891 $ 14,112
Computer equipment 134,114 106,843 27,271
Laboratory equipment 917,232 684,142 233,090
Leasehold improvements 49,158 49,158 --
----------------------------------------------------------------------------
$1,159,507 $ 885,034 $ 274,473
============================================================================
May 31, 2005
----------------------------------------
Accumulated Net Book
Cost Amortization Value
----------------------------------------------------------------------------
Furniture and fixtures $ 41,297 $ 39,867 $ 1,430
Computer equipment 110,766 101,146 9,620
Laboratory equipment 789,158 577,519 211,639
Leasehold improvements 49,158 49,158 --
----------------------------------------------------------------------------
$ 990,379 $ 767,690 $ 222,689
============================================================================
3. STOCKHOLDERS' EQUITY
(a) Common Stock
(i) On January 19, 2006, the stockholders of the Company during its
Annual General Meeting approved the increase in its authorized
capital stock from one hundred million shares of capital stock
consisting of 80,000,000 common shares with par value of $0.001
per share and 20,000,000 preferred shares with par value of
$0.001 per share to 160,000,000 of capital stock consisting of
140,000,000 common shares with par value of $0.001 per share and
20,000,000 preferred shares with par value of $0.001 per share.
(ii) During the nine month period ended February 28, 2006, a total of
1,704,689 Regulation S ("Reg S") stock has been issued at a price
range of $0.30 to $0.51 per share for total net proceeds of
$720,095 (net of agent's fees of $75,500).
As at February 28, 2006, 2,500,000 Reg S stocks are held in trust
by the financial custodian.
F-8
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
February 28, 2006
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
3. STOCKHOLDERS' EQUITY (CONTINUED)
(a) Common Stock (continued)
(iii) During the nine month period ended February 28, 2006, the
Company issued an aggregate of 811,595 common shares for
consulting, research and development, legal and employee services
for a total value of $567,871 being the fair value of the shares
at the agreement date and being expensed over the period of
completion of performance.
(iv) During the nine month period ended February 28, 2006, the Company
issued 3,289,016 common shares pursuant to an exercise of stock
purchase warrants for total proceeds of $1,711,008. Of these
shares, 340,949 were exercised under the cashless option of the
agreement.
(v) During the nine month period ended February 28, 2006, the Company
issued 112,723 common shares pursuant to an exercise of stock
purchase options for total proceeds of $18,000. Of these shares,
52,723 were exercised under the cashless option of the agreement.
(vi) On October 4, 2005, the Company issued an aggregate of 3,158,920
common shares pursuant to an exercise of Senior Convertible
Debentures (the "Debentures") issued by the Company in a private
placement on March 15, 2005. The Debentures was exercised at a
conversion price, as determined by the terms of the Debenture
Agreement, of $0.25 per common share. The conversion was for an
aggregate of $755,000 principal amount and $34,730 interest due
under the Debentures. The remaining $50,000 of Debentures were
repaid in cash including accrued interest of $2,278.
(vii) On October 6, 2005, the Company completed a private placement of
95,238 units at a price of $1.05 per unit for total proceeds of
$100,000. Each unit is comprised of one common share and one
non-transferable share purchase warrant. Each warrant entitles
the holder to purchase one common share for $1.55 per share for a
period of two years from the date of grant.
The warrants had an estimated fair value of $64,208 using the
Black Scholes Option Pricing Model. The assumptions used in the
Black Scholes Option Pricing Model are: volatility: 81.23%,
discount rate: 5.25% and call option value: $0.67.
In connection with the private placement, the Company issued to
the finder 9,524 units. Each unit is comprised of one common
share and one non-transferable share purchase warrant. Each
warrant entitles the holder to purchase one common share for
$1.55 per share for a period of two years from the date of grant.
F-9
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
February 28, 2006
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
3. STOCKHOLDERS' EQUITY (CONTINUED)
(a) Common Stock (continued)
The warrants had an estimated fair value of $2,306 using the
Black Scholes Option Pricing Model. The assumptions used in the
Black Scholes Option Pricing Model are: volatility: 87.29%,
discount rate: 5.25% and call option value: $0.24.
(viii) On August 11, 2005, the Company completed a private
placement of 7,545,000 units at the price of $0.45 per Unit for
total net proceeds of $3,370,250. Each Unit is comprised of one
common share together with one-half of one Series "A"
non-transferable share purchase warrant (each a "Series A
Warrant") and one-half of one Series "B" non-transferable share
purchase warrant (each a "Series B Warrant"). Each whole Series
A Warrant entitles the holder to purchase one common share at a
price of $0.65 per share for a period which is the earlier of
(i) 12 months from August 11, 2005 and (ii) six months
commencing from the effective date of the Company's proposed
"Registration Statement". Each whole Series B Warrant entitles
the holder to purchase one common share at a price of $0.70 per
share for the first 12 months, at a price of $0.85 per share for
the next 6 months, and at a price of $1.00 per share thereafter.
Series B Warrants are exercisable at the earlier of (i) 30
months from August 11, 2005 and (ii) 24 months commencing from
the effective date of the Company's proposed "Registration
Statement".
In connection to the private placement, a finder's fee comprised
of $25,000 in cash was paid and 62,500 Series A Warrants and
Series B Warrants were issued. In a separate
transaction, 39,994 units and 100,000 units were issued for legal
fees and investor relations services, respectively. These 39,994
shares and 100,000 shares have been included in Note 3(a)(iii).
These warrants had an estimated fair value of $2,245,749 using
the Black Scholes Option Pricing Model. The assumptions used in
the Black Scholes Option Pricing Model are: volatility: 81.20%
and 57.41% for Series A and B, respectively, discount rate: 5.25%
for both Series A and B and call option value: $0.32 and $0.26
for Series A and B, respectively.
F-10
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
February 28, 2006
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
3. STOCKHOLDERS' EQUITY (CONTINUED)
(b) Warrants
The following table summarizes information about the warrants issued
by the Company:
Weighted
Average
Number of Exercise
Shares price
------------------------
Balance, May 31, 2004 9,386,449 0.60
Issued - convertible debentures 1,851,500 0.25
Issued - finders' fees 10,000 0.75
Issued - services rendered 5,270,000 0.32
Exercised (2,310,710) 0.26
Expired (7,043,220) 0.65
------------------------
Balance, May 31, 2005 - Regular 7,164,019 0.45
Balance, May 31, 2005 - Series "A" 3,374,999 0.66
Balance, May 31, 2005 - Series "C" 674,997 0.66
------------------------
Balance, May 31, 2005 11,214,015 0.53
Regular:
Issued - services rendered 4,075,000 0.52
Issued - private placement 95,238 1.55
Issued - finder's fee 9,524 1.55
Exercised (1,134,290) 0.41
Expired (30,000) 0.30
Series "A":
Issued - private placement 3,842,498 0.65
Issued - finder's fee 62,500 0.65
Exercised (1,921,777) 0.66
Series "B":
Issued - private placement 3,842,498 0.65
Issued - finder's fee 62,500 0.65
Series "C":
Exercised (445,692) 0.66
------------------------
Balance, February 28, 2006 - Regular 10,179,491
0.49
Balance, February 28, 2006 - Series "A" 5,358,220 0.65
Balance, February 28, 2006 - Series "B" 3,904,998 0.65
Balance, February 28, 2006 - Series "C" 229,305 0.66
------------------------
BALANCE, FEBRUARY 28, 2006 19,672,014 0.57
========================
F-11
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
February 28, 2006
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
3. STOCKHOLDERS' EQUITY (CONTINUED)
(c) Stock Options
The Company's incentive stock options plan provides for the grant of
incentive stock options for up to 10,000,000 common shares to
employees, consultants, officers and directors of the Company.
Incentive benefits granted under the plan may be either incentive
stock options, non-qualified stock options, stock awards, restricted
shares or cash awards. Options are granted for a term not to exceed
five years from the date of grant. Stock options granted generally
vest over a period of two years.
During the period ended February 28, 2006, the Company granted
1,710,000 stock options to directors, employees and a consultant of
the Company with exercise prices ranging from $0.20 to $1.10 per share
being vested in accordance with their agreement and with an expiry
date of five years from date of grant.
The fair value of the option granted is estimated on the grant date
using the Black-Scholes option pricing model assuming no dividend
yield and the following weighted average assumptions:
NINE MONTHS THREE MONTHS FISCAL YEAR
ENDED ENDED ENDED
February 28 February 28 May 31
2006 2006 2005
----------- ----------- -----------
Risk-free interest rate 3.50% 3.50% 3.50%
Expected life (in years) 5 years 5 years 3 years
Expected volatility 88.87% 87.29% 78.58%
Option-pricing models require the use of highly subjective estimates
and assumptions including the expected stock price volatility. Changes
in the underlying assumptions can materially affect the fair value
estimates and therefore, in management's opinion, existing models do
not necessarily provide reliable measure of the fair value of the
Company's stock options.
F-12
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
February 28, 2006
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
3. STOCKHOLDERS' EQUITY (CONTINUED)
(c) Stock Options (continued)
Summary of employee stock options information for the period ended
February 28, 2006 is as follows:
Weighted Average
Exercise
Shares Price
----------------------------------------------------------------------
Options outstanding, May 31, 2005 7,780,000 0.35
Options granted 1,710,000 0.33
Options exercised (125,000) 0.29
Options expired (1,820,000) 0.27
----------------------------------------------------------------------
Options outstanding, February 28, 2006 7,545,000 0.36
======================================================================
The following summarizes information about the stock options
outstanding and exercisable at February 28, 2006:
Options Outstanding Options Exercisable
Weighted
Average Weighted Weighted
Range of Number of Remaining Average Number of Average
Exercise options Contractual Exercise options Exercise
Prices Outstanding Life (yr) Price Exercisable Price
------------- ----------- ------------ ---------- ----------- --------
$ 0.17 950,000 1.66 $ 0.17 950,000 $ 0.17
$ 0.20 1,930,000 4.08 $ 0.20 1,930,000 $ 0.20
$ 0.21 500,000 2.15 $ 0.21 500,000 $ 0.21
$ 0.30 1,995,000 3.52 $ 0.30 1,995,000 $ 0.30
$ 0.40 150,000 4.00 $ 0.40 150,000 $ 0.40
$ 0.50 550,000 1.54 $ 0.50 550,000 $ 0.50
$ 0.55 650,000 1.75 $ 0.55 650,000 $ 0.55
$ 0.80 110,000 4.57 $ 0.80 85,000 $ 0.80
$ 0.85 150,000 4.97 $ 0.85 150,000 $ 0.85
$ 1.00 510,000 0.78 $ 1.00 510,000 $ 1.00
$ 1.10 50,000 4.73 $ 1.10 25,000 $ 1.10
------------- ----------- ------------ ---------- ----------- --------
$0.17 - $1.10 7,545,000 2.92 $ 0.36 7,495,000 $ 0.36
============= =========== ============ ========== =========== ========
F-13
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
February 28, 2006
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
3. STOCKHOLDERS' EQUITY (CONTINUED)
(d) Pro-forma Disclosure
Had compensation expense for the Company's stock-based compensation
plans been determined under SFAS No. 123, based on the fair market
value at the grant dates, the Company's pro-forma net loss and
pro-forma net loss per share would have been reflected as follows:
---------------------------------------------------------------------------------------------------
NINE MONTHS ENDED THREE MONTHS ENDED
February 28 February 28
2006 2005 2006 2005
---------------------------------------------------------------------------------------------------
Net loss, as reported $(5,750,040) $(3,539,429) $(1,806,555) $(1,806,687)
Add: Stock-based employee
compensation expense included in
reported net loss above, net of
related tax effects 512,643 282,951 7,000 282,951
Deduct: Total stock-based employee
compensation expense determined
under fair value based method for
all awards, net of related tax
effects (804,579) (391,436) (87,821) (391,436)
---------------------------------------------------------------------------------------------------
Pro-forma loss for the period $(6,041,976) $(3,647,914) $(1,887,376) $(1,915,172)
===================================================================================================
Pro-forma basic and diluted
loss per share $ (0.10) $ (0.09) $ (0.03) $ (0.05)
===================================================================================================
4. RELATED PARTY TRANSACTIONS
The following services were provided by related parties. These
transactions, recorded at exchange amounts agreed to by all parties, were
as follows:
During the nine month period ended February 28, 2006, the Company paid or
accrued $551,522 (2005 - $321,072) of management and consulting fees to
four directors (2005 - three directors only) and an officer of the Company.
Of this amount, $149,257 (2005 - $113,234) was charged to research and
development. Included in accounts payable is $8,817 (May 31, 2005 -
$21,940).
F-14
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
February 28, 2006
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
4. RELATED PARTY TRANSACTIONS (CONTINUED)
As at February 28, 2006, an amount due from the CFO of the Company was
fully repaid (May 31, 2005 - $17,500).
As at February 28, 2006, an amount of $23,509 and $11,000 representing fees
paid in advance to the Chief Executive Officer and a director of the
Company, respectively, was recorded under prepaid expenses (May 31, 2005 -
nil).
5. ACQUISITION OF SAHAJANAND MEDICAL TECHNOLOGIES INC.
On March 1, 2005 the Company entered into a share acquisition Letter of
Intent ("Letter") with the shareholders of Sahajanand Medical Technologies
Inc. ("SMT") of India. Pursuant to the Letter, the Company shall issue
44,500,000 shares of the Company's common stock in exchange for 100% of the
outstanding equity of SMT subject to certain conditions.
On January 31, 2006, the Letter was terminated, by mutual agreement, of
both companies.
As at February 28, 2006, project acquisition costs of $85,102 which
represents direct costs incurred in the proposed acquisition which were
previously capitalized in the financial statements were expensed under
audit expense ($15,719) and legal expense ($69,383) as a result of the
termination.
6. COMMITMENTS AND CONTINGENT LIABILITIES
(a) The Company has obligations under a long-term premises lease for a
period of five years from January 1, 2006. The minimum rent payments
for the next five years are:
2006 $ 28,314
2007 $ 113,256
2008 $ 113,256
2009 $ 113,256
2010 $ 66,066
---------------------------------------------
TOTAL $ 434,148
---------------------------------------------
F-15
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
February 28, 2006
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
6. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
The Company received free rent, including property maintenance and
taxes, for the months of November to December 2005 and free basic rent
for the months of January to February 2006 for a total free rent of
$40,404. This amount was recorded under deferred lease inducement in
current portion of $8,081 and long-term portion of $29,630 and being
amortized over the term of the lease. As at February 28, 2006, total
amortization of $2,693 was recorded as a credit to rent expense in the
statement of operations.
(b) On March 14, 2005, the Company acquired 100% of SagaX, Inc. ("SagaX")
a Delaware corporation with operations in Israel. The Company agreed
to issue 4,200,000 shares in exchange for all of the issued and
outstanding shares of SagaX. The 4,200,000 will be issued in three
intervals: 2,000,000 of the shares within 30 days of the effective
date of this Agreement (issued), 1,100,000 shares upon successful
completion of large animal trials and the final 1,100,000 shares upon
CE Mark approval relating to SagaX's products. The Company has also
agreed to pay $145,000 (paid) of the vendor's debt at the time of
acquisition.
As at February 28, 2006, the 2 last issuances of 1,100,000 shares each
have not yet been accrued as SagaX has not yet accomplished the
underlying conditions.
(c) On November 18, 2002, a lawsuit against the Company was filed in the
Supreme Court of British Columbia.
The Statement of Claim arising from a Settlement Agreement, dated
September 14, 2001, seeks the exchange of 3,192,399 shares of the
Company for 3,192,399 shares in the capital of the Company's
subsidiary or, alternatively, damages and costs.
The Company and M-I Vascular ("MI") attended a court hearing in
chambers on April 16, 17 and 25, 2003 on a summary trial application
by the Plaintiff for an Order for a declaration of specific
performance that the Plaintiff is entitled to an exchange of 3,192,399
common shares of MI for 3,192,399 common shares of the Company
pursuant to the Settlement Agreement entered into on September 14,
2001. The Plaintiff was granted the relief sought at the summary trial
and the Company was ordered to perform the share exchange.
On May 16, 2003, the Company delivered a Take-Over Bid Circular (the
"Circular") to the Plaintiff, offering to exchange his common shares
in MI for shares in the Company pursuant to British Columbia
securities laws and regulations. In late May 2003, after the judgment
was received, the Company asked the Plaintiff to submit his MI share
certificates and fill in the required forms pursuant to the Circular,
so that the Company could comply with the judgement and exchange his
shares in accordance with British Columbia securities laws and
regulations.
F-16
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
February 28, 2006
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
6. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
On December 29, 2004, the Company issued 3,192,399 common shares to
exchange for 3,192,399 common shares of MI on a one-for-one basis.
These shares were issued to comply with an order of the Supreme Court
of British Columbia dated May 20, 2003.
In a counterclaim in the Supreme Court of British Columbia, the
Company continues to dispute the Plaintiff's entitlement to the
3,192,399 MI shares and any Company shares that he may receive
pursuant to court order.
No provision has been provided as at February 28, 2006 as the outcome
of this legal proceeding is uncertain at this time.
7. GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses comprise the following:
NINE MONTHS ENDED THREE MONTHS ENDED
FEBRUARY 28 FEBRUARY 28
2006 2005 2006 2005
-------------------------------------------------
Legal $ 354,815 $ 157,079 $ 148,239 $ 55,924
Public relations, financing and
corporate development 1,841,068 405,410 527,991 16,124
Management fees 406,445 188,911 138,504 63,544
Consulting 288,773 607,331 59,529 249,082
Professional fees 230,776 41,152 123,645 4,240
Operating expenses 656,616 339,953 224,857 110,668
-------------------------------------------------
$3,778,493 $1,739,836 $1,222,765 $ 499,582
=================================================
8. LICENSES
(a) On February 1, 2003, the Company entered into two license agreements
with the University of British Columbia ("UBC") which provides the
Company with the right to use, develop and sublicense coating
technology for stents.
On May 19, 2005, the Company signed an amendment to the existing
license agreements to include some amendments in the definition of
"Field of Use". Also, the royalties was amended to range from 2.5% to
5% of revenue.
In consideration of the amendments, the Company will issue 200,000
common shares for a total value of $74,000 being the fair value at the
time of the amendment. This amount was recorded as research and
development costs as of May 31, 2005. As of February 28, 2006, the
shares have not yet been issued.
F-17
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
February 28, 2006
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
8. LICENSES (CONTINUED)
(b) On March 15, 2004, the Company entered into a collaborative research
agreement with the UBC to continue with exploratory research on
coating technology for stents for a period from April 1, 2004 to March
31, 2006.
On October 28, 2004, the Company and UBC amended the existing
collaborative research agreements and referred to it as Amendment No.
1 and 2.
In Amendment No. 1, the contract period of the existing collaborative
agreement was changed to April 1, 2004 to November 30, 2004 and total
costs to the Company was estimated at CDN$110,400. As at May 31, 2005,
the Company has paid/accrued and recorded CDN$110,400 as research and
development costs in accordance with Amendment No. 1.
In Amendment No. 2, the contract period, work plan and total costs of
the existing collaborative agreement as amended by Amendment No. 1 was
amended. The contract period was extended from December 1, 2004 to
November 30, 2006 and total costs to the Company was estimated at
CDN$400,400, being payable over the term of the Agreement at various
stipulated intervals. As at February 28, 2006, the Company has paid
$258,000 to research and development costs in accordance with
Amendment No. 2.
The Company obtained support of up to CDN$315,000 from the Industrial
Research Assistance Program ("IRAP") from the National Research
Council Canada. As at February 28, 2006, the Company has received
$132,847 from IRAP. This amount was netted-off against research and
development expenses.
F-18
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
February 28, 2006
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
9. SUPPLEMENTAL CASH FLOW INFORMATION
Period from
inception
(January 20,
1999) to NINE MONTHS ENDED
February 28, FEBRUARY 28
2006 2006 2005
------------------------------------
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid in cash $ 29,683 $ -- $ --
Income taxes paid in cash -- -- --
SUPPLEMENTAL NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Debt settlement with shares $ 621,375 $ -- $ --
Debt forgiven 462,249 -- --
Conversion of convertible debentures
and accrued interest to common shares 740,810 740,810 --
Shares issued for service 3,309,732 623,417 223,259
Warrants issued for service 3,656,153 1,264,518 793,938
F-19
MIV THERAPEUTICS INC.
(A development stage company)
Consolidated Financial Statements
(Expressed in U.S. Dollars)
May 31, 2005 and 2004
Index
-----
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Stockholders' Equity (Deficit)
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
F-20
ERNST & YOUNG
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
MIV THERAPEUTICS INC.
(A development stage company)
We have audited the accompanying consolidated balance sheet of MIV THERAPEUTICS
INC. (a development stage company) as of May 31, 2005, the related consolidated
statements of stockholders' equity (deficit), operations and cash flows for the
year ended May 31, 2005 and for the period from January 20, 1999 (inception) to
May 31, 2005. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The consolidated financial statements as of May
31, 2004 and for the cumulative period from January 20, 1999 (inception) to May
31, 2004 were audited by other auditors whose reports dated September 23, 2005
(as reissued) and July 7, 2004 expressed unqualified opinions on those
statements. The financial statements for the period from January 2, 1999
(inception) to May 31, 2004 include total revenues and net loss of $nil and
$16,268,403 since inception, respectively. Our opinion on the statements of
stockholders' equity (deficit), operations and cash flows for the period January
20, 1999 (inception) to May 31, 2005, insofar as it relates to amounts for prior
periods through May 31, 2004 is based solely on the reports of other auditors.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an
audit of the Company's internal control over financial reporting. Our audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit and the reports of the other auditors provide a reasonable basis for our
opinion.
As more fully described in Note 15, subsequent to the issuance of the Company's
2005 consolidated financial statements and our initial report thereon dated
August 18, 2005, discovery of facts existing at the date of our report resulted
in a restatement of certain information in the consolidated financial
statements. Prior auditors reaudited the cumulative income, expense and cash
flow data from inception to May 31, 2003 which resulted in an adjustment to the
Cumulative Net Loss from inception to May 31, 2005 of $1,102,483 and a restated
cumulative loss per share of $1.16. The report of other auditors have been
reissued and remains unqualified. An additional restatement of information is
also described in Note 15, which resulted in the restatement of one of the
accompanying notes of the consolidated financial statements.
In our opinion, based on our audit and the reports of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of the Company as of May
31, 2005, and the results of its operations and its cash flows for the year
ended May 31, 2005, and for the cumulative period from January 20, 1999
(inception) to May 31, 2005 in conformity with U.S. generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1, the Company
has recurring losses from operations since inception and has a working capital
deficiency that raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Vancouver, Canada /s/ Ernst & Young LLP
August 18, 2005 except for Chartered Accountants
Notes 15 and 6d which are as of October 20, 2005
A Member of Ernst & Young Global
F-21
MOORE STEPHENS ELLIS FOSTER LTD.
CHARTERED ACCOUNTANTS
1650 West 1st Avenue
Vancouver, BC Canada V6J 1G1
Telephone: (604) 734-1112 Facsimile: (604) 714-5916
Website: www.ellisfoster.com
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF MIV THERAPEUTICS INC.
(A development stage company)
We have audited the consolidated balance sheet of MIV THERAPEUTICS INC. (a
development stage company) ("the Company") as at May 31, 2004 and the related
consolidated statements of stockholders' equity, operations and cash flows for
the year ended May 31, 2004. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit. We did not audit the cumulative
data from January 20, 1999 (inception) to May 31, 2003 in the statements of
stockholders' equity, operations and cash flows, which were audited by other
auditors whose report, dated July 29, 2003, which expressed an unqualified
opinion, has been furnished to us. Our opinion, insofar as it relates to the
amounts included for cumulative data from January 20, 1999 (inception) to May
31, 2003, is based solely on the report of the other auditors.
We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance 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 audit provide a reasonable
basis for our opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at May 31, 2004 and the
results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles in the United States of
America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company is a development stage company since inception
on January 20, 1999 and has incurred significant recurring net losses since then
resulting in a substantial accumulated deficit, which raise substantial doubt
about its ability to continue as a going concern. The Company is devoting
substantially all of its present efforts in establishing its business.
Management's plans regarding the matters that raise substantial doubt about the
Company's ability to continue as a going concern are also disclosed in Note 2 to
the financial statements. The ability to meet its future financing requirements
and the success of future operations cannot be determined at this time. These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Vancouver, Canada "MOORE STEPHENS ELLIS FOSTER LTD."
July 7, 2004 Chartered Accountants
- --------------------------------------------------------------------------------
MS - AN INDEPENDENTLY OWNED AND OPERATED MEMBER OF MOORE STEPHENS NORTH AMERICA,
INC. MEMBERS IN PRINCIPAL CITIES THROUGHOUT NORTH AMERICA. MOORE STEPHENS NORTH
AMERICA, INC. IS A MEMBER OF MOORE STEPHENS INTERNATIONAL LIMITED, MEMBERS IN
PRINCIPAL CITIES THROUGHOUT THE WORLD.
- --------------------------------------------------------------------------------
F-22
MIV THERAPEUTICS INC.
(A development stage company)
Consolidated Balance Sheets
May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- ---------------------------------------------------------------------------------------------------
2005 2004
- ---------------------------------------------------------------------------------------------------
(See Note 1 - Basis of Presentation)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 492,709 $ 2,034,530
Accounts receivable 33,742 13,336
Due from related party (Note 8) 17,500 --
Prepaid expenses and deposits 41,139 254,659
- ---------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 585,090 2,302,525
PROJECT ACQUISITION COSTS (Note 13) 53,426 --
PROPERTY AND EQUIPMENT (Note 5) 222,689 177,549
- ---------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 861,205 $ 2,480,074
===================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
CURRENT LIABILITIES
Accounts payable and other payables $ 307,369 $ 170,871
Due to related parties (Note 8) -- 13,585
Convertible debentures (Note 7) 756,080 --
- ---------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 1,063,449 184,456
COMMITMENTS AND CONTINGENT LIABILITIES (Note 11)
STOCKHOLDERS' EQUITY (DEFICIT)
COMMON STOCK (Note 6)
Authorized:
80,000,000 common shares with a par value of $0.001
20,000,000 preferred shares with a par value of $0.001
Issued and outstanding:
50,517,020 common shares at May 31, 2005 and
40,092,993 common shares at May 31, 2004 50,517 40,093
ADDITIONAL PAID-IN CAPITAL 22,383,581 18,032,242
DEFERRED COMPENSATION (556,138) (190,375)
COMMON STOCK ISSUABLE (Note 3 and 4) 139,000 --
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE (22,033,109) (15,424,227)
ACCUMULATED OTHER COMPREHENSIVE LOSS (186,095) (162,115)
- ---------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (202,244) 2,295,618
- ---------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 861,205 $ 2,480,074
===================================================================================================
(THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS)
F-23
MIV THERAPEUTICS INC.
(A development stage company)
Consolidated Statements of Stockholders' Equity (Deficit)
For the Period from Inception (January 20, 1999) to May 31, 2005
(EXPRESSED IN U.S. DOLLARS)
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated
Other Deficit Total
Compre- Accumulated Stock-
Common Stock Additional Deferred Common hensive During the holders'
---------------------- Paid-in Compen- Stock Income Development Equity
Shares Amount Capital sation Issuable (Loss) Stage Deficit
- ------------------------------------------------------------------------------------------------------------------------------------
$ $ $ $ $ $ $
BALANCE, January 20, 1999 -- -- -- -- -- -- -- --
Issuance of common stock for cash 12,217,140 12,217 920,826 -- -- -- -- 933,043
Common shares issuable pursuant
to anti-dilution provision -- -- -- -- 45,676 -- -- 45,676
Comprehensive income (loss):
Loss for the period -- -- -- -- -- -- (179,544) (179,544)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, May 31, 1999 12,217,140 12,217 920,826 -- 45,676 -- (179,544) 799,175
Issuance of common stock: --
- -- for cash 828,350 828 693,392 -- -- -- -- 694,220
- -- for services rendered 420,000 420 287,700 -- -- -- -- 288,120
- -- for settlement of agreement 99,500 100 68,157 -- -- -- -- 68,257
Common shares issuable pursuant
to anti-dilution provision -- -- -- -- 210,487 -- -- 210,487
Subscriptions received -- -- -- -- 249,800 -- -- 249,800
Stock options granted -- -- 54,600 (54,600) -- -- -- --
Amortization of stock-based
compensation -- -- -- 23,780 -- -- -- 23,780
Comprehensive income (loss):
Foreign currency translation
adjustment -- -- -- -- -- (731) -- (731)
Loss for the year -- -- -- -- -- -- (1,602,492) (1,602,492)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, May 31, 2000 13,564,990 13,565 2,024,675 (30,820) 505,963 (731) (1,782,036) 730,616
- ------------------------------------------------------------------------------------------------------------------------------------
(THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS)
F-24
MIV THERAPEUTICS INC.
(A development stage company)
Consolidated Statements of Stockholders' Equity (Deficit)
For the Period from Inception (January 20, 1999) to May 31, 2005
(EXPRESSED IN U.S. DOLLARS)
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated
Other Deficit Total
Compre- Accumulated Stock-
Common Stock Additional Deferred Common hensive During the holders'
--------------------- Paid-in Compen- Stock Income Development Equity
Shares Amount Capital sation Issuable (Loss) Stage (Deficit)
- ------------------------------------------------------------------------------------------------------------------------------------
$ $ $ $ $ $ $
BALANCE, May 31, 2000 13,564,990 13,565 2,024,675 (30,820) 505,963 (731) (1,782,036) 730,616
Issuance of common stock:
- -- for cash 1,865,000 1,865 1,660,235 -- -- -- -- 1,662,100
- -- for settlement of agreement 62,000 62 42,470 -- -- -- -- 42,532
- -- for conversion of subscription
receivable 269,800 270 249,530 -- (249,800) -- -- --
Common shares issuable -- -- -- -- 53,100 -- -- 53,100
Subscriptions received -- -- -- -- 57,825 -- -- 57,825
Stock options granted -- -- 112,600 -- -- -- -- 112,600
Common shares issuable pursuant
to anti-dilution provision -- -- -- -- 25,147 -- -- 25,147
Amortization of stock-based
compensation -- -- -- 20,183 -- -- -- 20,183
Beneficial conversion on related
party loan -- -- 850,000 -- -- -- -- 850,000
Comprehensive income (loss):
Foreign currency translation
adjustment -- -- -- -- 30,027 -- 30,027
Loss for the year -- -- -- -- -- (3,911,601) (3,911,601)
- ------------------------------------------------------------------------------------------------------------------------------------
--
Balance prior to recapitalization 15,761,790 15,762 4,939,510 (10,637) 392,235 29,296 (5,693,637) (327,471)
Minority interest of M-I Vascular
Innovations, Inc. (6,751,790) (6,752) (1,906,150) -- (392,235) -- 1,744,526 (560,611)
- ------------------------------------------------------------------------------------------------------------------------------------
Total relating to final M-I
Vascular Innovations, Inc.,
May 15, 2001 9,010,000 9,010 3,033,360 (10,637) -- 29,296 (3,949,111) (888,082)
DBS Holdings, Inc. (MIV
Therapeutics, Inc.)
shareholders at May 15, 2001 11,085,500 11,086 150,104 -- -- -- (193,910) (32,720)
Share redemption pursuant to
share exchange and financial
agreement (5,500,000) (5,500) (150,104) -- -- -- (64,396) (220,000)
Subscriptions received -- -- -- -- 1,070,000 -- -- 1,070,000
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, May 31, 2001 14,595,500 14,596 3,033,360 (10,637) 1,070,000 29,296 (4,207,417) (70,802)
- ------------------------------------------------------------------------------------------------------------------------------------
(THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS)
F-25
MIV THERAPEUTICS INC.
(A development stage company)
Consolidated Statements of Stockholders' Equity (Deficit)
For the Period from Inception (January 20, 1999) to May 31, 2005
(EXPRESSED IN U.S. DOLLARS)
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated
Other Deficit Total
Compre- Accumulated Stock-
Common Stock Additional Deferred Common hensive During the holders'
-------------------- Paid-in Compen- Stock Income Development Equity
Shares Amount Capital sation Issuable (Loss) Stage (Deficit)
- ------------------------------------------------------------------------------------------------------------------------------------
$ $ $ $ $ $ $
BALANCE, May 31, 2001 14,595,500 14,596 3,033,360 (10,637) 1,070,000 29,296 (4,207,417) (70,802)
Issuance of common stock:
- -- for subscription received 713,333 713 1,069,287 -- (1,070,000) -- -- --
- -- for cash 35,000 35 52,465 -- -- -- -- 52,500
- -- for settlement of related party
loan 1,133,333 1,133 848,867 -- -- -- -- 850,000
- -- for finders' fees 113,334 113 236,755 -- -- -- -- 236,868
- -- for services rendered 75,000 75 164,925 -- -- -- -- 165,000
Stock option granted -- -- 2,552,073 (322,439) -- -- -- 2,229,634
Amortization of stock-based
compensation -- -- -- 248,331 -- -- -- 248,331
Subscriptions received -- -- -- -- 256,066 -- -- 256,066
Comprehensive income (loss):
Foreign currency translation
adjustment -- -- -- -- -- (56,211) -- (56,211)
Loss for the year -- -- -- -- -- -- (3,929,466) (3,929,466)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, May 31, 2002 16,665,500 16,665 7,957,732 (84,745) 256,066 (26,915) (8,136,883) (18,080)
Issuance of common stock:
- -- for cash 2,452,523 2,453 892,305 -- -- -- -- 894,758
- -- for services rendered 1,789,777 1,790 538,251 (13,333) -- -- -- 526,708
- -- for license fee 750,000 750 248,677 -- -- -- -- 249,427
- -- for subscriptions received 640,165 640 193,499 -- (256,066) -- -- (61,927)
- -- for settlement of debt 235,294 235 110,600 -- -- -- -- 110,835
- -- in exchange of MI shares 2,043,788 2,044 639,299 -- -- -- (642,042) (699)
Stock option granted -- -- 257,032 (5,975) -- -- -- 251,057
Subscriptions received -- -- -- -- 31,244 -- -- 31,244
Warrants issued for services -- -- 659,673 (29,341) -- -- -- 630,332
Amortization of stock-based --
compensation -- -- -- 84,745 -- -- -- 84,745
Comprehensive income (loss):
Foreign currency translation
adjustment -- -- -- -- -- (24,834) -- (24,834)
Loss for the year -- -- -- -- -- -- (3,173,411) (3,173,411)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, May 31, 2003 24,577,047 24,577 11,497,068 (48,649) 31,244 (51,749) (11,952,336) (499,845)
- ------------------------------------------------------------------------------------------------------------------------------------
(THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS)
F-26
MIV THERAPEUTICS INC.
(A development stage company)
Consolidated Statements of Stockholders' Equity (Deficit)
For the Period from Inception (January 20, 1999) to May 31, 2005
(EXPRESSED IN U.S. DOLLARS)
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated
Other Deficit Total
Compre- Accumulated Stock-
Common Stock Additional Deferred Common hensive During the holders'
---------------------- Paid-in Compen- Stock Income Development Equity
Shares Amount Capital sation Issuable (Loss) Stage (Deficit)
- ------------------------------------------------------------------------------------------------------------------------------------
$ $ $ $ $ $ $
BALANCE, May 31, 2003 24,577,047 24,577 11,497,068 (48,649) 31,244 (51,749) (11,952,336) (499,845)
Issuance of common stock:
- -- for private placements and
subscriptions 9,423,079 9,423 3,558,439 -- (31,244) -- -- 3,536,618
- -- for services 2,394,456 2,395 1,145,731 (525,750) -- -- -- 622,376
- -- for settlement of debt 100,000 100 11,900 -- -- -- -- 12,000
- -- in exchange of MI shares 1,398,411 1,398 502,030 -- -- -- 503,428
- -- for warrants exercised 2,100,000 2,100 408,900 -- -- -- -- 411,000
- -- for options exercised 100,000 100 33,400 -- -- -- -- 33,500
Stock option granted to
consultants -- -- 59,976 -- -- -- -- 59,976
Warrants issued for services 814,798 (505,938) 308,860
Amortization of deferred
compensation -- -- -- 889,962 -- -- -- 889,962
Comprehensive income (loss):
Foreign currency translation
adjustment -- -- -- -- -- (110,366) -- (110,366)
Loss for the year -- -- -- -- -- -- (3,471,891) (3,471,891)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, May 31, 2004 40,092,993 40,093 18,032,242 (190,375) -- (162,115) (15,424,227) 2,295,618
- ------------------------------------------------------------------------------------------------------------------------------------
(THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS)
F-27
MIV THERAPEUTICS INC.
(A development stage company)
Consolidated Statements of Stockholders' Equity (Deficit)
For the Period from Inception (January 20, 1999) to May 31, 2005
(EXPRESSED IN U.S. DOLLARS)
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated
Other Deficit Total
Compre- Accumulated Stock-
Common Stock Additional Deferred Common hensive During the holders'
-------------------- Paid-in Compen- Stock Income Development Equity
Shares Amount Capital sation Issuable (Loss) Stage (Deficit)
- ------------------------------------------------------------------------------------------------------------------------------------
$ $ $ $ $ $ $
BALANCE, May 31, 2004 40,092,993 40,093 18,032,242 (190,375) -- (162,115) (15,424,227) 2,295,618
Issuance of common stock:
- -- for share subscriptions 904,215 904 217,499 -- -- -- -- 218,403
- -- for exercise of warrants 2,320,710 2,321 605,064 -- -- -- -- 607,385
- -- for exercise of options 75,000 75 22,425 -- -- -- -- 22,500
- -- for services 1,904,703 1,905 543,123 (194,968) 74,000 -- -- 424,060
- -- for finder's fee on private
placements completed in prior
year 10,000 10 (10) -- -- -- -- --
- -- in exchange of MI shares
(Note 6) 3,209,399 3,209 613,376 -- -- -- -- 616,585
- -- for acquisition of SagaX
(Note 3) 2,000,000 2,000 938,000 -- 65,000 -- -- 1,005,000
Fair value of warrants attached
to Convertible debentures
(Note 7) -- -- 48,920 -- -- -- -- 48,920
Warrants issued for services -- -- 917,164 (917,164) -- -- -- --
Stock options granted -- -- 155,978 -- -- -- -- 155,978
Amortization of deferred
compensation -- -- -- 746,369 -- -- -- 746,369
Beneficial conversion feature
of convertible debentures
(Note 7) -- -- 289,800 -- -- -- 289,800
Comprehensive income (loss):
Foreign currency translation
adjustment -- -- -- -- -- (23,980) -- (23,980)
Loss for the year -- -- -- -- -- -- (6,608,882) (6,608,882)
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, May 31, 2005 50,517,020 50,517 22,383,581 (556,138)) 139,000 (186,095) (22,033,109) (202,244)
====================================================================================================================================
(THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS)
F-28
MIV THERAPEUTICS INC.
(A development stage company)
Consolidated Statements of Operations
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- ----------------------------------------------------------------------------------------------------------------------------
Period
from
inception
(January 20
1999)to
May 31
2005 2005 2004
- ----------------------------------------------------------------------------------------------------------------------------
(As restated
see Note 15)
EXPENSES
General and administrative (Note 8 and 12) $ 11,042,504 $ 2,619,524 $ 2,590,779
Research and development 5,310,765 1,523,166 709,003
Stock-based compensation 3,234,694 155,978 59,976
Depreciation 754,742 176,453 146,783
Interest expense 879,683 -- 3,876
Licenses acquired charged to operations 479,780 -- --
Finance cost on convertible debentures (Note 7) 382,307 -- 382,307
Purchased in-process research and development (Note 3 and 6) 2,205,013 1,701,585 503,428
- ----------------------------------------------------------------------------------------------------------------------------
24,289,488 6,559,013 4,013,845
- ----------------------------------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS (24,289,488) (6,559,013) (4,013,845)
GAIN ON EXTINGUISHMENT OF DEBT 462,249 -- 462,249
INTEREST INCOME 54,928 5,161 --
GAIN (LOSS) ON FOREIGN EXCHANGE 88,715 (55,030) 79,705
- ----------------------------------------------------------------------------------------------------------------------------
LOSS FOR THE YEAR BEFORE MINORITY INTEREST (23,683,596) (6,608,882) (3,471,891)
MINORITY INTEREST SHARE OF LOSS 806,310 -- --
- ----------------------------------------------------------------------------------------------------------------------------
NET LOSS FOR THE YEAR $(22,877,286) $ (6,608,882) $ (3,471,891)
============================================================================================================================
LOSS PER COMMON SHARE
- basic and diluted $ (1.16) $ (0.15) $ (0.11)
============================================================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
- basic and diluted 19,668,319 42,881,975 31,024,826
============================================================================================================================
(THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS)
F-29
MIV THERAPEUTICS INC.
(A development stage company)
Consolidated Statements of Cash Flows
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- ----------------------------------------------------------------------------------------------------------------------------
Period
from
inception
(January 20
1999)to
May 31
2005 2005 2004
- ----------------------------------------------------------------------------------------------------------------------------
(As restated
see Note 15)
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Net loss $(22,877,286) $ (6,608,882) $ (3,471,891)
Adjustments to reconcile loss to
net cash used in operating activities:
- stock-based compensation 4,871,025 902,347 949,938
- stock issued for other than cash 4,043,612 424,060 943,235
- interest expense on related party loan 850,000 -- --
- depreciation 754,742 176,453 146,783
- leasehold improvements written down 13,300 -- --
- purchased in-process research and development 2,125,013 1,621,585 503,428
- intangible asset impairment 150,000
- gain on extinguishment of debt (462,249) -- (462,249)
- provision for bad debt 160,000 -- 160,000
- beneficial conversion feature on convertible debenture (Note 7) 289,800 289,800 --
- minority interest (806,310) -- --
Changes in non-cash working capital items:
- accounts receivable (193,993) (20,406) (7,946)
- due from related party (17,500) (17,500) --
- prepaid expenses and deposits (41,697) 213,520 (207,719)
- accounts payable and other payables 330,221 136,498 (279,851)
- ----------------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (10,811,322) (2,882,525) (1,726,272)
- ----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Issuance of common stock, less share issuance costs 9,380,307 848,288 3,981,118
Due to related parties 850,000 (13,585) (123,398)
Proceeds from convertible debentures (Note 7) 805,000 805,000 --
Project acquisition costs (53,426) (53,426) --
Cash acquired in reverse acquisition 13,824 -- --
Subscriptions received 1,357,310 -- --
Common stock redemption (120,000) -- --
Loan payable 500,000 -- --
- ----------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 12,733,015 1,586,277 3,857,720
- ----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS USED IN INVESTING ACTIVITIES
Acquisition of license (200,000) -- --
Purchase of property and equipment (1,000,573) (221,593) (17,078)
- ----------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (1,200,573) (221,593) (17,078)
- ----------------------------------------------------------------------------------------------------------------------------
FOREIGN EXCHANGE EFFECT ON CASH (228,411) (23,980) (91,454)
- ----------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 492,709 (1,541,821) 2,022,916
CASH AND CASH EQUIVALENTS, beginning of year -- 2,034,530 11,614
- ----------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, end of year $ 492,709 $ 492,709 $ 2,034,530
============================================================================================================================
(PLEASE SEE NOTE 10 FOR SUPPLEMENTAL DISCLOSURES)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-30
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION AND NATURE OF OPERATIONS
Basis of Presentation
These consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of
America.
Since inception, the Company has suffered recurring losses, totalling
$22,877,286 and working capital deficiency of $478,359 as of May 31, 2005.
Management has been able to, thus far, finance the operations through the
issuance of common stock, and through related party loans, in order to meet
its strategic objectives. Management plans to continue to seek other
sources of financing on favorable terms; however, there are no assurances
that any such financing can be obtained on favorable terms, if at all.
Management expects to keep its operating costs to a minimum until cash is
available through financing or operating activities. There are no
assurances that the Company will be successful in achieving these goals.
The Company anticipates that losses will continue until such time, if ever,
as the Company is able to generate sufficient revenues to support its
operations. The Company's ability to generate revenue primarily depends on
its success in completing development and obtaining regulatory approvals
for the commercialization of its stent technology. The Company's ability to
obtain sufficient financing to continue the development of, and if
successful, to commence the manufacture and sale of its products under
development, if and when approved by the applicable regulatory agencies is
uncertain. In view of these conditions, the ability of the Company to
continue as a going concern is in substantial doubt and dependent upon
achieving a profitable level of operations and on the ability of the
Company to obtain necessary financing to fund ongoing operations.
Management believes that its current and future plans enable it to continue
as a going concern. These consolidated financial statements do not give
effect to any adjustments which would be necessary should the Company be
unable to continue as a going concern and therefore be required to realize
its assets and discharge its liabilities in other than the normal course of
business and at amounts different from those reflected in the accompanying
consolidated financial statements.
Nature of Operations
MIV Therapeutics Inc. (the "Company") is a development stage company
involved in the research, manufacture and development of bio-compatible
stent coatings for implantable medical devices and drug-delivery
technologies.
On April 25, 2001, the Company executed a Share Exchange and Finance
Agreement ("Agreement") with M-I Vascular Innovations, Inc. ("M-I") which
is a development stage company incorporated in Delaware. The main business
of the Company prior to April 25, 2001 was its InvestorService.com website.
This business ceased operations as of April 25, 2001 and, at the time of
the Agreement, the Company was a non-operating public company.
F-31
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION (CONTINUED)
The Agreement closed effective as of May 15, 2001. As a consequence,
control of the Company shifted from the shareholders of the Company to the
founders of M-I. The change of control resulted from the combined effect of
(I) a redemption of 5,500,000 of the common shares of the Company, and (ii)
the issuance of 9,010,000 common shares by the Company in a one-for-one
exchange for the shares of M-I held by its shareholders. As a result, the
former shareholders of M-I obtained a majority interest in the Company.
As the Company was a non-operating public company, the share exchange has
been accounted for as a recapitalization of M-I and an issuance of shares
by M-I to the shareholders of the Company. On May 15, 2001, the Company had
total assets of $13,824 and total liabilities of $46,544. As the total
liabilities exceeded total assets by $32,720, the excess of liabilities
over assets over the par value of the stock related to the Company's
shareholders was charged to deficit as if a distribution was made to the
Company's shareholders. As 43% of the M-I shareholders did not tender their
shares in the combination, those interests represent a minority interest in
the legal subsidiary. Accordingly, 6,751,790 common shares related to the
minority interest were removed from the number of shares outstanding as at
May 15, 2001 along with the par value of such shares, a pro-rate amount
from additional paid-in capital and, as the Company has a shareholders'
deficiency, an amount from deficit to the extent of the amount removed from
common stock and additional paid-in capital. In addition, shares issuable
to certain subscribers were reflected as a minority interest. Any such
offer will be accounted for as a step purchase.
Pursuant to the terms of the Agreement, warrants held by shareholders who
agreed to exchange their common shares for the Company's common shares were
deemed to be exchanged for warrants in the Company. The value of warrants
held by shareholders who did not agree to exchange their shares was
allocated to minority interest. In addition, the value of compensatory
stock options issued by the Company to employees and other non-shareholders
and the value relating to common shares issuable in M-I have also been
allocated to minority interest.
In connection with the Agreement, the Company issued 2,043,788 common
shares during the year ended May 31, 2003. The shares of the Company were
exchanged on a one-for-one basis for shares of M-I. Accordingly, 2,043,788
common shares were added to the number of shares outstanding along with the
par value of such shares, a pro-rated amount to additional paid-in capital
and as the Company has a shareholders' deficiency, an amount to deficit to
the extent of the amount added to common stock and additional paid-in
capital.
F-32
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Accounting
These consolidated financial statements are stated in U.S. Dollars and
have been prepared in accordance with U.S. generally accepted
accounting principles.
(b) Principle of Consolidation
The accompanying consolidated financial statements include the
accounts of MIV Therapeutics Inc. (incorporated in Nevada, USA), 90%
of M-I Vascular Innovations, Inc. (incorporated in Delaware, USA), its
wholly-owned subsidiaries, MIVI Technologies, Inc. (incorporated in
Yukon, Canada) and SagaX, Inc. (incorporated in Delaware, USA). All
significant inter-company transactions and balances have been
eliminated upon consolidation.
(c) Development Stage
The Company's activities have primarily consisted of establishing
facilities, recruiting personnel, conducting research and development,
developing business and financial plans and raising capital.
Accordingly, the Company is considered to be in the development stage.
(d) Property and Equipment
Property and equipment are recorded at cost and amortized as follows:
Furniture and fixtures 5 years straight-line basis
Computer equipment 3 years straight-line basis
Laboratory equipment 5 years straight-line basis
Leasehold improvements Over term of lease
(e) Research and Development Costs
Expenditures for research and development are expensed in the period
incurred.
(f) Government assistance and other subsidies
Government assistance and other subsidies are recorded as either a
reduction of the cost of the applicable assets or the related
expenditures as determined by the terms and conditions of the
agreement under which the assistance is provided to the Company.
F-33
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(g) Income Taxes
The Company accounts for income taxes under the provisions of
Statement of Financial Accounting Standards ("SFAS" No. 109,
"ACCOUNTING FOR INCOME TAXES". Under SFAS No 109, deferred income tax
assets and liabilities are computed for differences between the
financial statements and tax bases of assets and liabilities that will
result in taxable or deductible amounts in the future, based on
enacted tax laws and rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation
allowances are established when necessary to reduce deferred income
tax assets to the amount expected to be realized. Income tax expense
is the tax payable or refundable for the period plus or minus the
change during the period in deferred tax assets and liabilities.
(h) Foreign Currency Translation
The Company's subsidiary's operations are located in Canada, and its
functional currency is the Canadian dollar. The financial statements
of the subsidiary have been translated using the current method
whereby the assets and liabilities are translated at the year-end
exchange rate, capital accounts at the historical exchange rate, and
revenues and expenses at the average exchange rate for the period.
Adjustments arising from the translation of the Company's subsidiary's
financial statements are included as a separate component of
shareholders' equity.
(i) Financial Instruments and Concentration of Credit Risk
Fair value of financial instruments are made at a specific point in
time, based on relevant information about financial markets and
specific financial instruments. As these estimates are subjective in
nature, involving uncertainties and matters of significant judgement,
they cannot be determined with precision. Changes in assumptions can
significantly affect estimated fair values.
The carrying value of cash and cash equivalents, amounts receivable,
accounts payable and accrued liabilities, and amount due to and from
related parties approximate their fair value because of the short-term
nature of these instruments.
Unless otherwise noted, it is management's opinion that the Company is
not exposed to significant interest or credit risks arising from these
financial instruments.
The Company operates and incurs significant expenditures outside of
the United States of America and is exposed to foreign currency risk
due to the fluctuation between Canadian dollar and the U.S. dollar.
F-34
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j) Earnings (Loss) Per Share
Basic earnings or loss per share is based on the weighted average
number of common shares outstanding. Diluted earnings or loss per
share is based on the weighted average number of common shares
outstanding and dilutive common stock equivalents. Basic
earnings(loss) per share is computed by dividing net income(loss)
applicable to common stockholders by the weighted average number of
common shares outstanding (denominator) for the period. All earnings
or loss per share amounts in the financial statements are basic
earnings or loss per share, as defined by SFAS No 128, "EARNINGS PER
SHARE." Diluted earnings or loss per share does not differ materially
from basic earnings or loss per share for all periods presented.
Convertible securities that could potentially dilute basic earnings
(loss) per share in the future, such as warrants, were not included in
the computation of diluted earnings (loss) per share because to do so
would be antidilutive.
(k) Stock-Based Compensation
The Company accounts for stock-based compensation using the intrinsic
value method prescribed in Accounting Principles Board Opinion No. 25,
"ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES." Compensation cost for
stock options, if any, is measured as the excess of the quoted market
price of the Company's stock at the date of grant over the amount an
employee must pay to acquire the stock. SFAS No. 123, "ACCOUNTING FOR
STOCK-BASED COMPENSATION" established accounting and disclosure
requirements using a fair-value-based method of accounting for
stock-based employee compensation plans. The company has elected to
remain on its current method of accounting as described above, and has
adopted the PRO FORMA disclosure requirements of SFAS No. 123.
(l) Comprehensive Loss
The Company adopted Statement of Financial Accounting Standards No.
130 (SFAS No. 130), "Reporting Comprehensive Income", which
establishes standards for reporting and display of comprehensive
income, its components and accumulated balances.
Comprehensive loss includes all changes in equity during the year
except those resulting from investments by, or distribution to,
shareholders. The Company's comprehensive loss consists solely of net
losses and foreign currency translation adjustment for the year.
F-35
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(m) Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with an
original maturity of three months or less to be cash equivalents. The
Company places its cash and cash equivalents with high credit quality
financial institutions. The Company occasionally maintains balances in
a financial institution beyond the insured amount. As at May 31, 2005,
the Company had deposits of $432,709 (2004 - $1,974,530) beyond the
insured amount.
(n) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in the United State of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Management makes its best estimate of the ultimate outcome for these
items based on historical trends and other information available when
the financial statements are prepared. Actual results could differ
from those estimates.
(o) Recent Accounting Pronouncements
The Financial Accounting Standards Board ("FASB") has issued the
following pronouncements, none of which are expected to have a
significant affect on the financial statements:
In November 2004, the FASB issued SFAS No. 151, "Inventory Costs - an
amendment of ARB No. 43, Chapter 4", which is the result of the FASB's
project to reduce difference between U.S. and international accounting
standards. SFAS No. 151 requires idle facility costs, abnormal
freight, handling costs, and amounts of wasted materials (spoilage) be
treated as current-period costs. Under this concept, if the costs
associated with the actual level of spoilage or production defects are
greater than the costs associated with the range of normal spoilage or
defects, the difference would be charged to current-period expense,
not included in inventory costs. SFAS No. 151 will be effective for
inventory costs incurred during fiscal years beginning after June 15,
2005. The adoption of SFAS No. 151 will not have a material impact on
the Company's consolidated financial statements.
F-36
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(o) Recent Accounting Pronouncements (continued)
In December 2004, the FASB issued SFAS No. 153, "Exchanges of
Nonmonetary Assets, an amendment of APB No. 29, Accounting for
Nonmonetary Transactions". SFAS No. 153 requires exchanges of
productive assets to be accounted for at fair value, rather than at
carryover basis, unless (1) neither the asset received nor the asset
surrendered has a fair value that is determinable within reasonable
limits or (2) the transactions lack commercial substance. SFAS 153 is
effective for nonmonetary asset exchanges occurring in fiscal periods
beginning after June 15, 2005. The adoption of FASB No. 153 will not
have a material impact on the Company's consolidated financial
statements.
In December 2004, the FASB issued SFAS No. 123(R), "Accounting for
Stock-Based Compensation". SFAS 123(R) establishes standards for the
accounting for transactions in which an entity exchanges its equity
instruments for goods or services. This Statement focuses primarily on
accounting for transactions in which an entity obtains employee
services in share-based payment transactions. SFAS 12(R) requires that
the fair value of such equity instruments be recognized as expense in
the historical financial statements as services are performed. SFAS
123(R) requires all share-based payments to be recognized in the
financial statements based on their fair values using either a
modified-prospective or modified-retrospective transition method.
Prior to SFAS 123(R) , only certain pro-forma disclosures of fair
value were required. SFAS 123(R) shall be effective for the Company as
of the beginning of the first interim or annual reporting period that
begins on or after April 1, 2006. The adoption of FASB No. 123(R) will
have a material impact on the consolidated financial statements.
3. ACQUISITION OF SAGAX, INC.
On March 14, 2005, the Company acquired 100% of SagaX, Inc. ("SagaX") a
Delaware corporation with operations in Israel from a third party. SagaX is
in the business of researching a neuro-vascular embolic stent filter
medical device through its subsidiary in Israel, which will complement the
Company's current research activities. SagaX has a registered patent
entitled Endovascular Device for Entrapment of Particulate and Method for
Use. The technology patented is still in the research stage. As at the date
of acquisition, SagaX did not have any other assets or activities prior to
acquisition, thus no pro-forma statement of operations has been prepared.
The Company agreed to issue 4,200,000 shares in exchange for all of the
issued and outstanding shares of SagaX. The shares are valued at $0.47,
which is the fair value of the shares at the time of agreement, and will be
issued in three intervals: 2,000,000 of the shares within 30 days of the
effective date of this Agreement (issued), 1,100,000 shares upon successful
completion of large animal trials and the final 1,100,000 shares upon CE
Mark approval relating to SagaX's products. The final 1,100,000 shares have
not been accrued as its issuance is dependent on obtaining CE Mark
approval, which
F-37
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
3. ACQUISITION OF SAGAX, INC. (CONTINUED)
can not be determine at this time. The Company has also agreed to pay
$145,000 of the vendor's debt at the time of acquisition and agreed to
finance up to $730,000 for SagaX's research in 2005. If the Company decides
to abandon the underlying patented project or is placed into receivership
or fails to fund SagaX in any six month period, then the vendor or its
nominee may repurchase SagaX, including all of its intellectual property,
in exchange for the return of all of the Company's common shares issued and
a cash payment equal to 125% of all cash advanced by the Company to SagaX.
As at May 31, 2005, the 2,000,000 common shares have been issued for a fair
value of $940,000 and $80,000 has been paid for the vendor's debt. The
balance of $65,000 of the vendor's debt has been recorded as common stock
issuable.
In accordance with FIN 4: "Applicability of FASB No. 2 to Business
Combinations Accounted for by the Purchase Method", all acquisition costs
of $1,085,000 have been recorded as Purchased in-process Research and
Development and expensed in the statement of operations.
4. LICENSES
(a) On February 1, 2003, the Company entered into two license agreements
with the University of British Columbia ("UBC") which provides the
Company with the right to use, develop and sublicense coating
technology for stents.
In consideration of granting the licenses, the Company will pay UBC a
royalty of 2.5% of revenue and a royalty ranging from 10% or 15% of
sublicense revenue depending upon the sublicensed technology. In
addition, various minimum annual royalties, maintenance fees and
milestone payments are payable over the period of development. The
Company issued 750,000 common shares to UBC as part of the
consideration for the grant of the rights.
The fair value of $187,500 of the 750,000 common shares issued were
recorded as an expense in the year ended May 31, 2003.
On May 19, 2005, the Company signed an amendment to the existing
license agreements to include some amendments in the definition of
"Field of Use". Also, the royalties was amended to range from 2.5% to
5% of revenue.
In consideration of the amendments, the Company will issue 200,000
common shares for a total value of $74,000 being the fair value at the
time of the amendment. The amount is recorded as research and
development costs.
F-38
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
4. LICENSES (CONTINUED)
(b) On March 15, 2004, the Company entered into a collaborative research
agreement with the UBC to continue with exploratory research on
coating technology for stents for a period from April 1, 2004 to March
31, 2006. During the period of the agreement, various milestone
payments will be made to UBC for the continuation of the research
program, estimated to be approximately CDN$220,800. As at May 31,
2004, the Company has paid CDN$50,000 and expensed to research and
development.
On October 28, 2004, the Company and UBC amended the existing
collaborative research agreements and referred to it as Amendment No.
1 and 2.
In Amendment No. 1, the contract period of the existing collaborative
agreement was changed to April 1, 2004 to November 30, 2004 and total
costs to the Company was estimated at CDN$110,400. As at May 31, 2005,
the Company has paid/accrued and recorded CDN$110,400 to research and
development costs in accordance with Amendment No. 1.
In Amendment No. 2, the contract period, work plan and total costs of
the existing collaborative agreement as amended by Amendment No. 1 was
amended. The contract period was extended from December 1, 2004 to
November 30, 2006 and total costs to the Company was estimated at
CDN$400,400, being payable over the term of the Agreement at various
stipulated intervals. As at May 31, 2005, the Company has paid $35,000
and accrued $94,000 to research and development costs in accordance
with Amendment No. 2.
The Company obtained support of up to CDN$315,000 from the Industrial
Research Assistance Program ("IRAP") from the National Research
Council Canada. As at May 31, 2005, the Company has received $44,150
from IRAP.
5. PROPERTY AND EQUIPMENT
2005 2004
--------------------------------------------- ----------
Accumulated Net book Net book
Cost Amortization value value
- ---------------------------------------------------------------------------------------------------
Furniture and fixtures $ 41,297 $ 39,867 1,430 $ 8,751
Computer equipment 110,766 101,146 9,620 2,977
Laboratory equipment 789,158 577,519 211,639 163,922
Leasehold improvements 49,158 49,158 -- 1,899
- ---------------------------------------------------------------------------------------------------
$ 990,379 $ 767,690 222,689 $177,549,000
===================================================================================================
F-39
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
6. STOCKHOLDERS' EQUITY
(a) Common Stock
(i) The Company placed 6,000,000 common stock to a financial
custodian acting as trustee pursuant to a listing of the
Company's shares on the Frankfurt Stock Exchange. The Company is
conducting a Regulation S ("Reg S") Offering through the
facilities of the Berlin Stock Exchange to raise capital in
mainly German speaking countries. The trustee will receive a fee
of 3% of the total value of the stocks held in trust to be paid
in equal installments of 30,000 common shares per month over a
ten month period, assuming the maximum offering is sold. The
stocks may only be traded on German stock exchanges pursuant to
Regulation S.
During the fiscal year ended May 31, 2005, a total of 1,209,108
Reg S stock have been issued at a price range of $0.34 to $0.62
per share of which 904,215 was issued for cash for total net
proceeds of $218,403 (net of agent's fees of 154,893 Reg S
stock). Of the 200,000 shares issued to a consultant for services
as a security for non-paid commissions, 50,000 shares were
returned to the Company.
As at May 31, 2005, 4,204,689 Regulation S stocks are held in
trust by the financial custodian.
(ii) During the fiscal year ended May 31, 2005, the Company issued an
aggregate of 1,599,810 common shares for consulting, research and
development, legal and employee services for a total value of
$515,028 being the fair value of the shares at the earlier of 1)
the agreement date and 2) the period of completion of
performance.
(iii) During the fiscal year ended May 31, 2005, the Company issued
2,320,710 common shares pursuant to an exercise of stock purchase
warrants for total proceeds of $607,385.
(iv) On December 29, 2004, the Company issued 3,192,399 common shares
to exchange for 3,192,399 common shares of MI on a one-for-one
basis. These shares were issued to comply with an order of the
Supreme Court of British Columbia dated May 20, 2003. On May 26,
2005, the Company issued 17,000 common shares to exchange for
17,000 common shares of M-I Vascular Innovations, Inc. on a
one-for-one basis. The exchanges were accounted for using the
step purchase method and accordingly the purchase price of
$616,585, being the fair market value of the Company's shares at
the time of exchange, was allocated to purchased in process
research and development. This amount was written off during the
fiscal year 2005 in accordance with FASB Interpretation No. 4,
"APPLICABILITY OF FASB NO. 2 TO BUSINESS COMBINATIONS ACCOUNTED
FOR BY THE PURCHASE METHOD".
F-40
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
6. STOCKHOLDERS' EQUITY (CONTINUED)
(a) Common Stock (continued)
(v) On March 24, 2005, the Company issued 75,000 common shares to a
consultant of the Company for stock options exercised at a price
of $0.30 per share, for total proceeds of $22,500.
(b) Warrants
The following table summarizes information about the warrants issued
by the Company:
Weighted
Average
Exercise
Number of Shares price
------------------------------
Balance, May 31, 2003 10,717,821 0.62
Issued - private placement 2,181,164 0.75
Issued - finders' fees 55,714 0.60
Issued - services rendered 3,375,000 0.40
Exercised (2,100,000) (0.20)
Expired (4,843,250) (0.75)
------------------------------
Balance, May 31, 2004 9,386,449 0.60
------------------------------
Weighted
Average
Exercise
Number of Shares price
------------------------------
Balance, May 31, 2004 9,386,449 0.60
Issued - convertible debentures (Note 7) 1,851,500 0.25
Issued - finders' fees 10,000 0.75
Issued - services rendered 5,270,000 0.32
Exercised (2,310,710) 0.26
Expired (7,043,220) 0.65
------------------------------
Balance, May 31, 2005 - Regular 7,164,019 0.45
Balance, May 31, 2005 and 2004 - Series "A" 3,374,999 0.66
Balance, May 31, 2005 and 2004 - Series "C" 674,997 0.66
------------------------------
Balance, May 31, 2005 11,214,015 0.53
==============================
F-41
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
6. STOCKHOLDERS' EQUITY (CONTINUED)
(b) Warrants (continued)
During the year ended May 31, 2005, the Company issued 5,270,000
warrants, with exercise prices ranging from $0.24 to $0.45 per share,
to various consultants for services rendered to the Company. These
warrants had an estimated fair value of $917,168, using the Black
Scholes Pricing Model.
During the year ended May 31, 2005, the board of directors approved an
extension to the expiry date for 381,800 warrants outstanding from
April 30, 2005 to April 30, 2006 and 200,000 warrants outstanding from
May 21, 2005 to May 21, 2007.
(c) Stock Options
The Company's incentive stock options plan provides for the grant of
incentive stock options for up to 5,000,000 common shares to
employees, consultants, officers and directors of the Company.
Incentive benefits granted under the plan may be either incentive
stock options, non-qualified stock options, stock awards, restricted
shares or cash awards. Options are granted for a term not to exceed
five years from the date of grant. Stock options granted generally
vest over a period of two years.
In fiscal year 2005, the Company granted an aggregate of 3,900,000
stock options; 2,200,000 to employees/directors of the Company and
1,700,000 to consultants. Each option entitles its holder to acquire
one common share of the Company between $0.20 and $0.40 per share,
being vested immediately or at a specified time and expires five years
from date of grant or term of agreement.
The fair value of each option granted is estimated on the grant date
using the Black-Scholes option pricing model assuming no dividend
yield and the following weighted average assumptions:
2005 2004
------- -------
Risk-free interest rate 3.50% 5.25%
Expected life (in years) 3 years 5 years
Expected volatility 78.58% 136.11%
Option-pricing models require the use of highly subjective estimates
and assumptions including the expected stock price volatility. Changes
in the underlying assumptions can materially affect the fair value
estimates and therefore, in management's opinion, existing models do
not necessarily provide reliable measure of the fair value of the
Company's stock options.
F-42
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
6. STOCKHOLDERS' EQUITY (CONTINUED)
(c) Stock Options (continued)
Compensation cost related to the stock options granted to consultants
and employees during the year ended May 31, 2005 was charged to
operations at their estimated fair value of $155,978 (2004 - $53,276).
A summary of the weighted average fair value of stock options granted
during the year ended May 31, 2005 is as follows:
------------------------------------------------------------------------------------------
Weighted Weighted
Average Average
Exercise Fair
Price Value
------------------------------------------------------------------------------------------
Exercise price equals market price at grant date: $ 0.30 $ 0.30
Exercise price greater than market price at grant date: $ 0.26 $ 0.21
Exercise price less than market price at grant date: $ 0.25 $ 0.29
==========================================================================================
A summary of the weighted average fair value of stock options granted during the year ended
May 31, 2004 is as follows:
------------------------------------------------------------------------------------------
Weighted Weighted
Average Average
Exercise Fair
Price Value
------------------------------------------------------------------------------------------
Exercise price equals market price at grant date: $ 0.40 $ 0.40
Exercise price greater than market price at grant date: $ 0.50 $ 0.31
Exercise price less than market price at grant date: $ 0.30 $ 0.31
==========================================================================================
F-43
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
6. STOCKHOLDERS' EQUITY (CONTINUED)
(c) Stock Options (continued)
Summary of employee stock options information for the period from
inception to May 31, 2005 is as follows:
------------------------------------------------------------------------------
Weighted Average
Shares Exercise Price
------------------------------------------------------------------------------
Options outstanding, May 31, 2003 4,175,000 0.53
Options granted 995,000 0.35
Options exercised (100,000) (0.34)
Options cancelled (565,000) (0.74)
Options expired (250,000) (0.67)
------------------------------------------------------------------------------
Options outstanding, May 31, 2004 4,255,000 0.47
Options granted 3,900,000 0.28
Options exercised (75,000) 0.30
Options expired (300,000) 1.00
------------------------------------------------------------------------------
Options outstanding, May 31, 2005 7,780,000 0.35
==============================================================================
The following summarizes information about the stock options
outstanding and exercisable at May 31, 2005:
Options Outstanding Options Exercisable
Weighted
Average Weighted Weighted
Range of Number of Remaining Average Number of Average
Exercise options Contractual Exercise options Exercise
Prices Outstanding Life (yr) Price Exercisable Price
--------------------------------------------------------------------------------------
$ 0.17 950,000 1.93 $ 0.17 950,000 $ 0.17
$ 0.20 1,400,000 4.71 $ 0.20 1,400,000 $ 0.20
$ 0.21 500,000 2.89 $ 0.21 500,000 $ 0.21
$ 0.30 2,920,000 4.18 $ 0.30 2,320,000 $ 0.30
$ 0.40 300,000 4.51 $ 0.40 230,000 $ 0.40
$ 0.50 550,000 2.28 $ 0.50 550,000 $ 0.50
$ 0.55 650,000 2.50 $ 0.55 650,000 $ 0.55
$ 1.00 510,000 1.53 $ 1.00 510,000 $ 1.00
--------------------------------------------------------------------------------------
$0.17 - $1.00 7,780,000 3.30 $ 0.35 7,110,000 $ 0.35
======================================================================================
F-44
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
6. STOCKHOLDERS' EQUITY (CONTINUED)
(d) Pro-forma Disclosure
Had compensation expense for the Company's stock-based compensation
plans been determined under SFAS No. 123, based on the fair market
value at the grant dates, the Company's pro-forma net loss and
pro-forma net loss per share would have been reflected as follows:
------------------------------------------------------------------------------------------
2005 2004
------------------------------------------------------------------------------------------
Net loss, as reported $(6,608,882) $(3,471,891)
Add: Stock-based employee compensation expense
included in reported net loss above, net of related
tax effects 155,978 6,700
Deduct: Total stock-based employee compensation expense
determined under fair value based method for all
awards, net of related tax effects (481,427) (226,962)
------------------------------------------------------------------------------------------
Pro-forma loss for the year $(6,934,331) $(3,251,629)
==========================================================================================
Pro-forma basic and diluted loss per share (0.16) (0.10)
==========================================================================================
F-45
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
7. CONVERTIBLE DEBENTURES
On March 15, 2005, the Company closed a bridge debenture financing for
gross proceeds of $805,000 of senior convertible debentures ("Debentures")
and 1,610,000 detachable share purchase warrants. The Debentures are
interest bearing at 10% per annum, and principal and accrued interest are
due and payable in one installment upon the earlier of (i) 180 days from
the date of closing of the offering and (ii) the closing of a financing or
series of related financings in the Company in the aggregate of $500,000.
At the option of the holder, all or a portion of the outstanding principal
amount and any accrued interest shall convert into the Company's common
stock at a conversion price of $0.25 per share or on the first occasion
following the date on which the Company has a financing or series of
financing, the Debentures are convertible at a conversion price equal to
the lower of (i) the purchase price per share in such subsequent financing,
or (ii) the conversion price then in effect. As at May 31, 2005, no
Debentures have been converted. If converted, the Debentures can be
converted into 3,220,000 common shares of the Company at the current
conversion price.
The transferable share purchase warrants are exercisable at $0.25 per share
and have a term of five (5) years from date of grant.
In connection with this financing, the Company paid a commission fee of
$88,000 (which is equal to 10% of the aggregate gross proceeds) in cash,
$4,507 in related expenses, and issued 241,500 share purchase warrants
("Agent's warrants") (which is equal to fifteen percent (15%) of the shares
of Common Stock underlying the warrants in the financing). The Agent's
Warrants are exercisable at $0.25 per share and have a term of five (5)
years from date of grant. The Agent's Warrants shall be exercisable for
cash or in a cashless exercise, whereby the optionee can elect to receive
common stock in lieu of paying cash for the options based on a formula, in
accordance with the Agent's Agreement.
The Company is also committed to pay a commission to the Agent in cash or
warrants if any of the Debenture holders invest in the Company within 18
months after the financing. As at May 31, 2005, no accrual have been
provided for as there is no obligation to the Company to pay commission and
future obligations are not determinable at this time.
Gross proceeds have been allocated to the liability ($756,080) and the
equity ($48,920) components using the relative fair value method of the
fair value of the debentures and the estimated fair value of the attached
warrants.
The transaction resulted in a beneficial conversion feature calculation in
accordance with EITF 98-5: "Accounting for Convertible Securities with
Beneficial Conversion Features or Contingently Adjustable Conversion
Ratios", of $289,800, which has been recorded as financing costs on
convertible debentures on the statements of operations.
F-46
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
8. RELATED PARTY TRANSACTIONS
The following services were provided by related parties. These
transactions, recorded at exchange amounts agreed to by all parties, were
as follows:
During the year ended May 31, 2005, the Company paid or accrued $445,904
(2004 - $293,963) of management and consulting fees to 4 directors and
officers of the Company. Of this amount, $158,718 (2004 - $63,967) was
charged to research and development.
As at May 31, 2005, an amount of $nil (2004 - $13,585) was due to the Chief
Executive Officer of the Company.
As at May 31, 2005, an amount of $17,500 (2004 - $nil) was due from the
Chief Financial Officer of the Company. Of this amount, $10,030 of this
amount has been paid subsequent to year-end.
9. INCOME TAXES
The Company is subject to income taxes in the United States of America
while its subsidiary is subject to income taxes in Canada. US federal net
operating loss carryforwards of $11,939,000, if not utilized to offset
taxable income in future periods, expire between 2021 and 2025. Canadian
net operating loss carryforwards of $3,502,000, if not utilized to offset
taxable income in future periods, expire between the years 2008 and 2015.
Following is a reconciliation between expected income tax benefit and
actual, using the applicable statutory income tax rates of 35% for the
years ended May 31, 2005 and 2004:
2005 2004
----------------------------
Income tax benefit at statutory rate $ (2,313,000) $ (1,156,000)
Foreign rate differential (12,000) --
Certain non-deductible expenses 140,000 140,000
Acquisition intangibles 596,000 --
Research and development 279,000 --
Change in valuation allowance 1,310,000 1,016,000
----------------------------
$ -- $ --
============================
F-47
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
9. INCOME TAXES (CONTINUED)
The Company's total deferred tax asset is as follows:
2005 2004
-----------------------------
Tax benefit relating to net operating loss carryforwards
$ 5,439,000 $ 4,433,000
Plant and equipment 151,000 151,000
Stock option compensation 304,000 --
Valuation allowance (5,894,000) (4,584,000)
------------------------------
$ -- $ --
==============================
Future utilization of the loss carryforward in the U.S. is subject to
certain limitations under the provisions of the Internal Revenue Code,
including limitations subject to Section 382. It is likely that a prior
ownership change has occurred and the losses will be limited in their
ability to offset future income.
10. SUPPLEMENTAL CASH FLOW INFORMATION
--------------------------------------
Period from
inception
(January 20,
1999) to May
31, 2005 2005 2004
--------------------------------------
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid in cash $ 29,683 $ -- $ 3,876
Income taxes paid in cash -- -- --
======================================
SUPPLEMENTAL NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Debt settlement with shares $ 621,375 $ -- $ 12,000
Debt forgiven 462,249 -- 462,249
Shares issued for service 2,686,315 545,028 1,148,125
Warrants issued for service 2,391,635 917,164 814,798
Subscriptions received 594,935 - --
======================================
F-48
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
11. COMMITMENTS AND CONTINGENT LIABILITIES
(a) The Company has obligations under a long-term premises lease for a
period of five years from November 1, 2000. Negotiations to renew the
lease is on-going at this time. The future minimum rent payments until
October 2005 is $37,557.
(b) On November 18, 2002, a lawsuit against the Company was filed in the
Supreme Court of British Columbia.
The Statement of Claim arising from a Settlement Agreement, dated
September 14, 2001, seeks the exchange of 3,192,399 shares of the
Company for 3,192,399 shares in the capital of the Company's
subsidiary or, alternatively, damages and costs.
The Company and M-I Vascular ("MI") attended a court hearing in
chambers on April 16, 17 and 25, 2003 on a summary trial application
by the Plaintiff for an Order for a declaration of specific
performance that the Plaintiff is entitled to an exchange of 3,192,399
common shares of MI for 3,192,399 common shares of the Company
pursuant to the Settlement Agreement entered into on September 14,
2001. The Plaintiff was granted the relief he sought at the summary
trial and the Company was ordered to perform the share exchange. The
Company has appealed the decision to the British Columbia Court of
Appeal and the appeal hearing has been set on September 7, 2004.
On May 16, 2003, the Company delivered a Take-Over Bid Circular (the
"Circular") to the Plaintiff, offering to exchange his common shares
in MI for shares in the Company pursuant to British Columbia
securities laws and regulations. In late May 2003, after the judgment
was received, the Company asked the Plaintiff to submit his MI share
certificates and fill in the required forms pursuant to the Circular,
so that the Company could comply with the judgement and exchange his
shares in accordance with British Columbia securities laws and
regulations.
On December 29, 2004, the Company issued 3,192,399 common shares to
exchange for 3,192,399 common shares of MI on a one-for-one basis.
These shares were issued to comply with an order of the Supreme Court
of British Columbia dated May 20, 2003.
In a counterclaim in the Supreme Court of British Columbia, the
Company continues to dispute the Plaintiff's entitlement to the
3,192,399 MI shares and any Company shares that he may receive
pursuant to court order.
No provision has been provided as at May 31, 2005 as the outcome of
this legal proceeding is uncertain at this time.
F-49
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
12. GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses comprise the following:
2005 2004
------------ ----------
Legal $ 195,379 $ 146,311
Public relations, financing and corporate development 935,337 772,493
Management fees 261,883 229,996
Consulting 692,690 856,692
Bad debt - 160,000
Operating expenses 534,235 425,287
------------ ----------
$ 2,619,524 $2,590,779
============ ==========
General and administrative expenses include $322,202 (2004 - $641,249) and
$390,429 (2004 - $237,170) of deferred compensation in public relations and
consulting, respectively.
13. ACQUISITION OF SAHAJANAND MEDICAL TECHNOLOGIES INC.
On March 1, 2005 the Company entered into a share acquisition Letter of
Intent ("Letter") with the shareholders of Sahajanand Medical Technologies
Inc. ("SMT") of India. SMT is in the business of manufacturing, marketing
and distributing bare metal and drug eluting stents, which will complement
the Company's research activities.
Pursuant to the Letter, the Company shall issue 44,500,000 shares of the
Company's common stock in exchange for 100% of the outstanding equity of
SMT.
In addition, if the SMT operations achieve at least $90 million in sales
within 36 months of the closing of the acquisition, the SMT shareholders
shall be issued 2,225,000 additional shares of the Company's common stock.
If the SMT operations achieve $180 million or more in sales within 36
months of the closing acquisition, the SMT shareholders shall be issued
2,225,000 additional shares of the Company's common stock so that the SMT
shareholders receive an aggregate of 4,450,000 shares of the outstanding
shares of the Company's common stock.
Following the closing, the combined entity will finance the development of
a catheterization laboratory, and upon completion, the combined entity will
have the right (but not obligation) to acquire all right, title and
interest in such technology at an acquisition price equal to 100% of the
production cost not to exceed $2.0 million to be paid in the form of cash
or common stock of the Company.
F-50
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
13. ACQUISITION OF SAHAJANAND MEDICAL TECHNOLOGIES INC. (CONTINUED)
The completion of the acquisition shall be at least subject to (i)
satisfactory completion of customary due diligence; (ii) mutual board and
shareholder approval and other customary consents; (iii) negotiation and
execution of the Definitive Agreement and the documents contemplated
therein; (iv) receipt of audited financial statements of SMT; (v)
negotiation and execution of the Management Employment Agreements; (vi)
receipt of all necessary third party consents; (vii) transfer of all assets
to SMT, free and clear of all liens, claims and encumbrances of any kind,
and (viii) the absence of material legal or government limitations.
As at August 18, 2005, the acquisition has yet to be finalized. Project
acquisition costs of $53,426 which represents direct costs incurred as a
result of this acquisition, have been capitalized on the financial
statements. These costs will be included in the total acquisition cost upon
consummation of this transaction.
14. SUBSEQUENT EVENTS
(a) Subsequent to the fiscal year 2005, the Company issued 409,290 and
159,500 common shares pursuant to an exercise of stock purchase
warrants at a price of $0.26 and $0.66 per share, respectively, for
total proceeds of $211,685.
(b) Subsequent to the fiscal year 2005, the Company issued 200,563 common
shares for research and development and consulting services for a
total value of $119,706.
(c) Subsequent to the fiscal year 2005, the Company issued 66,108 common
shares for employee services for a total value of $40,449.
(d) On June 3, 2005, the Company issued 116,071 shares to a consultant of
SagaX, Inc. for total value of $65,000. This is the remaining balance
of the vendor's debt which the Company has agreed to pay as part of
the Acquisition Agreement (See note 3).
(e) On June 7, 2005, the Company signed a consulting agreement and
pursuant to the agreement, issued 500,000 share purchase warrants with
a term of three years and exercise price of $0.50. Each warrant
entitles the holder to purchase one common share of the Company.
(f) On July 1, 2005, the Company signed a consulting agreement wherein the
Company will pay $10,000 and issue a total of 140,000 common shares
over a specified amount of time in the contract. The Company has paid
the $10,000 fees and issued 40,000 common shares on July 29, 2005.
F-51
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
14. SUBSEQUENT EVENTS (CONTINUED)
(g) On July 1, 2005, the Company signed a consulting agreement and
pursuant to the agreement, issued 250,000 share purchase warrants with
a term of three years and exercise price of $0.50. Each warrant
entitles the holder to purchase one common share of the Company.
(h) On August 11, 2005, the Company completed a non-brokered private
placement (the "Private Placement") of an aggregate of 7,684,995 units
at the price of $0.45 per Unit. Each Unit is comprised of one common
share together with one-half of one Series "A" non-transferable share
purchase warrant (each a "Series A Warrant") and one-half of one
Series "B" non-transferable share purchase warrant (each a "Series B
Warrant"). Each whole Series A Warrant entitles the holder to purchase
one common share at a price of $0.65 per share for a period which is
the earlier of (i) 12 months from August 11, 2005 and (ii) six months
commencing from the effective date of the Company's proposed
"Registration Statement". Each whole Series B Warrant entitles the
holder to purchase one common share at a price of $0.70 per share for
the first 12 months, at a price of $0.85 per share for the next 6
months, and at a price of $1.00 per share for the last 6 months
thereafter. Series B Warrants are exercisable at the earlier of (i) 30
months from August 11, 2005 and (ii) 24 months commencing from the
effective date of the Company's proposed "Registration Statement".
A finder's fee comprised of $25,000 in cash and 62,500 exchangeable
Series A Warrants and Series B Warrants was paid upon the completion
of the private placement.
F-52
MIV THERAPEUTICS INC.
(A development stage company)
Notes to Consolidated Financial Statements
Years Ended May 31, 2005 and 2004
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------
15. RESTATEMENTS
a) Restatement of Cumulative From Inception Balances
Subsequent to the issuance of the Company's financials statements,
management became aware of transcription errors effecting certain
components of the cumulative net loss for the period from inception,
January 20, 1999, to May 31, 2005 (the Cumulative Net Loss") and the
cumulative cash flows for the same period (the "Cumulative Cash
Flows"),
Correction of the components of the Cumulative Net Loss results in an
increase in the cumulative loss from operations of $320,160 (restated
-$24,289,488; previously reported - $23,969,328), an increase in Gain
on Foreign Exchange of $75,160 (restated - $88,715; previously
reported - loss of $13,555) and a decrease in Minority Interest Share
of Loss of $857,484 (restated - $806,310; previously reported -
$1,663,794). These corrections result in an increase in the Cumulative
Net Loss of $1,102,484 (restated - $22,877,286; previously reported -
$21,774,802). Restated cumulative loss per share (basic and dilutive)
increased by $0.04 (restated - $1.16; previously reported - $1.11).
Correction of the components of the Cumulative Cash Flows results in
the reallocation of certain amounts between components of the cash
flows, which are all found within operating activities, without effect
on the total.
b) Restatement of Pro-forma Disclosure of Stock Based Compensation
Subsequent to the issuance of the Company's consolidated financial
statements, management became aware of a disclosure error in Note 6(d)
Pro-forma Disclosure, where the "Total stock-based employee
compensation expense determined under the fair value method for all
awards, net of related tax effects" incorrectly presented the
pro-forma amounts as it omitted an adjustment for option expenses
recorded in the statement of operations and "Net Loss, as reported"
was incorrectly stated as a result. Corrections of the note resulted
in an increase of "Total stock-based employee compensation expense
determined under the fair value method for all awards, net of related
tax effects" of $155,978 (previously reported - ($325,449), restated -
($481,427) and increase in "Pro-forma loss for the year" of $538,285
(previously reported - ($6,396,046), restated - ($6,934,331) and
increase in "Net Loss, as reported" of $382,307 (previously reported -
($6,226,575), restated - ($6,608,882). The corrections did not have
any impact on the Net Loss for the year. Restated Pro-forma basic and
diluted loss per share increased by $0.01 (restated - $0.16;
previously reported - $0.15).
F-53
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Our officers and directors are indemnified as provided by the NEVADA REVISED
STATUTES, our Articles of Incorporation and our Bylaws.
NEVADA REVISED STATUTES
Section 78.7502 of the Nevada Revised Statutes provides as follows:
1. A Corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, or is or
was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, against expenses, including attorney's fees,
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with the action, suit or proceeding if he
acted in good faith and in a manner which he reasonable believed to be in
or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement conviction or upon a plea of nolo contender
or its equivalent, does not, of itself, create a presumption that the
person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation,
and that, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses, including amounts paid in settlement and attorneys' fees actually
and reasonably incurred by him in connection with the defense or settlement
of the action or suit if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim, issue or matter
as to which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to
the corporation or for amounts paid in settlement to the corporation,
unless and only to the extent that the court in which the action or suit
was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person
is fairly and reasonably entitled to indemnity for such expenses as the
court deems proper.
3. To the extent that a director, officer, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in subsections 1 and 2, or in defense of any
claim, issue or matter therein, the corporation shall indemnify him against
expenses, including attorneys' fees, actually and reasonably incurred by
him in connection with the defense.
II-1
Section 78.751 of the Nevada general corporation law also provides as follows:
1. Any discretionary indemnification under NRS 78.7502, unless ordered by a
court or advanced pursuant to subsection 2, may be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in
the circumstances. The determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum consisting of
directors who were not parties to the action, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were not
parties to the action, suit or proceeding so orders, by independent
legal counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the
action, suit or proceeding cannot be obtained, by independent legal
counsel in a written opinion.
2. The articles of incorporation, the bylaws or an agreement made by the
corporation may provide that the expenses of officers and directors
incurred in defending a civil or criminal action, suit or proceeding must
be paid by the corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount
if it is ultimately determined by a court of competent jurisdiction that he
is not entitled to be indemnified by the corporation. The provisions of
this subsection do not affect any rights to advancement of expenses to
which corporate personnel other than directors or officers may be entitled
under any contract or otherwise by law.
3. The indemnification and advancement of expenses authorized in or ordered by
a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the
articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either an
action in his official capacity or an action in another capacity while
holding his office, except that indemnification, unless ordered by a
court pursuant to NRS 78.7502 or for the advancement of expenses made
pursuant to subsection 2, may not be made to or on behalf of any
director or officer if a final adjudication establishes that his acts
or omissions involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of action.
(b) Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs, executors
and administrators of such a person.
Section 78.752 of the Nevada general corporation statutes also provides as
follows:
1. A corporation may purchase and maintain insurance or make other financial
arrangements on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise for any
liability asserted against him and liability and expenses incurred by him
in his capacity as a director, officer, employee or agent, or arising out
of his status as such, whether or not the corporation has the authority to
indemnify him against such liability and expenses.
2. The other financial arrangements made by the corporation pursuant to
subsection 1 may include the following:
(a) The creation of a trust fund.
(b) The establishment of a program of self-insurance.
II-2
(c) The securing of its obligation of indemnification by granting a
security interest or other lien on any assets of the corporation.
(d) The establishment of a letter of credit, guaranty or surety. No
financial arrangement made pursuant to this subsection may provide
protection for a person adjudged by a court of competent jurisdiction,
after exhaustion of all appeals therefrom, to be liable for
intentional misconduct, fraud or a knowing violation of law, except
with respect to the advancement of expenses or indemnification ordered
by a court.
3. Any insurance or other financial arrangement made on behalf of a person
pursuant to this section may be provided by the corporation or any other
person approved by the board of directors, even if all or part of the other
person's stock or other securities is owned by the corporation.
4. In the absence of fraud:
(a) The decision of the board of directors as to the propriety of the
terms and conditions of any insurance or other financial arrangement
made pursuant to this section and the choice of the person to provide
the insurance or other financial arrangement is conclusive; and
(b) the insurance or other financial arrangement:
(i) is not void or voidable; and
(ii) does not subject any director approving it to personal liability
for his action, even if a director approving the insurance or
other financial arrangement is a beneficiary of the insurance or
other financial arrangement.
5. A corporation or its subsidiary which provides self-insurance for itself or
for another affiliated corporation pursuant to this section is not subject
to the provisions of Title 57 of NRS.
OUR ARTICLES OF INCORPORATION
The Company's Articles of Incorporation also provide as follows:
No director or officer of the Corporation shall be personally liable to
the Corporation or any of its stockholders for damages for breach of
fiduciary duty as a director or officer involving any act or omission
of any such director or officer; provided, however, that the foregoing
provision shall not eliminate or limit the liability of a director or
officer (1) for acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law, or (2) the payment of dividends in
violation of Section 78.300 of the Nevada Revised Statutes. Any repeal
or modification of this Article by the stockholders of the Corporation
shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director or officer of the
Corporation for acts or omissions prior to such repeal or modification.
OUR BYLAWS
The Company's Bylaws provide as follows with respect to indemnification and
insurance:
The Corporation shall indemnify any and all of its directors and
officers, and its former directors and officers, or any person who may
have served at the corporation's request as a director or officer of
another corporation in which it owns shares of capital stock or of
which it is a creditor, against expenses actually and necessarily
incurred by them in connection with the defense of any action, suit or
proceeding in which they, or any of them, are made parties, or a party,
by reason of being or having been director(s) or officer(s) of the
corporation, or of such other corporation, except, in relation to
matters as to which any such director or officer or former director of
officer or person shall be adjudged in such action, suit or proceeding
to be liable for negligence or misconduct in the performance of duty.
Such indemnification shall not be deemed exclusive of any other rights
to which those indemnified may be entitled, under By-Law, agreement,
vote of the shareholders or otherwise.
The Company has not currently made any arrangements regarding insurance but may
do so in the future.
II-3
OPINION OF THE SEC
We have been advised that, in the opinion of the SEC, indemnification for
liabilities arising under the Securities Act is against public policy as
expressed in the Securities Act, and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities is asserted by one of
our directors, officers, or controlling persons in connection with the
securities being registered, we will, unless in the opinion of our legal counsel
the matter has been settled by controlling precedent, submit the question of
whether such indemnification is against public policy to a court of appropriate
jurisdiction. We will then be governed by the court's decision.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is a list of the expenses to be incurred by MIV in connection with
the preparation and filing of this registration statement. All amounts shown are
estimates except for the SEC registration fee:
SEC fee $3,094.80
Accounting fees and expenses $25,000.00
Legal fees and expenses $40,000.00
Transfer agent and registrar fees $1,000.00
Fees and expenses for qualification under state securities laws $2,500.00
Miscellaneous (including Edgar filing fees) $2,500.00
---------
Total: $74,094.80
We are paying all expenses of the offering listed above. No portion of these
expenses will be borne by the Selling Shareholders. The Selling Shareholders,
however, will pay any other expenses incurred in selling their common stock,
including any brokerage or underwriting discounts or commissions paid by the
Selling Shareholders to broker-dealers in connection with the sale of their
shares.
RECENT SALES OF UNREGISTERED SECURITIES
We have completed the following issuances of securities without registration
under the Securities Act during the past three years:
PRIVATE PLACEMENTS
On September 27, 2002, the Company issued 979,038 units at a price of $0.40 per
unit for net proceeds of $391,608. Each unit consists of one common share and
one share purchase warrant. The warrants expired on September 27, 2003. There
were no share issuance costs with respect to this issuance. The offer and sale
of these securities was exempt from the registration provisions of the
Securities Act pursuant to Regulation S and Section 4(2) of the Securities Act.
On December 13, 2002, the Company issued 593,750 units at a price of $0.40 per
unit for net proceeds of $237,500. Each unit consists of one common share and
one share purchase warrant. The warrants expired on December 13, 2003. There
were no share issuance costs with respect to this issuance. The offer and sale
of these securities was exempt from the registration provisions of the
Securities Act pursuant to Regulation S and Section 4(2) of the Securities Act.
II-4
On January 31, 2003, the Company issued 25,000 units at a price of $0.40 per
unit for net proceeds of $10,000.00. Each unit consists of one common share and
one share purchase warrant. The warrants expired on January 31, 2004. There were
no share issuance costs with respect to this issuance. The offer and sale of
these securities was exempt from the registration provisions of the Securities
Act pursuant to Regulation S of the Securities Act.
On May 15, 2003, the Company issued 31,250 units at a price of $0.20 per unit
for net proceeds of $6,250.00. Each unit consists of one common share and one
share purchase warrant. The warrants expired on May 15, 2004. There were no
share issuance costs with respect to this issuance. The offer and sale of these
securities was exempt from the registration provisions of the Securities Act
pursuant to Section 4(2) of the Securities Act.
On May 27, 2003, the Company issued 1,981,788 common shares to shareholders of
its subsidiary, M-I Vascular Innovations, Inc. pursuant to completion of a Share
Exchange Agreement entered into in early 2001. The issuance of these securities
was exempt from the registration provisions of the Securities Act pursuant to
Regulation S and Section 4(2) of the Securities Act.
On June 18, 2003, the Company issued 1,398,411 shares under a share exchange
agreement. The Company exchanged, on a one for one basis, shares of the Company
for shares in the Company's subsidiary, MI Vascular Innovations, Inc. The
issuance of these securities was exempt from the registration provisions of the
Securities Act pursuant to Regulation S and Section 4(2) of the Securities Act.
On June 26, 2003, the Company issued 657,592 units. 572,592 units were issued at
a price of $0.20 per unit and 85,000 units were issued at a price of $0.25 per
unit. Each unit consisted of one common share and one share purchase warrant
with price of $0.75 and an expiry date of June 26, 2003. There were no share
issuance costs with respect to this issuance. The offer and sale of these
securities was exempt from the registration provisions of the Securities Act
pursuant to Regulation S and Section 4(2) of the Securities Act.
On July 11, 2003, the Company issued 100,000 common shares to a consultant in
compliance with the Settlement Agreement dated June 5, 2003 for $12,000. The
issuance of these securities was exempt from the registration provisions of the
Securities Act pursuant to Regulation S of the Securities Act.
On July 11, 2003, the Company issued 50,000 common shares to a former consultant
of the Company for stock options exercised at a price of $0.17 per share, for
total proceeds of $8,500. The issuance of these securities was exempt from the
registration provisions of the Securities Act pursuant to Regulation S of the
Securities Act.
On various dates from June to July 2003, the Company issued 1,000,000 shares
pursuant to an exercise of stock purchase warrants at a price of $0.40 per
share, for total proceeds of $400,000. The issuance of these securities was
exempt from the registration provisions of the Securities Act pursuant to
Regulation S and Section 4(2) of the Securities Act.
On August 15, 2003, the Company issued 40,000 units at a price of $0.30 per
unit. Each unit consisted of one common share and one share purchase warrant
with a price of $0.75 and an expiry date of August 15, 2004. The offer and sale
of these securities was exempt from the registration provisions of the
Securities Act pursuant to Regulation S of the Securities Act.
On August 28, 2003, the Company issued 50,000 units at a price of $0.20 per
unit. Each unit consisted of one common share and one share purchase warrant
with a price of $0.75 and an expiry date of August 28, 2004. The offer and sale
of these securities was exempt from the registration provisions of the
Securities Act pursuant to Regulation S of the Securities Act.
On November 5, 2003, the Company issued 1,000,000 units at a price of $0.35 per
unit. Each unit consisted of one common share and one share purchase warrant
with a price of $0.75 and an expiry date of November 5, 2004, and thereafter a
price of $1.00 until November 5, 2005. The offer and sale of these securities
was exempt from the registration provisions of the Securities Act pursuant to
Regulation S and Section 4(2) of the Securities Act.
II-5
On January 14, 2004, the Company issued 71,429 units at a price of $0.35 per
unit. Each unit consisted of one common share and one share purchase warrant
with a price of $0.75 and an expiry date of September 8, 2004 and thereafter a
price of $1.00 until September 8, 2005. The Company issued a further 125,000
units at a price of $0.35 per share. Each unit consisted of one common share and
one share purchase warrant with a price of $0.60 and an expiry date of June 11,
2004 and thereafter a price of $0.75 until December 11, 2005. The Company issued
then issued a further 57,143 units at a price of $0.35 per unit. Each unit
consisted of one common share and one share purchase warrant with a price of
$0.60 to May 28, 2004 and thereafter a price of $0.75 until November 28, 2004.
The offer and sale of these securities was exempt from the registration
provisions of the Securities Act pursuant to Regulation S of the Securities Act.
On January 14, 2004, the Company issued 182,143 Units at a price of $0.35 per
Unit for proceeds of $63,750. An additional 5,714 Units were issued as a
finder's fee. Each Unit consists of one common share and one non-transferable
stock purchase warrant. Of the total consideration, $40,806 was allocated to the
common shares and $22,944 was allocated to the warrants. Each warrant entitles
the holder to purchase one common share of the Company for $0.60 for a period of
six months from the date of subscription, and thereafter for $0.75 for the next
six months. The offer and sale of these securities was exempt from the
registration provisions of the Securities Act pursuant to Regulation S and
Section 4(2) of the Securities Act.
On February 23, 2004, the Company issued 100,000 Units at a price of $0.35 per
Unit for proceeds of $35,000. An additional 10,000 Units were issued as a
finder's fee. Each Unit consists of one common share and one non-transferable
stock purchase warrant. Of the total consideration, $24,608 was allocated to the
common shares and $10,392 was allocated to the warrants. Each warrant entitles
the holder to purchase one common share of the Company for $0.60 until August 1,
2004, and thereafter for $0.75 until February 1, 2005. The offer and sale of
these securities was exempt from the registration provisions of the Securities
Act pursuant to Regulation S of the Securities Act.
On February 23, 2004, the Company issued 120,000 units at a price of $0.35 per
unit. Each unit consisted of one common share and one share purchase warrant
with a price of $0.60 and an expiry date of August 6, 2004 and thereafter a
price of $0.75 until February 6, 2005. The Company issued a further 110,000
units at a price of $0.35 per unit. Each unit consisted of one common share and
one share purchase warrant with a price of $0.60 and an expiry date of August 1,
2004 and thereafter a price of $0.75 until February 1, 2005. The offer and sale
of these securities was exempt from the registration provisions of the
Securities Act pursuant to Regulation S of the Securities Act.
On March 18, 2004, the Company issued 5,714 units at a price of $0.35 per unit.
Each unit consisted of one common share and one share purchase warrant with a
price of $0.60 and an expiry date of September 18, 2004 and thereafter a price
of $0.75 until March 18, 2005. The offer and sale of these securities was exempt
from the registration provisions of the Securities Act pursuant to Regulation S
of the Securities Act.
On March 18, 2004, the Company issued 50,000 common shares to a former director
of the Company for stock options exercised at a price of $0.50 per share, for
total proceeds of $25,000. The issuance of these securities was exempt from the
registration provisions of the Securities Act pursuant to Regulation S of the
Securities Act.
On March 29, 2004, the Company issued 6,749,995 March 2004 Units at a price of
$0.45 per March 2004 Unit, with each March 2004 Unit consisting of one common
share, one-half of one non-transferable March 2004 Series A Warrant and one-half
of one non-transferable March 2004 Series B Warrant. The Company had agreed to
file a registration statement with the SEC in accordance with the requirements
of the Securities Act in order to register the resale by the investors of the
shares and the shares issuable upon exercise of the warrants in the March 2004
Private Placement, completed pursuant to Rule 903 of Regulation S and Rule 506
of Regulation D. Each whole March 2004 Series A Warrant entitles the holder to
purchase one share of common stock at an exercise price of $0.66 per share
during the period commencing March 29, 2004 and ending on March 18, 2009. The
March 2004 Series B Warrants have now expired with no such warrants were
exercised prior to expiry. There were also 674,997 non-transferable March 2004
Finder's Fee Warrants issued in relation to the March 2004 Private Placement
which are exercisable upon the same terms and conditions as the March 2004
Series A Warrants. The offer and sale of these securities was exempt from the
registration provisions of the Securities Act pursuant to Regulation S and
Section 4(2) of the Securities Act.
II-6
On May 7, 2004, the Company issued 500,000 common shares to an officer of the
Company pursuant to an exercise of stock purchase warrants for total proceeds of
$5,000 for acquisition of technology. The issuance of these securities was
exempt from the registration provisions of the Securities Act pursuant to
Regulation S of the Securities Act.
On May 14, 2004, the Company issued 600,000 common shares to a former consultant
pursuant to an exercise of stock purchase warrants for total proceeds of $6,000
for services rendered in 2002 and 2003. The issuance of these securities was
exempt from the registration provisions of the Securities Act pursuant to
Regulation S of the Securities Act.
During the fiscal year ended May 31, 2004, a total of 586,203 Regulation S stock
have been issued at a price range from $0.56 to $1.01 per share of which 426,203
was issued for cash for total net proceeds of $207,721 (net of agent's fees of
55,107 Regulation S stocks). 100,000 shares were issued to a consultant for
services and 50,000 shares were issued as a loan as security for non-paid
commissions.
The Company placed 6,000,000 common stock to a financial custodian acting as
trustee pursuant to a listing of the Company's shares on the Frankfurt Stock
Exchange. The Company is conducting a Regulation S ("Reg S") Offering through
the facilities of the Berlin Stock Exchange to raise capital in mainly German
speaking countries. The trustee will receive a fee of 3% of the total value of
the stocks held in trust to be paid in equal installments of 30,000 common
shares per month over a ten month period, assuming the maximum offering is sold.
The stocks may only be traded on German stock exchanges pursuant to Regulation
S.
On September 8, 2004, the Company issued 71,429 non-transferable September 2003
Warrants pursuant to a private placement to purchase 71,429 shares of our common
stock at an exercise price of $0.75 per share until September 8, 2006. The offer
and sale of these securities was exempt from the registration provisions of the
Securities Act pursuant to Section 4(2) of the Securities Act.
On December 29, 2004, the Company issued 3,192,399 common shares to exchange for
3,192,399 common shares of M-I Vascular Innovations, Inc. on a one-for-one
basis. These shares were issued to comply with an order of the Supreme Court of
British Columbia dated May 20, 2003. On May 26, 2005, the Company issued 17,000
common shares to exchange for 17,000 common shares of M-I Vascular Innovations,
Inc. on a one-for-one basis. The exchanges were accounted for using the step
purchase method and accordingly the purchase price of $616,585, being the fair
market value of the Company's shares at the time of exchange, was allocated to
purchased in process research and development. This amount was written off
during the fiscal year 2005 in accordance with FASB Interpretation No. 4,
"Applicability of FASB No. 2 To Business Combinations Accounted For By The
Purchase Method". The issuance of these securities was exempt from the
registration provisions of the Securities Act pursuant to Regulation S of the
Securities Act.
On March 24, 2005, the Company issued 75,000 common shares to a consultant of
the Company for stock options exercised at a price of $0.30 per share, for total
proceeds of $22,500. The offer and sale of these securities was exempt from the
registration provisions of the Securities Act pursuant to Regulation S of the
Securities Act.
During the fiscal year ended May 31, 2005, a total of 1,209,108 Reg S stock had
been issued at a price range of $0.34 to $0.62 per share of which 904,215 was
issued for cash for total net proceeds of $218,403 (net of agent's fees of
154,893 Reg S stock). Of the 200,000 shares issued to a consultant for services
as a security for non-paid commissions, 50,000 shares were returned to the
Company. The issuance of these securities was exempt from the registration
provisions of the Securities Act pursuant to Regulation S of the Securities Act.
During the fiscal year ended May 31, 2005, the Company issued 2,320,710 common
shares pursuant to an exercise of stock purchase warrants for total proceeds of
$607,385. The issuance of these securities was exempt from the registration
provisions of the Securities Act pursuant to Regulation S of the Securities Act.
As at May 31, 2005, 4,204,689 Regulation S stocks are held in trust by the
financial custodian.
II-7
During the fiscal year ended May 31, 2005, the Company issued an aggregate of
1,599,810 common shares for consulting, research and development, legal and
employee services for a total value of $515,028 being the fair value of the
shares at the earlier of (a) the agreement date and (b) the period of completion
of performance.
On October 4, 2005, the Company issued an aggregate of 3,158,920 shares of
common stock, at a deemed price of $0.25 per share, in consideration of then
conversion of an aggregate of $789,730 of principal and interest due under
certain Convertible Debentures issued by us on March 15, 2005 pursuant to the
March 2005 Private Placement. As part of the March 2005 Private Placement each
$0.25 of the indebtedness which was convertible under the Convertible Debentures
entitled the holder thereof to acquire one-half of one transferable March 2005
Placement Warrant exercisable at a price of $0.25 per share until March 15,
2010. The offer and sale of these securities was exempt from the registration
provisions of the Securities Act pursuant to Regulation S and Section 4(2) of
the Securities Act.
On July 10, 2006, the Company issued 620,000 July 2006 Units at a price of $0.50
per July 2006 Unit, with each July 2006 Unit consisting of one common share and
one July 2006 Warrant. The Company had agreed to file a registration statement
with the SEC in accordance with the requirements of the Securities Act in order
to register the resale by the investors of the shares and the shares issuable
upon exercise of the July 2006 Warrants in the July 2006 Private Placement,
completed pursuant to Rule 903 of Regulation S and Rule 506 of Regulation D.
Each July 2006 Warrant entitles the holder to purchase one share of common stock
at an exercise price of $0.75 per share during the period commencing July 10,
2006 and ending on the earlier of (i) January 10, 2008 and (ii) 12 months
commencing from the effective date of the Company's proposed registration
statement related to the July 2006 Private Placement. An aggregate of 300,000 of
the July 2006 Warrants issued to one Selling Shareholder are transferable. The
offer and sale of these securities was exempt from the registration provisions
of the Securities Act pursuant to Regulation S and Section 4(2) of the
Securities Act.
On November 18, 2004, the Company issued 2,720,000 share purchase warrants
pursuant to Trilogy Capital Partners pursuant to a warrant agreement and an
Amended Letter of Engagement. In exchange for marketing, business development
and strategic advisory services, the Company will pay Trilogy $10,000 per month
and issue to Trilogy an aggregate of 2,720,000 Warrants with a term of three
years and with an exercise price of $0.50 per share. The warrants are
non-transferable. The offer and sale of these securities was exempt from the
registration provisions of the Securities Act pursuant to Section 4(2) of the
Securities Act.
On August 11, 2005, the Company issued 7,684,995 August 2005 Units at a price of
$0.45 per August 2005 Unit, with each August 2005 Unit consisting of one common
share, one-half of one non-transferable August 2005 Series A Warrant and
one-half of one non-transferable August 2005 Series B Warrant. The Company had
agreed to file a registration statement with the SEC in accordance with the
requirements of the Securities Act in order to register the resale by the
investors of the shares and the shares issuable upon exercise of the common
stock purchase warrants in the August 2005 Private Placement, completed pursuant
to Rule 903 of Regulation S and Rule 506 of Regulation D. We agreed to use our
reasonable commercial efforts to file a registration statement within 120 days
from the date of completion of the August 2005 Private Placement. Each whole
August 2005 Series A Warrant entitles the holder to purchase one share of common
stock at an exercise price of $0.65 per share during the period commencing
August 11, 2005 and ending at 5:00 p.m. (Vancouver time) on the day which is the
earlier of (i) August 11, 2006 and (ii) six months commencing from the effective
date of the Company's proposed registration statement related to the August 2005
Private Placement. Each whole August 2005 Series B Warrant entitles the holder
to purchase one share of common stock at an exercise price of between $0.70 and
$1.00 per share during the period commencing August 11, 2005 and ending at 5:00
p.m. (Vancouver time) on the day which is the earlier of (i) February 11, 2008
and (ii) 24 months commencing from the effective date of the Company's proposed
registration statement related to August 2005 Private Placement. Each whole
August 2005 Series B Warrant is exercisable at an exercise price of $0.70 per
August 2005 Series B Warrant share during the first 12 months of the warrant
exercise period (months one to 12), at an exercise price of $0.85 per warrant
share during the next six months of the warrant exercise period (months 13 to
18) and at an exercise price of $1.00 per warrant share during the final six
months of the warrant exercise period (months 19 to 24). There were also 62,500
non-transferable Series A August 2005 Finder's Fee Warrants and 62,500
non-transferable Series B August 2005 Finder's Fee Warrants issued in relation
to the August 2005 Private Placement and are exercisable upon the same terms and
conditions as the August 2005 Series A Warrants and the August 2005 Series B
Warrants, respectively. Included with the August 2005 Private Placement was the
issuance of 100,000 August 2005 Units pursuant to a settlement proposal reached
by us on August 9, 2005, with Casimir and relating to a previous right of
refusal granted to Casimir under the March 2005 Private Placement. The offer and
sale of these securities was exempt from the registration provisions of the
Securities Act pursuant to Regulation S and Section 4(2) of the Securities Act.
II-8
On October 6, 2005, the Company issued 95,238 October 2005 Units at a price of
$1.05 per October 2005 Unit, with each October 2005 Unit consisting of one
common share and one non-transferable October 2005 Warrant. The Company had
agreed to file a registration statement with the SEC in accordance with the
requirements of the Securities Act in order to register the resale by the
investors of the shares and the shares issuable upon exercise of the warrants in
the October 2005 Private Placement, completed pursuant to Rule 903 of Regulation
S. Each October 2005 Warrant entitles the holder to purchase one share of common
stock at an exercise price of $1.55 per share during the period commencing on
October 6, 2005 and ending on October 6, 2007. There were also 9,524 common
shares and 9,524 non-transferable October 2005 Finder's Fee Warrants issued in
relation to the October 2005 Private Placement which are exercisable upon the
same terms and conditions as the October 2005 Warrants. The offer and sale of
these securities was exempt from the registration provisions of the Securities
Act pursuant to Regulation S and Section 4(2) of the Securities Act.
During the nine month period ended February 28, 2006, a total of 1,704,689 Reg S
stock has been issued at a price range of $0.30 to $0.51 per share for total net
proceeds of $720,095 (net of agent's fees of $75,500).
As at May 31, 2006, 2,500,000 Regulation S stocks were held in trust by the
financial custodian. Those share are now being returned to treasury for
cancellation by the Company.
During the nine month period ended February 28, 2006, the Company issued an
aggregate of 811,595 common shares for consulting, research and development,
legal and employee services for a total value of $567,871 being the fair value
of the shares at the agreement date and being expensed over the period of
completion of performance.
During the nine month period ended February 28, 2006, the Company issued
3,289,016 common shares pursuant to an exercise of stock purchase warrants for
total proceeds of $1,711,008. Of these shares, 340,949 were exercised under the
cashless option of the agreement.
During the nine month period ended February 28, 2006, the Company issued 112,723
common shares pursuant to an exercise of stock purchase options for total
proceeds of $18,000. Of these shares, 52,723 was exercised under the cashless
option of the agreement.
On October 4, 2005, the Company issued an aggregate of 3,158,920 shares of
common stock, at a deemed price of $0.25 per share, in consideration of then
conversion of an aggregate of $789,730 of principal and interest due under
certain senior secured Convertible Debentures issued by us on March 15, 2005
pursuant to the March 2005 Private Placement. As part of the March 2005 Private
Placement each $0.25 of the principal indebtedness which was convertible under
the Convertible Debentures entitled the holder thereof to acquire one-half of
one transferable March 2005 Placement Warrant exercisable at a price of $0.25
per share until March 15, 2010. The Convertible Debentures were exercised at a
conversion price, as determined by the terms of the Debenture Agreement, of
$0.25 per common share. The conversion was for an aggregate of $755,000
principal amount and $34,730 interest due under the Debentures. The remaining
$50,000 of Debentures were repaid in cash including accrued interest of $2,278.
The offer and sale of these securities was exempt from the registration
provisions of the Securities Act pursuant to Regulation S and Section 4(2) of
the Securities Act.
As at November 30, 2005, the warrants had an estimated fair value of $64,208
using the Black Scholes Option Pricing Model.
II-9
ISSUE OF SHARES FOR SERVICES
In October of 2003 the Company issued 1,000,000 non-transferable October 2003
Warrants pursuant to a consulting agreement, with 500,000 of such October 2003
Warrants being exercisable at an exercise price of $0.50 per share, and with
500,000 of such October 2003 Warrants being exercisable at an exercise price of
$0.75 per share, until October 24, 2006, in each such instance. The issuance of
these securities was exempt from the registration provisions of the Securities
Act pursuant to Section 4(2) of the Securities Act.
On April 17, 2003, the Company issued 65,217 common shares to a consultant for
value of $15,000 in bona fide services rendered to the Company by the consultant
to provide business developing and general business consulting services. The
issuance of these securities was exempt from the registration provisions of the
Securities Act pursuant to Regulation S of the Securities Act.
On July 14, 2003, the Company issued 100,000 common shares pursuant to a
settlement agreement. The issuance of these securities was exempt from the
registration provisions of the Securities Act pursuant to Section 4(2) of the
Securities Act.
On October 24, 2003, the Company issued 500,000 share purchase warrants pursuant
to a consulting agreement. The warrants have an exercise price of $0.50 and an
expiry date of October 24, 2005. The issuance of these securities was exempt
from the registration provisions of the Securities Act pursuant to Regulation S
of the Securities Act.
During the year ended May 31, 2003, the Company issued an aggregate of 1,789,777
common shares to directors, consultants and employees for consulting services at
a value of $540,041. Accordingly, $526,708 was recorded as a charge to general
and administrative expense in the consolidated statement of operations, and
$13,333 will be charged to operations over the remaining term of the consulting
agreement.
In May of 2003 the Company issued 400,000 non-transferable May 2003 Warrants
pursuant to a February 2003 consulting agreement exercisable at an exercise
price of at $0.50 per share until May 20, 2008.
On May 21, 2004, the Company issued 200,000 non-transferable May 2004 Warrants
pursuant to a consulting agreement to purchase 200,000 shares of our common
stock at an exercise price of $0.45 per share until May 21, 2007. The issuance
of these securities was exempt from the registration provisions of the
Securities Act pursuant to Section 4(2) of the Securities Act.
During the year ended May 31, 2004, the Company issued an aggregate of 2,394,456
common shares to directors, consultants and employees for consulting services at
a value of $1,148,126. Accordingly, $622,376 was recorded as a charge to general
and administrative and research and development expenses in the consolidated
statement of operations, and $525,750 will be charged to operations over the
remaining term of the consulting agreements.
During the six months ended November 30, 2004, the Company issued an aggregate
of 616,223 common shares to directors and consultants for consulting services at
a value of $117,088 which was recorded as a charge to general and administrative
and research and development expenses in the consolidated statement of
operations.
On September 24, 2004, the Company issued 400,000 non-transferable September
2004 Warrants pursuant to a consulting agreement to purchase 400,000 shares of
our common stock at an exercise price of $0.30 per share until September 24,
2009. The issuance of these securities was exempt from the registration
provisions of the Securities Act pursuant to Regulation S of the Securities Act.
On March 5, 2005, the Company issued 400,000 non-transferable March 2005
Warrants pursuant to a consulting agreement to purchase 400,000 shares of our
common stock at an exercise price of $0.30 per share until March 5, 2010. The
issuance of these securities was exempt from the registration provisions of the
Securities Act pursuant to Regulation S of the Securities Act.
II-10
On June 7, 2005, the Company issued 500,000 non-transferable June 2005 Warrants
pursuant to a consulting agreement to purchase 500,000 shares of our common
stock at an exercise price of $0.50 per share until June 7, 2008. The issuance
of these securities was exempt from the registration provisions of the
Securities Act pursuant to Regulation S of the Securities Act.
On July 1, 2005, the Company issued 2,750,000 non-transferable July 2005
Warrants pursuant to a letter of engagement, as amended, to purchase 2,750,000
shares of our common stock at an, exercise price of $0.50 per share until
November 18, 2007. The issuance of these securities was exempt from the
registration provisions of the Securities Act pursuant to Section 4(2) of the
Securities Act.
On February 2, 2006, the Company issued 150,000 non-transferable February 2006
Warrants pursuant to a consulting agreement to purchase 150,000 shares of our
common stock at an exercise price of $0.50 per share until February 2, 2011. On
February 2, 2006, the Company also issued a further 150,000 non-transferable
February 2006 Warrants pursuant to a further consulting agreement to purchase
150,000 shares of our common stock at an exercise price of $0.50 per share until
February 2, 2011. The issuance of these securities was exempt from the
registration provisions of the Securities Act pursuant to Section 4(2) of the
Securities Act.
II-11
EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- -------------------- -----------------------------------------------------------
3.1 Articles of Incorporation(1)
3.2 Bylaws, as amended(1)
5.1 Opinion of Braun & Company, with consent to use, regarding
the legality of the securities being registered(2)
23.1 Consent of Independent Auditors, Ernst & Young LLP(2)
23.2 Consent of Independent Auditors, Moore Stephens Ellis
Foster Ltd.(2)
24.1 Power of Attorney (Included on the signature page of this
registration statement)
(1) Previously filed with the SEC as an exhibit to the Registrant's Form
10SB12G originally filed on April 25, 2000.
(2) Filed herewith.
II-12
UNDERTAKINGS
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information set
forth in this registration statement; provided that 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 the volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution;
2. That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof;
3. To remove from registration by means of a post-effective amendment any of
the securities being registered hereby which remain unsold at the
termination of the offering;
4. That, for the purpose of determining liability of the undersigned small
business issuer under the Securities Act to any purchaser in the initial
distribution of the securities, the undersigned small business issuer
undertakes that in a primary offering of securities of the undersigned
small business issuer pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if
the securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned small business issuer will be a
seller to the purchaser and will be considered to offer or sell such
securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned small
business issuer relating to the offering required to be filed pursuant
to Rule 424 of Regulation C of the Securities Act;
(ii) Any free writing prospectus relating to the offering prepared by or on
behalf of the undersigned small business issuer or used or referred to
by the undersigned small business issuer;
(iii) The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned small
business issuer or its securities provided by or on behalf of the
undersigned small business issuer; and
(iv) Any other communication that is an offer in the offering made by the
undersigned small business issuer to the purchaser.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to our directors, officers and controlling persons
pursuant to the provisions above, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933, and is,
therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other
than the payment by us of expenses incurred or paid by one of our directors,
officers, or controlling persons in the successful defense of any action, suit
or proceeding, is asserted by one of our directors, officers, or controlling
persons in connection with the securities being registered, we 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 is against public policy as expressed in the Securities Act of
1933, and we will be governed by the final adjudication of such issue.
II-13
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 has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Vancouver, Province of British Columbia, Canada
on July 12, 2006.
MIV THERAPEUTICS, INC.
BY: /S/ ALAN P. LINDSAY
------------------------------------------
ALAN P. LINDSAY
CHAIRMAN, CHIEF EXECUTIVE OFFICER,
PRINCIPAL EXECUTIVE OFFICER AND A DIRECTOR
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following person in the capacities and
on the dates stated:
MIV THERAPEUTICS, INC.
BY: /S/ ALAN P. LINDSAY
---------------------------------
ALAN P. LINDSAY
CHAIRMAN, CHIEF EXECUTIVE OFFICER, PRINCIPAL EXECUTIVE
OFFICER AND A DIRECTOR
/S/ PATRICK A. MCGOWAN
---------------------------------
PATRICK A. MCGOWAN
EXECUTIVE VICE PRESIDENT, SECRETARY, CHIEF FINANCIAL
OFFICER, PRINCIPAL ACCOUNTING OFFICER AND A DIRECTOR
II-14
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Alan P.
Lindsay, as his true and lawful attorney-in-fact and agent with full power of
substitution and re-substitution for him and his name, place and stead, in any
and all capacities, to sign any or all amendments to this Registration Statement
(including post-effective amendments or any abbreviated registration statements
and any amendments thereto filed pursuant to Rule 462(b) increasing the number
of securities for which registration is sought) and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the foregoing, as fully to all intents and
purposes as he might or could do in person hereby ratifying and confirming all
that said attorney-in-fact, or his substitute, may lawfully do or cause to be
done by virtue hereof.
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 indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/S/ ALAN P. LINDSAY CHAIRMAN, CHIEF EXECUTIVE OFFICER, PRINCIPAL July 12, 2006
- ----------------------------- EXECUTIVE OFFICER AND A DIRECTOR
ALAN P. LINDSAY
/S/ I. MARK LANDY PRESIDENT AND A DIRECTOR July 12, 2006
- -----------------------------
I. MARK LANDY
/S/ PATRICK A. MCGOWAN EXECUTIVE VICE PRESIDENT, SECRETARY, CHIEF July 12, 2006
- ----------------------------- FINANCIAL OFFICER, PRINCIPAL ACCOUNTING OFFICER
PATRICK A. MCGOWAN AND A DIRECTOR
/S/ DANIEL SAVARD A DIRECTOR July 12, 2006
- -----------------------------
DANIEL SAVARD
/S/ DOV SHIMON CHIEF MEDICAL OFFICER AND A DIRECTOR July 12, 2006
- -----------------------------
DOV SHIMON
II-15