As filed with the Securities and Exchange Commission on ____ ___, 2005
REGISTRATION NO. ___-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
MAZAL PLANT PHARMACEUTICALS, INC.
(F/K/A AKID CORPORATION)
(Name of Small Business Issuer in its Charter)
Nevada (formerly Colorado) 2834 20-3761221 (formerly 84-1493150)
-------------------------- ---- --------------------------------
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
43 West 33rd Street
New York, NY 10001
(212) 695-3334
(Address, including zip code, and telephone
number, including area code, of registrant's principal
executive offices)
Mechael Kanovsky
Chief Executive Officer
Mazal Plant Pharmaceuticals, Inc.
43 West 33rd Street
New York, NY 10001
(212) 695-3334
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of communications to:
Sam Berkowitz
Secretary
Mazal Plant Pharmaceuticals, Inc.
43 West 33rd Street
New York, NY 10001
(212) 695-3334
Approximate date of commencement of proposed sale to the public: From time to
time after the effectiveness of the registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, 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 of 1933, 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(d) under
the Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.|_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION FEE
TO BE REGISTERED REGISTERED (1) PER SHARE PRICE (2)
---------------- ------------------- -------------------- -------------------
Common Shares, $0.001 par value 10,000,000(3) $ 0.45 $ 4,500,000 $
- ------------------------------------ ---------------- ------------------- -------------------- -------------------
Common Shares, $0.001 par value 6,005,0000(4) $ 0.60 (5) $ 3,603,000 $ 339.33
- ------------------------------------ ---------------- ------------------- -------------------- -------------------
Common Shares, $0.001 par value 1,200,000(6)
- ------------------------------------ ---------------- ------------------- -------------------- -------------------
Total.......................... 16,205,000 $ 339.33
- ------------------------------------ ---------------- ------------------- -------------------- -------------------
- ----------
(1) In the event of a stock split, stock dividend or similar transaction
involving our common shares, the number of shares registered shall
automatically be increased to cover the additional shares of common shares
issuable pursuant to Rule 416 under the Securities Act of 1933, as
amended.
(2) Fee calculated in accordance with Rule 457(g) of the Securities Act.
(3) Represents shares of common stock offered directly to the public by us.
(4) Represents shares of common stock held by selling security holders.
(5) Represents the initial bid and asked price for the shares quoted on the
Pink Sheets LLC.
(6) Represents shares of common stock issuable in connection with the exercise
of non-transferable warrants. Each warrant entitles the holder to purchase
one share of common stock at any time until two years after their date of
issuance at an exercise price of $0.60 per share.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED __________, 2005
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING SECURITY HOLDER MAY NOT SELL OR OFFER THESE SECURITIES UNTIL THIS
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
MAZAL PLANT PHARMACEUTICALS, INC.
10,000,0000 SHARES OF COMMON STOCK OFFERED BY THE COMPANY
6,005,000 SELLING STOCKHOLDERS SHARES OF COMMON STOCK
1,200,000 SHARES OF COMMON STOCK ISSUABLE IN
CONNECTION WITH EXERCISE OF WARRANTS
The prospectus relates to: (1) the sale by us of up to 10,000,000 shares of
common stock and (2) to the resale by certain selling security holders of the
Company of up to 8,205,000 shares of common stock in connection with the resale
of (a) up to 6,005,000 shares of our common stock that were issued in various
transactions exempt from registration under the Securities Act of 1933 and (b)
up to 1,200,000 shares of our common stock which may be issued upon exercise of
certain warrants that were issued in a transaction exempt from registration.
Upon the effectiveness of this prospectus:
The selling security holders may offer to sell shares of our common stock being
offered in this prospectus at fixed prices, at prevailing market prices at the
time of sale, at varying prices or at negotiated prices.
We may offer to sell shares of our common stock being offered in this prospectus
at a purchase price of $0.45 per share.
Our common shares are not traded on any exchange or in the over-the-counter
market. We have submitted to Pink Sheets LLC an application for our common stock
to be traded on the Pink Sheets. As of November 22, 2005, such application is
still pending. The trading symbol assigned to us by the NASDAQ is MZPP.
OUR BUSINESS IS SUBJECT TO MANY RISKS AND AN INVESTMENT IN OUR COMMON SHARES
WILL ALSO INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE
FACTORS DESCRIBED UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE 6 BEFORE
INVESTING IN OUR COMMON SHARES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is _______, 2005
The following table of contents has been designed to help you find information
contained in this prospectus. We encourage you to read the entire prospectus.
TABLE OF CONTENTS
PROSPECTUS SUMMARY 3
RISK FACTORS 5
FORWARD-LOOKING STATEMENTS 12
THE OFFERING 13
USE OF PROCEEEDS 13
DETERMINATION OF OFFERING PRICE 13
SELLING SECURITY HOLDERS 13
PLAN OF DISTRIBUTION 15
LEGAL PROCEEDINGS 21
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS 21
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 22
DESCRIPTION OF SECURITIES 23
EXPERTS 25
INTEREST OF NAMED EXPERTS AND COUNSEL 25
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES 25
ORGANIZATION WITH THE LAST FIVE YEARS 26
DESCRIPTION OF BUSINESS 27
DESCRIPTION OF PROPERTY 31
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OR OPERATION 32
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 33
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 34
EXECUTIVE COMPENSATION 36
FINANCIAL STATEMENTS F-1
Until ______, all dealers that effect transactions in these securities whether
or not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealer's obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
As used in this prospectus, the terms "we", "us", "our" and the "Company" means
Mazal Plant Pharmaceuticals, Inc., a Nevada corporation, unless otherwise
indicated. "Delaware Mazal" refers to our subsidiary, Mazal Plant
Pharmaceuticals, Inc., a Delaware corporation.
2
PROSPECTUS SUMMARY
Our Company
Although we are now a Nevada corporation, we were originally organized pursuant
to the laws of the State of Colorado on April 9, 1998 under the name "Akid
Corporation". Our only activity prior to June 6, 2005 had been attempts to
locate and negotiate with a business entity for the merger of that target
company into us. Our operations consisted solely of seeking merger or
acquisition candidates, and we had no business operations or revenues.
On June 6, 2005, we underwent a change in control and substantially shifted the
focus of our business. On June 6, 2005, a majority of our common stock was
acquired by Advanced Plant Pharmaceuticals, Inc., a Delaware corporation,
pursuant to the Share Exchange Agreement, dated May 2005, among Advanced Plant
Pharmaceuticals, Inc., the Company, and James B. Wiegand, who was one of our
principals at the time. Pursuant to the Share Exchange Agreement, we agreed to
issue to Advanced Plant Pharmaceuticals, Inc. 20,000,000 shares of the Company's
common stock. In exchange, Advanced Plant Pharmaceuticals, Inc. transferred to
us 7,000,000 shares of the common stock of Mazal Plant Pharmaceuticals, Inc., a
Delaware corporation (the "Delaware Mazal"), which represented 68.5% of the
issued and outstanding shares of the Delaware Mazal. For accounting purposes,
such transaction is characterized as a reverse merger between the Company and
the Delaware Mazal.
As a result of the closing of the Share Exchange Agreement, Advanced Plant
Pharmaceuticals now holds a majority of the issued and outstanding shares of our
common stock, and we hold a majority of the issued and outstanding shares of
common stock of Mazal Plant Pharmaceuticals, Inc. James B. Wiegand, who had been
serving as our sole director and officer since April 1998, resigned from his
positions with us on June 6, 2005. On the same date as Mr. Wiegand's
resignation, Mechael Kanovsky was elected to serve as director and as Chief
Executive Officer and Sam Berkowitz was elected to serve as Secretary.
Since such change in control, we engage in the development, manufacture, and
distribution of plant-based pharmaceutical drugs for the treatment of various
human illnesses through our subsidiary, the Delaware Mazal. Our only product
currently under development is MAHDL, a plant based drug whose purpose is the
improving of levels of cholesterol in the bloodstream and the prevention of
cardiovascular diseases associated with high cholesterol levels.
On November 9, 2005, we changed our state of incorporation from Colorado to
Nevada by the merger of the Company with and into a wholly owned subsidiary we
formed pursuant to the laws of Nevada under the name Mazal Plant
Pharmaceuticals, Inc. As a result of such merger, the Company's name was changed
to Mazal Plant Pharmaceuticals, Inc., which is identical to the company name of
the Delaware Mazal, in order to better reflect the Company's business
operations.
Number of Shares Being Offered
The prospectus relates to:
3
o The resale by certain selling security holders of the Company of up to
8,205,000 common shares in connection with the resale of (a) up to
6,005,000 shares of our common stock that were issued in various
transactions exempt from registration under the Securities Act of 1933 and
(b) up to 1,200,000 shares of our common stock which may be issued upon
exercise of certain warrants that were issued in a transaction exempt from
registration.
o The sale by us to the public of up to 10,000,000 shares of common stock.
The selling security holders may sell these common shares in the public
market or through privately negotiated transactions or otherwise. The
selling security holders may sell these common shares through ordinary
brokerage transactions, directly to market makers or through any other
means described in the section entitled "Plan of Distribution".
Number of Common Shares Outstanding
We have 33,350,000 shares of common stock outstanding as of November 22, 2005.
Use of Proceeds
We will not receive any of the proceeds from the sale of the common shares being
offered for sale by the selling security holders. However, we will receive
proceeds from the exercise of the warrants if and to the extent that any of the
warrants are exercised. We will also receive proceeds from our sale of shares to
the public under this prospectus. The proceeds we receive shall be used for the
payment of costs and expenses we expect to incur in the conduct of human
clinical trials of MAHDL that must be conducted in order for MAHDL to be
approved by the United States Food and Drug Administration.
Summary Financial Data
On June 6, 2005, we entered into a stock purchase agreement with Advanced Plant
Pharmaceuticals, Inc., a Delaware corporation, to acquire 7,000,000 shares of
the common stock of the Delaware Mazal, in exchange for 20,000,000 shares of our
common stock. We also acquired 3,130,000 shares of the outstanding shares of
common stock of the Delaware Mazal in exchange of 6,180,000 shares of our common
stock. In connection with the merger, the Delaware Mazal became our wholly owned
subsidiary. Prior to the merger, we were a non-operating "shell" corporation.
Pursuant to Securities and Exchange Commission rules, the merger of a private
operating company into a non-operating public shell corporation, with nominal
net assets is considered a capital transaction. At the time of the merger, our
officers and directors resigned and were replaced with the officers and
directors of the Delaware Mazal. For Financial Statement presentation, the
merger has been reflected in the Financial Statements as though it occurred on
December 31, 2004. The historical statements prior to December 31, 2004 are
those of the Delaware Mazal. Since the merger is a recapitalization and not a
business combination, pro forma information is not presented.
The following summary audited financial information as of December 31, 2004 and
for the period May 18, 2004 (inception) to December 31, 2004 includes balance
sheet and statement of operations data from the audited financial statements
included herein.
4
Mazal Plant Pharmaceuticals, Inc.
For the Period May 18, 2004
(inception) to December 31, 2004
Statement of Operations Data
Net Sales $ --
Costs and Expenses 13,778
Net Loss (13,778)
Net Loss per share $ (0.01)
Balance Sheet Data --------
Working Capital (Deficiency) $(12,733)
Total Assets 50,700
Total Current Liabilities 12,733
Total Liabilities 63,465
Total Shareholders' Deficit $(12,765)
RISK FACTORS
An investment in our common shares must be considered highly speculative,
generally because of the nature of our business and the general stage of its
development. In addition to the usual risks associated with investment in a
business, potential investors should carefully review the following factors
together with the other information contained in this quarterly report before
making an investment decision. The risks described below are not the only ones
facing us. If any of the following risks actually occur, our business, financial
condition and operating results could be materially affected.
RISKS RELATED TO THIS OFFERING
THE PRICE OF OUR COMMON STOCK MAY FLUCTUATE SIGNIFICANTLY AS A RESULT OF THE
SHARES WE ARE REGISTERING FOR THE SELLING STOCKHOLDERS AND YOU MAY FIND IT
DIFFICULT FOR YOU TO REALIZE THE 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 have
33,350,000 shares of common stock issued and outstanding as of November 22,
2005. When this registration statement is declared effective, the selling
stockholders may be reselling up to 6,005,000 shares of our common stock. As a
result of such registration statement, a substantial number of shares of our
common stock may become available for immediate resale, which could cause a
decrease in the market price of our common stock. As a result of any such
decreases in market price of our common stock, purchasers who acquire shares
from the selling stockholders may not be able to sell their shares at current
market prices, and such purchasers may lose some or all of their investment. To
the extent any of the selling stockholders exercise any of their warrants, and
then resell the shares of common stock issued to them upon such exercise, the
price of our common stock may decrease due to the additional shares of common
stock in the market, and, in addition, any significant decrease in the price of
our common stock as the selling stockholder sells shares of our common stock
could encourage short sales by the selling stockholder or others. Any such short
sales could cause the market price of our common stock to decrease even further.
5
THE SALE OF SHARES UNDER THIS PROSPECTUS AND THE ISSUANCE OF ADDITIONAL SHARES
THAT WE HAVE ALREADY AUTHORIZED MAY CAUSE OUR STOCK PRICE TO DROP, WILL DILUTE
THE PERCENTAGE OF COMMON STOCK OWNED BY EACH OF OUR EXISTING STOCKHOLDERS AND
MAY MAKE IT DIFFICULT FOR US TO RAISE FUNDS FROM THE SALE OF EQUITY SECURITIES.
We have 33,350,000 shares of common stock outstanding as of November 22, 2005.
The issuance of additional shares authorized by us
o May cause our stock price to drop significantly below the offering price
of stock under this prospectus;
o Will dilute the percentage ownership of our other stockholders.
The issuance of additional shares authorized by us in the public market could
materially impair our ability to raise capital through future offerings of our
common stock because of low stock price and further dilution of existing
stockholders. If we are unable to raise capital through offering of our common
stock, we will be unable to finance future clinical and pre-clinical activities,
which would have a serious negative impact on the future prospects of our
business.
SEC RULES AND NASD SALES PRACTICE REQUIREMENTS MAY ALSO LIMIT A STOCKHOLDER'S
ABILITY TO BUY AND SELL OUR STOCK.
Because the market price of our common stock is less than $5.00 per share,
our common stock is classified as a "penny stock." SEC Rules impose additional
sales practice requirements on broker-dealers that recommend the purchase or
sale of penny stocks to persons other than those who qualify as an "established
customer" or an "accredited investor." This includes the requirement that a
broker-dealer must make a determination that investments in penny stocks are
suitable for the customer and must make special disclosures to the customer
concerning the risks of penny stocks. Application of the penny stock rules to
our common stock could adversely affect the market liquidity of the shares,
which in turn may affect the ability of holders of shares of our common stock to
resell the shares. As a result of the difficulty in selling our shares,
investors may not be able to liquidate their shareholdings in our company as
quickly as they might otherwise be able to do in more conventionally traded
securities and therefore you may lose all or a significant portion of your
investment in our company.
In addition to the "penny stock" rules described above, the NASD has
adopted rules that require that in recommending an investment to a customer, a
broker-dealer must have reasonable grounds for believing that the investment is
suitable for that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer's financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, the NASD believes that there is a high probability that
speculative low priced securities will not be suitable for at least some
customers. The NASD requirements make it more difficult for broker-dealers to
recommend that their customers buy our common stock, which may have the effect
of reducing the level of trading activity in our common stock. As a result,
fewer broker-dealers may be willing to make a market in our common stock,
reducing a stockholder's ability to resell shares of our common stock.
6
RISKS RELATED TO OUR INDUSTRY
BECAUSE THE MANUFACTURE AND MARKETING OF HUMAN PHARMACEUTICAL PRODUCTS REQUIRES
THE APPROVAL OF THE FOOD AND DRUG ADMINISTRATION IN THE UNITED STATES AND
SIMILAR AGENCIES IN OTHER COUNTRIES, AND SINCE WE DO NOT YET HAVE SUCH APPROVAL,
SHAREHOLDERS ARE AT RISK THAT WE WILL BE UNABLE TO SUCCESSFULLY DEVELOP AND
MARKET OUR PRODUCTS. WE HAVE NOT YET ESTABLISHED THAT OUR PRODUCTS WILL BE SAFE
AND EFFECTIVE THROUGH CLINICAL TRIALS.
The manufacture and marketing of human pharmaceutical products in the United
States and other countries require the approval from the United States Food and
Drug Administration and other similar foreign regulatory agencies. The process
that our pharmaceutical product candidates must undergo to obtain these
approvals includes preclinical testing and clinical trials to demonstrate safety
and efficacy. Such process is expensive and time consuming. Investors are at
risk that we will be unable to successfully develop future products, prove
safety and effectiveness in clinical trials, or receive applicable regulatory
approvals.
REGULATORY AUTHORITIES HAVE THE POWER TO WITHDRAW A PREVIOUSLY APPROVED PRODUCT
FROM THE MARKET UPON A CHANGE IN REGULATIONS OR UPON RECEIPT OF NEWLY DISCOVERED
INFORMATION AND/OR REQUIRE ADDITIONAL, AND POTENTIALLY EXPENSIVE, ADDITIONAL
TESTING. SINCE WE HAVE NO HISTORY WITH OUR PRODUCTS, WE MIGHT FACE SUCH NEWLY
DISCOVERED INFORMATION THAT COMES TO LIGHT AFTER INITIAL APPROVAL OF OUR
PRODUCTS.
Unanticipated changes in existing regulations or the adoption of new regulations
could adversely affect the development, manufacture and marketing of our
products. Since we have no operating history, ongoing government regulation
could cause unexpected delays and adversely impact our business in areas where
our inexperience might lead to failure in complying with applicable
requirements. Such failure to comply might also result in criminal prosecution,
civil penalties, recall or seizure of products, or partial or total suspension
of production. Any of these penalties could delay or prevent the promotion,
marketing or sale of our products. Furthermore, the laws, regulations, policies
or current administrative practices of any governmental body, organization or
regulatory agency in the United States or any other jurisdiction, might be
changed, or applied or interpreted in a manner which will fundamentally alter
the ability of us or our collaborative partners to develop, operate, export or
market the products or services which we may provide. We do not have lobbying or
other resources to affect the course of such changes. If such future changes
have an adverse impact on our products or their manufacture and marketing, the
likelihood of our success could be damaged.
WE ARE ENGAGED IN A RAPIDLY CHANGING FIELD CHARACTERIZED BY INTENSE COMPETITION
THAT WE EXPECT TO INCREASE. SINCE WE ARE A SMALL COMPANY WITH LIMITED FINANCIAL
RESOURCES, AND MANY OF OUR COMPETITORS HAVE SIGNIFICANT PRODUCTS THAT HAVE BEEN
APPROVED OR ARE IN DEVELOPMENT AND OPERATE LARGE, WELL-FUNDED DISCOVERY AND
DEVELOPMENT PROGRAMS, WE WILL EXPERIENCE A COMPETITIVE DISADVANTAGE.
7
We are engaged in a rapidly changing field characterized by rapid technological
change, new and improved product introductions, changes in regulatory
requirements and evolving industry standards. Other products and therapies that
will compete directly with the products that we are seeking to develop currently
exist or are being developed. We expect competition from fully integrated
pharmaceutical companies and more established companies to be intense and to
increase. These companies have significantly greater financial resources and
expertise in discovery and development, manufacturing, preclinical and clinical
testing, obtaining regulatory approvals and marketing than we do. Many of our
competitors have significant products that have been approved or are in
development and operate large, well-funded discovery and development programs.
Academic institutions, governmental agencies and other public and private
research organizations also conduct research, seek patent protection and
establish collaborative arrangements for therapeutic products and clinical
development and marketing. We have none of these resources. In addition, we will
face competition based on product efficacy and safety, the timing and scope of
regulatory approvals, availability of supply, marketing and sales capability,
reimbursement coverage, pricing and barriers from patent positions of larger
companies. We do not have any experience in these areas at this time and
therefore we are at a competitive disadvantage.
IF OUR COMPETITORS SUCCEED IN DEVELOPING COMPETING PRODUCTS EARLIER THAN WE DO,
IN OBTAINING REGULATORY APPROVALS FOR SUCH PRODUCTS MORE RAPIDLY THAN WE DO, OR
IN DEVELOPING PRODUCTS THAT ARE MORE EFFECTIVE OR LESS EXPENSIVE THAN THE
PRODUCTS WE DEVELOP, WE WILL HAVE DIFFICULTY COMPETING WITH THEM.
Since our competitors keep this type of information confidential, we do not know
where they stand in developing competing products. As a result, we might be
using our resources to develop products that will face such competition from our
competitors and our products might not be successful in the marketplace. Our
future success depends on our ability to timely identify new market trends and
develop, introduce and support new and enhanced products on a successful and
timely basis. We might not be successful in developing or introducing to the
market our products. If we fail to develop and deploy new products on a
successful and timely basis, we will be non-competitive and unable to recoup the
research and development and other expenses we incur to develop and test new
product candidates.
EVEN IF OUR PRODUCTS ARE APPROVED FOR SALE BY THE REGULATORY AUTHORITIES, WE
HAVE NOT YET DEMONSTRATED THEIR MARKET ACCEPTANCE AND THEY MIGHT NOT GAIN MARKET
ACCEPTANCE AMONG PHYSICIANS, PATIENTS, HEALTHCARE PAYERS AND THE MEDICAL
COMMUNITY.
The degree of market acceptance will depend on a number of factors, including:
o demonstration of the clinical efficacy and safety of the products;
o cost-effectiveness;
o potential advantage over alternative treatment methods;
o the effectiveness of marketing and distribution support for the products;
and
o reimbursement policies of government and third party payers.
8
If our product candidates do not achieve significant market acceptance, our
business and financial condition will be materially adversely affected.
OUR SUCCESS MAY DEPEND IN PART ON THE EXTENT TO WHICH REIMBURSEMENT FOR THE COST
OF OUR PRODUCTS WILL BE AVAILABLE FROM GOVERNMENT HEALTH ADMINISTRATION
AUTHORITIES, PRIVATE HEALTH COVERAGE INSURERS AND OTHER ORGANIZATIONS, SINCE
POTENTIAL CUSTOMERS MIGHT NOT USE OUR PRODUCTS IF SUCH REIMBURSEMENT IS NOT
AVAILABLE.
At the present time, we have not established that such governmental authorities
or non-governmental providers will reimburse physicians and patients for the use
of our products. Recently, the prices of medical products and services have
increasingly been examined and challenged by third parties and consumers of such
products and services. We anticipate that new federal or state legislation will
be proposed to attempt to provide broader and better health care and to manage
and contain costs. Since we have not yet established reimbursement coverage, we
face significant uncertainty as to the reimbursement status of newly approved
health-care products and whether third party reimbursement will be available at
price levels sufficient for us to realize our desired returns.
SINCE WE WILL BE ADMINISTERING OUR PRODUCTS IN HUMAN CLINICAL TRIALS AND
THEREAFTER TO PATIENTS, WE WILL BE SUBJECT TO POTENTIAL PRODUCT LIABILITY RISKS
WHICH ARE INHERENT IN THE TESTING, MANUFACTURING, MARKETING AND SALE OF
THERAPEUTIC PRODUCTS.
Our clinical studies will include trials on humans. These studies create a risk
of liability for serious side effects to participants resulting from an adverse
reaction to the products being tested or resulting from negligence or misconduct
and the associated adverse publicity. We manage our liability risks by trying to
follow proper protocols and through product liability insurance. We intend to
purchase liability insurance for clinical trials at the time we begin such
trials. Such insurance is expensive and difficult to obtain. In the future,
insurance coverage might not be available to us on acceptable terms, if at all.
If we are unable to obtain sufficient insurance coverage on reasonable terms or
to otherwise protect against potential product liability claims we might not be
able to commercialize our products. If we face a future product liability claim
or a product withdrawal, we will suffer a material adverse effect on our
financial condition.
RISKS RELATED TO OUR BUSINESS
SINCE WE ARE AT AN EARLY STAGE OF DEVELOPMENT, WE HAVE NOT COMPLETED THE
DEVELOPMENT OF ANY PRODUCT AND WE HAVE NOT BEGUN TO MARKET OR GENERATE REVENUES.
WE DO NOT ANTICIPATE GENERATING ANY REVENUE IN THE FORESEEABLE FUTURE. IF WE ARE
UNSUCCESSFUL IN COMPLETING THE DEVELOPING AND MARKETING OF OUR PRODUCTS, OUR
SECURITIES WILL BE WORTHLESS.
We are at an early stage of development. Our operations to date have consisted
primarily of developing and testing our MAHDL product. MAHDL will require
significant additional clinical testing and investment prior to
commercialization. A commitment of substantial resources by us and/or future
collaborative partners to conduct time-consuming research and clinical trials
will be required if we are to complete the development of MAHDL. We do not know
if we will be able to complete these tasks. We do not expect MAHDL to be
commercially available for several years. Accordingly, we do not know if and
when we will generate revenues from MAHDL. Because of these uncertainties, we
might never generate enough revenue to allow shareholders to recoup and profit
from their investment.
9
SINCE WE HAVE A HISTORY OF OPERATING LOSSES AND EXPECT EXPENSES AND LOSSES TO
INCREASE IN THE NEAR TERM, WE DO NOT KNOW IF WE WILL EVER BECOME PROFITABLE OR
THAT OUR INVESTORS WILL EVER RECOUP OR PROFIT FROM THEIR INVESTMENT IN OUR
SHARES.
From the date of incorporation to December 31, 2004, our accumulated losses are
$15,438. Since inception we have earned no revenues from the sale of any of our
product candidates. We expect expenses and losses to increase in the near term
as we fund research and development and general and administrative expenses. We
expect to continue to incur substantial operating losses unless and until
product sales and royalty payments generate sufficient revenues to fund
continuing operations. As a result, investors might never recoup their
investment or profit from their investment in our shares.
SINCE OUR SUCCESS IS DEPENDENT ON THE COMMENCEMENT AND COMPLETION OF CLINICAL
TRIALS, REGULATORY APPROVAL AND INTRODUCTION OF OUR PRODUCTS INTO THE MARKET,
AND SINCE WE HAVE COMPLETED NONE OF THE TASKS AT THIS TIME, WE DO NOT KNOW IF WE
WILL BE ABLE TO COMPLETE THEM.
The actual timing of these events can vary dramatically due to factors such as
delays or failures in our clinical trials, the uncertainties inherent in the
regulatory approval process, and the inability to establish on favorable terms
the collaborative partnerships that we plan to use for the completion of our
clinical trials and the marketing and manufacturing of our product candidates.
We might not be able to complete the clinical trials involving MAHDL, to make
the necessary regulatory submissions, or to gain regulatory approvals necessary
for marketing our products. Our failure to achieve these objectives will mean
that investors will not be able to recoup their investment or to receive a
profit on their investment.
WE WILL CONTINUE TO REQUIRE SUBSTANTIAL ADDITIONAL FUNDS FOR FURTHER RESEARCH
AND DEVELOPMENT, PLANNED CLINICAL TRIALS AND REGULATORY APPROVALS. WE MIGHT NOT
BE ABLE TO OBTAIN ADDITIONAL FUNDING ON ACCEPTABLE TERMS IF AT ALL. WITHOUT
ADDITIONAL FUNDING, WE WILL FAIL.
We will require substantial additional funds for further research and
development, planned clinical trials and regulatory approvals. Our planned cash
requirements may vary materially in response to a number of factors, including
research and development on our products, clinical trial results, changes in any
aspect of the regulatory process, and delays in obtaining regulatory approvals.
We may seek further funding through public or private equity or debt financings,
collaborative arrangements with pharmaceutical companies or from other sources.
Further equity financings may substantially dilute shareholders' investment in
our shares. If we cannot obtain the required additional funding, then investors
will not be able to recoup their investment or to profit from their investment.
SINCE WE RELY SUBSTANTIALLY ON OUR ABILITY TO PATENT OUR INTELLECTUAL PROPERTY
OR MAINTAIN OUR PROPRIETARY INFORMATION AS TRADE SECRETS IN DEVELOPING OUR
PRODUCTS, OUR SUCCESS WILL DEPEND ON OUR ABILITY TO OBTAIN PATENTS, MAINTAIN
TRADE SECRET PROTECTION AND OPERATE WITHOUT INFRINGING ON THE PROPRIETARY RIGHTS
10
OF THIRD PARTIES OR PREVENTING THIRD PARTIES FROM CIRCUMVENTING OUR RIGHTS. AS
DESCRIBED BELOW, THERE IS CONSIDERABLE UNCERTAINTY ABOUT OUR INTELLECTUAL
PROPERTY RIGHTS. IF WE ARE UNSUCCESSFUL IN ESTABLISHING THE VALIDITY OF OUR
INTELLECTUAL PROPERTY RIGHTS, WE WILL LIKELY FAIL AS A COMPANY AND OUR
SECURITIES WILL BE WORTHLESS.
The steps we have taken to protect our intellectual property may not prevent the
misappropriation of our proprietary information and technologies. We have filed
and are actively pursuing applications for U.S., Canadian and foreign patents.
The patent positions of biotechnology and pharmaceutical companies can be highly
uncertain and involve complex legal and factual questions. We are uncertain
whether:
o any of our patent applications will result in the issuance of
patents;
o we will develop additional proprietary products that are patentable;
o the patent already issued to us will provide us with any competitive
advantages;
o we will be challenged by third parties on the validity of our
patents;
o the patents of others will impede our ability to do business;
o third parties will be able to circumvent our patents;
o third parties will independently develop similar products that will
not infringe our products;
o third parties will duplicate any of our products not covered by a
patent; or
o third parties will design around our patents.
Since patent applications in the United States are maintained in secrecy until
the patent is issued or foreign counterparts, if any, published and, since
publication of discoveries in the scientific or patent literature often lag
behind actual discoveries, we do not know if there are currently pending
applications that would result in issued patents that would interfere with
MAHDL. Moreover, we might have to participate in interference proceedings
declared by the U.S. Patent and Trademark Office to determine priority of
invention, which could result in substantial cost to us, even if the eventual
outcome is favorable to us.
Much of our know-how and technology might not be patentable. To protect our
rights, we require employees, consultants, advisors and collaborators to enter
into confidentiality agreements. However, these agreements might not provide
meaningful protection for trade secrets, know-how or other proprietary
information in the event of any unauthorized use or disclosure.
WE INTEND TO ENTER INTO VARIOUS ARRANGEMENTS WITH CORPORATE AND ACADEMIC
COLLABORATORS, LICENSORS, LICENSEES AND OTHERS FOR THE RESEARCH, DEVELOPMENT,
CLINICAL TESTING, MANUFACTURING, MARKETING AND COMMERCIALIZATION OF MAHDL. WE
WILL NOT HAVE CONTROL OVER HOW THEY PERFORM THEIR CONTRACTUAL OBLIGATIONS.
ACCORDINGLY, WE WILL SUFFER IF THEY DO NOT FULFILL THEIR CONTRACTUAL
OBLIGATIONS.
11
We intend to enter into agreements to develop and commercialize MAHDL. We might
not be able to establish such additional collaborations on favorable terms, if
at all, or that our current or future collaborative arrangements will be
successful. In addition, third party arrangements may require us to grant
certain rights to third parties, including exclusive marketing rights to one or
more products, or may have other terms that are burdensome to us.
These arrangements may place responsibility on our collaborative partners for
Phase III clinical trials, human clinical trials, the preparation and submission
of applications for regulatory approval, or for marketing, sales and
distribution support for product commercialization. These third parties might
not fulfill their obligations in a manner which maximizes our revenues. These
arrangements may also require us to transfer certain material rights or issue
equity securities to corporate investors, licensees and others. If we license or
sublicense our commercial rights to others we might realize reduced product
revenue compared to our direct commercial exploitation. Moreover, we might not
derive any revenue or profit from these arrangements.
In addition, we have no direct experience in marketing, sales or distribution,
and we do not intend to develop a sales and marketing infrastructure to
commercialize pharmaceutical products. If we develop products eligible for
commercial sales, we intend to rely on third parties such as licensees,
collaborators, joint venture partners or independent distributors to market and
sell these products. We might not be able to obtain access to a marketing and
sales force with sufficient technical expertise and distribution capability. We
also will not be able to control the resources and effort that a third party
will devote to marketing our product candidates. If we are unable to develop and
maintain relationships with third parties with the necessary marketing and sales
force, we may fail to gain market acceptance of our product candidates, and our
revenues could be impaired.
WE DEPEND UPON OUR KEY PERSONNEL AND THEY WOULD BE DIFFICULT TO REPLACE.
We believe that our success will depend on the continued employment of our
senior management team and key sales and technical personnel. If one or more
members of our senior management team were unable or unwilling to continue in
their present positions, our business would suffer.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements which relate to future
events or our future financial performance. In some cases, you can identify
forward-looking statements by terminology such as "may", "should", "expects",
"plans", "anticipates", "believes", "estimates", "predicts", "potential" or
"continue" or the negative of these terms or other comparable terminology. These
statements are only predictions and involve known and unknown risks,
uncertainties and other factors, including the risks in the section entitled
"Risk Factors" on pages 4 to 12, that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.
12
While these forward-looking statements, and any assumptions upon which they are
based, are made in good faith and reflect our current judgment regarding the
direction of our business, actual results will almost always vary, sometimes
materially, from any estimates, predictions, projections, assumptions or other
future performance suggested herein. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.
THE OFFERING
This prospectus relates to the resale by certain selling security holders of the
Company of up to 8,205,000 shares of common stock in connection with the resale
of (a) up to 6,005,000 shares of our common stock that were issued in various
transactions exempt from registration under the Securities Act of 1933 and (b)
up to 1,200,000 shares of our common stock which may be issued upon exercise of
certain warrants that were issued in a transaction exempt from registration.
The selling security holders may offer to sell the common shares being offered
in this prospectus at fixed prices, at prevailing market prices at the time of
sale, at varying prices or at negotiated prices.
We are also offering for sale to the public up to 10,000,000 shares of common
stock at $0.45 per share. We will offer the shares directly to the public
through our employees, without the use of any broker-dealer. Our employees will
not receive any compensation, directly or indirectly, in connection with the
offer and sale of the shares under this prospectus.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the common shares being
offered for sale by the selling security holders. However, we will receive
proceeds of up to $720,000 from the exercise of the warrants if and to the
extent that any of the warrants are exercised, and such proceeds will be used
for general working capital purposes.
We will receive proceeds from our sale of shares to the public under this
prospectus. The proceeds we receive shall be used for The proceeds we receive
shall be used for the payment of costs and expenses we expect to incur in the
conduct of human clinical trials of MAHDL that must be conducted in order for
MAHDL to be approved by the United States Food and Drug Administration.
SELLING SECURITY HOLDERS
The selling security holders may offer and sell, from time to time, any or all
of the shares of common stock held by them and the common stock issuable to them
upon exercise of the warrants. Because the selling security holders may offer
all or only some portion of the 8,205,000 common shares to be registered, no
estimate can be given as to the amount or percentage of these common shares that
will be held by the selling security holders upon termination of the offering.
The following table sets forth certain information regarding the beneficial
ownership of common shares by the selling security holders as of November 22,
2005, and the number of common shares covered by this prospectus. The number of
shares in the table represents an estimate of the number of common shares to be
offered by the selling security holder. To our knowledge, none of the selling
security holders is a broker-dealer, or an affiliate of a broker-dealer.
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None of the selling security holders has any position, office or material
relationship with us, except for James B. Wiegand, who was our President and a
director from February 2003 until June 6, 2005, Sam Berkowitz, who is our
Secretary, and Mechael Kanovsky, who is our Chief Executive Officer and
director. Except as otherwise, indicated, all securities are owned directly.
- --------------------------------------------------------------------------------------------------------
COMMON SHARES NUMBER OF
BENEFICIALLY OWNED SHARES
BEFORE OFFERING (1) ISSUABLE COMMON SHARES COMMON SHARES PERCENTAGE OF
NAME OF SELLING COMMON SHARES UPON EXERCISE BEING OFFERED BENEFICIALLY CLASS OWNED
NAME OF SELLING BENEFICIALLY OWNED OF ALL OF THE IN THE OWNED AFTER AFTER OFFERING
SECURITY HOLDER BEFORE OFFERING (1) WARRANTS OFFERING (1) OFFERING (1) OFFERING (2)
- --------------------------------------------------------------------------------------------------------
Malcolm Jennings 3,800,000 0 3,800,000 0 0
- --------------------------------------------------------------------------------------------------------
Leonard Cohen 120,000 0 120,000 0 0
- --------------------------------------------------------------------------------------------------------
Halcyon S.A. 50,000 0 50,000 0 0
- --------------------------------------------------------------------------------------------------------
Ronnie Yacov 600,000 0 60,000 540,000
- --------------------------------------------------------------------------------------------------------
James B. Wiegand 500,000 0 50,000 450,000
- --------------------------------------------------------------------------------------------------------
Max Gould 500,000 0 50,000 450,000
- --------------------------------------------------------------------------------------------------------
Corporate Management
Services 250,000 25,000 225,000
- --------------------------------------------------------------------------------------------------------
Chaim Lieberman 1,800,000(3) 0 1,000,000 800,000
- --------------------------------------------------------------------------------------------------------
David Lieberman 1,800,000(4) 0 50,000 1,750,000
- --------------------------------------------------------------------------------------------------------
Sam Berkowitz 1,800,000(5) 0 50,000 1,750,000
- --------------------------------------------------------------------------------------------------------
Mechael Kanovsky 600,000(6) 0 50,000 550,000
- --------------------------------------------------------------------------------------------------------
Luc Verelst 1,200,000 1,000,000 1,200,000 0 0
- --------------------------------------------------------------------------------------------------------
- ----------
(1) The number of common shares listed as beneficially owned by such selling
security holder represents the number of common shares currently owned.
Assumes all of the common shares offered in this prospectus are sold.
(2) Based on 33,350,000 shares of common stock outstanding as of November 22,
2005.
(3) Chaim J. Lieberman is entitled to receive 1,800,000 shares of our common
stock in consideration for his services rendered to our subsidiary, the
Delaware Mazal, pursuant to an Employment Agreement, dated December 10,
2004, as amended on August 1, 2005, among Mr. Lieberman, us, and the
Delaware Mazal.
14
(4) David Lieberman is entitled to receive 1,800,000 shares of our common
stock in consideration for his services rendered to our subsidiary, the
Delaware Mazal, pursuant to an Employment Agreement, dated December 10,
2004, as amended on August 1, 2005, among Mr. Lieberman, us, and the
Delaware Mazal.
(5) Mr. Berkowitz, our Secretary, is entitled to receive 1,800,000 shares of
our common stock pursuant to the Employment Agreement, dated December 10,
2004, as amended on August 1, 2005, among Mr. Berkowitz, the Company, and
our subsidiary, the Delaware Mazal, as compensation for his services
rendered to the Delaware Mazal.
(6) Dr. Mechael Kanovsky, our Chief Executive Officer and a director, is
entitled to receive 600,000 shares of our common stock in consideration
for his services rendered to our subsidiary, the Delaware Mazal, pursuant
to an Employment Agreement, dated December 10, 2004, as amended on August
1, 2005, among Dr. Kanovsky, us and the Delaware Mazal.
We may require the selling security holders to suspend the sales of the
securities offered by this prospectus upon the occurrence of any event that
makes any statement in this prospectus or the related registration statement
untrue in any material respect or that requires the changing of statements in
these documents in order to make statements in those documents not misleading.
We will file a post-effective amendment to this registration statement to
reflect any material changes to this prospectus.
The shares being offered hereby by each of Messrs. Yacov, Wiegand and Gould and
Corporate Management are subject to a lock-up agreement dated May 13, 2005
pursuant to which each of said persons agreed that it would not directly or
indirectly sell, transfer, pledge, distribute or otherwise encumber their shares
until May 13, 2006.
PLAN OF DISTRIBUTION
NO CURRENT MARKET FOR OUR SHARES
There is currently no market for our shares. We cannot give you any assurance
that the shares you purchase will ever have a market value or that if a market
for our shares ever develops, that you will be able to sell your shares. In
addition, even if a public market for our shares develops, there is no assurance
that a secondary public market will be sustained.
The shares you purchase are not traded or listed on any exchange. After we begin
selling our shares, we intend to have our shares quoted on the Pink Sheets.
However, there is no assurance that we will be successful in finding a market
maker who will be successful at having our shares quoted. Further, even assuming
we do locate such a market maker, it could take several months before the market
maker's listing application for our shares is approved.
The OTC Bulletin Board is maintained by the National Association of Securities
Dealers. The securities traded on the Bulletin Board are not listed or traded on
the floor of an organized national or regional stock exchange. Instead, these
securities transactions are conducted through a telephone and computer network
connecting dealers in stocks. Over-the-counter stocks are traditionally smaller
companies that do not meet the financial and other listing requirements of a
regional or national stock exchange.
15
Even if our shares are quoted on the OTC Bulletin Board, a purchaser of our
shares may not be able to resell the shares. Broker-dealers may be discouraged
from effecting transactions in our shares because they will be considered penny
stocks and will be subject to the penny stock rules. Rules 15g-1 through 15g-9
promulgated under the Securities Exchange Act of 1934, as amended, impose sales
practice and disclosure requirements on NASD brokers-dealers who make a market
in a "penny stock." A penny stock generally includes any non-NASDAQ equity
security that has a market price of less than $5.00 per share. Under the penny
stock regulations, a broker-dealer selling penny stock to anyone other than an
established customer or "accredited investor" (generally, an individual with net
worth in excess of $1,000,000 or an annual income exceeding $200,000, or
$300,000 together with his or her spouse) must make a special suitability
determination for the purchaser and must receive the purchaser's written consent
to the transaction prior to sale, unless the broker-dealer or the transactions
is otherwise exempt. In addition, the penny stock regulations require the
broker-dealer to deliver, prior to any transaction involving a penny stock, a
disclosure schedule prepared by the Commission relating to the penny stock
market, unless the broker-dealer or the transaction is otherwise exempt. A
broker-dealer is also required to disclose commissions payable to the
broker-dealer and the registered representative and current quotations for the
securities. Finally, a broker-dealer is required to send monthly statements
disclosing recent price information with respect to the penny stock held in a
customer's account and information with respect to the limited market in penny
stocks.
The additional sales practice and disclosure requirements imposed upon
brokers-dealers may discourage broker-dealers from effecting transactions in our
shares, which could severely limit the market liquidity of the shares and impede
the sale of our shares in the secondary market, assuming one develops.
THE OFFERING WILL BE SOLD BY OUR OFFICERS
We are offering up to a total of 10,000,000 shares of common stock on a best
efforts basis. The offering price is $0.45 per share. The offering will be for a
period of 90 business days from the effective date and may be extended for an
additional 90 business days if we choose to do so. In our sole discretion, we
have the right to terminate the offering at any time, even before we have sold
the 10,000,000 shares. There are no specific events which might trigger our
decision to terminate the offering.
We have not established a minimum amount of proceeds that we must receive in the
offering before any proceeds may be accepted. We cannot assure you that all or
any of the shares offered under this prospectus will be sold. No one has
committed to purchase any of the shares offered. Therefore, we may only sell a
nominal amount of shares and receive minimal proceeds from the offering. We
reserve the right to withdraw or cancel this offering and to accept or reject
any subscription in whole or in part, for any reason or for no reason.
Subscriptions will be accepted or rejected promptly. All monies from rejected
subscriptions will be returned immediately by us to the subscriber, without
interest or deductions.
16
Any accepted subscriptions will be made on a rolling basis. Once accepted, the
funds will be deposited into an account maintained by us and be immediately
available to us. Subscription funds will not be placed into escrow, trust or any
other similar arrangement. There are no investor protections for the return of
subscription funds once accepted. Once we receive the purchase price for the
shares, we will be able to use the funds. Certificates for shares purchased will
be issued and distributed by our transfer agent promptly after a subscription is
accepted and "good funds" are received in our account.
We will sell the shares in this offering through our officers and directors. The
officers and directors engaged in the sale of the securities will receive no
commission from the sale of the shares nor will they register as a broker-dealer
pursuant to Section 15 of the Securities Exchange Act of 1934 in reliance upon
Rule 3(a)4-1. Rule 3(a)4-1 sets forth those conditions under which a person
associated with an issuer may participate in the offering of the issuer's
securities and not be deemed to be a broker-dealer. Our officers and directors
satisfy the requirements of Rule 3(a)4-1 in that:
1. None of such persons is subject to a statutory disqualification, as
that term is defined in Section 3(a)(39) of the Act, at the time of
his participation; and,
2. None of such persons is compensated in connection with his or her
participation by the payment of commissions or other remuneration
based either directly or indirectly on transactions in securities;
and
3. None of such persons is, at the time of his participation, an
associated person of a broker- dealer; and
4. All of such persons meet the conditions of Paragraph (a)(4)(ii) of
Rule 3(a)4-1 of the Exchange Act, in that they (A) primarily
perform, or are intended primarily to perform at the end of the
offering, substantial duties for or on behalf of the issuer
otherwise than in connection with transactions in securities; and
(B) are not a broker or dealer, or an associated person of a broker
or dealer, within the preceding twelve (12) months; and (C) do not
participate in selling and offering of securities for any issuer
more than once every twelve (12) months other than in reliance on
Paragraphs (a)(4)(i) or (a)(4)(iii).
As long as we satisfy all of these conditions, we are comfortable that we will
be able to satisfy the requirements of Rule 3a4-1 of the Exchange Act
notwithstanding that a portion of the proceeds from this offering will be used
to pay the salaries of our officers.
As our officers and directors will sell the shares being offered pursuant to
this offering, Regulation M prohibits the company and its officers and directors
from certain types of trading activities during the time of distribution of our
securities. Specifically, Regulation M prohibits our officers and directors from
bidding for or purchasing any common stock or attempting to induce any other
person to purchase any common stock, until the distribution of our securities
pursuant to this offering has ended.
We have no intention of inviting broker-dealer participation in this offering.
We intend to advertise and hold investment meetings in various states where the
offering will be registered. We will also distribute the prospectus to potential
investors at the meetings and to our friends and relatives who are interested in
us and a possible investment in the offering.
17
We intend to pay accrued officer and director salaries on a pro rata basis as
offering proceeds are raised. The use of proceeds to pay accrued salaries will
not be linked in any way to any officer or director's success or failure in
selling securities.
OFFERING PERIOD AND EXPIRATION DATE
This offering will commence on the effective date of this prospectus, as
determined by the Securities and Exchange Commission and continue for a period
of 90 business days. We may extend the offering for an additional 90 business
days unless the offering is completed or otherwise terminated by us.
PROCEDURES FOR SUBSCRIBING
If you decide to subscribe for any shares in this offering, you must deliver a
check or certified funds for acceptance or rejection. There are no minimum share
purchase requirements for individual investors. All checks for subscriptions
must be made payable to "Mazal Plant Pharmaceuticals, Inc." Upon receipt, all
funds provided as subscriptions will be immediately deposited into our account
and be available.
RIGHT TO REJECT SUBSCRIPTIONS
We maintain the right to accept or reject subscriptions in whole or in part, for
any reason or for no reason. All monies from rejected subscriptions will be
returned immediately by us to the subscriber, without interest or deductions.
Subscriptions for securities will be accepted or rejected within 48 hours of our
having received them.
SELLING STOCKHOLDERS DISTRIBUTION
The selling security holders may, from time to time, sell all or a portion of
the common shares on any market upon which the common shares may be listed or
quoted (currently the Pink Sheets.com or National Association of Securities
Dealers OTC Bulletin Board in the United States), in privately negotiated
transactions or otherwise. Such sales may be at fixed prices prevailing at the
time of sale, at prices related to the market prices or at negotiated prices.
The common shares being offered for resale by this prospectus may be sold by the
selling security holders by one or more of the following methods, without
limitation:
(a) an exchange distribution in accordance with the rules of the
applicable exchange;
(b) ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
(c) privately negotiated transactions;
(d) market sales (both long and short to the extent permitted under the
federal securities laws);
(e) at the market to or through market makers or into an existing market
for the shares;
18
(f) through transactions in options, swaps or other derivatives (whether
exchange listed or otherwise); and
(g) a combination of any of the aforementioned methods of sale.
In the event of the transfer by any of the selling security holders of its
warrants or common shares to any pledgee, donee or other transferee, we will
amend this prospectus and the registration statement of which this prospectus
forms a part by the filing of a post-effective amendment in order to have the
pledgee, donee or other transferee in place of the selling security holder who
has transferred his, her or its shares.
The selling security holders may distribute to its shareholders, as a dividend
on a pro-rata basis, some or all of the 6,005,000 common shares held by such
selling security holder.
In effecting sales, brokers and dealers engaged by the selling security holders
may arrange for other brokers or dealers to participate. Brokers or dealers may
receive commissions or discounts from a selling security holder or, if any of
the broker-dealers act as an agent for the purchaser of such shares, from a
purchaser in amounts to be negotiated which are not expected to exceed those
customary in the types of transactions involved. Broker-dealers may agree with a
selling security holder to sell a specified number of the common shares at a
stipulated price per share. Such an agreement may also require the broker-dealer
to purchase as principal any unsold common shares at the price required to
fulfill the broker-dealer commitment to the selling security holder if such
broker-dealer is unable to sell the shares on behalf of the selling security
holder. Broker-dealers who acquire common shares as principal may thereafter
resell the common 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. Such sales by a broker-dealer could
be at prices and on terms then prevailing at the time of sale, at prices related
to the then-current market price or in negotiated transactions. In connection
with such resales, the broker-dealer may pay to or receive from the purchasers
of the shares commissions as described above.
The selling security holders and any broker-dealers or agents that participate
with the selling security holders in the sale of the common shares may be deemed
to be "underwriters" within the meaning of the Securities Act in connection with
these sales. In that event, any commissions received by the broker-dealers or
agents and any profit on the resale of the common shares purchased by them may
be deemed to be underwriting commissions or discounts under the Securities Act.
From time to time, any of the selling security holders may pledge common shares
pursuant to the margin provisions of customer agreements with brokers. Upon a
default by a selling security holder, their broker may offer and sell the
pledged common shares from time to time. Upon a sale of the common shares, the
selling security holders intend to comply with the prospectus delivery
requirements under the Securities Act by delivering a prospectus to each
purchaser in the transaction. We intend to file any amendments or other
necessary documents in compliance with the Securities Act that may be required
in the event any of the selling security holders defaults under any customer
agreement with brokers.
19
To the extent required under the Securities Act, a post effective amendment to
this registration statement will be filed disclosing the name of any
broker-dealers, the number of common shares involved, the price at which the
common shares is to be sold, the commissions paid or discounts or concessions
allowed to such broker-dealers, where applicable, that such broker-dealers did
not conduct any investigation to verify the information set out or incorporated
by reference in this prospectus and other facts material to the transaction.
We and the selling security holders will be subject to applicable provisions of
the Exchange Act and the rules and regulations under it, including, without
limitation, Rule 10b-5 and, insofar as a selling security holder is a
distribution participant and we, under certain circumstances, may be a
distribution participant, under Regulation M. All of the foregoing may affect
the marketability of the common shares.
All expenses of the registration statement including, but not limited to, legal,
accounting, printing and mailing fees are and will be borne by us. Any
commissions, discounts or other fees payable to brokers or dealers in connection
with any sale of the common shares will be borne by the selling security
holders, the purchasers participating in such transaction, or both.
Any common shares 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.
BLUE SKY RESTRICTIONS ON RESALE
When a selling security holder wants to sell common shares under this
registration statement, the selling security holders will also need to comply
with state securities laws, also known as "Blue Sky laws," with regard to
secondary sales. All states offer a variety of exemption from registration for
secondary sales. Many states, for example, have an exemption for secondary
trading of securities registered under Section 12(g) of the Securities Exchange
Act of 1934 or for securities of issuers that publish continuous disclosure of
financial and non-financial information in a recognized securities manual, such
as Standard & Poor's. The broker for a selling security holder will be able to
advise a selling security holder which states our common shares is exempt from
registration with that state for secondary sales.
Any person who purchases common shares from a selling security holder under this
registration statement who then wants to sell such shares will also have to
comply with Blue Sky laws regarding secondary sales.
When the registration statement becomes effective, and a selling security holder
indicates in which state(s) he desires to sell his shares, the Company will be
able to identify whether it will need to register or will rely on an exemption
there from.
PENNY STOCK REGULATIONS
You should note that our common shares are a penny stock. The Securities and
Exchange Commission has adopted Rule 15g-9 which generally defines "penny stock"
to be any equity security that has a market price (as defined) less than $5.00
20
per share or an exercise price of less than $5.00 per share, subject to certain
exceptions. Our securities are covered by the penny stock rules, which impose
additional sales practice requirements on broker-dealers who sell to persons
other than established customers and "accredited investors". The term
"accredited investor" refers generally to institutions with assets in excess of
$5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock
rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from the rules, to deliver a standardized risk disclosure
document in a form prepared by the SEC that provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer's account. The bid and offer
quotations, and the broker-dealer and salesperson compensation information, must
be given to the customer orally or in writing prior to effecting the transaction
and must be given to the customer in writing before or with the customer's
confirmation. In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from these 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
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for the stock
that is subject to these penny stock rules. Consequently, these penny stock
rules may affect the ability of broker-dealers to trade our securities. We
believe that the penny stock rules discourage investor interest in and limit the
marketability of our common shares.
LEGAL PROCEEDINGS
There is no litigation pending or threatened by or against us.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our directors, executive officers and other significant employees, their ages,
positions held and duration each person has held that position, are as follows:
NAME POSITION WITH THE COMPANY AGE
Dr. Mechael Chief Executive Officer and Director 43
Kanovsky
Sam Berkowitz Secretary 49
BUSINESS EXPERIENCE
The following is a brief account of the education and business experience of
each director, executive officer and key employee during at least the past five
years, indicating each person's principal occupation during the period, and the
name and principal business of the organization by which he was employed.
DR. MECHAEL KANOVSKY is the President and a director of Amazon Biotech, Inc. He
obtained his Ph.D. in Molecular Biology from Mount Sinai School of Medicine, New
York. Dr. Kanovsky worked as a research scientist with the Department of
Pathology at the Brooklyn VA Hospital and at State University of New York. Dr.
Kanovsky previously was a consultant for Marantech Corp. assisting in developing
a cancer screening test.
21
MR. SAM BERKOWITZ has been the general and operating manager of Advanced Plant
Pharmaceuticals, Inc., a Delaware corporation, since 1996. Mr. Berkowitz
obtained his Bachelor of Arts Degree from Yeshiva University, New York. He is
not a director or officer in any other reporting company.
Until the change in control of the Company on June 6, 2005, the Company's sole
director and officer was James B. Wiegand. Mr. Wiegand resigned as a result of
the change in control of the Company and not because of any disagreement with
the Company. Each director and executive officer holds office until the next
annual meeting of shareholders or until his successor has been duly elected and
qualified. There are no family relationships among the persons described below.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists, as of November 22, 2005, the number of shares of
common stock of the Company beneficially owned by (i) each person or entity
known to us to be the beneficial owner of more than 5% of the outstanding common
stock; (ii) each of our officers and directors; and (iii) all of our officers
and directors as a group. Information relating to beneficial ownership of common
stock by our principal stockholders and management is based upon information
furnished by each person using "beneficial ownership" concepts under the rules
of the Securities and Exchange Commission. Under these rules, a person is deemed
to be a beneficial owner of a security if that person has or shares voting
power, which includes the power to vote or direct the voting of the security, or
investment power, which includes the power to vote or direct the voting of the
security. The person is also deemed to be a beneficial owner of any security of
which that person has a right to acquire beneficial ownership within 60 days.
Under the Securities and Exchange Commission rules, more than one person may be
deemed to be a beneficial owner of the same securities, and a person may be
deemed to be a beneficial owner of securities as to which he or she may not have
any pecuniary beneficial interest. Except as noted below, each person has sole
voting and investment power.
The percentages below are calculated based on 33,350,000 shares of common stock
which we have authorized for issuance. Unless otherwise indicated, the business
address of each such person is c/o Mazal Plant Pharmaceuticals, Inc., 43 West
33rd Street, New York, NY 10001.
- --------------------------------------------------------------------------------
OFFICERS, DIRECTORS NUMBER BENEFICIAL
AND 5% STOCKHOLDERS OF SHARES OWNERSHIP (%)
- --------------------------------------------------------------------------------
Advanced Plant Pharmaceuticals, Inc. 20,000,000(1)* 60%
- --------------------------------------------------------------------------------
Malcolm Jennings 3,800,000 11.4%
- --------------------------------------------------------------------------------
Sam Berkowitz 1,800,000(2)* 5.4%
- --------------------------------------------------------------------------------
Mechael Kanovksy 600,000(3)* 1.8%
- --------------------------------------------------------------------------------
Chaim J. Lieberman 1,800,000(4)* 5.4%
- --------------------------------------------------------------------------------
David Lieberman 1,800,000(5)* 5.4%
- --------------------------------------------------------------------------------
All directors and executive officers 2,400,000* 7.2%
as a group (2 persons)
- --------------------------------------------------------------------------------
22
- ----------
(1) Pursuant to the Share Exchange Agreement, dated June 6, 2005, among the
Company, Advanced Plant Pharmaceuticals, Inc., and James Wiegand, Advanced
Plant Pharmaceuticals, Inc. is entitled to a total of 20,000,000 shares of
our common stock as consideration for its sale to us of its 7,000,000
shares of Mazal Plant Pharmaceuticals, Inc.
(2) Mr. Berkowitz is entitled to receive 1,800,000 shares of our common stock
pursuant to the Employment Agreement, dated December 10, 2004, as amended
on August 1, 2005, among Mr. Berkowitz, the Company, and our subsidiary,
the Delaware Mazal, as compensation for his services rendered to the
Delaware Mazal.
(3) Dr. Kanovsky is entitled to receive additional shares of our common stock
pursuant to the Employment Agreement, dated December 10, 2004, as amended
on August 1, 2005, among Dr. Kanovsky, us, and our subsidiary, the
Delaware Mazal. Pursuant to such employment agreement, Dr. Kanovsky is
employed by the Delaware Mazal and is entitled to receive as partial
compensation 200,000 shares of our common stock for each three months he
is employed by the Delaware Mazal, up to a total of 600,000 shares of our
common stock.
(4) Chaim J. Lieberman is entitled to receive 1,800,000 shares of our common
stock in consideration for his services rendered to our subsidiary, the
Delaware Mazal, pursuant to an Employment Agreement, dated December 10,
2004, as amended on August 1, 2005, among Mr. Lieberman, us, and the
Delaware Mazal. Pursuant to such employment agreement, Mr. Lieberman is
also entitled to receive 500,000 shares of our common stock each time that
the Delaware Mazal receives an IND and 100,000 shares of our common stock
each time that the Delaware Mazal receives a patent.
(5) David Lieberman is entitled to receive 1,800,000 shares of our common
stock in consideration for his services rendered to our subsidiary, the
Delaware Mazal, pursuant to an Employment Agreement, dated December 10,
2004, as amended on August 1, 2005, among Mr. Lieberman, us, and the
Delaware Mazal.
DESCRIPTION OF SECURITIES
Our authorized capital stock Company consists of 100,000,000 shares of
common stock, $0.001 par value and 1,000,000 shares of non-voting preferred
stock, $0.001 par value. The following statements relating to the capital stock
are summaries and do not purport to be complete. Reference is made to the more
detailed provisions of, and such statements are qualified in their entirety by
reference to, our Articles of Incorporation and By-laws, copies of which are
filed as exhibits to this registration statement.
COMMON STOCK
Our Articles of Incorporation authorizes the issuance of 100,000,000
shares of common stock, $0.001 par value, of which 33,350,000 shares have been
issued. Holders of shares of common stock are entitled to one vote for each
share on all matters to be voted on by the stockholders. Holders of common stock
do not have cumulative voting rights. Holders of common stock are entitled to
share ratably in dividends, if any, as may be declared from time to time by the
23
Board of Directors in its discretion from funds legally available therefor. In
the event of a liquidation, dissolution or winding up of the Company, the
holders of common stock are entitled to share pro rata all assets remaining
after payment in full of all liabilities. All of the outstanding shares of
common stock are, and the shares of common stock offered by the Company pursuant
to this offering will be, when issued and delivered, fully paid and
non-assessable.
Holders of common stock have no preemptive rights to purchase our common
stock. There are no conversion or redemption rights or sinking fund provisions
with respect to our common stock.
PREFERRED STOCK
Our Articles of Incorporation authorizes the issuance of 1,000,000 shares
of non-voting preferred stock, $0.001 par value, of which no shares have been
issued. The Board of Directors is authorized to provide for the issuance of
shares of preferred stock in series and, by filing a certificate pursuant to the
applicable law of Nevada, to establish from time to time the number of shares to
be included in each such series, and to fix the designation, powers, preferences
and rights of the shares of each such series and the qualifications, limitations
or restrictions thereof without any further vote or action by the shareholder.
Any shares of preferred stock so issued would have priority over the common
stock with respect to dividend or liquidation rights. Any future issuance of
preferred stock may have the effect of delaying, deferring or preventing a
change in control of us without further action by the shareholder and may
adversely affect the voting and other rights of the holders of common stock. At
present, we have no plans to issue any preferred stock nor adopt any series,
preferences or other classification of preferred stock.
The issuance of shares of preferred stock, or the issuance of rights to
purchase such shares, could be used to discourage an unsolicited acquisition
proposal. For instance, the issuance of a series of preferred stock might impede
a business combination by including class voting rights that would enable the
holder to block such a transaction, or facilitate a business combination by
including voting rights that would provide a required percentage vote of the
stockholders. In addition, under certain circumstances, the issuance of
preferred stock could adversely affect the voting power of the holders of the
common stock. Although the Board of Directors is required to make any
determination to issue such stock based on its judgment as to the best interests
of the stockholders of the Company, the Board of Directors could act in a manner
that would discourage an acquisition attempt or other transaction that some, or
a majority, of the stockholders might believe to be in their best interests or
in which stockholders might receive a premium for their stock over the then
market price of such stock. The Board of Directors does not at present intend to
seek stockholder approval prior to any issuance of currently authorized stock,
unless otherwise required by law or stock exchange rules. The Company has no
present plans to issue any preferred stock.
WARRANTS
We have outstanding 1,200,000 warrants to purchase 1,200,000 shares of our
common stock, which are exercisable until two years after the date of their
issuance at $0.60 per share. These warrants were issued in a private placement.
Except for these warrants, there are no outstanding options, other warrants, or
rights to purchase any of the securities of the Company.
24
DIVIDENDS
The Company does not expect to pay dividends. Dividends, if any, will be
contingent upon the Company's revenues and earnings, if any, capital
requirements and financial conditions. The payment of dividends, if any, will be
within the discretion of the Company's Board of Directors. The Company presently
intends to retain all earnings, if any, for use in its business operations and
accordingly, the Board of Directors does not anticipate declaring any dividends
in the foreseeable future.
EXPERTS
Our financial statements for the period May 28, 2004 (inception) to December 31,
2004, appearing in this prospectus and this registration statement, and as
included in Form 8-K/A filed on September 2, 2005, have been audited by Meyler &
Company, LLC, independent auditors, as set forth in their report thereon, which
contains an explanatory paragraph with respect to the uncertainty surrounding
our ability to continue as a going concern, appearing elsewhere herein, and are
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
INTEREST 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 shares was employed on a contingency
basis or had, or is to receive, in connection with the offering, a substantial
interest, directly or indirectly, in the registrant or any of its parents or
subsidiaries. Nor was any such person connected with the registrant or any of
its parents, subsidiaries as a promoter, managing or principal underwriter,
voting trustee, director, officer or employee.
DISCLOSURE OF SEC POSITION OF
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our bylaws provide that directors and officers (and any person who acted at our
request as an officer or director) shall be indemnified by us to the fullest
extent authorized by the general corporate laws of Nevada, against all expenses
and liabilities reasonably incurred in connection with services for us or on our
behalf if:
o Such person acted in good faith with a view to our best interests;
and
o In the case of a monetary penalty in connection with a criminal or
administrative action or proceeding, such person had reasonable
grounds to believe that his or her conduct was lawful.
25
Insofar as indemnification for liabilities arising under the Securities Act
might be permitted to directors, officers or persons controlling our company
under the provisions described above, we have been informed that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
ORGANIZATION WITHIN THE LAST FIVE YEARS
On June 6, 2005, we issued to James B. Wiegand 500,000 shares of our common
stock in consideration for the services he rendered to us during his appointment
as Chief Executive Officer of the Company from 2003 to June 6, 2005.
On June 6, 2005, we issued to Max Gould 500,000 shares of our common stock in
consideration for his prior services to us.
Advanced Plant Pharmaceuticals, Inc., our majority shareholder, is subleasing to
us office space of approximately 2,500 square feet located at 43 West 33rd
Street, New York, NY 10001 at a monthly rate of $750 pursuant to a one-year
sublease.
On August 1, 2005, we authorized the issuance of 600,000 shares of our common
stock to Dr. Mechael Kanovsky, our Chief Executive Officer and a director, in
consideration for his services rendered to the Delaware Mazal, our subsidiary,
pursuant to an Employment Agreement, dated December 10, 2004, as amended on
August 1, 2005, among Dr. Kanovsky, us and the Delaware Mazal Pursuant to such
employment agreement, Dr. Kanovsky is employed by the Delaware Mazal and is
entitled to receive as partial compensation an additional 200,000 shares of our
common stock for each three months he is employed by the Delaware Mazal, up to a
total of 600,000 shares of our common stock. Dr. Kanovsky is also entitled to
receive 100,000 shares of our common stock each time that the Delaware Mazal
receives an IND or a patent. The shares were authorized to be issued under
Section 4(2) of the Securities Act of 1933, as amended, and/or Regulation D
promulgated by the Securities and Exchange Commission.
On August 1, 2005, we authorized the issuance of 1,800,000 shares of our common
stock to Sam Berkowitz, our Secretary, in consideration for his services
rendered to the Delaware Mazal, our subsidiary, pursuant to an Employment
Agreement, dated December 10, 2004, as amended on August 1, 2005, among Mr.
Berkowitz, us, and the Delaware Mazal. The shares were authorized to be issued
under Section 4(2) of the Securities Act of 1933, as amended, and/or Regulation
D promulgated by the Securities and Exchange Commission.
Other than as set forth above, none of the following parties has, during the
last two years, had any material interest, direct or indirect, in any
transaction with the Company or in any presently proposed transaction that has
or will materially affect us:
o any of our directors or officers;
o any person proposed as a nominee for election as a director;
26
o any person who beneficially owns, directly or indirectly, shares
carrying more than 10% of the voting rights attached to our
outstanding shares of common stock; or
o any relative or spouse of any of the foregoing persons who has the
same house as such person.
DESCRIPTION OF BUSINESS
We were organized under the laws of the State of Colorado on April 9, 1998. Our
only activity prior to June 6, 2005 had been attempts to locate and negotiate
with a business entity for the merger of that target company into us. Our
operations consisted solely of seeking merger or acquisition candidates, and we
had no business operations or revenues.
We were an insignificant participant among the firms which engaged in the
acquisition of business opportunities. There were many established venture
capital and financial concerns which had significantly greater financial and
personnel resources and technical expertise than the Company. In view of our
limited financial resources and limited management availability, we may have
been at a competitive disadvantage compared to our competitors.
On June 6, 2005, we underwent a change in control and substantially shifted the
focus of our business. As discussed above, on June 6, 2005, we acquired a
majority interest in Delaware Mazal pursuant to the Share Exchange Agreement.
For accounting purposes, such transaction is characterized as a reverse merger
between the Company and the Delaware Mazal Since such change in control, we,
through Delaware Mazal, engage in the development, manufacture, and distribution
of plant-based pharmaceutical drugs for the treatment of various human
illnesses.
On November 9, 2005, we changed our state of incorporation from Colorado to
Nevada by the merger of the Company with and into its wholly owned subsidiary,
Mazal Plant Pharmaceuticals, Inc., a Nevada corporation. As a result of such
merger, the Company's name was changed to Mazal Plant Pharmaceuticals, Inc. in
order to better reflect the Company's business operations.
Principal Products and their Markets
Our only product currently under development is MAHDL, a plant based drug whose
purpose is the improving of levels of cholesterol in the bloodstream and the
prevention of cardiovascular diseases associated with high cholesterol levels.
We are also considering developing plant-based drugs for the treatment of
diabetes and Alzheimer's disease. In addition, we intend to develop the
capabilities necessary to become a world supplier of pharmaceutical-grade
medicinal plants for the neutraceutical, homeopathic, and plant pharmaceutical
markets.
MAHDL is a drug consisting of various combinations of herbs. In order to
understand how MAHDL works, it is important to understand that cholesterol
levels can be improved by either directly lowering bloodstream levels of
low-density lipoprotein, also known as "LDL" or "bad" cholesterol, or by raising
bloodstream levels of high-density lipoprotein, also known as "HDL" or "good"
cholesterol. HDL extracts cholesterol particles from the cholesterol deposits
attached to arterial walls and transports them to the liver, where they are
disposed of by the body. HDL also interferes with the accumulation of LDL
27
cholesterol deposits on the arterial walls. The risk of atherosclerosis and
heart attacks in both men and women is strongly related to HDL levels. High HDL
levels are associated with a lower risk. The lowering of levels of triglycerides
in the bloodstream also has a positive effect on cholesterol levels. It is our
hope that our MAHDL drug balances cholesterol levels by improving the human
body's metabolic processes that naturally improve cholesterol levels by both
increasing HDL cholesterol levels and lowering triglyceride levels in the body.
There is a large potential market for a safe and effective treatment for
elevated cholesterol levels. Cardiovascular diseases are among the leading
causes of death worldwide, and high blood cholesterol (Hypercholesterolemia) is
one of the major risk factors for heart disease. Elevated LDL cholesterol in the
bloodstream collects on the walls of the arteries and causes the flow of blood
to the heart to be blocked.
Distribution Methods of the Products
We are currently searching for opportunities to enter into a joint venture with
a major pharmaceutical distribution company that already has the resources and
capabilities required to distribute our products throughout the United States
and internationally. Specifically, the Company is looking for a joint venturer
who will provide the following services:
o Complete the development of MAHDL;
o Submit the required documentation to the Food and Drug
Administration and secure approval for MAHDL;
o Support MAHDL with pre-launch, launch and ongoing marketing and
support activities commensurate with the sales potential; and
o Dedicate and manage a sales force of sufficient numbers to maximize
the international market potential for MAHDL
Such joint venturer can be either a branded pharmaceutical company (perhaps one
with a drug whose patent rights are running out shortly) or, alternatively, one
of the major pharmaceutical generic manufacturers looking for its own brand.
Competition
Currently, the most widely used drugs that reduce elevated LDL is a group of
drugs known as Statins. Statins include atorvastatin (Lipitor), rosuvastatin
(Crestor), simvastatin (Zocor), and pravastatin (Pravachol). However, we believe
that we may have a competitive advantage over Statins because Statins have
significant side effects, including abdominal pain, muscle inflammation and
liver abnormalities. In addition, although these drugs lower LDL levels
significantly, they do not appreciably affect HDL or triglyceride levels.
Niacin is the most widely used drug that is used for the purpose of raising HDL
levels. However, up to 88% of patients experience flushing or hot flashes as a
side effect of Niacin, and there are other side effects as well. Fibrates such
as Lopid are successful in lowering triglycerides.
28
In addition, there are legions of natural dietary supplements sold as
nutraceuticals that claim to lower cholesterol. These over-the-counter
supplements range from fish oil (omega-3 fatty acids) to garlic, and from
circumin (turmeric) and guggul (gum resin) to Chlorella (microalgae), cinnamon,
calcium citrate, and pantethine (vitamin B-6), amongst others. The clinical
effects of these dietary supplements are controversial, and for the most part
are undocumented and unproven.
Sources and Availability of Raw Materials; Names of Principal Suppliers
Active pharmaceutical ingredients and other materials and supplies that we use
in our operations are generally available and purchased from many different
foreign and domestic suppliers. Additionally, we maintain sufficient raw
materials inventory and are developing the capability to farm many of the plants
we use as raw materials. However, there is no guarantee that we will always have
timely and sufficient access to a critical raw material or finished product. A
prolonged interruption in the supply of a single-sourced active ingredient or
finished product could cause our financial position and results of operations to
be materially adversely affected.
Intellectual Property
We have secured a U.S. patent in a version of MAHDL known as Drug Formulation 1.
Such patent will expire in 2013. In March 2005, we filed a U.S. patent
application for another version of MAHDL, and such application is still pending.
There can be no assurance that the pending patent application will result in
issued patents, that patents, trademarks or trade names issued to us will not be
challenged or circumvented by competitors, or that such patents, trademarks or
trade names will be found to be valid or sufficiently broad to protect our
proprietary technology or to provide us with a competitive advantage.
Governmental Regulation
Our product is subject to extensive governmental regulation, including the
Federal Food, Drug, and Cosmetic Act, as amended, the Public Health Service Act,
also as amended, as well as other federal, state, and local statutes and
regulations. These laws, and similar laws outside the U.S., govern the clinical
and non-clinical testing, manufacture, safety, effectiveness, approval,
labeling, distribution, sale, import, export, storage, record keeping,
reporting, advertising and promotion of our products, if approved. Violations of
regulatory requirements at any stage may result in various adverse consequences,
including regulatory delay in approving or refusal to approve a product,
enforcement actions, including withdrawal of approval, labeling restrictions,
seizure of products, fines, injunctions and/or civil or criminal penalties. Any
product that we develop must receive all relevant regulatory approvals or
clearances before it may be marketed.
The regulatory process, which includes extensive pre-clinical testing and
clinical trials of each clinical candidate to study its safety and efficacy, is
uncertain, takes many years and requires the expenditure of substantial
resources. We cannot assure you that the clinical trials of our product
candidates under development will demonstrate the safety and efficacy of those
product candidates to the extent necessary to obtain regulatory approval.
29
FOOD AND DRUG ADMINISTRATION
Our product is subject to regulation by the Food and Drug Administration (the
"FDA") and other authorities. The activities required by the FDA before a
product such as MAHDL may be marketed in the United States are generally
performed in the following sequential steps:
1. Pre-clinical testing. This includes laboratory testing of our products
in animals to determine safety, efficacy and potential toxicity. Pre-clinical
studies must be conducted by laboratories that comply with FDA regulations
regarding good laboratory practice.
2. Submission to the FDA of an investigational new drug application
("IND"). The results of pre-clinical studies, together with manufacturing
information, analytical data and proposed clinical trial protocols, are
submitted to the FDA as part of an IND, which must become effective before the
clinical trials can begin. Once the IND is filed, the FDA has 30 days to review
it. The IND will automatically become effective 30 days after the FDA receives
it, unless the FDA indicates prior to the end of the 30-day period that the
proposed protocol raises concerns that must be resolved to the FDA's
satisfaction before the trials may proceed. If the FDA raises concerns, we may
be unable to resolve the proposed protocol to the FDA's approval in a timely
fashion, if at all.
3. Completion of clinical trials. Human clinical trials are necessary to
seek approval for a new drug or biologic and typically involve a three-phase
process. In phase I, small clinical trials are generally conducted to determine
the safety of the product. In phase II, clinical trials are generally conducted
to assess safety, acceptable dose, and gain preliminary evidence of the efficacy
of the product. In phase III, clinical trials are generally conducted to provide
sufficient data for the statistically valid proof of safety and efficacy.
Clinical trials must be conducted according to good clinical practices under
protocols that detail the trial's objectives, inclusion and exclusion criteria,
the parameters to be used to monitor safety and the efficacy criteria to be
evaluated, and informed consent must be obtained from all study subjects. Each
protocol must be submitted to the FDA as part of the IND. The FDA may impose a
clinical hold on an ongoing clinical trial if, for example, safety concerns
arise, in which case the study cannot recommence without FDA authorization under
terms sanctioned by the agency. In addition, before a clinical trial can be
initiated, each clinical site or hospital administering the product must have
the protocol reviewed and approved by an independent institutional review board
("IRB"). The independent IRB will consider, among other things, ethical factors
and the safety of human subjects. The independent IRB may require changes in a
protocol, which may delay initiation or completion of a study. Phase I, Phase II
or Phase III clinical trials may not be completed successfully within any
specific period of time, if at all, with respect to any of our potential
products. Furthermore, we, the FDA or an independent IRB may suspend a clinical
trial at any time for various reasons, including a finding that the healthy
individuals or the patients are being exposed to an unacceptable health risk.
4. Submission to the FDA of a New Drug Application ("NDA"). After
completion of clinical studies for a biologics product, a New Drug Application
("NDA") is submitted to the FDA for product marketing approval. No action can be
taken to market any new drug or biologic product in the United States until the
FDA has approved an appropriate marketing application.
30
5. FDA review and approval of the NDA before the product is commercially
sold or shipped. The results of pre-clinical studies and clinical trials and
manufacturing information are submitted to the FDA in the form of an NDA for
approval of the manufacture, marketing and commercial shipment of the product.
The FDA may take a number of actions after the NDA is filed, including but not
limited to, denying the NDA if applicable regulatory criteria are not satisfied,
requiring additional clinical testing or information; or requiring post-market
testing and surveillance to monitor the safety or efficacy of the product.
Adverse events that are reported after marketing approval can result in
additional limitations being placed on the product's use and, potentially,
withdrawal of the product from the market. Any adverse event, either before or
after marketing approval, can result in product liability claims against us.
An IND filed with the FDA with respect to MAHDL is presently effective. MAHDL
has been approved by the FDA for Phase I and Phase II clinical trials. We
estimate that Phase II clinical trials will take about 8 months to complete at a
cost of approximately $1,000,000.
MEDICAID AND MEDICARE
Medicaid, Medicare and other reimbursement legislation or programs govern
reimbursement levels and require all pharmaceutical manufacturers to rebate a
percentage of their revenues arising from Medicaid-reimbursed drug sales to
individual states.
ENVIRONMENT
We believe that our operations comply in all material respects with applicable
laws and regulations concerning the environment. While it is impossible to
predict accurately the future costs associated with environmental compliance and
potential remediation activities, compliance with environmental laws is not
expected to require significant capital expenditures and has not had, and is not
expected to have, a material adverse effect on our earnings or competitive
position.
PRODUCT LIABILITY
The sale of pharmaceutical products can expose the manufacturer of such products
to product liability claims by consumers. A product liability claim, if
successful and in excess of our insurance coverage, if any, could have a
material adverse effect on our financial condition.
EMPLOYEES
We have six part-time employees.
DESCRIPTION OF PROPERTY
We currently lease office space of approximately 2,500 square feet located at 43
West 33rd Street, New York, NY 10001 at a monthly rate of $750 pursuant to a
one-year sublease from Advanced Plant Pharmaceuticals, Inc., our majority
shareholder. We also lease office space of approximately 3,000 feet at Beit
Offer Building, 5 Nahum Hefzadi Street, Jerusalem, Israel pursuant to a one-year
lease having a monthly rate of $1,200. Prior to June 6, 2005, we used office
space in the home of our then President.
31
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operation.
From May 18, 2004 (inception), through December 31, 2004, the Company had no
operating revenues. Going forward, we intend to engage in the development and
sale of plant-based pharmaceutical drugs through the Delaware Mazal
Financial Condition and Results of Operation.
We had no operating revenues from May 18, 2004 (inception) through December 31,
2004. Total expenses during such period were $13,778. Such expenses consisted
primarily of salaries.
Liquidity and Capital Resources
We currently do not have sufficient resources to finance our operations. We need
to raise additional capital, and are currently attempting to raise funds through
the issuance of shares. Although we are confident that we will be able to raise
the capital necessary to fund our operations for the next 12 months, there is no
assurance that we will be able to obtain such financing in sufficient amounts or
on acceptable terms when needed, which could adversely affect our operating
results and prospects.
GOING CONCERN CONSIDERATION
As shown in the accompanying financial statements, we have incurred net losses
of $15,438 since inception, have no working capital, and a stockholders' deficit
of $12,765 at December 31, 2004. Management's plans include the raising of
capital through the equity markets to fund future operations, seeking additional
acquisitions, and the generating of revenue through its business. Failure to
raise adequate capital and generate adequate sales revenues could result in our
having to curtail or cease operations. Additionally, even if we do not raise
sufficient capital to support our operating expenses and generate adequate
revenues, there can be no assurances that the revenue will be sufficient to
enable us to develop business to a level where it will generate profits and cash
flows from operations. These matters raise substantial doubt about our ability
to continue as a going concern. However, the accompanying financial statements
have been prepared on a going concern basis, which contemplates the realization
of assets and satisfaction of liabilities in the normal course of business.
These financial statements do not include any adjustments relating to the
recovery of the recorded assets or the classification of the liabilities that
might be necessary should we be unable to continue as a going concern.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
32
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 6, 2005, we issued to James B. Wiegand 500,000 shares of our common
stock in consideration for the services he rendered to us during his appointment
as Chief Executive Officer of the Company from 2003 to June 6, 2005.
On June 6, 2005, we issued to Max Gould 500,000 shares of our common stock in
consideration for his prior services to us.
Advanced Plant Pharmaceuticals, Inc., our majority shareholder, is subleasing to
us office space of approximately 2,500 square feet located at 43 West 33rd
Street, New York, NY 10001 at a monthly rate of $750 pursuant to a one-year
sublease.
On August 1, 2005, we authorized the issuance of 600,000 shares of our common
stock to Dr. Mechael Kanovsky, our Chief Executive Officer and a director, in
consideration for his services rendered to the Delaware Mazal, our subsidiary,
pursuant to an Employment Agreement, dated December 10, 2004, as amended on
August 1, 2005, among Dr. Kanovsky, us and the Delaware Mazal Pursuant to such
employment agreement, Dr. Kanovsky is employed by the Delaware Mazal and is
entitled to receive as partial compensation an additional 200,000 shares of our
common stock for each three months he is employed by the Delaware Mazal, up to a
total of 600,000 shares of our common stock. Dr. Kanovsky is also entitled to
receive 100,000 shares of our common stock each time that the Delaware Mazal
receives an IND or a patent. The shares were authorized to be issued under
Section 4(2) of the Securities Act of 1933, as amended, and/or Regulation D
promulgated by the Securities and Exchange Commission.
On August 1, 2005, we authorized the issuance of 1,800,000 shares of our common
stock to Sam Berkowitz, our Secretary, in consideration for his services
rendered to the Delaware Mazal, our subsidiary, pursuant to an Employment
Agreement, dated December 10, 2004, as amended on August 1, 2005, among Mr.
Berkowitz, us, and the Delaware Mazal. The shares were authorized to be issued
under Section 4(2) of the Securities Act of 1933, as amended, and/or Regulation
D promulgated by the Securities and Exchange Commission.
Other than as set forth above, none of the following parties has, during the
last two years, had any material interest, direct or indirect, in any
transaction with the Company or in any presently proposed transaction that has
or will materially affect us:
o any of our directors or officers;
o any person proposed as a nominee for election as a director;
o any person who beneficially owns, directly or indirectly, shares
carrying more than 10% of the voting rights attached to our
outstanding shares of common stock; or
o any relative or spouse of any of the foregoing persons who has the
same house as such person.
33
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
We have submitted to Pink Sheets LLC an application for our common stock to be
traded on the Pink Sheets. As of November 22, 2005, such application is still
pending. The trading symbol assigned to us by the NASDAQ is AKDC, and we have
requested from NASDAQ that such symbol be changed to reflect the change in the
Company's name from Akid Corporation to Mazal Plant Pharmaceuticals, Inc.
HOLDERS
On November 22, 2005, there were approximately 58 holders of record of our
common stock.
DIVIDENDS
We have not declared or paid any cash dividends on our common stock nor do we
anticipate paying any in the foreseeable future. Furthermore, we expect to
retain any future earnings to finance our operations and expansion. The payment
of cash dividends in the future will be at the discretion of our Board of
Directors and will depend upon our earnings levels, capital requirements, any
restrictive loan covenants and other factors the Board considers relevant.
WARRANTS OR OPTIONS
We have outstanding 1,200,000 warrants to purchase 1,200,000 shares of our
common stock, which are exercisable until two years after the date of their
issuance at $0.60 per share. These warrants were issued in a private placement
to. Except for the foregoing warrants, no warrants, options, or other securities
convertible or exchangeable into equity securities were issued or outstanding as
of December 31, 2004 or as of November 22, 2005.
EQUITY COMPENSATION PLANS
We currently have no equity compensation plans.
RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED
SECURITIES
On June 6, 2005, upon the consummation of the transactions contemplated by the
Share Exchange Agreement, we became contractually obligated to issue 20,000,000
shares of common stock to Advanced Plant Pharmaceuticals, Inc., a Delaware
corporation. In consideration for such issuance, we acquired from Advanced Plant
Pharmaceuticals, Inc. its entire ownership interest in 7,000,000 shares of the
common stock of Delaware Mazal, which represented 68.5% of the issued and
outstanding shares of Delaware Mazal. The shares were issued under Section 4(2)
of the Securities Act of 1933, as amended, and/or Regulation D promulgated by
the Securities and Exchange Commission.
34
On June 6, 2005, we issued to one of our consultants 600,000 shares of our
common stock, as consideration for his services to us. We granted to the
consultant piggy-back registration rights with respect to 60,000 of his shares.
The shares were issued under Section 4(2) of the Securities Act of 1933, as
amended, and/or Regulation D promulgated by the Securities and Exchange
Commission.
On June 6, 2005, we issued to each of James B. Wiegand and Max Gould 500,000
shares of our common stock, as consideration for their services to us. We
granted to Mr. Wiegand and Mr. Gould piggy-back registration rights with respect
to 50,000 of each of their shares. The shares were issued under Section 4(2) of
the Securities Act of 1933, as amended, and/or Regulation D promulgated by the
Securities and Exchange Commission.
On June 30, 2005, we issued to Malcolm Jennings 3,800,000 shares of our common
stock. In consideration, Mr. Jenning's conveyed to us 1,900,000 shares of the
Delaware Mazal that he previously owned. The shares were issued under Regulation
S promulgated by the Securities and Exchange Commission.
On August 1, 2005, we authorized the issuance of 600,000 shares of our common
stock to Dr. Mechael Kanovsky, the Chief Executive Officer and our sole
director, in consideration for his services rendered to the Delaware Mazal, our
subsidiary. The shares were authorized to be issued under Section 4(2) of the
Securities Act of 1933, as amended, and/or Regulation D promulgated by the
Securities and Exchange Commission.
On August 1, 2005, we authorized the issuance of 1,800,000 shares of our common
stock to Sam Berkowitz, our Secretary, in consideration for his services
rendered to the Delaware Mazal, our subsidiary. The shares were authorized to be
issued under Section 4(2) of the Securities Act of 1933, as amended, and/or
Regulation D promulgated by the Securities and Exchange Commission.
On August 1, 2005, we authorized the issuance to Chaim J. Lieberman of 1,800,000
shares of our common stock in consideration for his services rendered to the
Delaware Mazal, our subsidiary. The shares were authorized to be issued under
Section 4(2) of the Securities Act of 1933, as amended, and/or Regulation D
promulgated by the Securities and Exchange Commission.
On August 1, 2005, we authorized the issuance to David Lieberman of 1,800,000
shares of our common stock in consideration for his services rendered to the
Delaware Mazal, our subsidiary. The shares were issued under Section 4(2) of the
Securities Act of 1933, as amended, and/or Regulation D promulgated by the
Securities and Exchange Commission.
On August 1, 2005, we issued to Leonard Cohen 120,000 shares of our common
stock. In consideration, Mr. Cohen conveyed to us 120,000 shares of Delaware
Mazal that he previously owned. We granted to Mr. Cohen piggy-back registration
rights with respect to 60,000 of his shares, meaning that we must include such
shares in a registration statement that it may file with the Securities and
Exchange Commission. The shares were issued under Regulation S promulgated by
the Securities and Exchange Commission.
35
On August 1, 2005, we issued to Halcyon SA 50,000 shares of our common stock. In
consideration, Halcyon SA conveyed to us 50,000 shares of the Delaware Mazal
that it previously owned. The shares were issued under Regulation S promulgated
by the Securities and Exchange Commission.
On September 13, 2005, the Company issued to Performance Profiler Quarterly
400,000 shares of its common stock in consideration for services rendered by it
in connection with the preparation and publication of an article relating to the
Company. The shares were issued under Section 4(2) of the Securities Act of
1933, as amended, and/or Regulation D promulgated by the Securities and Exchange
Commission.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
We made no purchases of our equity securities nor were any such purchases made
by any purchaser affiliated with us.
OUR TRANSFER AGENT
We have appointed Manhattan Stock Transfer, with offices at P.O. Box 756, Miller
Place, NY 11764, phone number, (631) 928-7655, facsimile: (631) 928-6171 as
transfer agent for our common shares. The transfer agent is responsible for all
record-keeping and administrative functions in connection with our common
shares.
EXECUTIVE COMPENSATION
The following table presents certain specific information regarding the
compensation of our Chief Executive Officer of the Company, during the last
three fiscal years. We have not paid any other executive officer in excess of
$100,000 (including salaries and benefits) during the years ended April 30,
2005, April 30, 2004 or April 30, 2003.
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation Awards
Securities
Name and Restricted Stock Underlying All Other
Principal Position Year Salary ($) Bonus ($) Awards ($) Options (#) Compensation ($)
- ------------------ ---- ---------- --------- ---------- ----------- ----------------
James B. Wiegand 2005 0 0 0 0 0
Chief Executive Officer 2004 0 0 0 0 0
2003 0 0 0 0 0
- ----------
(1) Mr. Wiegand was our Chief Executive Officer and a director from 2003
through June 6, 2005, when he resigned as a result of the change in
control of us. On June 6, 2005, Mr. Wiegand received 500,000 shares of our
common stock in consideration for services he previously rendered to us.
(2) On June 6, 2005, Mechael Kanovsky replaced Mr. Wiegand as our Chief
Executive Officer.
36
We did not grant any options to any employee or executive officer during the
period May 18, 2004 (inception) to December 31, 2004 or as of November 22, 2005.
There is an employment agreement between Dr. Mechael Kanovsky and the Delaware
Mazal and an employment agreement between Sam Berkowitz and Delaware Mazal.
Pursuant to the terms of the Employment Agreement, dated December 10, 2004, as
amended on August 1, 2005, among Mechael Kanovsky, us, and the Delaware Mazal,
Dr. Kanovsky was appointed as the President and Chief Science Officer of the
Delaware Mazal for 2 years commencing November 1, 2004. The base salary is
$48,000 per year. In addition, Dr. Kanovsky is entitled to receive 600,000
shares of our common stock, and he is also entitled to receive 200,000 shares of
our common stock for each three months he is employed by the Delaware Mazal, up
to a total of 600,000 shares. Upon the receipt of each IND, Dr. Kanovsky shall
receive an additional 100,000 shares of our common stock and upon the receipt of
the first IND, his annual base salary shall be increased to $66,000. For each
patent received by the Delaware Mazal, he shall receive an additional 100,000
shares of our common stock and if the Delaware Mazal obtains a minimum of $2
million in funding or enters into a joint venture arrangement, the annual base
salary shall increase to $83,400.
Pursuant to the terms of the Employment Agreement, dated December 10, 2004, as
amended on August 1, 2005, among Mr. Berkowitz, us, and the Delaware Mazal, Mr.
Berkowitz was appointed as the Secretary of the Delaware Mazal for 2 years
commencing January 2, 2005. The base salary is $36,000 per year. As additional
compensation, Mr. Berkowitz is entitled to be issued 1,800,000 shares of our
common stock.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
On August 12, 2005, we dismissed Cordovano and Honeck LLP (the "Former
Accountant") from serving as our principal independent accountants. On August
12, 2005, we retained Meyler & Co. (the "New Accountant") as our new principal
independent accountants. The decision to change accountants was recommended and
approved by our Board of Directors.
THE FORMER ACCOUNTANT
The reports of the Former Accountant on the financial statements for either of
the past two fiscal years contained no adverse opinion or disclaimer of opinion,
and were not qualified or modified as to audit scope, or accounting principles.
The reports have been modified as to uncertainty as a going concern. In
addition, during our two most recent fiscal years and through August 12, 2005,
there were no disagreements with the Former Accountant on any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedures, which disagreements, if not resolved to the satisfaction of
the Former Accountant, would have caused it to make reference to the subject
matter of the disagreements in connection with its reports. None of the
reportable events set forth in Item 304(a)(1)(iv)(B) of Regulation S-B occurred
within our two most recent fiscal years nor through August 12, 2005.
37
We have provided the Former Accountant with a copy of this disclosure and has
requested that the Former Accountant furnish it with a letter addressed to the
U.S. Securities and Exchange Commission ("SEC") stating whether it agrees with
the above statements, and if not, stating the respects in which it does not
agree. A copy of the letter from the Former Accountant addressed to the SEC,
dated August 12, 2005 is filed as Exhibit 16.1 to our Current Report on Form
8-K, dated August 12, 2005, filed on August 12, 2005.
THE NEW ACCOUNTANT
During our two most recent fiscal years and through August 12, 2005: (1) we did
not consult the New Accountant regarding either the application of accounting
principles to a specified transaction, either completed or proposed, or the type
of audit opinion that might be rendered on Registrant's financial statements;
(2) neither a written report nor oral advice was provided to the Registrant by
the New Accountant that they concluded was an important factor considered by the
Registrant in reaching a decision as to the accounting, auditing or financial
reporting issue; and (3) we did not consult the New Accountant regarding any
matter that was either the subject of a "disagreement" (as defined in Item
304(a)(1)(iv) of Regulation S-B and the related instructions) or any of the
reportable events set forth in Item 304(a)(1)(iv)(B) of Regulation S-B.
38
FINANCIAL STATEMENTS
AKID CORPORATION
AUDITED FINANCIAL STATEMENTS
FOR THE PERIOD
MAY 18, 2004 (INCEPTION) THROUGH DECEMBER 31, 2004
AND
UNAUDITED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2005
CONTENTS
- --------------------------------------------------------------------------------
Audited Financial Statements for the Period May 18, 2004 (Inception)
Through December 31, 2004 Page F 2
Report of Independent Registered Public Accounting Firm F 2
Consolidated Balance Sheet F 3
Consolidated Statement of Operations F 4
Consolidated Statement of Cash Flows F 5
Consolidated Statement of Stockholders' Deficit F 6
Notes to Consolidated Financial Statements F 7
Unaudited Financial Statements for the Period Ended September 30 2005 F 11
Consolidated Balance Sheet F 11
Consolidated Statement of Operations F 12
Consolidated Statement of Cash Flows F 13
Consolidated Statement of Stockholders' Deficit F 14
Notes to Consolidated Financial Statements
F-1
MEYLER & COMPANY, LLC
CERTIFIED PUBLIC ACCOUNTANTS
ONE ARIN PARK
1715 HIGHWAY 35
MIDDLETOWN, NJ 07748
Report of Independent Registered Public Accounting Firm
To the Board of Directors
AKID Corporation
We have audited the accompanying consolidated balance sheet of AKID Corporation
as of December 31, 2004 and the related consolidated statements of operations,
stockholders' deficit, and cash flows for the period May 18, 2004 (Inception) to
December 31, 2004. These consolidated 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 audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 2004 and the results of its operations and its cash flows for the
period May 18, 2004 (inception) to December 31, 2004 in conformity with U.S.
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note A to the
consolidated financial statements, the Company has incurred net losses of
$15,438 since inception, has no working capital, a stockholders' deficit of
$12,765 at December 31, 2004, and there are existing uncertain conditions the
Company faces relative to its ability to obtain capital and operate
successfully. These conditions raise substantial doubt about its ability to
continue as a going concern. Management's plans regarding those matters are also
described in Note A. The financial statements do not include any adjustments
that might result from the outcome of these uncertainties.
/s/ Meyler & Company, LLC
Middletown, NJ
August 17, 2005
F-2
AKID CORPORATION
CONSOLIDATED BALANCE SHEET
December 31, 2004
ASSETS
INTANGIBLE ASSETS $ 50,700
--------
Total Assets $ 50,700
========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accrued expenses $ 633
Accrued salaries 12,100
--------
Total Current Liabilities 12,733
LONG-TERM DEBT
Due to Advanced Plant Pharmaceutical, Inc. 50,732
STOCKHOLDERS' DEFICIT
Preferred stock, no par value; authorized
5,000,000 shares; none issued and outstanding
Common stock authorized 20,000,000
shares; no par value; issued and outstanding
20,000,000 shares 2,673
Accumulated deficit (15,438)
--------
Total Stockholders' Deficit (12,765)
--------
Total Liabilities and Stockholders' Deficit $ 50,700
========
See accompanying notes to financial statements.
F-3
AKID CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
For the Period May 18, 2004 (Inception) to December 31, 2004
COSTS AND EXPENSES
Operating expenses $ 13,466
Stock based compensation 312
------------
Total Costs and Expenses 13,778
------------
NET LOSS $ (13,778)
============
NET LOSS PER COMMON SHARE
(BASIC AND DILUTED)
$ (0.01)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 27,410,000
============
See accompanying notes to financial statements.
F-4
AKID CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Period May 18, 2004 (Inception) to December 31, 2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(13,778)
Adjustments to reconcile net loss to cash flows used
in operating activities:
Stock based compensation 312
Accrued expenses 633
Accrued salaries 12,100
--------
Net Cash Flows Used in Operating Activities (733)
--------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from Advanced Plant Pharmaceutical, Inc. 733
--------
Net Cash Flows provided by Financing Activities 733
--------
INCREASE (DECREASE) IN CASH
CASH, BEGINNING OF PERIOD
--------
CASH, END OF PERIOD $
========
SUPPLEMENTAL CASH FLOW INFORMATION:
Amount due to Advanced Plant Pharmaceutical, Inc.
for technology rights $ 50,000
========
Issuance of common stock for technology rights $ 700
========
See accompanying notes to financial statements.
F-5
AKID CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
For the Period May 18, 2004 (Inception) to December 31, 2004
Common Stock Additional Total
-------------------------- Paid in Accumulated Stockholders'
Shares Amount Capital Deficit Deficit
- --------------------------------------------------------------------------------------------------------------
Mazel Plant Pharmaceuticals, Inc. 10,130,000 $ 1,013 $ 1,013
----------- ----------- -----------
Total Mazel Plant Pharmaceuticals,
Inc. prior to reverse merger 10,130,000 1,013 1,013
Reverse Merger
Merger with AKID Corporation
Cancellation of Mazel Plant
Pharmaceuticals, Inc. common stock (10,130,000) (1,013) $ 1,013
Equity of AKID Corporation 1,230,000 2,673 25,840 $ (28,513)
Issuance of 20,000,000 shares
in exchange for 7,000,000 shares
of Mazel 20,000,000
Issuance of 6,180,000 shares in
exchange for 3,130,000 shares
of Mazel 6,180,000
Capitalization of AKID net loss (26,853) 26,853
Net loss for the period May 18, 2004
(inception) to December 31, 2004 (13,778) (13,778)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 2004 27,410,000 $ 2,673 $ $ (15,438) $ (12,765)
=========== =========== =========== =========== ===========
See accompanying notes to financial statements.
F-6
AKID CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Mazel Plant Pharmaceutical, Inc. (the "Company") has the technology
rights to develop, manufacture and distribute three products,
specifically, plant based compositions designed to treat elevated
cholesterol, leukemia and Alzheimer 's disease.
Reverse Merger
On June 6, 2005, AKID Corporation (hereafter referred to as "AKID")
entered into a stock exchange agreement with Advanced Plant
Pharmaceuticals, Inc. ("APPI") to acquire 7,000,000 shares of the
Company's common stock in exchange for 20,000,000 shares of AKID
common stock. AKID also acquired 3,130,000 shares of the company's
outstanding shares in exchange for 6,180,000 shares of its common
stock. In connection with the merger, the company became a wholly
owned subsidiary of AKID. Prior to the merger, AKID was a
non-operating "shell" corporation. Pursuant to Securities and
Exchange Commission rules, the merger of a private operating company
Mazel Plant Pharmaceutical, Inc. into a non-operating public shell
corporation, with nominal net assets, is considered a capital
transaction. At the time of the merger, the officers and directors of
AKID resigned and were replaced with the officers and directors of
the Company. For Financial Statement presentation, the merger has
been reflected in the Financial Statements as though it occurred on
December 31, 2004. The historical statements prior to December 31,
2004 are those of Mazel Plant Pharmaceutical, Inc. Since the merger
is a recapitalization and not a business combination, pro forma
information is not presented.
Going Concern
As shown in the accompanying financial statements, the Company has
incurred net losses of $15,438 since inception, has no working
capital, and a stockholders' deficit of $12,765 at December 31, 2004.
Management's plans include the raising of capital through the equity
markets to fund future operations, seeking additional acquisitions,
and the generating of revenue through its business. Failure to raise
adequate capital and generate adequate sales revenues could result in
the Company having to curtail or cease operations. Additionally, even
if the Company does raise sufficient capital to support its operating
expenses and generate adequate revenues, there can be no assurances
that the revenue will be sufficient to enable it to develop business
to a level where it will generate profits and cash flows from
operations. These matters raise substantial doubt about the Company's
ability to continue as a going concern. However, the accompanying
financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. These financial
statements do not include any adjustments relating to the recovery of
the recorded assets or the classification of the liabilities that
might be necessary should the Company be unable to continue as a
going concern.
Cash Equivalents
For purposes of reporting cash flows, cash equivalents include
investment instruments purchased with a maturity of three months or
less.
F-7
AKID CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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 reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Net Loss Per Common Share
The Company computes per share amounts in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share". SFAS No. 128 requires presentation of basic and diluted EPS.
Basic EPS is computed by dividing the income (loss) available to
common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS is based on the
weighted-average number of shares of common stock and common stock
equivalents outstanding during the period.
Consolidated Financial Statements
The consolidated financial statements include the Company and its
wholly owned subsidiary. All significant intercompany transactions
and balances have been eliminated in consolidation.
Stock-Based Compensation
SFAS No. 123, "Accounting for Stock-Based Compensation" prescribes
accounting and reporting standards for all stock-based compensation
plans, including employee stock options, restricted stock, employee
stock purchase plans and stock appreciation rights. SFAS No. 123
requires employee compensation expense to be recorded (1) using the
fair value method or (2) using the intrinsic value method as
prescribed by accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" ("APB 25") and related interpretations
with pro forma disclosure of what net income and earnings per share
would have been if the Company adopted the fair value method. The
Company accounts for employee stock based compensation in accordance
with the provisions of APB 25. For non-employee options and warrants,
the company uses the fair value method as prescribed in SFAS 123.
Business Combinations and Goodwill
In July 2001, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 141, "Business Combinations". SFAS No. 141 requires
the purchase method of accounting for business combinations initiated
after June 30, 2001 and eliminates the pooling-of-interests method.
In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets", which the Company adopted during 2004. SFAS No.
142 requires, among other things, the discontinuance of goodwill
amortization. In addition, the standard includes provisions for the
reclassification of certain existing recognized intangibles as
goodwill, reassessment of the useful lives of existing recognized
intangibles, reclassification of certain intangibles out of
previously reported goodwill and the identification of reporting
units for purposes of assessing potential future impairment of
goodwill.
F-8
AKID CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Business Combinations and Goodwill (Continued)
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". SFAS No. 144 changes
the accounting for long-lived assets to be held and used by
eliminating the requirement to allocate goodwill to long-lived assets
to be tested for impairment, by providing a probability weighted cash
flow estimation approach to deal with situations in which alternative
courses of action to recover the carrying amount of possible future
cash flows and by establishing a primary-asset approach to determine
the cash flow estimation period for a group of assets and liabilities
that represents the unit of accounting for long-lived assets to be
held and used. SFAS No. 144 changes the accounting for long-lived
assets to be disposed of other than by sale by requiring that the
depreciable life of a long-lived asset to be abandoned be revised to
reflect a shortened useful life and by requiring the impairment loss
to be recognized at the date a long-lived asset is exchanged for a
similar productive asset or distributed to owners in a spin-off if
the carrying amount of the asset exceeds its fair value. SFAS No 144
changes the accounting for long-lived assets to be disposed of by
sale by requiring that discontinued operations no longer be
recognized at a net realizable value basis (but at the lower of
carrying amount or fair value less costs to sell), by eliminating the
recognition of future operating losses of discontinued components
before they occur, and by broadening the presentation of discontinued
operations in the income statement to include a component of an
entity rather than a segment of a business. A component of an entity
comprises operations and cash flows that can be clearly distinguished
operationally, and for financial reporting purposes, from the rest of
the entity.
NOTE B - TECHNOLOGY RIGHTS
The technology rights include the rights to develop, manufacture, and
distribute plant based compositions designed to treat elevated
cholesterol, leukemia, and Alzheimer's disease. The Company acquired
these rights from Advanced Plant Pharmaceuticals, Inc. (hereafter
referred to as "APPI") for stock and a note payable aggregating
$50,700. APPI is deemed to be an affiliate of the Company.
NOTE C - RELATED PARTY TRANSACTIONS
The Company is indebted to Advanced Plant Pharmaceuticals, Inc. for
$50,732 for the technology rights as discussed in Note B to the
Financial Statements. The advances are non-interest bearing and have
no definitive repayment dates.
NOTE D - INCOME TAXES
The Company has adopted Financial Accounting Statement SFAS No. 109,
Accounting for Income Taxes. Under this method, the Company
recognizes a deferred tax liability or asset for temporary
differences between the tax basis of an asset or liability and the
related amount reported on the financial statements. The principal
types of differences, which are measured at the current tax rates,
are net operating loss carry forwards. At December 31, 2004, these
differences resulted in a deferred tax asset of approximately $2,100.
SFAS No. 109 requires the establishment of a valuation allowance to
reflect the likelihood of realization of deferred tax assets. Since
realization is not assured, the Company has recorded a valuation
allowance for the entire deferred tax asset, and the accompanying
financial statements do not reflect any net asset for deferred taxes
at December 31, 2004.
F-9
AKID CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
NOTE D - INCOME TAXES (CONTINUED)
The Company's net operating loss carry forwards amounted to
approximately $14,000 at December 31, 2004, which will expire through
2024.
NOTE E - COMMITMENTS AND CONTINGENCIES
In December 2004, the Company entered into five different employment
contracts, three of which expire in 2006 and two which expire in 2007
and 2009. The contracts call for minimum salaries of $182,400 with
escalations and issuances of stock for employee achievements.
NOTE F - STOCKHOLDERS' EQUITY
As discussed in the Reverse Merger (see Note A to the Financial
Statements), the exchange of Mazel shares for AKID, caused the
Company to exceed the authorized shares. For Financial Statement
purposes, the Financial Statements have been prepared as though they
were issued.
NOTE G - SUBSEQUENT EVENTS
In March 2005, the Company issued 50,000 shares of its common stock
to an employee for achievements reached. The shares were valued at
.0001 per share.
In April 2005, the Company sold 50,000 shares of its common stock
under a private placement at $0.40 per share.
In April 2005, the Company issued 90,000 shares of its common stock
to consultants for services rendered. The shares were valued at
$0.065 per share and will be recorded as stock based compensation.
In June 2005, the Company issued 3,800,000 shares of its common stock
under a private placement. The shares were sold at $0.065 per share.
In June 2005, the Company issued 1,600,000 shares of its common stock
to consultants for services rendered in connection with the reverse
merger. The shares have registration rights. The shares are being
valued at $0.065 per share and will be recorded as stock based
compensation.
F-10
AKID CORPORATION
UNAUDITED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED SEPTEMBER 30, 2005
AKID CORPORATION
(A Development Stage Corporation)
CONSOLIDATED BALANCE SHEET
September 30, December 31,
2005 2004
----------- -----------
ASSETS
CURRENT ASSETS
Cash $ 300
Due from affiliated company 440
Prepaid consulting fees 5,000
---------
Total Current Assets 5,740
OTHER ASSETS - TECHNOLOGY RIGHTS 50,700 $ 50,700
--------- ---------
Total Assets $ 56,440 $ 50,700
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Bank overdraft $ 458
Advance from individual 51,625
Loans from officers and directors 18,550
Due to affiliated company 50,732
Accrued expenses 76,042 633
Accrued salaries to officers and directors 73,500 12,100
--------- ---------
Total Current Liabilities 220,175 63,465
STOCKHOLDERS' DEFICIT
Preferred stock, no par value; authorized
5,000,000 shares; none issued and outstanding
Common stock authorized 20,000,000
shares; no par value; issued and outstanding
20,000,000 shares 333,778 2,673
Accumulated deficit (497,513) (15,438)
--------- ---------
Total Stockholders' Deficit (163,735) (12,765)
--------- ---------
Total Liabilities and Stockholders' Equity (Deficit) $ 56,440 $ 50,700
========= =========
See accompanying notes to financial statements.
F-11
AKID CORPORATION
(A Development Stage Corporation)
CONSOLIDATED STATEMENT OF OPERATIONS
For the Period
For the Three For the Nine May 18, 2004
Months Ended Months Ended (Inception) to
September 30, September 30, September 30,
2005 2005 2005
------------ ------------ ------------
COSTS AND EXPENSES
Operating expenses $ 208,437 $ 420,969 $ 436,096
Stock based compensation 55,250 61,105 61,417
------------ ------------ ------------
Total Costs and Expenses 263,687 482,074 497,513
------------ ------------ ------------
NET LOSS $ (263,687) $ (482,074) $ (497,513)
============ ============ ============
NET LOSS PER COMMON SHARE
(BASIC AND DILUTED) $ (0.01) $ (0.02) $ (0.02)
============ ============ ============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 31,477,223 31,401,728
============ ============
Note: The Company had no operations for the three and nine months ended
September 30, 2004.
See accompanying notes to financial statements.
F-12
AKID CORPORATION
(A Development Stage Corporation)
CONSOLIDATED STATEMENT OF CASH FLOWS
For the
Period
For the Nine May 18, 2004
Months Ended (Inception) to
September 30, September 30,
2005 2005
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(482,074) $(497,513)
Adjustments to reconcile net loss to cash flows used
in operating activities:
Merger capitalization adjustment 1,793
Stock based compensation 61,105 61,417
Increase in prepaid consulting fees (5,000) (5,000)
Due from affiliated company (net) (51,173) (51,172)
Increase in accrued expenses 75,409 76,042
Increase in accrued salaries to officer and directors 61,400 73,500
--------- ---------
Net Cash Flows Used in Operating Activities (340,333) (340,933)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Bank overdraft 458 458
Proceeds from the sale of common stock 270,000 270,000
Loan from individual 51,625 51,625
Loans from officer and directors 18,550 18,550
--------- ---------
Net Cash Flows provided by Financing Activities 340,633 340,633
--------- ---------
INCREASE (DECREASE) IN CASH 300 300
CASH, BEGINNING OF PERIOD
--------- ---------
CASH, END OF PERIOD $ 300 $ 300
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Amount due to Advanced Plant Pharmaceutical, Inc.
for technology rights $ 50,000
=========
Issuance of common stock for technology rights $ 700
=========
See accompanying notes to financial statements.
F-13
AKID CORPORATION
(A Development Stage Corporation)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE A - CONDENSED FINANCIAL STATEMENTS
In the opinion of the Company, the accompanying unaudited condensed
financial statements include all adjustments (consisting only of normal
recurring accruals) which are necessary for a fair presentation of the
results for the periods presented. Certain information and footnote
disclosure, normally included in the financial statements prepared in
accordance with generally accepted accounting principles, have been
condensed and omitted. The results of operations for the three and nine
months ended September 30, 2005 are not indicative of the results of
operations for the year ended December 31, 2005. The condensed
financial statements should be read in conjunction with the Company's
financial statements included in its Form 8 K filed on September 16,
2005.
NOTE B - GOING CONCERN
As shown in the accompanying financial statements, the Company has
incurred net losses of $497,513 since inception and has a negative
working capital of $214,435 at September 30, 2005. Management's plans
include the raising of capital through the equity markets to fund
future operations, seeking additional acquisitions, and the generating
of revenue through its business. Failure to raise adequate capital and
generate adequate sales revenues could result in the Company having to
curtail or cease operations. Additionally, even if the Company does
raise sufficient capital to support its operating expenses and generate
adequate revenues, there can be no assurances that the revenue will be
sufficient to enable it to develop business to a level where it will
generate profits and cash flows from operations. These matters raise
substantial doubt about the Company's ability to continue as a going
concern. However, the accompanying financial statements have been
prepared on a going concern basis, which contemplates the realization
of assets and satisfaction of liabilities in the normal course of
business. These financial statements do not include any adjustments
relating to the recovery of the recorded assets or the classification
of the liabilities that might be necessary should the Company be unable
to continue as a going concern.
NOTE C - RELATED PARTY TRANSACTIONS
The officers, which are shareholders of the Company, have employment
contracts with the Company. For the three and six months ended June 30,
2005, the officers were paid $148,850 and were owed $23,500.
An affiliated company Advanced Plant Pharmaceuticals, Inc. (a major
shareholder) originally transferred technology rights to the Company
for $50,700. During the three months ended June 30, 2005, the Company
paid Advanced Plant Pharmaceuticals, Inc. $34,422. Advanced Plant
Pharmaceuticals, Inc., additionally, charges the company $750 per month
for rent.
NOTE D - LOAN FROM INDIVIDUAL
The Company borrowed $101,625 from two individuals. One loan is
non-interest bearing and one accrues interest at 10% per annum. The
loans are unsecured with no specific repayment dates.
NOTE E - STOCKHOLDERS' EQUITY
During the quarter ended June 30, 2005, the Company authorized for
issuance 140,000 shares of its common stock to consultants for services
rendered. The shares were valued at $0.0418 per share. Accordingly,
stock based compensation in the amount of $5,855 was recorded.
F-14
AKID CORPORATION
(A Development Stage Corporation)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE E - STOCKHOLDERS' EQUITY (CONTINUED)
During the quarter ended June 30, 2005, the Company sold 50,000 shares
of common stock for cash at $0.40 per share aggregating $20,000.
During the quarter ended June 30, 2005, the Company sold 3,800,000
shares of common stock for cash at $0.658 per share aggregating
$250,000.
At June 30, 2005, the Company's authorized capital stock for issuance
was 20,000,000 shares. Had all the shares authorized to be issued been
issued, the Company would have exceeded it authorization by 11,400,000
shares. See Subsequent Events Note.
In September 2005, the Company authorized issuance of 850,000 shares of
its common stock to consultants at $0.065. Accordingly, stock based
compensation in the third quarter 2005 will be recorded amounting to
$55,250.
NOTE F - SUBSEQUENT EVENTS
On September 15, 2005, a proxy statement was approved whereby the
shareholders approved the following: (1) the reincorporation of the
Company under the laws of the State of Nevada, (2) an increase in the
authorized common stock from 20,000,000 to 100,000,000, (3) the
authorization of a par value of $0.001 per share for common stock, and
(4) the authorization of 1,000,000 shares of preferred stock at a par
value of $0.001 per share. In November 2005, the Certificate of
Incorporation was filed.
F-15
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Nevada law provides for discretionary indemnification 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 either: (i) by the stockholders;
(ii) by the board of directors by majority vote of a quorum consisting of
directors who were not parties to the action, suit or proceeding; (iii) if a
majority vote of a quorum consisting of directors who were not parties to the
actions, suit or proceeding so orders, by independent legal counsel in a written
opinion; or (iv) 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. 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 actions, 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 do not affect any
right to advancement of expenses to which corporate personnel other than
directors or officers may be entitled under any contract or otherwise by law.
The indemnification and advancement of expenses authorized in or ordered by a
court pursuant to Nevada law 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 or her
official capacity or an action in another capacity while holding office, except
that indemnification, unless ordered by a court or for the advancement of
expenses, may not be made to or on behalf of any director or officer if his or
her acts or omissions involved intentional misconduct, fraud or a knowing
violation of the law and were material to the cause of action. In addition,
indemnification 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.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection with the issuance and
distribution of the securities being registered hereby. All such expenses will
be borne by the registrant; none shall be borne by any selling stockholders.
Securities and Exchange
Commission registration fee........................... $ 339.33
Legal fees and expenses (1)........................... 32,000.00
Accounting fees and expenses (1)...................... 6,500.00
Miscellaneous (1)..................................... 2,500.00
-----------------------
Total (1)............................................. $ 41,339.33
=======================
- ----------
(1) Estimated.
II-1
RECENT SALES OF UNREGISTERED SECURITIES
On June 6, 2005, upon the consummation of the transactions contemplated by the
Share Exchange Agreement, we became contractually obligated to issue 20,000,000
shares of common stock to Advanced Plant Pharmaceuticals, Inc., a Delaware
corporation. In consideration for such issuance, we acquired from Advanced Plant
Pharmaceuticals, Inc. its entire ownership interest in 7,000,000 shares of the
common stock of the Delaware Mazal, which represented 68.5% of the issued and
outstanding shares of the Delaware Mazal. The shares were issued under Section
4(2) of the Securities Act of 1933, as amended, and/or Regulation D promulgated
by the Securities and Exchange Commission.
On June 6, 2005, we issued to one of our consultants 600,000 shares of our
common stock, as consideration for his services to us. We granted to the
consultant piggy-back registration rights with respect to 60,000 of his shares.
The shares were issued under Section 4(2) of the Securities Act of 1933, as
amended, and/or Regulation D promulgated by the Securities and Exchange
Commission.
On June 6, 2005, we issued to each of James B. Wiegand and Max Gould 500,000
shares of our common stock, as consideration for their services to us. We
granted to Mr. Wiegand and Mr. Gould piggy-back registration rights with respect
to 50,000 of each of their shares. The shares were issued under Section 4(2) of
the Securities Act of 1933, as amended, and/or Regulation D promulgated by the
Securities and Exchange Commission.
On June 30, 2005, we issued to Malcolm Jennings 3,800,000 shares of our common
stock. In consideration, Mr. Jenning's conveyed to us 1,900,000 shares of the
Delaware Mazal that he previously owned. The shares were issued under Regulation
S promulgated by the Securities and Exchange Commission.
On August 1, 2005, we authorized the issuance of 600,000 shares of our common
stock to Dr. Mechael Kanovsky, the Chief Executive Officer and our sole
director, in consideration for his services rendered to the Delaware Mazal, our
subsidiary. The shares were authorized to be issued under Section 4(2) of the
Securities Act of 1933, as amended, and/or Regulation D promulgated by the
Securities and Exchange Commission.
On August 1, 2005, we authorized the issuance of 1,800,000 shares of our common
stock to Sam Berkowitz, our Secretary, in consideration for his services
rendered to the Delaware Mazal, our subsidiary. The shares were authorized to be
issued under Section 4(2) of the Securities Act of 1933, as amended, and/or
Regulation D promulgated by the Securities and Exchange Commission.
On August 1, 2005, we authorized the issuance to Chaim J. Lieberman of 1,800,000
shares of our common stock in consideration for his services rendered to the
Delaware Mazal, our subsidiary. The shares were authorized to be issued under
Section 4(2) of the Securities Act of 1933, as amended, and/or Regulation D
promulgated by the Securities and Exchange Commission.
On August 1, 2005, we authorized the issuance to David Lieberman of 1,800,000
shares of our common stock in consideration for his services rendered to the
Delaware Mazal, our subsidiary. The shares were issued under Section 4(2) of the
Securities Act of 1933, as amended, and/or Regulation D promulgated by the
Securities and Exchange Commission.
II-2
On August 1, 2005, we issued to Leonard Cohen 120,000 shares of our common
stock. In consideration, Mr. Cohen conveyed to us 120,000 shares of the Delaware
Mazal that he previously owned. We granted to Mr. Cohen piggy-back registration
rights with respect to 60,000 of his shares, meaning that we must include such
shares in a registration statement that it may file with the Securities and
Exchange Commission. The shares were issued under Regulation S promulgated by
the Securities and Exchange Commission.
On August 1, 2005, we issued to Halcyon SA 50,000 shares of our common stock. In
consideration, Halcyon SA conveyed to us 50,000 shares of the Delaware Mazal
that it previously owned. The shares were issued under Regulation S promulgated
by the Securities and Exchange Commission.
EXHIBITS AND FINANCIAL STATEMENTS
(a) Exhibits:
The following exhibits are filed as part of this registration statement:
EXHIBIT
NUMBER DESCRIPTION WHERE FOUND
- ------ ------------------------------------------ ---------------------------------------------------
3.1 Articles of Incorporation Filed herewith.
3.2 By-Laws Filed herewith.
4.1 Warrant Filed herewith.
5.1 Opinion regarding the legality of the To be filed with an amendment to this Form SB-2.
securities being registered
10.1 Share Exchange Agreement, dated May Previously filed with our Current Report on Form
2005, among the Company, Advanced 8-K, dated June 6, 2005, filed with the SEC on June
Plant Pharmaceuticals, Inc., and 9, 2005 and incorporated herein by reference.
James B. Wiegand
10.2 Employment Agreement, dated Previously filed with our Annual Report on Form
December 10, 2004, as amended on 10-KSB for the fiscal year ended April 30, 2005,
August 1, 2005, among Mechael filed with the SEC on August 11, 2005 and
Kanovsky, the Company, and Delaware incorporated herein by reference.
Mazal
10.3 Employment Agreement, dated Previously filed with our Annual Report on Form
December 10, 2004, as amended on 10-KSB for the fiscal year ended April 30, 2005,
August 1, 2005, among Sam filed with the SEC on August 11, 2005 and
Berkowitz, the Company, and incorporated herein by reference.
Delaware Mazal
10.4 Employment Agreement, dated Filed herewith.
December 10, 2004, as amended on
August 1, 2005, among Chaim J.
Lieberman, the Company, and
Delaware Mazal
II-3
EXHIBIT
NUMBER DESCRIPTION WHERE FOUND
- ------ ------------------------------------------ ---------------------------------------------------
10.5 Employment Agreement, dated Filed herewith.
December 10, 2004, as amended on
August 1, 2005, among David
Lieberman, the Company, and
Delaware Mazal
10.6 Share Exchange Agreement, dated June Filed herewith.
30, 2005, between the Company and
Malcolm Jennings
10.7 Share Exchange Agreement, dated Filed herewith.
August 1, 2005, between the Company
and Leonard Cohen
10.8 Share Exchange Agreement, dated Filed herewith.
August 1, 2005, between the Company
and Halcyon SA
10.9 Letter Agreement, dated May 11, 2005, Previously filed with our Current Report on Form
between Delaware Mazal and Corporate 8-K, dated June 6, 2005, filed with the SEC on
Management Services, Inc. June 9, 2005 and incorporated herein by reference.
10.10 Lock Up Letters, dated May 2005, Previously filed with our Current Report on Form
issued by Corporate Management 8-K, dated June 6, 2005, filed with the SEC on June
Services, Inc., James B. Wiegand, and 9, 2005 and incorporated herein by reference.
Max Gould
21.1 Subsidiaries Filed herewith.
23.1 Consent of Meyler & Co. Filed herewith.
23.2 Consent of ______________ (included To be filed with an Amendment to this Form SB-2
in Exhibit 5.1).
II-4
UNDERTAKINGS
(A) 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 to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information set forth in the registration statement; and
(iii) Include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering therein, 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 which remain unsold at the
termination of the offering.
(B) Undertaking Required by Regulation S-B, Item 512(e).
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or controlling persons
pursuant to the foregoing provisions, or otherwise, the Registrant has 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 the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel that the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue. (C) Undertaking Required by Regulation S-B, Item 512(f)
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act of 1934 that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be deemed
to be the initial bona fide offering thereof.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 23rd day of November, 2005.
MAZAL PLANT PHARMACEUTICALS, INC.
/s/Mechael Kanovsky
- -----------------------------------
Mechael Kanovsky
Chief Executive Officer
(principal executive officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Mechael Kanovsky and Sam Berkowitz, and each or either
of them, his or her true and lawful attorneys-in-fact, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities to sign any and all amendments (including
post-effective amendments) to this registration statement and to sign a
registration statement pursuant to Section 462(b) of the Securities Act of 1933,
and to file the same with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-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
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact or his
substitute or substitutes, 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/Mechael Kanovsky Chief Executive Officer and November 23, 2005
- --------------------------- Director (principal executive
Mechael Kanovsky officer and principal financial
and accounting officer)
/s/Sam Berkowitz Secretary November 23, 2005
- ---------------------------
Sam Berkowitz
II-6