UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported): December 20, 2004
ENHANCE BIOTECH, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 000-31653 95-4766094
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
712 Fifth Avenue, 19th Floor, New York, NY 10019
(Address of principal executive offices) (Zip code)
(646) 723 8940
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
The Registrant hereby amends the Current Report on Form 8-K filed on December
27, 2004 (the "Current Report"), which reported the completion of the merger of
Ardent Acquisition Corp, a wholly owned subsidiary of the Registrant, with and
into Ardent Pharmaceuticals, Inc. As a result of the merger, Ardent
Pharmaceuticals, Inc. became a wholly owned subsidiary of the Registrant. This
amendment to the Current Report provides audited financial statements for Ardent
Pharmaceuticals, Inc. and unaudited pro forma condensed combined financial
statements of the Registrant and Ardent Pharmaceuticals, Inc.
SECTION 5 - CORPORATE GOVERNANCE AND MANAGEMENT
ITEM 5.03 AMENDMENTS TO THE ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN
FISCAL YEAR
(b) On March 23, 2005, the Board of Directors of the Registrant elected to
change the date of the Registrant's fiscal year end from January 31 to December
31. The Company will report the transition period on Form 10-KSB
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired.
Financial statements of Ardent Pharmaceuticals, Inc. for the year ended December
31, 2004
Report of Independent Registered Public Accounting Firm
Balance Sheet
Statement of Operations
Statement of Stockholders Deficit
Statement of Cash Flows
Notes to Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
Ardent Pharmaceuticals, Inc.
We have audited the accompanying balance sheet of Ardent Pharmaceuticals, Inc.
(the "Company") as of December 31, 2004, and the related statements of
operations, stockholders' deficit and cash flows for the year then ended. 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 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. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2004, and the
results of its operations and its cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. At December 31, 2004, the Company has an
accumulated deficit of $69,000,000, negative working capital, and liabilities
that exceed assets by $2,300,000. These factors create substantial doubt about
the Company's ability to continue as a going concern. Management's plans
regarding this matter are described in Note 8. The financial statements do not
include any adjustments that might be necessary if the Company is unable to
continue as a going concern.
/s/ CACCIAMATTA ACCOUNTANCY CORPORATION
Irvine, California
March 9, 2005
ARDENT PHARMACEUTICALS, INC.
BALANCE SHEET
As of December 31, 2004
ASSETS
Current assets
Cash and cash equivalents $ 370,585
Accounts receivable 110,030
------------
Total current assets 480,615
Property and equipment, net of accumulated
depreciation and amortization of $1,915,413 755,275
Patents, net of accumulated amortization of $72,016 576,943
Other long term assets 11,405
------------
$ 1,824,238
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable $ 285,767
Accrued interest due to affiliate 457,908
Current portion of long-term debt 119,042
Other liabilities 15,450
Current portion of deferred revenue 60,000
------------
Total current liabilities 938,167
Deferred revenue, less current portion 1,190,000
Long-term debt, less current portion 55,560
Covertible note payable to affiliate 1,925,028
------------
Total liabilities 4,108,755
------------
Stockholders' deficit
Preferred stock, no par value, 20,000,000 shares authorized
Series A convertible preferred stock,
120,150 shares issued and outstanding 12,015,000
Series B convertible exchangeable preferred stock,
120,150 shares issued and outstanding 12,015,000
Series C preferred stock,
1,000,000 shares issued and outstanding 4,117,648
Series D-1 convertible preferred stock,
795,715 shares issued and outstanding 640,453
Accretion of series D-1 dividends 163,618
Series D-2 convertible preferred stock,
2,453,333 shares issued and outstanding 1,897,806
Accretion of series D-2 dividends 172,960
Common stock, no par value, 100,000,000 shares authorized
23,320,969 shares issued and outstanding 34,797,476
Warrants 915,314
Accumulated deficit (69,019,792)
------------
Total stockholders' deficit (2,284,517)
------------
$ 1,824,238
============
See accompanying notes to financial statements.
ARDENT PHARMACEUTICALS, INC.
STATEMENT OF OPERATIONS
For the Year ended December 31, 2004
Revenues
License fees $ 123,168
------------
Operating costs and expenses
Research and development (1,768,255)
General and administrative (3,551,677)
------------
Total costs and expenses (5,319,932)
------------
Loss from operations (5,196,764)
Other income (expense)
Interest income 20,235
Interest expense (236,893)
------------
Net loss (5,413,422)
Accretion of dividends on preferred stock (877,435)
------------
Net loss applicable to common stockholders $ (6,290,857)
============
Net loss per common share - basic and diluted $ (0.28)
============
Weighted average common shares outstanding - basic and diluted 22,165,000
============
See accompanying notes to financial statements.
ARDENT PHARMACEUTICALS, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
For the Year ended December 31, 2004
Balance Accretion of Conversions to Options 2004 Balance
31-Dec-03 Dividends Common Stock Granted Net Loss 31-Dec-04
------------ ------------ -------------- ------- ----------- ------------
PREFERRED STOCK
Series A
No. of Shares 120,150 120,150
Amount $ 12,015,000 $ 12,015,000
Dividend $ 2,746,103 330,316 (3,076,419) $ --
Series B
No. of Shares 120,150 120,150
Amount $ 12,015,000 $ 12,015,000
Dividend $ 2,357,493 329,894 (2,687,387) $ --
Series C
No. of Shares 2,428,571 (1,428,571) 1,000,000
Amount $ 10,000,000 (5,882,352) $ 4,117,648
Series D-1
No. of Shares 795,715 795,715
Amount $ 640,453 $ 640,453
Dividend $ 58,020 105,598 $ 163,618
Series D-2
No. of Shares 2,453,333 2,453,333
Amount $ 1,897,806 $ 1,897,806
Dividend $ 61,333 111,627 $ 172,960
COMMON STOCK
No. of Shares 21,173,759 2,147,210 23,320,969
Amount $ 23,073,595 11,662,479 61,402 $ 34,797,476
Warrants $ 931,531 (16,217) $ 915,314
ACCUMULATED DEFICIT $(62,728,935) (877,435) (5,413,422) $(69,019,792)
DEFERRED COMPENSATION $ (55,693) 55,693 $ --
--------------------------------------------------------------------------------------------------
TOTAL $ 3,011,706 $ -- $ 55,797 $61,402 $(5,413,422) $ (2,284,517)
==================================================================================================
See accompanying notes to financial statements.
ARDENT PHARMACEUTICALS, INC.
STATEMENT OF CASH FLOWS
For the Year ended December 31, 2004
Cash flows from operating activities
Net loss $ (5,413,422)
Non-cash items included in net loss
Amortization and impairment of patents 177,346
Depreciation 424,482
Stock-based compensation 117,095
Changes in operating assets and liabilities
Accounts receivable (104,715)
Prepaid expenses 4,809
Accounts payable (36,394)
Accrued interest due to affiliate 197,415
Other liabilities 6,050
Deferred revenue 1,250,000
------------
Net cash used in operating activities (3,377,334)
------------
Cash flows from investing activities
Purchase of property and equipment (6,270)
------------
Net cash used in investing activities (6,270)
------------
Cash flows from financing activities
Proceeds from issuance of common stock 104
Principal payments on long-term debt (202,648)
------------
Net cash used in financing activities (202,544)
------------
Net decrease in cash and cash equivalents (3,586,148)
Cash and cash equivalents, at beginning of period 3,956,733
------------
Cash and cash equivalents, at end of period $ 370,585
============
Supplemental disclosure of cash flow information
Cash paid for interest $ 43,726
============
Cash paid for income taxes $ --
============
Supplemental disclosure of non-cash investing and
financing information
Conversion of preferred stock to common stock $ 11,662,479
============
See accompanying notes to financial statements.
ARDENT PHARMACEUTICALS, INC.
NOTES TO FINANCIAL STATEMENTS
For Year ended December 31, 2004
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Ardent Pharmaceuticals, Inc. ("Company" or "Ardent"), was incorporated in
North Carolina in 1995 to commercialize pharmaceutical products focused
primarily on the delta receptor. The Company is engaged in the development
of new drug candidates, primarily in the markets of pain management,
urinary incontinence, premature ejaculation, depression and
cardio-protection, among others.
The Company faces risks associated with companies whose products are in
preclinical and clinical development. These risks include, among others,
the Company's need for additional financing to complete the research,
development and clinical testing necessary to bring its products to
market. The Company has incurred net losses since inception and has funded
those losses primarily through the sale of equity. There is no assurance
such financing will continue to be available to the Company when required
or that such financing would be available under favorable terms.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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. Actual
results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments with an original
maturity at date of purchase of three months or less to be cash
equivalents. Included in cash and cash equivalents is restricted cash of
$61,110 which secures a $61,000 letter of credit.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation on property and
equipment is calculated using the straight-line method over the estimated
useful lives, which are three to five years. Leasehold improvements are
amortized using the straight-line method over the lesser of the lease term
or estimated useful life. Expenses for repairs and maintenance are charged
to operations as incurred. Upon retirement or sale, the cost of the assets
disposed of and the related accumulated depreciation are removed from the
accounts, and any resulting gain or loss is credited or charged to
operations. Property and equipment consist of the following:
Leasehold improvements $ 1,255,640
Furniture and equipment 1,415,048
-----------
2,670,688
Accumulated depreciation and amortization (1,915,413)
-----------
$ 755,275
===========
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PATENTS
Costs directly related to filing patent applications are capitalized and
amortized using the straight-line method over the estimated useful life of
the patent from the date of grant. The Company assesses the recoverability
of this intangible asset at least annually based on the expected future
economic benefit to be derived from the underlying patent over its
remaining useful life. A patent impairment charge of $150,181 was taken
against the patent portfolio after a review of the portfolio conducted as
of December 31, 2004. The net book value of the patent portfolio is
$576,943 ($648,959 less accumulated amortization of $72,016.)
IMPAIRMENT OF LONG-LIVED ASSETS
The Company evaluates the recoverability of its long-lived assets annually
and when circumstances indicate that an event of impairment may have
occurred in accordance with the provisions of Statement of Financial
Accounting Standard ("SFAS") No. 144, "Accounting for the Impairment or
disposal of Long-Lived Assets".
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has determined the estimated fair value of its financial
instruments. Due to their short-term nature, the carrying values for cash
and cash equivalents, accounts receivable, prepaid expenses, accounts
payable and accrued expenses approximate their fair values. The historical
carrying value of the Company's long-term debt approximated fair value
because the interest rates on these obligations approximate rates
currently available to the Company.
REVENUE RECOGNITION
License fee revenue is recognized under collaborative research agreements
when services are performed or when contractual obligations are met.
Nonrefundable fees received at the initiation of collaboration agreements
for which the Company has an ongoing research and development or
commercial commitments are deferred and recognized ratably over the period
of the related research, development or commercial commitments. Milestone
payments under collaboration agreements and research agreements are
recognized as revenues ratably over the remaining period of involvement by
the Company in the research, development and commercialization of the
asset beginning on the date the Company achieves the indicated milestone
and such achievement is acknowledged by the collaborative partner, which
generally coincides with the receipt of the milestone payment. Research
grants revenues are recognized as the related research is performed.
RESEARCH AND DEVELOPMENT EXPENSE
Research and development direct and indirect costs are expensed as
incurred and include all costs associated with the development of drug
compounds.
EMPLOYEE BENEFIT PLANS
All eligible employees may elect to have a portion of their salary
contributed to the Company's 401(k) Plan. Ardent does not match employee
contributions.
In 2004, Ardent terminated a non-qualified deferred compensation Trust,
which permitted eligible employees to defer up to 50% of their salary, and
distributed all Trust assets to the Trust beneficiary.
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
Valuation allowances are established when necessary to reduce tax assets
to the amounts that are to be realized.
STOCK BASED COMPENSATION
SFAS No. 148, Accounting for Stock-Based Compensation -- Transition and
Disclosure -- an amendment of FASB Statement No. 123 provides alternative
methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation from the
intrinsic value-based method of accounting prescribed by APB Opinion No.
25, Accounting for Stock Issued to Employees. . As allowed by SFAS No.
123, the Company has elected to continue to apply the intrinsic
value-based method of accounting prescribed in APB No. 25 and,
accordingly, does not recognize compensation expense for stock option
grants made to employees at an exercise price equal to or in excess of the
fair value of the stock at the date of grant. Deferred compensation is
recognized and amortized on an accelerated basis in accordance with FASB
Interpretation No. 28, Accounting for Stock Appreciation Rights and Other
Variable Stock Option or Award Plans, over the vesting period of the
related options.
For non-employee awards, the Company is required to follow the provisions
of SFAS No. 123 and EITF 96-18, which require that compensation be
measured at the end of each reporting period for changes in the fair value
of the Company's common stock until the options are vested.
The Company utilized the following assumptions in the Black-Scholes fair
value calculation model at December 31, 2004:
Estimated dividend Yield 0.0%
Expected stock price volatility 60.0%
Risk-free interest rate 4.75%
Expected life of options - employees 4 years
Expected life of options - non-employees 10 years
Had the Company elected to recognize compensation expense based on the
estimated fair value of stock-based instruments at the grant date, as
prescribed by SFAS 123, its pro forma net loss and net loss per common share
would have been as follows:
Net loss - as reported $(6,290,857)
Less fair value of options granted employees (104,605)
-----------
Net loss - pro forma $(6,395,462)
Net loss per common share - as reported $ (0.28)
Net loss per common share - pro forma $ (0.29)
The effects of applying SFAS No. 123 in this pro forma disclosure are not
indicative of future amounts. Stock option grants are expensed over their
respective vesting periods.
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
NET LOSS PER COMMON SHARE
Basic and diluted net loss per common share is presented in conformity
with SFAS No. 128, "Earnings per Share". Basic and diluted net loss per
common share has been computed using the weighted-average number of shares
of common stock outstanding during the period. The assumed conversion of
convertible stock and related accumulated stock dividends, and other
outstanding common stock equivalents, were not included in the computation
of weighted average common shares outstanding because the impact of their
assumed conversion would be anti-dilutive.
Numerator - Net loss $ 6,290,857
Denominator-Weighted average shares outstanding 22,165,000
Net loss per share $ (0.28)
Incremental common shares outstanding at December 31, 2004
(not included because of their anti-dilutive nature):
Common Stock Options 5,439,360
Warrants 1,218,046
------------
6,657,406
============
COMPREHENSIVE LOSS
Comprehensive income (loss) is defined as all changes in a company's net
assets, except changes resulting from transactions with shareholders. At
December 31, 2004, the Company has no reportable differences between net
loss and comprehensive loss.
SEGMENT REPORTING
The Company has determined that it does not have any separately reportable
operating segments.
RECENTLY ISSUED ACCOUNTING STANDARDS
In December 2004 the FASB issued SFAS No. 123R, "Share-Based Payment,"
which is an amendment to SFAS No. 123, "Accounting for Stock-Based
Compensation." This new standard eliminates the ability to account for
share-based compensation transactions using Accounting Principles Board,
or APB, Opinion No. 25, "Accounting for Stock Issued to Employees," and
generally requires such transactions be accounted for using a
fair-value-based method and the resulting cost recognized in our financial
statements. This new standard is effective for awards that are granted,
modified or settled in cash in interim and annual periods beginning after
June 15, 2005 (December 15, 2005 for small business issuers). In addition,
this statement will apply to unvested options granted prior to the
effective date. The Company will adopt this new standard effective for the
first fiscal quarter of 2006 and it has not yet determined what impact
this standard will have on its financial position or results of
operations.
(2) RESEARCH & DEVELOPMENT AND LICENSE AGREEMENTS
LICENSE AGREEMENTS - DEFERRED REVENUE
During 1999, the Company granted a license to N.V. Organon AG ("Organon")
to use the Company's patent rights in the development, manufacture, use
and sale of one of its analgesic compounds (the "License"). Organon made
nonrefundable cash payments to the Company of $1 million and $3 million
during 1999 and 2000, respectively. These payments were recorded as
deferred revenue and were being amortized to revenue on a straight-line
basis over the period of time the Company expected to be involved with
Organon in developing the technology. During March 2003, Organon notified
the Company of its intention to discontinue development of DPI-3290 under
the License. Subsequent to this notification, Ardent delivered to Organon
a notification of termination of the agreement for cause. With the
termination of the License and any rights thereunder, the remainder of the
deferred License revenue was recognized in 2003.
By letter to the Company, dated January 11, 2005, Organon asserted its
belief that it maintains certain rights under the License. The Company
believes this claim is without merit and has initiated dispute resolution
procedures specified in the License to confirm that the License has been
terminated and that Organon has no further rights thereunder.
During 2004 the Company announced that it had entered into a Feasibility
Study, Option and License Agreement with ALZA Corporation (a division of
Johnson & Johnson) for the development of DPI-125 for moderate-to-severe
pain. In consideration of an initial non-refundable fee of $1,250,000,
Ardent granted ALZA a 12-month option for an exclusive, worldwide license
to the compound. During the 12-month period, ALZA will conduct feasibility
studies. If ALZA exercises the option, ALZA will proceed with development
of at least two potential products, an intravenous formulation for acute
pain and at least one formulation for chronic pain. ALZA may also elect to
develop other formulations of DPI-125. The agreement also provides ALZA
with exclusive options to license additional analgesic compounds from the
Ardent portfolio. Development and commercialization expenses for the
products will be borne by ALZA. In addition to the option fee upon signing
the agreement, Ardent will receive further payments should ALZA exercise
its option following feasibility studies, and will also be eligible for
development milestone payments and royalties. Ardent also has the right to
co-promote the intravenous product in the US.
The Company completed delivery to ALZA of certain quantities of compounds
required by the agreement during December 2004. Beginning in January 2005,
the Company will amortize the initial $1,250,000 fee to revenue on a
straight-line basis over the period of time the Company expects to be
involved with ALZA in developing and commercializing the technology. Any
subsequent payments or development milestones payments will be amortized
to revenue on a similar basis. The Company paid a cash fee of $150,000
plus issuance of 40,000 options to Century Capital as the agent in this
transaction.
(3) STOCKHOLDERS' EQUITY
TRANSACTION WITH XENOBIOTIC LABORATORIES INC
In 1997, the Company issued 3,400,000 shares of common stock to XenoBiotic
Laboratories Inc (XenoBiotic). The Company has a right-of-first-refusal to
repurchase those shares from XenoBiotic at the same terms as offered by a
third party.
(3) STOCKHOLDERS' EQUITY (CONTINUED)
TRANSACTIONS WITH ELAN
In 1999 and 2000, the Company formed two joint ventures with Elan
Corporation (Elan) which were terminated in 2002 and 2003. In conjunction
with the formation of the joint ventures, Elan was issued 120,150 shares
each of Series A and Series B preferred stock. Both series accrue 5%
dividends that compound semi-annually (Series A) and annually (Series B),
payable either in-kind or in cash, at the Company's option. Both series
are convertible through 2005 (Series A) and 2006 (Series B) at $7 per
share (Series A) and $10 per share (Series B). Both series mandatorily
convert with the consummation of an initial public offering. Both series
carry a liquidation preference equal to the original proceeds plus accrued
dividends. The liquidation preference is payable only in the event of a
liquidation, dissolution or winding-up of the affairs of the Company, as
defined. During 2004, all Series A and B dividends accreted since
inception were paid in-kind by the issuance of 439,488 shares of common
stock, valued at $3,076,419 (Series A), and 268,734 common shares, valued
at $2,687,387 (Series B).
During 2000, the Company issued 2,428,571 shares of Series C Preferred
Stock ("Series C") to Elan for total proceeds of $10,000,000. Series C
allows Elan to participate equally with the holders of common stock in
dividends if and when declared by the Board of Directors and entitles Elan
to convert Series C into common stock at a ratio of one share of common
stock for one share of Series C. Series C has no preferential terms over
common stock and mandatorily converts to common stock with the
consummation of an initial public offering.
During 2004 Elan sold all their Series A, Series B, and common shares and
1,000,000 of their Series C shares to Scarlet Knights, and converted the
remaining 1,428,571 shares of Series C into an equal number of common
shares, valued at $5,882,352.
SERIES D
During 2003, the Company exchanged 795,715 shares of common stock valued
at $640,453, for equal shares of Series D-1 Preferred Stock ("D-1)" and
sold 2,453,333 shares of Series D-2 Preferred Stock ("D-2") for total
proceeds of $2,944,000. Both Series D accrue 5% dividends that compound
annually which, when paid, are payable either in-kind or in cash, at the
Company's option. D-1 shares are convertible at any time after the
Original Issue Date.
D-2 shares are convertible upon the first occurrence of a liquidation
event or qualifying financing, as defined. Both series will mandatorily
convert with the consummation of an initial public offering. Both series
carry a liquidation preference equal to the original proceeds plus accrued
dividends. Upon any liquidation, dissolution or winding up of the Company,
holders of D-2 stock shall be entitled, before any distribution is made
upon the common stock, to be paid an amount equal to two times the D-2
price per share, plus any declared but unpaid dividends, and holders of
D-1 stock shall be entitled to an amount equal to the original issue
price. In addition, the Company issued the D-2 shareholders one warrant
for every two D-2 shares exercisable at $0.01 per share. Using a fair
value-pricing model, the Company determined the value of the preferred D-2
Series and the warrants to be $1,897,806 and $931,531, respectively, after
deducting fundraising expenses of $76,824 and $37,839, respectively.
During 2004, 10,417 common shares were issued upon the exercise of an
equal number of warrants.
COMMON STOCK OPTIONS
Under the Company's 1997 Stock Award Plan, as amended, 5,000,000 common
shares have been reserved for granting options to employees, directors or
consultants. At December 31, 2004, 4,062,000 options had been granted and
938,000 options were available for grant. In addition, the Company granted
1,377,360 options outside the Plan. The option strike price is generally
the fair value of the Company stock as determined by the board of
directors.
(3) STOCKHOLDERS' EQUITY (CONTINUED)
A summary of options activity during 2004 follows:
Number Weighted Average
of Shares Exercise Price
---------- ----------
Balances as of December 31, 2003 4,571,860 $ 0.56
Granted 1,087,500 0.60
Cancelled (220,000) 0.60
---------- ----------
Balances as of December 31, 2004 5,439,360 $ 0.57
========== ==========
Exercisable as of December 31, 2004 3,838,860 $ 0.56
========== ==========
Additional information concerning options outstanding at December 31, 2004
follows:
Number of Weighted Average
Exercise Price Shares Remaining Life
------------------------------------------------
$ 0.25 330,000 2.21
$ 0.35 85,000 2.34
$ 0.50 479,000 3.44
$ 0.60 4,545,360 8.33
------------------------------------------------
$ 0.25 - 0.60 5,439,860 7.44
================================================
Compensation expense for non-employee stock options granted in 2004 was
61,402. Had the Company valued employee stock options at fair value using
the minimum value method, compensation expense would have increased by
approximately $104,605. The fair value of common stock options is
estimated on the date of grant using the Black-Scholes option-pricing
model.
WARRANTS
At December 31, 2004, there are 1,218,046 common stock warrants
outstanding that are exercisable at $0.01 to $3.50 and expire between July
2005 and October 2010.
(4) CONVERTIBLE NOTE PAYABLE TO AFFILIATE
Under the joint venture agreements with Elan, discussed in note 3, Elan
loaned the Company $1,925,028 in convertible debt financing, maturing on
April 14, 2006. Interest accrues at 9% per annum, compounded on an annual
basis. Elan has the right to convert outstanding debt into the number of
common shares that is obtained by dividing outstanding principal and
interest by $7.50. At December 31, 2004, accrued interest totaled
$457,908.
(5) INCOME TAXES
The provision for income taxes consists of current income tax expense. The
reasons for the difference between the actual provision for income taxes
and the amount computed by applying the statutory federal rate to net loss
are:
Net loss before provision for income taxes $(5,413,422)
Income tax (benefit) at statutory rate (1,841,000)
State income taxes, net of federal tax benefit (246,000)
Change in valuation allowance 2,167,000
Non-deductible expenses 44,000
Credits generated in current year (124,000)
-----------
Provision for income taxes $ --
===========
(5) INCOME TAXES (CONTINUED)
There are no deferred tax liabilities. The components of the deferred tax
assets are:
Net operating loss carryforwards $ 22,333,000
Research and development tax credits 1,073,000
Stock based compensation 862,000
Depreciation and amortization 150,000
Deferred Income 482,000
Less valuation allowance (24,900,000)
------------
Deferred tax asset, net of valuation allowance $ --
============
The valuation allowance increased $2,167,000 in 2004.
As of December 31, 2004, the Company had federal and state income tax net
operating loss carryforwards of approximately $31,829,000, which are
available to offset future taxable income and expire between 2018 and 2024
for federal income taxes and between 2013 and 2019 for state income taxes.
Additionally, the Company has federal tax research and development credits
of approximately $1,073,000 with expiration dates through 2024. The Tax
Reform Act of 1986 contains provisions which limit the ability to utilize
the net operating loss carryforwards in the case of certain events
including significant changes in ownership interests. If the Company's net
operating loss carryforwards are limited, and the Company has taxable
income which exceeds the permissible yearly net operating loss
carryforward, the Company would incur a federal income tax liability even
though net operating loss carryforwards would be available in future
years.
(6) LONG-TERM DEBT
The Company entered into an equipment lease financing line of $1,300,000
and issued warrants to the lender for the purchase of a number of shares
of common stock equal to the result of dividing 4.5% of the loan amount by
the share price of the most recent prior round of equity financing, as
defined. No additional funding is available under this line as of December
31, 2004. Borrowings under the financing agreement are collateralized by
the related equipment and furniture and fixtures. The borrowings mature in
three to four years after the date of the borrowing with interest rates of
between 12%-13%. The aggregate annual maturities of long-term debt at
December 31, 2004, are:
2005 $119,042
2006 55,560
--------
$174,602
========
(7) TRANSACTIONS WITH AFFILIATES
CENTURY CAPITAL ASSOCIATES
David LaVance, a former Company Director, is a managing director of
Century Capital Associates (CCA). CCA provides business and financial
consulting services to the Company. CCA received $660,105 from Ardent in
2004; $500,000 related to merger costs, $150,000 related to commission on
the Alza licensing agreement and $10,105 in expense reimbursements.
(7) TRANSACTIONS WITH AFFILIATES (CONTINUED)
JINN WU
Jinn Wu, a Company Director, is President and CEO of XenoBiotic, a firm
that performs contract research for the Company. Mr. Wu and XenoBiotics
received $88,570 from Ardent in 2004 for laboratory services.
In March 2004, the Company issued 100,000 options to a Jinn Wu as
compensation for time and efforts made on behalf of the Company primarily
with respect to assistance in the Company's efforts to raise additional
funds to finance operations.
DR. KWEN-JEN CHANG
Two scientists related to Dr. Kwen-Jen Chang, Chairman, President and CEO
of the Company, were employed by the Company in 2004 and received
compensation as follows:
o Ms. Jane Chang, his spouse, $53,316 in wages and 20,000 common
stock options
o Ms. Jane Hai Xai, his niece, $41,767 in wages and 20,000
common stock options
TIM C. GUPTON
Tim Gupton, a Director, is a partner in Hughes, Pittman, and Gupton. His
firm received $6,014 in 2004 as compensation for tax return preparation
and other financial analysis services. As of the end of 2004, the Company
will no longer utilize the services of Hughes, Pittman, and Gupton.
SCARLET KNIGHTS HOLDINGS, LLC
Scarlet Knights Holdings, LLC, a company owned in part by CCA, of which
David LaVance, a former Director of the Company, is a partner, has
acquired 120,150 shares of Series A Preferred Stock of the Company,
120,150 shares of Series B Preferred Stock of the Company, 1,000,000
shares of Series C Preferred Stock of the Company, and 1,142,857 shares of
Common Stock of the Company from Elan.
ELAN
Prior to 2004, the Company participated in two joint ventures with Elan.
In conjunction therewith, Elan loaned money to and purchased preferred and
common shares of the Company. The outstanding balance on the loan totals
$1,925,028. During 2004, the Company expensed $236,893 in interest; at
December 31, 2004, accrued interest to Elan totaled $457,908.
(8) COMMITMENTS AND CONTINGENCIES
LEASES
The Company leases office and lab space under noncancelable operating
leases. Future minimum annual lease payments under non-cancelable
operating leases in effect as of December 31, 2004 are:
2005 $ 344,147
2006 348,943
2007 310,536
2008 319,852
Thereafter 329,448
----------
$1,652,926
==========
Rent expense was $368,631 in 2004.
CONSULTING AGREEMENTS
In October 2002, the Company entered into an agreement with Century
Capital Associates, whose managing director is a member of the Board of
Directors, to assist in securing alternative financing and licensing
agreements with other pharmaceutical companies. Compensation includes a
one-time retainer fee of $50,000 and fees that are contingent upon the
amount of funding, as defined.
During 2004, the Company entered into an agreement with SCO Financial
Group to assist in certain aspects of securing financing or a merger.
Compensation includes a one-time retainer fee of $25,000 and fees
(including cash and warrants) that are contingent upon the successful
completion of certain funding or merger events, as defined.
ROYALTY PAYMENTS
The Company possesses the exclusive worldwide rights to certain technology
acquired from GlaxoWellcome (now known as GlaxoSmithKline), and as a
result may be obligated for future royalty payments of up to 2% of net
sales, as defined, for the duration of the related patents.
LITIGATION
From time to time, the Company is a defendant in lawsuits incidental to
the operation of its business. Management does not believe that any
pending legal proceedings would have a material adverse effect on the
financial position or results of operations of the Company.
By letter to the Company, dated January 11, 2005, Organon asserted its
belief that it maintains certain rights under the License (see Note 2).
The Company believes this claim is without merit and has initiated dispute
resolution procedures specified in the License to confirm that the License
has been terminated and that Organon has no further rights thereunder.
(8) COMMITMENTS AND CONTINGENCIES (CONTINUED)
GOING CONCERN
As shown in the accompanying financial statements, the Company has
incurred significant losses, has negative working capital and needs
additional capital to finance its operations. These factors create
substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a going
concern. The Company intends to finance its operations through sales of
its securities as well as entering into loans and other types of financing
arrangements such as convertible debenture. There is no assurance that the
Company will be successful in its efforts.
(9) SUBSEQUENT EVENTS - MERGER BETWEEN ARDENT AND ENHANCE BIOTECH, INC.
On December 20, 2004, the Company completed a merger whereby it became a
wholly owned subsidiary of Enhance Biotech Inc. ("Enhance"), pursuant to
the Agreement and Plan of Merger, as amended. For accounting purposes, the
merger was made effective December 31, 2004. Enhance acquires, develops
and seeks to commercialize drugs primarily to treat lifestyle disorders.
Enhance's drug pipeline consists of eight products and focuses on two of
the seven major segments in the lifestyle drug market: male sexual
dysfunction and dermatology. Except for certain "Excluded Shares" (a
certain warrant to purchase 1.5 million shares of common stock issued to
Bioaccelerate, Inc., Enhance's largest shareholder) and "Contingent Fee
Shares" (319,171 shares of Enhance common stock reserved for issuance in
settlement of certain fee arrangements entered into with CCA, the
financial advisor for this transaction), upon the conclusion of the
merger, on a fully diluted basis, Enhance shareholders of record
immediately prior to the merger own approximately fifty-five percent
(55%), and the former Ardent securities holders own approximately
forty-five percent (45%), of the common stock, par value $0.001 per share
of Enhance.
Ardent's management and Board of Directors considered a range of factors
in favor of the merger including:
o Favorable merger consideration
o Improved access to financing
o Access to a credit facility through Bioaccelerate
o Significant ownership and role in Enhance's management
o Complementary development programs between the two companies
o Increased liquidity for Ardent shareholders
As a result of the merger, the combined portfolio of products under
development between the merged companies is a substantial one including
products in Urology, Dermatology, and the Central Nervous System (CNS).
The Company considers the Urology and Dermatology areas to be its core
areas of focus and intends to invest the majority of its capital and
attention in these areas. The Company intends to invest modestly in its
non-core areas and looks to partner these compounds at an early stage of
development.
On January 1, 2005, Bioaccelerate provided a $2 million line of credit
convertible into common stock at the lower of $1.50 per share or the price
per share of the Company's next financing from an unrelated third party.
The line matures in five years and bears interest at 3.5%, the equivalent
Federal Risk Free Rate at the time of issuance. The Company granted
Bioaccelerate 750,000 warrants as an inducement to provide the facility.
The five year $3 warrants immediately vest upon grant.
(9) SUBSEQUENT EVENTS - MERGER BETWEEN ARDENT AND ENHANCE BIOTECH, INC.
(CONTINUED)
Upon the effective date of the merger, each outstanding share of Ardent
common and preferred stock, including preferred dividends, was cancelled
automatically and converted into shares of Enhance's Common Stock ("Merger
Shares"). Also, Ardent options, warrants and certain convertible notes
which could have been exercised or converted to receive shares of Ardent
common stock, may be exercised or converted into shares of Enhance Common
Stock. In addition, Enhance reserved for issuance sufficient shares to
cover such exercises or conversions.
As a consequence, upon the effectiveness of the merger, in the aggregate,
the outstanding shares of Ardent common and preferred stock were converted
into, and the outstanding Ardent options, warrants and convertible notes
became exercisable or convertible to receive, approximately the following
number of shares of Enhance Common Stock:
Ardent Common Stock** 16,999,116 Shares
Ardent Options** 3,964,857 Shares
Ardent Warrants** 887,858 Shares
Ardent Convertible Promissory Notes** 258,584 Shares
Series A Preferred Stock** 1,251,139 Shares
Series B Preferred Stock** 875,797 Shares
Series C Preferred Stock** 801,812 Shares
Series D 1 Preferred Stock 1,034,604 Shares
Series D 2 Preferred Stock 2,187,340 Shares
** Includes the number of shares of Enhance common stock allotted for
Ardent common and preferred stock holders, as well as the Contingent Fee
Shares.
As a consequence of the effectiveness of the merger, Ardent shareholders
receive approximately 23,149,808 shares of Enhance, in the aggregate.
Enhance has reserved approximately 5,111,299 shares in the aggregate for
issuance upon exercise of outstanding options, warrants and convertible
promissory notes of Ardent outstanding prior to the merger. As of December
31, 2004, approximately 234,172 of the Contingent Fee Shares have been
issued.
The 23,149,808 Enhance shares issued in conjunction with the merger were
valued at approximately $27,263,000, or approximately $1.18 per share, as
determined by management. Shares of Enhance common stock are currently
traded on the pink sheets with very limited trading volume.
In conjunction with the merger, Enhance entered into a Registration Rights
Agreement, dated December 20, 2004, in which Enhance has agreed to file a
registration statement under the Securities Act to register up to 30,000
shares of the Enhance common stock issued to each Ardent shareholder as
soon as practicable after a Qualified Financing, but in no event later
than 150 days following the closing of the merger and to use its best
efforts to have that registration statement declared effective by the
Securities and Exchange Commission (SEC). Enhance also agreed that if the
common stock is then listed on a national stock exchange, Enhance will
file a listing application with such exchange, and use its best efforts to
have admitted to trading on such exchange all shares of common stock
issued to Ardent shareholders as merger consideration that are covered by
a registration statement under the Securities Act which has been declared
effective by the SEC. Enhance agreed to use its commercially reasonable
best efforts to keep each such registration statement continuously
effective, subject to customary blackout periods and exceptions, for one
year following the date upon which each such registration statement is
declared effective by the SEC (such period to be extended by the duration
of any such blackout period or other period in which the registration
statement does not continue to be effective).
(9) SUBSEQUENT EVENTS - MERGER BETWEEN ARDENT AND ENHANCE BIOTECH, INC.
(CONTINUED)
Enhance also agreed to file with the SEC, no later than 180 days after the
closing of the merger, a Registration Statement on Form S-8 covering the
shares of common stock to be issued upon exercise of Ardent stock options
which continue to be outstanding after the closing of the merger, and to
use its best efforts to have such Registration Statement become and remain
continuously effective under the Securities Act. Enhance agreed to furnish
corresponding registration rights in respect of the shares of common stock
underlying warrants or options held by Bioaccelerate. All but 1,500,000 of
the underlying shares held by Bioaccelerate will continue to be subject to
a 12-month lock-up notwithstanding registration.
All shares of merger consideration issued to former Ardent security
holders are "restricted shares" within the meaning of the Securities Act
of 1933, as amended (the "Securities Act"), and may not be freely traded
until either covered by an effective registration statement filed with the
SEC under applicable laws (as well as any corresponding filings which may
be required under state or other securities laws) or disposed of pursuant
to an available exemption to such registration. In addition, each holder
of 5% or more of Enhance's common stock has agreed to be subject to a
lock-up period restricting transfer of such shares for a period of 12
months after the effectiveness of the merger, with such lock-up to end
earlier with respect to any shares covered by a registration statement
filed by Enhance pursuant to the Securities Act and declared effective by
the SEC.
Notwithstanding Enhance's agreements, there can be no assurance that
Enhance will ever file any such registration statement and, even if so,
that any such registration statement will ever become effective, or that
once effective, such effectiveness will be maintained.
Ardent and Enhance incurred fees to legal advisors and agents associated
with the merger totaling $775,000, plus 234,172 shares of Enhance common
stock.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed combined balance sheet
aggregates the balance sheet of Enhance Biotech, Inc. (a Delaware
corporation) ("PARENT") as of December 31, 2004 and the balance sheet of
Ardent Pharmaceutical, Inc. (a North Carolina corporation) ("SUBSIDIARY")
as of December 31, 2004, accounting for the transaction as an acquisition
of a SUBSIDIARY with the issuance of common stock of the PARENT for all
the issued and outstanding shares of the SUBSIDIARY and using the
assumptions described in the following notes, giving effect to the
transaction, as if the transaction had occurred as of the beginning of the
period. The transaction was completed on December 20, 2004, though for
accounting purposes it was made effective December 31, 2004.
The following unaudited pro forma condensed combined statement of
operations combines the results of operations of PARENT for the eleven
months ended December 31, 2004 and the results of operations of SUBSIDIARY
for the year ended December 31, 2004 as if the transaction had occurred at
the beginning of the periods.
The pro forma condensed combined financial statements should be read in
conjunction with the separate financial statements and related notes
thereto of PARENT and SUBSIDIARY. These pro forma financial statements are
not necessarily indicative of the combined financial position, or the
combined results of operations which might have existed for the periods
indicated or the results of operations as they may be in the future.
(9) SUBSEQUENT EVENTS - MERGER BETWEEN ARDENT AND ENHANCE BIOTECH, INC.
(CONTINUED)
ENHANCE BIOTECH, INC
AND ARDENT PHARMACEUTICALS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
December 31, 2004
(in thousands, except loss per share)
Enhance Ardent Pro forma Pro forma
Biotech, Inc. Pharmaceutical, Inc Increase Combined
[PARENT] [SUBSIDIARY] (Decrease)
CONDENSED
BALANCE SHEET
ASSETS
Current assets $ 391 $ 481 $ -- $ 872
Patents -- 577 24,251[A] 24,828
Property and equipment 52 755 -- 807
Other long term assets 749 11 -- 760
--------------------------------------------------- ----------
TOTAL ASSETS $ 1,192 $ 1,824 $ 24,251 $ 27,267
=================================================== ==========
LIABILITIES & EQUITY
Current Liabilities $ 3,340 $ 938 $100[B] $ 4,378
Long term liabilities -- 3,171 -- 3,171
Stockholders' Equity (2,148) (2,285) 24,151[C] 19,718
--------------------------------------------------- ----------
TOTAL LIABILITIES & EQUITY $ 1,192 $ 1,824 $ 24,251 $ 27,267
=================================================== ==========
CONDENSED
STATEMENT OF OPERATIONS
Revenues -- 123 -- 123
Operating costs & expenses (4,773) (5,320) (100)[B] (10,193)
Other income (expenses) 1 (217) -- (216)
--------------------------------------------------- ----------
NET LOSS $ (4,772) $ (5,414) $ (100) $ (10,286)
=================================================== ==========
$ (0.20)
BASIC AND DILUTED
NET LOSS PER COMMON SHARE
==========
WEIGHTED AVERAGE 51,695
SHARES OUTSTANDING ==========
NOTE 1 -PRO FORMA ADJUSTMENTS
On December 20, 2004, SUBSIDIARY was acquired by PARENT pursuant to a
definitive Merger Agreement signed on August 11, 2004. The agreement
called for PARENT to issue up to 23,149,808 shares of common stock to the
shareholders of SUBSIDIARY for 100% of the outstanding shares of
SUBSIDIARY. The ownership interests of the former owners of SUBSIDIARY in
the combined enterprise will be approximately 45% of the ongoing
shareholders of PARENT.
Pro forma adjustments above include the following:
[A] Allocate excess purchase price to patents.
[B] Add estimated regulatory compliance costs.
[C] Issue 23,149,808 shares of common stock and eliminate equity
accounts of SUBSIDIARY.
NOTE 2 - PRO FORMA (LOSS) PER SHARE
Pro forma (loss) per share is computed based on the number of shares
outstanding, as though all merger shares had been issued at the beginning
of the period.
(b) Pro forma financial information.
The following unaudited pro forma condensed combined balance sheet
aggregates the balance sheet of Enhance Biotech, Inc. (a Delaware
corporation) ("PARENT") as of December 31, 2004 and the balance sheet of
Ardent Pharmaceutical, Inc. (a North Carolina corporation) ("SUBSIDIARY") as
of December 31, 2004, accounting for the transaction as an acquisition of a
SUBSIDIARY with the issuance of common stock of the PARENT for all the
issued and outstanding shares of the SUBSIDIARY and using the assumptions
described in the following notes, giving effect to the transaction, as if
the transaction had occurred as of the beginning of the period. The
transaction was completed on December 20, 2004, though for accounting
purposes it was made effective December 31, 2004.
The following unaudited pro forma condensed combined statement of operations
combines the results of operations of PARENT for the eleven months ended
December 31, 2004 and the results of operations of SUBSIDIARY for the year
ended December 31, 2004 as if the transaction had occurred at the beginning
of the periods.
The pro forma condensed combined financial statements should be read in
conjunction with the separate financial statements and related notes thereto
of PARENT and SUBSIDIARY. These pro forma financial statements are not
necessarily indicative of the combined financial position, or the combined
results of operations which might have existed for the periods indicated or
the results of operations as they may be in the future.
ENHANCE BIOTECH, INC
AND ARDENT PHARMACEUTICALS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
December 31, 2004
(in thousands, except loss per share)
Enhance Ardent Pro forma Pro forma
Biotech, Inc. Pharmaceutical, Inc Increase Combined
[PARENT] [SUBSIDIARY] (Decrease)
CONDENSED
BALANCE SHEET
ASSETS
Current assets $ 391 $ 481 $ -- $ 872
Patents -- 577 24,251[A] 24,828
Property and equipment 52 755 -- 807
Other long term assets 749 11 -- 760
-------------------------------------------------- ----------
TOTAL ASSETS $ 1,192 $ 1,824 $ 24,251 $ 27,267
================================================== ==========
LIABILITIES & EQUITY
Current Liabilities $ 3,340 $ 938 $100[B] $ 4,378
Long term liabilities -- 3,171 -- 3,171
Stockholders' Equity (2,148) (2,285) 24,151[C] 19,718
-------------------------------------------------- ----------
TOTAL LIABILITIES & EQUITY $ 1,192 $ 1,824 $ 24,251 $ 27,267
================================================== ==========
CONDENSED
STATEMENT OF OPERATIONS
Revenues -- 123 -- 123
Operating costs & expenses (4,773) (5,320) (100)[B] (10,193)
Other income (expenses) 1 (217) -- (216)
-------------------------------------------------- ----------
NET LOSS $ (4,772) $ (5,414) $ (100) $ (10,286)
================================================== ==========
$ (0.20)
BASIC AND DILUTED
NET LOSS PER COMMON SHARE
==========
WEIGHTED AVERAGE 51,695
SHARES OUTSTANDING ==========
NOTE 1 -PRO FORMA ADJUSTMENTS
On December 20, 2004, SUBSIDIARY was acquired by PARENT pursuant to a
definitive Merger Agreement signed on August 11, 2004. The agreement
called for PARENT to issue up to 23,149,808 shares of common stock to the
shareholders of SUBSIDIARY for 100% of the outstanding shares of
SUBSIDIARY. The ownership interests of the former owners of SUBSIDIARY in
the combined enterprise will be approximately 45% of the ongoing
shareholders of PARENT.
Pro forma adjustments above include the following:
[A] Allocate excess purchase price to patents.
[B] Add estimated regulatory compliance costs.
[C] Issue 23,149,808 shares of common stock and eliminate equity
accounts of SUBSIDIARY.
NOTE 2 - PRO FORMA (LOSS) PER SHARE
Pro forma (loss) per share is computed based on the number of shares
outstanding, as though all merger shares had been issued at the beginning
of the period.
(c) Exhibits.
The following exhibit is filed with this report:
23.1 Consent of Cacciamatta Accountancy Corporation
[Signatures on following page.]
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENHANCE BIOTECH, INC.
(Registrant)
By: /s/ Christopher Every
-------------------------
Christopher Every
Chief Executive Officer
Date: March 24, 2005
EXHIBIT INDEX
Exhibit Description
23.1 Consent of Cacciamatta Accountancy Corporation