As filed with the Securities and Exchange Commission on April 11, 2006
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 (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification No.)
organization) Code Number)
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, Suite 405
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, Suite 405
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
AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES REGISTERED (1) OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED PER SHARE PRICE REGISTRATION FEE
---------------- ------------------- -------------------- -------------------
Common Shares, $0.001 par value 10,000,000(2) $ 0.45 $ 4,500,000 $ 414
- ------------------------------------ ---------------- ------------------- -------------------- -------------------
Common Shares, $0.001 par value 7,429,500(3) $ 0.85 $ 6,315,075(4) $ 581
- ------------------------------------ ---------------- ------------------- -------------------- -------------------
Common Shares, $0.001 par value 1,000,000(5) $ 500,000(6) $ 46
- ------------------------------------ ---------------- ------------------- -------------------- -------------------
Total.......................... 18,429,500 11,315,075 $ 1041
- ------------------------------------ ---------------- ------------------- -------------------- -------------------
(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) Represents shares of common stock offered directly to the public by us.
(3) Represents shares of common stock being registered by selling security
holders.
(4) Stated for the purpose of calculating the amount of the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933. Such price has been
computed based on the average of the high and low sales prices on the Pink
Sheets for ordinary shares of Mazal within five business days of filing.
(5) Represents resale of shares of common stock issuable in connection with the
exercise of the warrant. The warrant entitles the holder to purchase one share
of common stock at any time until October 30, 2008 at an exercise price of $0.50
per share.
(6) Stated for the purpose of calculating the amount of the registration fee
pursuant to Rule 457(g)(1) under the Securities Act of 1933. Such price has been
computed based on the warrant exercise price of $0.50 per share.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED __________, 2006
The Registrant hereby amends this Registration Statement on such dates as may be
necessary to delay its effective date until the Registrant files a further
amendment which specifically states that this Registration Statement will
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until this Registration Statement becomes effective on such date
as the Commission, acting pursuant to Section 8(a), may determine.
2
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.
10,000,000 Shares of Common Stock
7,429,500 Selling Stockholders Shares of Common Stock
1,000,000 Shares of Common Stock issuable in
connection with the exercise of a Warrant
The prospectus relates to: (1) the sale by us of up to 10,000,000 shares of
common stock at a purchase price of $0.45 per share (Offering") and (2) to the
registration for resale by certain selling security holders of the Company of up
to 8,429,500 shares of common stock in connection with the registration for
resale of (a) up to 7,429,500 shares of our common stock that were issued in
various transactions exempt from registration under the Securities Act of 1933
("Act") and (b) the registration for resale of up to 1,000,000 shares of our
common stock which may be issued upon exercise of a warrant that was issued in a
transaction exempt from registration.
This Offering is conditioned upon our raising at least $2,000,000. Until a
minimum of $2,000,000 is raised by us by selling our common stock offered in
this prospectus (the "Minimum Offering"), all payments for shares will be
deposited into an escrow account at Bank Hapoalim New York. If $2,000,000 is not
raised in this Offering, all payments deposited in the escrow account will be
promptly refunded in full, without interest and without any deduction for
expenses. Once $2,000,000 is raised in this Offering, all funds held in escrow
will be released to us and we will continue to sell shares up to the maximum
amount of 10,000,000 shares.
Upon the effectiveness of this prospectus:
The selling security holders may offer to resell shares of our common stock
being registered in this prospectus from time to time at prevailing market
prices at the time of sale .
The trading symbol assigned to us by the Pink Sheets is MZPP.PK
The securities offered in this prospectus involve a high degree of risk. See
"Risk Factors" beginning on page 5 of this prospectus to read about factors you
should consider before buying shares of our common stock.
Neither the Securities Exchange Commission nor any state securities commission
has approved or disapproved of these securities or determined whether this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is _______, 2006
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 12
USE OF PROCEEEDS 13
DETERMINATION OF OFFERING PRICE 13
SELLING SECURITY HOLDERS 13
PLAN OF DISTRIBUTION 16
LEGAL PROCEEDINGS 22
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS 22
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT 24
DESCRIPTION OF SECURITIES 25
EXPERTS 27
INTEREST OF NAMED EXPERTS AND COUNSEL 27
DISCLOSURE OF COMMISSION POSITION OF
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES 27
ORGANIZATION WITH THE LAST FIVE YEARS 28
DESCRIPTION OF BUSINESS 29
DESCRIPTION OF PROPERTY 36
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OR OPERATION 36
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 38
MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS 39
EXECUTIVE COMPENSATION 43
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE 44
FINANCIAL STATEMENTS F-1
As used in this prospectus, the terms "we", "us", "our" and "Mazal" 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
General
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. Our
principal executive office is located at 43 West 33rd Street, Suite 405, New
York, NY 10001, and our telephone number is (212) 695-3334.
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., Akid Corporation, 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 our common
stock which represented 94.21 % of our issued and outstanding 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 Delaware Mazal and
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 all of the issued and outstanding shares of common
stock of Delaware Mazal. 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 wholly owned subsidiary, the Delaware Mazal. Our
only product currently under development is MAHDL-01, a plant based drug whose
purpose is the improving of levels of cholesterol in the bloodstream and the
prevention of cardiovascular diseases associated with improper cholesterol
levels.
On April 8, 2005, the FDA consented to the Investigational New Drug application
(IND) that Mazal submitted for the Phase I/II clinical trials of MAHDL-01 (IND
#72,040). Mazal is currently undergoing negotiations with several Clinical
Research Organization (CROs) and medical facilities to conduct the Phase I/II
trials.
On November 9, 2005, we changed our state of incorporation from Colorado to
Nevada by the merger of Mazal 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, our name was changed to Mazal Plant Pharmaceuticals,
Inc., which is identical to the company name of the Delaware Mazal, in order to
better reflect our business operations.
Number of Shares Being Offered
3
The prospectus relates to:
o The sale by us to the public of up to 10,000,000 shares of common stock
at a price of $0.45 per share. We will offer the shares directly to the public
through our employees, with the assistance of European American Securities
Inc.(EASi), a broker registered with the NASD. Our employees will not receive
any commissions in connection with the offer and sale of the shares under this
prospectus, however we will pay selling commissions of 10% to EASi for its
assistance in this Offering.
o The registration by certain of our selling security holders of up to
8,429,500 common shares comprised of the following: (a) up to 7,429,500 shares
of our common stock that were issued in various transactions exempt from
registration under the Securities Act of 1933 and (b) up to 1,000,000 shares of
our common stock which may be issued upon exercise of a warrant that was issued
in a transaction exempt from registration. The selling security holders plan to
sell these shares from time to time in market transactions at prevailing market
prices.
Number of Common Shares Outstanding
We have 35,081,000 shares of common stock outstanding as of January 16, 2006.
Use of Proceeds
We will receive proceeds from our sale of shares to the public under this
prospectus, however, 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 resale of the warrant if and to the
extent that the warrant is exercised. 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-01 that must be conducted in order for MAHDL-01 to be
approved by the United States Food and Drug Administration and any remaining
amounts will be used as working capital.
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. On June 6, 2005, we entered into a stock purchase agreement for
the purchase of 3,130,000 shares of the outstanding shares of common stock of
the Delaware Mazal from Gerry Gruenbaum, Barry Ginsburg, Avi Harris, Chaim
Lieberman, David Liebeman, Sam Berkowitz and Mechael Kanovsky each an individual
stockholder of Delaware Mazal, in exchange for 6,180,000 shares of our common
stock. Each of Gerry Gruenbaum and Barry Ginsburg were provided with one share
of our stock for each share of Delaware Mazal held by them. The other
stockholders of Delaware Mazal swapped each of their Delaware Mazal shares in
consideration for two of our shares. In connection with the merger with and into
a wholly owned subsidiary we formed pursuant to the laws of Nevada under the
name Mazal Plant Pharmaceuticals, Inc, 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.
4
The following summary financial information for the period May 18, 2004
(inception) to September 30, 2005 includes balance sheet and statement of
operations data from the audited annual consolidated financial statements from
December 31, 2004 and the reviewed financial statements from September 30, 2005.
Mazal Plant Pharmaceuticals, Inc.
- --------------------------- ------------------------- -------------------------
For the Period May 18, For the Period May 18,
2004 (inception) to 2004 (inception) to
December 31, 2004 September 30, 2005
- --------------------------- ------------------------- -------------------------
Statement of
Operations Data
- --------------------------- ------------------------- -------------------------
Net Sales $- $-
- --------------------------- ------------------------- -------------------------
Costs and Expenses 13,778 497,513
- --------------------------- ------------------------- -------------------------
Net Loss (13,778) (497,513)
- --------------------------- ------------------------- -------------------------
- --------------------------- ------------------------- -------------------------
Net Loss per share $(0.01) $(0.02)
- --------------------------- ------------------------- -------------------------
- --------------------------- ------------------------- -------------------------
Balance Sheet Data
- --------------------------- ------------------------- -------------------------
Total Assets 50,700 56,440
- --------------------------- ------------------------- -------------------------
Total Current Liabilities 12,733 220,175
- --------------------------- ------------------------- -------------------------
Total Liabilities 63,465 220,175
- --------------------------- ------------------------- -------------------------
Total Shareholders' (12,765) $(163,735)
Deficit
- --------------------------- ------------------------- -------------------------
- --------------------------- ------------------------- -------------------------
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 prospectus before making
an investment decision. The risks described below are the material risks facing
us. If any of the following risks actually occur, our business, financial
condition and operating results could be materially affected.
5
GOING CONCERN
OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS HAVE EXPRESSED SUBSTANTIAL DOUBT
ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN AND IF WE FAIL TO PRODUCE
REVENUES WE MAY FAIL IN OUR BUSINESS, CEASE OPERATIONS, AND YOU MAY LOSE YOUR
ENTIRE INVESTMENT.
Our independent registered public accountants have reviewed our financial data
and information and rendered a statement that they have substantial doubt about
our ability to continue as a going concern for the following reasons:
o we have limited financial resources and we have incurred net losses
of $497,513 since inception;
o we have negative working capital of $214,435;
o we have a stockholders` deficit of $163,735 as of September 30,
,2005; and
o our ability to obtain capital and operate successfully is uncertain.
RISKS RELATED TO THIS OFFERING
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 35,081,000 shares of common stock outstanding as of January 16, 2006.
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 stockholders.
o Any significant decrease in the price of our common stock could
encourage short sales by the selling stockholders or others. Any
such short sales could cause the market price of our common stock to
decrease even further.
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.
6
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-01 product. MAHDL-01 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-01. We do not
know if we will be able to complete these tasks. We do not expect MAHDL-01 to be
commercially available for several years. Accordingly, we do not know if and
when we will generate revenues from MAHDL-01. Because of these uncertainties, we
might never generate enough revenue to allow shareholders to recoup and profit
from their investment.
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 September 30, 2005, our accumulated losses are
$497,513. 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-01, 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.
7
We will require substantial additional funds for further research and
development, the conduct of our Phase I/II clinical trials for MAHDL-01 and
regulatory approvals. Our planned cash requirements may vary materially in
response to a number of factors, including research and development on our
products, the progress of our Phase I/II clinical trials and the results of
those trials, 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
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.
We have secured a U.S. patent in a version of MAHDL-01 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-01, and such application is still
pending. We also plan to file foreign patent applications. These steps we have
taken and will continue to take to protect our intellectual property may not
prevent the misappropriation of our proprietary information and technologies.
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-01. 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.
8
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-01. WE
WILL NOT HAVE CONTROL OVER HOW THEY PERFORM THEIR CONTRACTUAL OBLIGATIONS.
ACCORDINGLY, WE WILL SUFFER IF THEY DO NOT FULFILL THEIR CONTRACTUAL
OBLIGATIONS.
We intend to enter into agreements to develop and commercialize MAHDL-01. We
might not be able to establish collaborations on favorable terms, if at all, or
that 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 these future 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.
9
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.
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. For example, we are about to commence Phase I/II clinical trials
for MAHDL-01. 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.
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.
10
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 MAHDL-01 OR ANOTHER OF OUR PRODUCTS IS APPROVED FOR SALE BY THE
REGULATORY AUTHORITIES, WE HAVE NOT YET DEMONSTRATED ANY MARKET ACCEPTANCE AND
THE PRODUCT 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 each product;
o cost-effectiveness;
o potential advantage over alternative treatment methods;
o the effectiveness of marketing and distribution support for each
product; and
o reimbursement policies of government and third party payers.
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.
11
Our clinical studies will include trials on humans. For example, the Phase I/II
trials 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.
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.
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
We are 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
Chief Financial Officer, Mr. Simcha Edell, with the assistance of EASi, a
broker-dealer under the Securities laws. Mr. Edell will not receive any
commisions in connection with the offer and sale of the shares by us under this
prospectus.
We also are registering for resale by certain of our selling
security holders of up to 8,429,500 shares of common stock comprised of the
following: (a) up to 7,429,500 shares of our common stock that were issued in
various transactions exempt from registration under the Securities Act of 1933
and (b) up to 1,000,000 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 sell their common shares from
time to time at prevailing market prices at the time of sale.
12
USE OF PROCEEDS
We plan to use the proceeds that we receive from the sale of our shares to the
public for the following purposes:
o We plan to use in excess of $1.5 million to finance the Phase I/II
clinical trials of MAHDL-01 that must be conducted in order for
MAHDL-01 to be approved by the United States Food and Drug
Administration.
o We plan to use approximately $350,000 to finance continued research
and development.
o We plan to pay approximately $350,000 of accrued, unpaid salaries to
our officers and directors.
o We plan to spend approximately $350,000 on legal, accounting and
other professional services fees.
o We plan to use approximately $1.0 million as working capital.
o We plan to use up to $450,000 to pay selling commissions to EASi.
o We plan to use approximately $500,000 for new business acquisitions.
We will not receive any of the proceeds from the sale of the common shares to be
sold from time to time by the selling security holders. However, we will receive
gross proceeds of up to $500,000 from the exercise of the warrants if and to the
extent that any of the warrants are exercised. Such proceeds will be used for
general working capital purposes.
DETERMINATION OF OFFERING PRICE
The offering price for the common stock to be sold in this offering has been
determined by our management. The price bears no relation to current income,
revenue or other objective financial data. The factors used by our management to
determine the offering price include the market potential for our products and
the growing potential of foreign markets for our products.
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 8,429,500common 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.
13
The following table sets forth certain information regarding the beneficial
ownership of common shares by the selling security holders as of January 16,
2006, and the number of common shares currently being registered. The number of
shares in the table represents the number of common shares being registered by
the selling security holder. To our knowledge, except for Malcolm Jennings, none
of the selling security holders is a broker-dealer, or an affiliate of a
broker-dealer. 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, Mechael Kanovsky, who is our Chief Executive Officer and a
director, Simcha Edell who is our Chief Financial Officer, Chaim Lieberman and
David Lieberman who are employees of Mazal. Except as otherwise, indicated, all
securities are owned directly.
NUMBER OF
SHARES
ISSUABLE
UPON COMMON SHARES COMMON SHARES
COMMON SHARES EXERCISE BEING BENEFICIALLY PERCENTAGE OF
BENEFICIALLY OF ALL OF OFFERED IN OWNED CLASS OWNED
NAME OF SELLING OWNED BEFORE THE THE AFTER OFFERING AFTER
SECURITY HOLDER OFFERING (1) WARRANTS OFFERING (1) (1) OFFERING (2)
- --------------------------------------------------------------------------------------------------------
Malcolm Jennings 2,457,896 0 2,457,896 0 0
- --------------------------------------------------------------------------------------------------------
Leonard Cohen 120,000 0 120,000 0 0
- --------------------------------------------------------------------------------------------------------
Debbie Gushlak.(8) 100,000 0 50,000 50,000 0.1
- --------------------------------------------------------------------------------------------------------
Ronnie Yacov 600,000 0 60,000 540,000 1.5
- --------------------------------------------------------------------------------------------------------
James B. Wiegand 625,000 0 50,000 575,000 1.6
- --------------------------------------------------------------------------------------------------------
Max Gould 625,000 0 50,000 575,000 1.6
- --------------------------------------------------------------------------------------------------------
Corporate Management
Services(9) 250,000 25,000 225,000 0.6
- --------------------------------------------------------------------------------------------------------
Chaim Lieberman 2,300,000(3) 0 1,000,000 1,300,000 3.7
- --------------------------------------------------------------------------------------------------------
David Lieberman 1,800,000(4) 0 50,000 1,750,000 5.0
- --------------------------------------------------------------------------------------------------------
Sam Berkowitz 1,800,000(5) 0 50,000 1,750,000 5.0
- --------------------------------------------------------------------------------------------------------
Mechael Kanovsky 800,000(6) 0 50,000 750,000 2.1
- --------------------------------------------------------------------------------------------------------
Luc Verelst(7) 1,625,000 1,000,000 2,625,000 0 0
- --------------------------------------------------------------------------------------------------------
Simcha Edell (10) 75,000 0 75,000 0 0
- --------------------------------------------------------------------------------------------------------
Chris Birts (11) 442,104 442,104 0 0
- --------------------------------------------------------------------------------------------------------
Rene Brezinger (11) 80,000 0 80,000 0 0
- --------------------------------------------------------------------------------------------------------
14
- --------------------------------------------------------------------------------------------------------
Ray Dirks (11) 20,000 0 20,000 0 0
- --------------------------------------------------------------------------------------------------------
First Southwest (11) 199,500 0 199,500 0 0
- --------------------------------------------------------------------------------------------------------
Louk Jongen (11) 80,000 0 80,000 0 0
- --------------------------------------------------------------------------------------------------------
Lanier Inc (11) 100,000 0 100,000 0 0
- --------------------------------------------------------------------------------------------------------
Bernie Meier (11) 80,000 0 80,000 0 0
- --------------------------------------------------------------------------------------------------------
Peter Mullen (11) 88,420 88,420 0 0
- --------------------------------------------------------------------------------------------------------
Richard Robbins (11) 40,000 0 40,000 0 0
- --------------------------------------------------------------------------------------------------------
Nicloace Wace (11) 125,528 0 125,528 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 registered by the selling stockholders in this
prospectus are sold by the selling stockholders.
(2) Based on 35,081,000 shares of common stock outstanding as of January 16,
2006.
(3) Chaim J. Lieberman received 2,300,000 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.
(4) David Lieberman received 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, received 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, Mazal, 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, received
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 Dr. Kanovsky, us and the
Delaware Mazal.
(7) Mr. Luc Verelest received 1,200,000 shares of our common stock and warrants
to purchase 1,000,000 shares of our common stock at an exercise price of $0.50
in consideration for $300,000.
(8) Debbie Gushlak is the beneficial owner of Halcyon S.A.
(9) George Andrews and Joan Andrews are the beneficial owners of Corporate
Management Services.
15
(10) Simcha Edell, our Chief Financial Officer, received 75,000 shares of our
common stock in consideration for his services rendered to our subsidiary, the
Delaware Mazal, pursuant to an Employment Agreement with Delaware Mazal, dated
November 9, 2005.
(11) These shares were transferred to the selling stockholder by Malcolm
Jennings.
We may require the selling security holders to suspend the sales of the
securities registered 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 registered hereby by each of Messrs. Yacov, Wiegand, Gould and
Corporate Management Services 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
CURRENT MARKET FOR OUR SHARES
Our shares are currently traded on the Pink Sheets under the Symbol: MZPP.PK and
are subject to the penny stock rules. 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.
16
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.
We have filed a Form 15c211 for the purpose of listing our shares on the OTC
Bulletin Board, which is maintained by the National Association of Securities
Dealers. Irrespective of whether our shares are traded on the OTC Bulleting
Board a purchaser of our shares may not be able resell our shares, and our
shares willl remain subject to the penny stock rules.
THE OFFERING WILL BE SOLD BY OUR CHIEF FINANCIAL OFFICER WITH THE ASSISTANCE OF
EASI.
We are offering up to a total of 10,000,000 shares of common stock as a
self-undertaken offering. The offering price is $0.45 per share.
Until a minimum of $2,000,000 is raised by us by selling our common stock
offered in this prospectus (the "Minimum Offering"), all payments for shares
will be deposited into an escrow account at Bank Hapoalim, New York. If
$2,000,000 is not raised in this offering, all payments deposited in the escrow
account will be promptly refunded in full, without interest and without any
deduction for expenses. If $2,000,000 is raised in this offering, all funds held
in escrow will be released to us and we will continue to sell shares up to the
maximum amount of 10,000,000 shares.
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 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 by us to the subscriber,
without interest or deductions.
Once accepted after the Minimum Offering is met, the funds will be deposited
into an account maintained by us and be immediately available to us. 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 primarily through our Chief Financial
Officer, Mr. Simcha Edell. Mr. Edell will receive no commission from the sale of
Mazal shares by us nor will he 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 chief financial officer satisfies the
requirements of Rule 3(a)4-1 in that:
17
1. He is not 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. He is not being paid commissions or other remuneration based either
directly or indirectly on transactions in securities; and
3. He is not, at the time of his participation, an associated person of
a broker- dealer; and
4. Mr. Edell meets the conditions of Paragraph (a)(4)(ii) of Rule
3(a)4-1 of the Exchange Act, in that he (A) primarily performs, 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) is not a broker
or dealer, or an associated person of a broker or dealer, within the
preceding twelve (12) months; and (C) does 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 Chief Financial Officer 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 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.
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.
18
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). Such sales may be at prevailing market
prices at the time of sale. The common shares being registered for resale by
this prospectus may be sold by the selling security holders by one or more of
the following methods:
(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; and
(f) through transactions in options, swaps or other derivatives (whether
exchange listed or otherwise).
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.
19
In effecting resales, 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.
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.
20
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. 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, we will be able to
identify whether it will need to register or will rely on an exemption there
from.
ADDITIONAL SEC AND NASD RESTRICTIONS
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
21
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
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 or regulatory proceeding 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 AGE
Dr. Mechael Kanovsky Chief Executive Officer and Director 43
Sam Berkowitz Secretary 49
Simcha Edell Chief Financial Officer 50
Chaim J. Lieberman Significant Employee 44
David Lieberman Significant Employee 43
22
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 our Chief Executive Officer and Director since June 6,
2005. Since December 2004, he is also the part time President and director of
Amazon Biotech, Inc. a development stage company that develops and markets
pharmaceuticals for the HIV/ AIDS market. 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 from 1999 until August 2002. Dr. Kanovsky
worked as a senior cancer researcher in the biotech industry for Gene Vectors
Technologies, Israel from January 2003 until November 2003. From January 2004
until November 2004, Dr. Kanovsky was a consultant for Marantech Corp., a
company in the business of researching, developing and exploiting technological
applications for various electron-jumping compounds. He assisted Marantech in
developing a cancer screening test.
MR. SAM BERKOWITZ has been working as Secretary at Mazal from December 2004 to
present. Since 1996, Mr. Berkowitz has been the general and operating manager of
Advanced Plant Pharmaceuticals, Inc., a Delaware corporation which developed and
sells nutritional supplements. Mr. Berkowitz obtained his Bachelor of Arts
Degree from Yeshiva University, New York.
MR. SIMCHA EDELL has been at Mazal from July 2005, and presently functions as
CFO. From July 2003 until March 2005 he was CEO of Advanced Combat Systems Ltd.,
an Israeli company developing homeland security products. He was head of finance
and business development in SightLine Technologies Inc., an Israeli firm
developing medical devices, from January 2001 to April 2003 Inc. He obtained his
B.Comm from the University of Toronto, and his MBA from York University.
MR. CHAIM J. LIEBERMAN has been an employee at Mazal from December 2004 to
present. For the previous five years Mr. Lieberman has been a consultant to
Advanced Plant Pharmaceuticals, Inc., a Delaware corporation which developed and
sells nutritional supplements.
MR. DAVID LIEBERMAN has been an employee at Mazal from December 2004 to present.
For the previous five years Mr. Lieberman was the president of Advanced Plant
Pharmaceuticals, Inc., a Delaware corporation which developed and sells
nutritional supplements.
Until the change in control of Mazal on June 6, 2005, our sole director and
officer was James B. Wiegand. Mr. Wiegand resigned as a result of our change in
control and not because of any disagreement with us. 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.
23
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists, as of January 16, 2006, the number of shares of our
common stock 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 35,081,000 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)* 57%
- --------------------------------------------------------------------------------
Malcolm Jennings 2,457,896 (6) 7%
- --------------------------------------------------------------------------------
Sam Berkowitz 1,800,000(2)* 5.1%
- --------------------------------------------------------------------------------
Mechael Kanovksy 800,000(3)* 2.2%
- --------------------------------------------------------------------------------
Chaim J. Lieberman 2,300,000(4)* 6.6%
- --------------------------------------------------------------------------------
David Lieberman 1,800,000(5)* 5.1%
- --------------------------------------------------------------------------------
Simcha Edell 75,000 (7)* 0.2%
- --------------------------------------------------------------------------------
All directors and executive officers 2,675,000* 7.6%
as a group (3 persons)
- --------------------------------------------------------------------------------
(1) Pursuant to the Share Exchange Agreement, dated June 6, 2005, among Mazal,
Advanced Plant Pharmaceuticals, Inc., and James Wiegand, Advanced Plant
Pharmaceuticals, Inc. received 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. The sole director of Advanced Plant Pharmaceuticals, Inc.
is David Lieberman.
(2) Mr. Berkowitz received 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, Mazal, and our subsidiary, the Delaware Mazal, as
compensation for his services rendered to the Delaware Mazal.
24
(3) Dr. Kanovsky received 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
received a total of 600,000 shares of our common stock. On December 19th, 2006,
our Board of Directors issued an additional 100,000 shares of our common stock
to Dr. Kanovsky as a performance bonus. On January 25th, 2006, our Board of
Directors issued an additional 100,000 shares of our common stock to Dr.
Kanovsky as a performance bonus in consideration for the acceptance of the IND
by the FDA.
(4) Chaim J. Lieberman received 2,300,000 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 additional 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 received 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.
(6) Malcolm Jennings's address is 1 Regent Street, London SW1Y4NS UK.
(7) Mr. Edell received 75,000 shares of our common stock in consideration for
his services rendered to our subsidiary, the Delaware Mazal, pursuant to an
Employment Agreement, dated November 9, 2005. Mr. Edell is entitled to an
additional 75,000 shares of our common stock at the end of his first year of
employment, as compensation for services rendered to Delaware Mazal. In
addition, Mr. Edell is entitled to the issuance of additional 75,000 shares of
our common stock upon our receipt of one million dollars in funding.
DESCRIPTION OF SECURITIES
Our authorized capital stock 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.
COMMON STOCK
Our Articles of Incorporation authorizes the issuance of 100,000,000
shares of common stock, $0.001 par value, as of January 16, 2006, 35,081,000
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 Board of Directors in its discretion from funds legally available
therefor. In the event of a liquidation, dissolution or winding up of Mazal, the
holders of common stock are entitled to share pro rata all assets remaining
after payment in full of all liabilities.
25
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 our stockholders, 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. We have no present plans to
issue any preferred stock.
WARRANTS
On October 31, 2005, as part of a private placement transactions, we
granted to Mr. Luc Verelst, one of our current investors, a warrant to purchase
1,000,000 shares of our common stock at $0.50 per share. This warrant is
exercisable by Mr. Verelst until October 30, 2008. Mr. Verelst's warrant may be
exercised for cash and we may receive up to $500,000 in gross proceeds from the
exercise of this warrant. Except for this warrant and certain commitments to
issue additional shares of our common stock upon the achievement of certain
milestones pursuant to the employment agreements of Chaim J. Lieberman, Dr.
Kanovsky and Simcha Edell, there are no outstanding options, other warrants, or
rights to purchase any of our securities.
26
DIVIDENDS
We do not expect to pay dividends. Dividends, if any, will be contingent
upon our revenues and earnings, if any, capital requirements and financial
conditions. The payment of dividends, if any, will be within the discretion of
our Board of Directors. We presently intend 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
The validity of the common stock offered in this Offering was passed upon for us
by Steve Kronengold, Esq. Our financial statements for the period May 18, 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.
27
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 December 7, 2005, we issued to James B. Wiegand 625,000 shares of our common
stock in consideration for the services he rendered to us during his appointment
as our Chief Executive Officer from 2003 to June 6, 2005.
On December 7, 2005, we issued to Max Gould 625,000 shares of our common stock
in consideration for his prior services to us.
On June 30, 2005, we issued to Malcolm Jennings 3,800,000 shares of our common
stock. In consideration, Mr. Jennings conveyed to us 1,900,000 shares of common
stock of Delaware Mazal. The shares were issued under Regulation S promulgated
by the Securities and Exchange Commission.
On June 6, 2005, we became contractually obligated to exchange 20,000,000 shares
of our common stock for 7,000,000 shares of Delaware Mazal with Advanced Plant
Pharmaceuticals, Inc. pursuant to the Share Exchange Agreement, dated June 6,
2005.
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 and issued on January 5, 2006,
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. On each of December 19, 2005 and January 25, 2006, we issued
100,000 shares of our common stock to Dr. Mechael Kanovsky as performance
bonuses. Dr. Kanovsky is also entitled to receive an additional 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 and issued on January 5, 2006,
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.
28
On August 1, 2005, we authorized the issuance of and issued thereafter 2,300,000
shares of our common stock to Chaim J. Lieberman in consideration for his
services rendered to our subsidiary, Delaware Mazal, pursuant to an employment
Agreement, dated December 10, 2004, as amended on August 1, 2005, among Mr.
Lieberman, us, and Delaware Mazal.
On August 1, 2005, we authorized the issuance of and thereafter issued on
January 5, 2006, 1,800,000 shares of our common stock to David Lieberman 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.
On December 19, 2005, Mr. Edell received 75,000 shares of our common stock in
consideration for his services rendered to our subsidiary, the Delaware Mazal,
pursuant to an Employment Agreement, dated November 9, 2005. Mr. Edell is
entitled to an additional 75,000 shares of our common stock at the end of his
first year of employment, as compensation for services rendered to Delaware
Mazal. In addition, Mr. Edell is entitled to the issuance of additional 75,000
shares of our common stock upon our receipt of one million dollars in funding.
On December 19, 2005, we issued to Malcolm Jennings 500,000 shares of our common
stock pursuant to a Subscription Agreement dated May 2005. The shares were
issued under Regulation S.
In February 2006, we issued to Mr. Malcolm Jennings 200,000 shares of our common
stock in consideration for $50,000. The shares were issued under Regulation S
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 us or in any 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 5% 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
Company History
We were originally 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 the
predecessor of Mazal. Our operations consisted solely of seeking merger or
acquisition candidates, and we had no business operations or revenues.
29
On June 6, 2005, we underwent a change in control and adopted the current focus
of our business, which is the development, manufacture and supply of plant based
pharmaceuticals. We are dedicated to using whole plants in order to develop
healthier natural pharmaceuticals for the treatment of human diseases.
As discussed above, on June 6, 2005, we acquired a majority interest in Delaware
Mazal pursuant to the Share Exchange Agreement. 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., Akid Corporation, 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 our common stock which represented 94.21 % of our issued
and outstanding 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 Delaware Mazal and us. 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, our name was changed to Mazal Plant Pharmaceuticals, Inc. in order to
better reflect our business operations.
Principal Products and their Markets
The Company's lead drug candidate, MAHDL-01, is a drug designed to improve
cholesterol levels in individuals with unbalanced cholesterol levels. We are
also considering developing plant-based drugs for the treatment of diabetes and
Alzheimer's disease. Independent research published in the scientific literature
has documented a link between low HDL levels and an increased incidence of
diabetes including that an increase in HDL levels lowers the risk of diabetes.
Based on such literature, we are planning on conducting clinical studies with
MAHDL-01 and with other versions of MAHDL-01 that are specifically designed to
help combat diabetes. However, research into the company's drugs for diabetes is
in its preclinical phases and further research depends on our capability in
funding such research..
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.
30
MAHDL-01 is a drug consisting of various combinations of herbs. In order to
understand how MAHDL-01 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
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-01 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, we are looking for a joint venturer who will
provide the following services:
o Complete the development of MAHDL-01;
o Submit the required documentation to the Food and Drug
Administration and secure approval for MAHDL-01;
o Support MAHDL-01 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-01
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.
Initial Studies, IND, Phase I and Phase II clinical trials
Initial studies have shown a promising trend on cholesterol levels without major
side effects therefore we applied for an IND from the FDA to do a Phase I/II
clinical trial to prove efficacy.
An IND filed with the FDA with respect to MAHDL-01 is presently effective. The
IND for MAHDL-01 was submitted on April 8, 2005, and approved on June 2, 2005.
MAHDL-01 has been approved by the FDA for Phase I and Phase II clinical trials.
The FDA made some comments and requests for additional information. These
comments and requests do not have major implications for conducting the clinical
trials.
31
The cost of conducting the Phase I/II trials is estimated to be between 1.0 and
1.6 million dollars. We are in negotiations with a number of CRO's and medical
facilities and we cannot provide assurances as to the final cost of the Phase I/
II trials which will be known when we execute an agreement with a CRO. The
currently planned study as approved in the IND is a Phase I/II study in 400
subjects. We are conducting quality control analysis of manufacturing suppliers
and facilities. The Preclinical studies have not been conducted yet but may be
later required by the FDA in line with the FDA's Guidance for Industry:
Botanical Drug Products (June 2004).
We estimate that the Phase I/II clinical trials will take one year from
enrolment to analysis of all statistical data. The ingredients that make up
MAHDL-01 are all from the GRAS (generally regarded as safe) list of the FDA. The
company is inquiring as to the cost of clinical trial insurance for a drug that
is made up wholly of GRAS ingredients.
Competition
Our product is designed to be a whole plant pharmaceutical attractive to the
natural supplement marketplace. 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.
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.
Many of the Statins are nearing the end of their patent protection and drug
companies are scrambling to combine their statin drug with another drug in order
to extend their patent protection. MAHDL can be a strong candidate, as it
complements Statins by raising HDL levels while the Statins lower the LDL
levels.
32
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.
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.
MAHDL can be marketed as a whole plant medicine, and attract that part of the
marketplace interested in natural plant substances.
Once MAHDL has successfully passed Phase II clinical trials, we intend to form a
strategic partnership for co-development and co-marketing with a major player in
the market in order to maximize the sales opportunity for MAHDL. Specifically,
we are looking for a partner who will help perform the following activities:
o Complete the development program;
o Submit the required documentation to FDA and secure approval for the
product;
o Support the product 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
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. We will outsource farming to existing producers
according to our specifications. MAHDL-01 is to be manufactured using qualified
raw material suppliers, outsourced powder facilities and a formulation plant,
all working in compliance with good manufacturing practices. We have not
finalized these operations as we are in negotiations with a quality control
consultant to qualify these facilities.
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.
33
Intellectual Property
We have secured a U.S. patent in a version of MAHDL-01 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-01, 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.
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-01 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 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.
34
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.
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.
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.
35
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.
OUR FACILITIES
We conduct our administration and clinical trials in our US offices and we
conduct our research and product development in our Jerusalem office, as
described below in "Description of Properties".
EMPLOYEES
We have 2 part-time employees in administration and 2 part-time employees in
operations.
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 1,000 feet at Beit
Offer Building, 5 Nahum Hefzadi Street, Jerusalem, Israel pursuant to a one-year
sublease having a monthly rate of $1,200. Prior to June 6, 2005, we used office
space in the home of our then President. We may need to expand our offices in
Jerusalem if we choose to establish our own lab.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operation.
We plan to commence with Phase I/II studies when we raise the full amount of
funds needed to do the study. The trial itself should take about a year to
complete with enrolment taking about 3 months, the trial itself taking 6 months,
and analysis of the data and generation of a report an additional 3 months. The
funding sources for the trial will be from investors. After we sign an agreement
with a Clinical Research Organization (CRO) or another medical facility to
conduct the trial, the amount of funding needed for the trial will be put in a
separate escrow account and will be used specifically to pay for the trial. The
cost of conducting the Phase I/II trials is estimated to be between 1.0 and 1.6
million dollars.
36
From May 18, 2004 (inception), through September 30, 2005, we 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 September 30,
2005. Total expenses during such period were $497, 513. Such expenses consisted
primarily of salaries and professional fees.
Liquidity and Capital Resources
We currently do not have sufficient resources to finance our operations. As of
September 30, 2005, we have negative working capital in an amount of $214,435.
We need to raise additional capital, and are currently attempting to raise funds
through the issuance of shares. While we will undertake best efforts to raise
the capital necessary to fund our operations, there can be no assurances that we
will be successful in these efforts.
In December 2004 and as amended in August 2005, the Company entered into five
different employment contracts expiring between November 2006 and December 2006.
The contracts provide for salaries ranging between $1,100 and $4,000 per month.
Two of the contracts provide for a salary increase to $5,500 per month upon
receipt of the first IND, and issuances of stock for the achievement of certain
milestones.
GOING CONCERN CONSIDERATION
As shown in the accompanying financial statements, we have incurred net losses
of $497,513 since inception, have no working capital, and a stockholders'
deficit of $163,275 as of 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 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.
37
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 7, 2005, we issued to James B. Wiegand 625,000 shares of our common
stock in consideration for the services he rendered to us regarding the merger
during his appointment as our Chief Executive Officer from 2003 to June 6, 2005.
On December 7, 2005, we issued to Max Gould 625,000 shares of our common stock
in consideration for his participation in the merger.
On June 30, 2005, we issued to Malcolm Jennings 3,800,000 shares of our common
stock. In consideration, Mr. Jennings conveyed to us 1,900,000 shares of
Delaware Mazal.
On June 6, 2005 we became contractually obligated to exchange with Advanced
Plant Pharmaceuticals, Inc. pursuant to the Share Exchange Agreement 20,000,000
shares of our common stock for 7,000,000 shares of Delaware Mazal.
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 December 19, 2005, we issued 500,000 shares of our common stock to Malcolm
Jennings pursuant to a Subscription Agreement dated May 2005.
On August 1, 2005, we authorized the issuance of and issued on January 5, 2006,
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 On each of December 19, 2005 and January 25, 2006, we issued
100,000 shares of our common stock to Dr. Mechael Kanovsky as performance
bonuses. Dr. Kanovsky is also entitled to receive 100,000 shares of our common
stock each time that we receive an IND or a patent for one of our products under
development. 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 and issued on January 5, 2006,
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.
38
On December 19, 2005, Mr. Edell received 75,000 shares of our common stock in
consideration for his services rendered to our subsidiary, the Delaware Mazal,
pursuant to an Employment Agreement, dated November 9, 2005. Mr. Edell is
entitled to an additional 75,000 shares of our common stock at the end of his
first year of employment, as compensation for services rendered to Delaware
Mazal. In addition, Mr. Edell is entitled to the issuance of additional 75,000
shares of our common stock upon our receipt of one million dollars in funding.
On August 1, 2005, we authorized the issuance of and issued thereafter 2,300,000
shares of our common stock to Chaim J. Lieberman in consideration for his
services rendered to our subsidiary, Delaware Mazal, pursuant to an employment
Agreement, dated December 10, 2004, as amended on August 1, 2005, among Mr.
Lieberman, us, and Delaware Mazal.
On August 1, 2005, we authorized the issuance of and thereafter issued on
January 5, 2006, 1,800,000 shares of our common stock to David Lieberman 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.
In February 2006, we issued to Mr. Malcolm Jennings 200,000 shares of our common
stock in consideration for $50,000.
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 us 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 5% 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.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
Our stock is traded on the Pink Sheets under the symbol of MZPP.PK.
39
HOLDERS
On January 16, 2006, 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 a warrant to purchase 1,000,000 shares of our common stock,
which we issued on October 31, 2005 and such warrant is exercisable by Luc
Verelst until October 30, 2008 at $0.50 per share. Except for the foregoing
warrant, and pursuant to the employment agreements of Chaim J. Lieberman, Dr.
Kanovsky and Simcha Edell, no warrants, options, or other securities convertible
or exchangeable into equity securities were issued or outstanding as of December
31, 2004 or as of date of this prospectus.
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.
On June 6, 2005, we issued to Ronnie Yacov 600,000 shares of our common stock,
as consideration for his finder 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 December 7, 2005, we issued to each of James B. Wiegand and Max Gould 625,000
shares of our common stock, as consideration for their consulting services
provided to us during the merger. 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.
40
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 and issued on January 5, 2006,
600,000 shares of our common stock to Dr. Mechael Kanovsky, our Chief Executive
Officer and our sole director, in consideration for his employment 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 and issued on January 5, 2006,
1,800,000 shares of our common stock to Sam Berkowitz, our Secretary, in
consideration for his employment 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 and thereafter issued to Chaim
J. Lieberman 2,300,000 shares of our common stock in consideration for his
business development 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 and thereafter issued on
January 5, 2006, 1,800,000 shares of our common stock to David Lieberman 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.
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, we issued, to Performance Profiler Quarterly, pursuant to
a publication agreement, as a review fee 400,000 shares of our common stock in
consideration for services rendered by it in connection with the preparation and
publication of an article relating to us. 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.
41
On September 26, 2005, we issued to Imperial Consulting Network 200,000 shares
of our common stock for services rendered by it in connection with the
preparation and publication of an article relating to us. 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 September 26, 2005, we issued to Golden Key 200,000 shares of our common
stock for services rendered by it in connection with the preparation and
publication of an article relating to us. 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 October 31, 2005, we issued to Mr. Luc Verelest 1,200,000 shares of our
common stock and warrants to purchase 1,000,000 shares of our common stock at an
exercise price of $0.50 in consideration for $300,000. The shares were issued
under Regulation S promulgated by the Securities and Exchange Commission.
On November 15, 2005, we issued to Yosef Tzairi 800,000 shares of our common
stock for services provided to us. 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 December 7, 2005, we issued to Corporate Management Services 250,000 shares
of our common stock for services provided to us. 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 December 19, 2005, we issued to Simcha Edell 75,000 shares of our common
stock for services provided to us. 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 December 19, 2005, we issued to Mechael Kanovsky 100,000 shares of our common
stock for services provided to us. 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 December 19, 2005, we issued to Bernard Harris 40,000 shares of our common
stock for services provided to us. 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 December 19, 2005, we issued to Malcolm Jennings 500,000 shares of our common
stock pursuant to a Share Exchange Agreement, dated July 2005. The shares were
issued under Regulation S promulgated by the Securities and Exchange Commission.
On December 19, 2005, we issued to Leonard Cohen 120,000 shares of our common
stock pursuant to a Share Exchange Agreement, dated July 2005. The shares were
issued under Regulation S promulgated by the Securities and Exchange Commission.
42
On January 25, 2006, we issued 100,000 shares of our common stock to Dr. Mechael
Kanovsky as a performance bonus. 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.
In February 2006, we issued to Mr. Malcolm Jennings 200,000 shares of our common
stock in consideration for $50,000. The shares were issued under Regulation S
promulgated by the Securities and Exchange Commission.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
We made no purchases of our equity securities nor were any such purchases made
by any purchaser affiliated with us.
OUR TRANSFER AGENT
We have appointed Manhattan Stock Transfer, with offices at P.O. Box 756, Miller
Place, NY 11764, phone number, (631) 928-7655, facsimile: (631) 928-6171 as
transfer agent for our common shares. The transfer agent is responsible for all
record-keeping and administrative functions in connection with our common
shares.
EXECUTIVE COMPENSATION
The following table presents all information regarding the compensation awarded
to, earned by, or paid to Mazal's named executive offices for the fiscal year
ended November 30, 2005 and during the last three fiscal years.
SUMMARY COMPENSATION TABLE
Long Term All Other
Annual Compensation Compensation Awards Compensation ($)
Securities
Name and Restricted Stock Underlying
Principal Position Year Salary ($) Bonus ($) Awards ($) Options (#)
- ------------------ ---- ---------- --------- ---------- -----------
James B.
Wiegand 2005 0 0 0 0 0
Chief Executive Officer 2004 0 0 0 0 0
2003 0 0 0 0 0
- ------------------------------ ------- ------------ ---------- ------------------ ------------------- -------
Mechael Kanovsky Chief
Executive Officer 2004 $30 0 0
2005 63,000 $25,000
- ------------------------------ ------- ------------ ---------- ------------------ ------------------- -------
Sam Berkowitz
Secretary 2005 $36,000 90 0 0
- ------------------------------ ------- ------------ ---------- ------------------ ------------------- -------
Simcha Edell
CFO 2005 $17,400 18,750 0 0
- ------------------------------ ------- ------------ ---------- ------------------ ------------------- -------
43
(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
December 7, 2005, Mr. Wiegand received 625,000 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.
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 are employment agreements between Delaware Mazal and Dr. Mechael Kanovsky,
Sam Berkowitz and Simcha Edell.
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 Executive Officer of the
Delaware Mazal for 2 years commencing November 1, 2004. The base salary is
$48,000 per year. In addition, Dr. Kanovsky received 800,000 shares of our
common stock. Upon the receipt of each additional 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 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 was issued 1,800,000 shares of our common stock.
Pursuant to the terms of the Employment Agreement dated November 9, 2005,
between Mr. Edell and our subsidiary, the Delaware Mazal, Mr. Edell received
75,000 shares of our common stock. In addition, Mr. Edell is entitled to 75,000
shares of our common stock upon our receipt of one million dollars in funding,
and another 75,000 shares of our common stock at the end of twelve months of
employment with us, as compensation for his services rendered to Delaware Mazal.
The base salary is $34,800, to be increased to $42,000 upon our receipt of at
least one million dollars in funding.
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.
44
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.
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.
45
FINANCIAL STATEMENTS
AKID CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE 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 15
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
and Subsidiary 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 AND SUBSIDIARY
(A DEVELOPMENT STAGE 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 AND SUBSIDIARY
(A DEVELOPMENT STAGE 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 AND SUBSIDIARY
(A DEVELOPMENT STAGE 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 AND SUBSIDIARY
(A DEVELOPMENT STAGE 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
--------------------------------------------------------------------
Mazal Plant Pharmaceuticals, Inc. 10,130,000 $1,013 $ 1,013
---------- ------ ----------
Total Mazal Plant Pharmaceuticals,
Inc. prior to reverse merger 10,130,000 1,013 1,013
Reverse Merger
Merger with AKID Corporation
Cancellation of Mazal 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 Mazal 20,000,000
Issuance of 6,180,000 shares in
exchange for 3,130,000 shares
of Mazal 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 AND SUBSIDIARY
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2004
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Mazal 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
Mazal 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 Mazal 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 AND SUBSIDIARY
(A DEVELOPMENT STAGE 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 AND SUBSIDIARY
(A DEVELOPMENT STAGE 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 AND SUBSIDIARY
(A DEVELOPMENT STAGE 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 and as amended in August 2005, the Company entered
into five different employment contracts expiring between November
2006 and December 2006. The contracts call for salaries ranging
between $1,100 and $4,000 per month. Two of the contracts call for a
salary increase to $5,500 per month upon receipt of the first IND,
and issuances of stock for the achievement of certain milestones.
NOTE F - STOCKHOLDERS' EQUITY
As discussed in the Reverse Merger (see Note A to the Financial
Statements), the exchange of Mazal 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.
Office Leases
In January 2005, the Company entered into a non written agreement to
sub-lease office space in Israel, on a month to month basis, at a
monthly rent of $1,000.
In January 2005, the Company entered into a non written agreement to
sub-lease office space in New York from an affiliated company, on a
month to month basis, at a monthly rent of $750.
F-10
AKID CORPORATION AND SUBSIDIARY
(A Development Stage Corporation)
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2005 2004
------------- ------------
(unaudited)
-------------
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' Deficit $ 56,440 $ 50,700
========= =========
See accompanying notes to financial statements.
F-11
AKID CORPORATION AND SUBSIDIARY
(A Development Stage Corporation)
CONSOLIDATED STATEMENTS 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
------------ ------------ -------------
(unaudited) (unaudited) (unaudited)
------------ ------------ -------------
COSTS AND EXPENSES
Operating expenses $ 208,438 $ 420,970 $ 436,096
Stock based compensation 55,250 61,105 61,417
------------ ------------ ------------
Total Costs and Expenses 263,688 482,075 497,513
------------ ------------ ------------
NET LOSS $(263,688) $ (482,075) $ (497,513)
============ ============ ============
NET LOSS PER COMMON SHARE
(BASIC AND DILUTED)
$ (0.01) $ (0.02) $ (0.02)
============ ============ ============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 31,538,587 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 AND SUBSIDIARY
(A Development Stage Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Period
For the Nine May 18, 2004
Months Ended (Inception) to
September 30, September 30,
2005 2005
------------- --------------
(Unaudited) (Unaudited)
------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(482,075) $(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 75,410 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 issuance 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 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 AND SUBSIDIARY
(A Development Stage Corporation)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
For the Period May 18, 2004 (Inception) to September 30, 2005
Additional Total
- -----------------------------------------------------------------------------------------------------------
Common Stock Paid in Accumulated Stockholders'
- ---------------------------------------------------------------------------------------------------------------
Shares Amount Capital Deficit Deficit
- -----------------------------------------------------------------------------------------------------------
Mazal Plant Pharmaceuticals, Inc. 10,130,000 $1,013 $ 1,013
- -----------------------------------------------------------------------------------------------------------
Total Mazal Plant Pharmaceuticals,
Inc. prior to reverse merger 10,130,000 1,013 1,013
- -----------------------------------------------------------------------------------------------------------
Reverse Merger
Merger with AKID Corporation
Cancellation of Mazal 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 Mazal 20,000,000
- ---------------------------------------------------
Issuance of 6,180,000 shares in
exchange for 3,130,000 shares
of Mazal 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)
- -----------------------------------------------------------------------------------------------------------
Issuance of 50,000 shares for
services valued at $0.0001
per share 50,000 5 5
- -----------------------------------------------------------------------------------------------------------
Issuance of 50,000 shares in
private placement at $0.40
per share 50,000 20,000 20,000
- -----------------------------------------------------------------------------------------------------------
Issuance of 90,000 shares for
consulting services valued
at $0.065 per share 90,000 5,850 5,850
- -----------------------------------------------------------------------------------------------------------
Issuance of 3,800,000 shares
in private placement at
$0.0658 per share 3,800,000 250,000 250,000
- -----------------------------------------------------------------------------------------------------------
Issuance of 850,000 shares for
Consulting services valued
At $0.065 per share 850,000 55,250 55,250
- -----------------------------------------------------------------------------------------------------------
Net loss for the nine months ended
September 30, 2005 (482,075) (482,075)
- -----------------------------------------------------------------------------------------------------------
Balance, September 30, 2005 32,250,000 $333,778 $ (497,513) $(163,735)
- -----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-14
AKID CORPORATION AND SUBSIDIARY
(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 nine months ended September 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 nine months ended September 30, 2005, the
Company paid Advanced Plant Pharmaceuticals, Inc. $51,173. 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
In March 2005, the Company authorized the issuance of 50,000 shares
of its common stock to an employee for achievements reached. The
shares were valued at $0.0001 per share. Accordingly, stock based
compensation in the amount of $5 was recorded.
F-15
AKID CORPORATION AND SUBSIDIARY
(A Development Stage Corporation)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
In April 2005, the Company authorized the issuance of 90,000 shares
of its common stock to consultants for services rendered. The shares
were valued at $0.065 per share. Accordingly, stock based
compensation in the amount of $5,850 was recorded.
In April 2005, the Company authorized the issuance of 50,000 shares
of its common stock under a private placement at $0.40 per share
aggregating $20,000.
In June 2005, the Company authorized the issuance of 3,800,000 shares
of its common stock under a private placement at $0.658 per share
aggregating $250,000.
In September 2005, the Company authorized the issuance of 850,000
shares of its common stock to consultants at $0.065 per share.
Accordingly, stock based compensation in the third quarter of 2005
was recorded amounting to $55,250.
At September 30, 2005, the Company's authorized capital stock for
issuances was 20,000,000 shares. Had all the shares authorized to be
issued been issued, the Company would have exceeded it authorization
by 12,250,000 shares. See Subsequent Events Note.
NOTE F - SUBSEQUENT EVENTS
On October 31, 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, an Amended
Certificate of Incorporation was filed.
In October 2005, the Company received a stock subscription agreement
from an individual to acquire 1,200,000 shares of common stock at
$0.25 per share aggregating $300,000. The subscription is divided
into two equal parts of $150,000 each conditional upon certain
events. The first subscription is conditional upon the Company paying
$5,000 to Fletcher Spaght Inc. pursuant to a previous agreement and
continuing to make payments under such agreement, and paying $78,500
for commissions and legal fees in connection with the private
placement. The second subscription is conditional upon the Company
filing Form S-8, paying $10,000 to Fletcher Spaght Inc. and
continuing to make payments under the agreement, and pay $19,500 in
commissions and legal fees in connection with the private placement.
The agreement also calls for the issuance of warrants to acquire
1,000,000 shares of common stock at an exercise price of $0.50 per
share. The warrants will be issued in increments of 500,000
coinciding with the issuance of common stock pursuant to the
completion of each of the subscriptions. The warrants will expire
three years from the date of issuance.
F-16
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........................... $
Legal fees and expenses (1)........................... 32,000
Accounting fees and expenses (1)...................... 6,500
Printing expenses .................................... 2,500
State and Federal taxes ..............................
Miscellaneous (1)..................................... 2,500
-----------------------
Total (1)............................................. $ 43,500
=======================
(1) Estimated.
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RECENT SALES OF UNREGISTERED SECURITIES
During the past three years, the Company has issued the following securities
without registration under the Securities Act of 1933:
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 Ronnie Yacov 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 December 7, 2005, we issued to each of James B. Wiegand and Max Gould 625,000
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 and issued on January 5, 2006,
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 and issued on January 5, 2006,
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 of 1,800,000 shares of our common
stock to Chaim J. Lieberman 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.
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On August 1, 2005, we authorized the issuance and issued on January 5, 2006
1,800,000 shares of our common stock to David Lieberman 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 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 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 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, we issued to Performance Profiler Quarterly, pursuant to
a publication agreement, as a review fee 400,000 shares of our common stock in
consideration for services rendered by it in connection with the preparation and
publication of an article relating to us. 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 September 26, 2005, we issued to Imperial Consulting Network 200,000 shares
of our common stock for services rendered by it in connection with the
preparation and publication of an article relating to us. 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 September 26, 2005, we issued to Golden Key 200,000 shares of our common
stock for services rendered by it in connection with the preparation and
publication of an article relating to us. 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 October 31, 2005, we issued to Mr. Luc Verelest 1,200,000 shares of our
common stock and warrants to purchase 1,000,000 shares of our common stock at an
exercise price of $0.50 in consideration for $300,000. The shares were issued
under Regulation S promulgated by the Securities and Exchange Commission.
On November 15, 2005, we issued to Yosef Tzairi 800,000 shares of our common
stock for services provided to us. 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 December 7, 2005, we issued to Corporate Management Services 250,000 shares
of our common stock for services provided to us. 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.
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On December 19, 2005, we issued to Simcha Edell , our Chief Financial Officer,
75,000 shares of our common stock for services provided to us. 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 December 19, 2005, we issued to Mechael Kanovsky 100,000 shares of our common
stock for services provided to us. 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 December 19, 2005, we issued to Bernard Harris 40,000 shares of our common
stock for services provided to us. 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 December 19, 2005, we issued to Malcolm Jennings 500,000 shares of our common
stock pursuant to a Share Exchange Agreement, dated July 2005. The shares were
issued under Regulation S promulgated by the Securities and Exchange Commission.
On December 19, 2005, we issued to Leonard Cohen 120,000 shares of our common
stock pursuant to a Share Exchange Agreement, dated July 2005. The shares were
issued under Regulation S promulgated by the Securities and Exchange Commission.
On January 25, 2006, we issued 100,000 shares of our common stock to Dr. Mechael
Kanovsky as a performance bonus. 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 January 25, 2006, we issued 500,000 shares of our common stock to Chaim J.
Lieberman. 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.
In February 2006, we issued to Mr. Malcolm Jennings 200,000 shares of our common
stock in consideration for $50,000. 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 Provided herewith.
3.2 By-Laws Provided herewith.
4.1 Warrant Provided herewith.
5.1 Opinion regarding the legality of the Provided herewith.
securities being registered
II-4
10.1 Share Exchange Agreement, dated May Previously filed with our
2005, among the Company, Advanced Current Report on Form 8-K,
Plant Pharmaceuticals, Inc., and dated June 6, 2005, filed
James B. Wiegand with the SEC on June 9, 2005
and incorporated herein by
reference.
10.2 Employment Agreement, dated Previously filed with our
December 10, 2004, as amended on Annual Report on Form 10-KSB
August 1, 2005, among Mechael for the fiscal year ended
Kanovsky, the Company, and Delaware April 30, 2005, filed with
Mazal the SEC on August 11, 2005
and incorporated herein by
reference.
10.3 Employment Agreement, dated Previously filed with our
December 10, 2004, as amended on Annual Report on Form 10-KSB
August 1, 2005, among Sam for the fiscal year ended
Berkowitz, the Company, and April 30, 2005, filed with
Delaware Mazal the SEC on August 11, 2005
and incorporated herein by
reference.
10.4 Employment Agreement, dated Provided herewith.
December 10, 2004, as amended on
August 1, 2005, among Chaim J.
Lieberman, the Company, and
Delaware Mazal
10.5 Employment Agreement, dated Provided herewith.
December 10, 2004, as amended on
August 1, 2005, among David
Lieberman, the Company, and
Delaware Mazal
10.6 Subscription Agreement, dated June Provided herewith.
30, 2005, between the Company and
Malcolm Jennings
10.7 Subscription Agreement, dated April Provided herewith.
11, 2005, between the Company and
Leonard Cohen
10.8 Subscription Agreement, dated April Provided herewith.
11, 2005, between the Company and
Halcyon SA
10.9 Letter Agreement, dated May 11, 2005, Previously filed with our
between Delaware Mazal and Current Report on Form
Corporate Management 8-K, dated June 6, 2005,
Services, Inc. filed with the SEC on June 9
, 2005 and incorporated
herein by reference.
10.10 Lock Up Letters, dated May 2005, Previously filed with our
issued by Corporate Management Current Report on Form 8-K,
Services, Inc., James B. Wiegand, and dated June 6, 2005, filed
Max Gould with the SEC on June 9, 2005
and incorporated herein by
reference.
II-5
16.1 Letter on change in certifying Previously filed with our
accountant Current Report on Form 8-K,
dated August 12, 2005, filed
with the SEC on August 12,
2005 and incorporated herein
by reference.
21.1 Subsidiaries Provided herewith.
23.1 Consent of Meyler & Co. Provided herewith.
23.2 Consent of Steve Kronengold, Esq Provided herewith
(included in Exhibit 5.1).
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 ("Act");
(ii) Reflect in the prospectus any facts or events arising after
the Registeration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in
the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration
Statement; and
(iii) Include any material information or changed material
information on the plan of distribution.
(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering 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
end of the offering.
(B) Undertaking Required by Regulation S-B, Item 512(e).
II-6
Insofar as indemnification for liabilities arising under the Act 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 Act 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 Act and will be governed by the final adjudication of such
issue.
II-7
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 _rd day of April, 2006.
MAZAL PLANT PHARMACEUTICALS, INC.
/s/Mechael Kanovsky
-------------------
Mechael Kanovsky
Director and
-------------------
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 April 11, 2006
- -------------------
Mechael Kanovsky Director
(principal executive officer and
principal financial and accounting
officer)
/s/Sam Berkowitz Secretary April 11, 2006
- -------------------
Sam Berkowitz
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