AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON March 26, 2003
REGISTRATION NO. 333-101771
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
Amendment No. 2 to FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
GUARDIAN BIOTECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
Canada 8731-26 N/A
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) Number)
IPW, 4450 - 110 Gymnasium Place
SASKATOON, SASKATCHEWAN, CANADA S7N 0W9
(306) 384-4114
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
AGENT FOR SERVICE:
TARGET GROUP
520 - 177 TELEGRAPH ROAD
BELLINGHAM WASHINGTON
U.S.A. 98226
1-866-802-1222
(Name, address, including zip code, and telephone number, including area code,
of agent of service)
WITH COPIES TO:
LAW OFFICES OF FRANK BIRKHOLZ DAE JON
SUITE #3827 - 1001 - 4TH AVENUE PENN CAPITAL CANADA LTD.
SEATTLE, WASHINGTON 16TH FLOOR, 543 GRANVILLE STREET
U.S.A. 98154 VANCOUVER, BRITISH COLUMBIA, CANADA V6C 1X8
(206) 682 - 7626 EXT. 13 (604) 647 - 0044
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this 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, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier 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:
[ ]
1
PROPOSED
PROPOSED MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED UNIT OFFERING PRICE REGISTRATION FEE
- --------------------------- ------------- ------------------ -------------- ----------------
Common stock, without par US$0.10 per share(1) $ (1) $
value:
- - offered by selling
shareholders 2,200,000 US$0.10 US$220,000 US$20.24
- - offered by Guardian 5,000,000 US$0.10 US$500,000 US$46.00
- --------------------------- ------------- ------------------ -------------- ----------------
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(o) under the Securities Act of 1933.
The registrant hereby amends this registration statement on such date as may be
necessary to delay its effective date until the registrant shall file a further
amendment which specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the registration statement shall become effective on such
date as the Securities and Exchange Commission, acting pursuant to said Section
8(a), may determine.
There are no pre-existing contractual agreements for any person to purchase the
shares. We have made no selling arrangements for the sale of the securities
offered in this prospectus.
You should rely only on the information contained in this document. We have not
authorized anyone to provide you with information that is different. This
document may only be used where it is legal to sell these securities.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities, and we are not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
March 26, 2003
SUBJECT TO COMPLETION
PROSPECTUS
[GRAPHIC OMITED]
GUARDIAN BIOTECHNOLOGIES INC.
2,200,000 SHARES OF COMMON STOCK
TO BE SOLD BY SELLING SHAREHOLDERS
5,000,000 SHARES OF COMMON STOCK
TO BE SOLD BY GUARDIAN
The common shares to be sold by selling shareholders hereunder are being offered
for sale by existing shareholders of Guardian Biotechnologies Inc. ('Guardian').
The proceeds from the sale of shares by selling shareholders will not be for the
benefit of Guardian and Guardian will receive no proceeds from these sales.
Guardian is also offering shares for sale to the public hereunder, and 5,000,000
new shares are to be issued from treasury. All proceeds from the anticipated
sale of these shares will accrue to the benefit of Guardian.
No public market currently exists for our shares.
INVESTING IN OUR COMMON SHARES INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE 8.
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS GUARDIAN
-------- -------------- -----------
SELLING SHAREHOLDERS
Per common share US$0.10 nil $nil
OFFERED BY GUARDIAN
Per common share US$0.10 nil $0.10
Total US$0.10 nil $500,000.00
-------- -------------- -----------
Guardian's common stock is not listed on a national securities exchange or the
Nasdaq Stock Market. We intend to apply to have our common stock included for
quotation on the OTC Bulletin Board or BBX. There can be no assurance that an
active trading market for Guardian stock will develop.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
PAGE
PROSPECTUS SUMMARY 6
RISK FACTORS 8
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 13
USE OF PROCEEDS 13
DETERMINATION OF OFFERING PRICE 14
DIVIDEND POLICY 14
DILUTION 14
SELLING SHAREHOLDERS 16
PLAN OF DISTRIBUTION 16
EXCHANGE RATES 18
CAPITALIZATION 19
SELECTED FINANCIAL AND OTHER DATA 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 20
BUSINESS 24
MANAGEMENT 30
PRINCIPAL SHAREHOLDERS 32
DESCRIPTION OF SHARE CAPITAL 33
SHARES ELIGIBLE FOR FUTURE SALE 34
TAX CONSIDERATIONS 34
UNDERWRITING 35
LEGAL MATTERS 35
EXPERTS 35
INFORMATION AVAILABLE TO THE PUBLIC 35
INDEX TO FINANCIAL STATEMENTS 37
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS
PROSPECTUS MAY ONLY BE USED WHERE IT IS LEGAL TO SELL THESE SECURITIES. THE
INFORMATION IN THIS PROSPECTUS MAY ONLY BE ACCURATE ON THE DATE OF THIS
DOCUMENT.
DEALER PROSPECTUS DELIVERY OBLIGATION
Until XXXX , 2003 (25 days after the commencement of this offering), all dealers
that effect transactions in these securities, whether or not participating in
this offering, may be required to deliver a prospectus. This is in addition to a
dealer's obligation to deliver a prospectus when acting as an underwriter and
with respect to unsold allotments or subscriptions.
4
[This Page Intentionally Left Blank]
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PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information regarding Guardian and our common shares being sold in this offering
and our historical financial statements included elsewhere in this prospectus.
The following information should be read in conjunction with, and is qualified
in its entirety by, the more detailed information and the Financial Statements
(including the Notes thereto) contained elsewhere in this prospectus. This
summary does not contain all of the information you should consider before
buying shares in the offering. You should read the entire prospectus carefully.
GUARDIAN BIOTECHNOLOGIES INC.
OVERVIEW
The Company remains in its developmental stage. In a development stage
company, management devotes most of its activities to investigating business
opportunities. The ability of the Company to emerge from the development stage
with respect to any planned principal business activity is dependent upon its
successful efforts to raise additional equity financing and/or attain profitable
operations. There is no guarantee that the Company will be able to raise any
equity financing or sell any of its products at a profit. There is substantial
doubt regarding the Company's ability to continue as a going concern.
The Company does not anticipate generating significant revenues over the next
year and intends to depend upon equity financing through private placement and
other offerings of its common stock to fund the implementation of its business
plan. Over the longer term, two to five years, the Company expects to
fund its operations through a combination of revenues from operation of its
business and through additional equity financing.
The Company will need additional capital to carry out its business plans. No
commitments to provide additional funds have been made by management or other
stockholders or investors. Accordingly, there can be no assurance that any
additional funds will be available on terms acceptable to the Company or at all.
Guardian's business will develop in three areas:
1. Guardian intends to be a distributor of laboratory instruments, products and
supplies manufactured in Korea by Toylab Inc.
2. Through its research and development activities, Guardian has acquired DNA
isolation technology and is currently developing a fee for service program which
will focus on screening genetically modified species and their crop products for
clients.
3. Guardian has begun the practice known as molecular farming, whereby
scientists raise crops in a controlled environment. The crops are used to derive
proteins which have medical and industrial applications. Recent advances allow
scientists to utilize low cost production methods to modify plants for the
creation of specialized proteins that can be used in beneficial applications in
medicine and industry. These advances make possible the production of
important value-added products. Guardian will work towards being a significant
factor in the large-scale production and the proprietary isolation and recovery
of therapeutic proteins and industrial and cosmetic enzymes.
Guardian's goal is to be self sufficient within two years and to then focus on
its long term molecular farming programs. To reach its two year goal, Guardian
intends to rely on the sale of its shares, other shareholder financings and
standard business trade financing.
STRATEGY
In summary, the business strategy for Guardian will be multi staged in that it
will consist of three components:
1) Long term: Guardian will apply the majority of any capital investment into
molecular farming for the development of valuable proteins. Concurrent with this
will be the formation of strategic alliances with Canadian and North American
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pharmaceutical, neutraceutical, cosmetic and animal industry partners with
Guardian to facilitate the manufacture, marketing and distribution of these
protein products within Canada and the United States. The association with the
parent company, Nexgen, will enable Guardian to have access to Asian and
European markets. As well, products developed by Nexgen will have North American
market penetration through Guardian.
2) Mid-term: Guardian will develop a fee for service program which will focus on
screening genetically modified species and crop products as well as diagnostic
testing for external clients. This service will be based upon proprietary
technology already developed by Nexgen. The operation of fee for service will
allow cash flow for Guardian for its yearly operational budget. The goal is to
be ISO certified within two years.
3) Short-term: To deal with immediate cash flow, Guardian will function as a
distributor of scientific instruments, products and supplies manufactured in
Korea by Toylab, Inc. It is the goal of Guardian to be self-sufficient within
two years and to then focus the majority of capital investment on long-term
molecular farming programs.
CONTACT INFORMATION
Our principal executive offices are located at 4th Floor, IPW, 4450 - 110
Gymnasium Place, Saskatoon, Saskatchewan, Canada S7N 0W9 and our telephone
number is (306) 384-4114.
THE OFFERING
Common stock offered by selling shareholders: 2,200,000 shares
Common stock offered by Guardian: 5,000,000 shares
Common stock outstanding before this offering: 8,200,000 shares
Common stock to be outstanding after this offering: 13,200,000 shares
PROCEEDS OF THIS OFFERING
The offering by the selling shareholders and by Guardian under this prospectus
will be on a continuous and delayed basis.
We will not receive any of the proceeds from the sale of shares by our selling
shareholders. The selling shareholders may offer and sell up to an aggregate of
2,200,000 shares of our common stock under this prospectus. The selling
shareholders will offer and sell the shares at a price of US$0.10 per share
until such time as our common stock may be listed on the OTC Bulletin Board and
thereafter at prevailing market prices or privately at negotiated prices.
We will receive the proceeds from the sale of shares by Guardian. Guardian may
offer and sell up to an aggregate of 5,000,000 shares of its common stock under
this prospectus. Guardian will offer and sell the shares at a price of US$0.10
per share until such time as the 5,000,000 shares are subscribed and paid for or
190 days from the effective date of the offering.
The offering by the selling shareholders and by Guardian will begin after the
registration statement that includes this prospectus becomes effective.
There is no minimum number of shares to be sold in this offering and no public
market currently exists for our shares.
Any and all funds received by Guardian from its sale of shares under this
prospectus will be immediately available for use at the discretion of Guardian.
No funds will be held in escrow.
SUMMARY FINANCIAL AND OTHER DATA
The summary financial and other data set forth below should be read in
conjunction with the financial statements of Guardian including the notes
thereto, and ''Management's Discussion and Analysis of Financial Condition and
Results of Operations'' included in this prospectus. The statement of operations
data set forth below for the fiscal period from inception August 15, 2002 to
October 31, 2002 and the balance sheet data as of October 31, 2002 are derived
from the October 31, 2002 audited financial statements of Guardian included
elsewhere in this prospectus, which have been audited by Pannell Kerr Forster
(whose partners are members of The Canadian Institute of Chartered Accountants).
Our financial statements are prepared in accordance with accounting principles
7
generally accepted in the United States of America. Monetary amounts are shown
in US$'s unless otherwise indicated.
SUMMARY FINANCIAL DATA
The following tables summarize the statement of operations and balance sheet
data for our business.
PERIOD FROM INCEPTION
(AUGUST 15, 2002)
THROUGH OCTOBER 31,
STATEMENT OF OPERATIONS DATA: 2002
- ---------------------- -------------------------------------------
Revenues $ 0
- -------- ---------------------
Operating Expenses $ 98,207
- ------------------- ---------------------
Net Loss $ (98,207)
- --------- ---------------------
Basic loss per share $ (0.026)
- ----------------------- ---------------------
Weighted average common shares outstanding 3,831,169
- ---------------------------------------------- ---------------------
BALANCE SHEET DATA: AS AT OCTOBER 31, 2002
- ------------------- ----------------------
Cash $ 259,186
- ---- ---------------------
Total Assets $ 259,186
- ------------- ---------------------
Total Liabilities $ 40,496
- ------------------ ---------------------
Shareholders' Equity $ 218,690
- --------------------- ---------------------
The Company has an operating deficit of $98,207 accumulated to October 31, 2002.
This deficit arose from expenditures of: $92,253 for consulting services in
developing its business concept and plan, $2,118 for wages paid, $1,903 in legal
and accounting fees and $1,933 in miscellaneous office expenditures.
RISK FACTORS
THERE ARE SIGNIFICANT RISKS ASSOCIATED WITH AN INVESTMENT IN GUARDIAN COMMON
STOCK. BEFORE MAKING A DECISION CONCERNING THE PURCHASE OF GUARDIAN SECURITIES,
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS AND OTHER INFORMATION IN
THIS PROSPECTUS WHEN YOU EVALUATE OUR BUSINESS. THE POTENTIAL SUCCESS OF OUR
BUSINESS MODEL MUST BE CONSIDERED IN LIGHT OF OUR STATUS AS A DEVELOPMENT STAGE
COMPANY THE MATERIAL RISKS OF WHICH ARE DESCRIBED AS FOLLOWS:
BUSINESS RISKS
WE HAVE NOT COMMENCED OPERATIONS AND MAY NOT BECOME COMMERCIALLY VIABLE
Since we have not begun operating, the prediction of future financial results is
difficult and, in some cases, impossible. Furthermore, we believe that
period-to-period comparisons of our financial results may not be meaningful and
that the results for any particular period should not be relied upon as an
indication of future performance. To the extent that we are unable to generate
revenues as anticipated, our results of operations and financial condition will
be materially and adversely affected, and our company may fail.
WE MAY BE UNABLE TO CONTINUE AS A GOING CONCERN WHICH COULD RESULT IN A LOSS FOR
OUR INVESTORS
We may never become profitable. Since we have not begun operating, we are
unable at this time to predict our potential to realize a profit. Our auditor
has issued an auditors' report with explanatory paragraph for uncertainty to
continue as a going concern. If we do achieve profitability at some point in the
8
future, we cannot be certain that we will remain profitable or that profits will
increase in the future. At this time, we have not commenced operations and
expect to incur net losses for the foreseeable future. For further discussion,
see the section of this prospectus entitled "management's discussion and
analysis or plan of operation" below.
WE REQUIRE ADDITIONAL FUNDING SINCE WE EXPECT A NEGATIVE OPERATING CASH FLOW
OVER THE NEXT 12 MONTHS
We expect to experience negative operating cash flow for the foreseeable future
as a result of significant upfront expenses needed to develop proprietary
therapeutic proteins for medical and veterinary use. Accordingly, we will need
to raise additional funds in the short-term in order to fund our business plan.
We will need to raise the funds by offering and selling equity securities or
convertible debt securities, which will cause the percentage of ownership of our
shareholders to be reduced. The securities issued to raise funds may have
rights, preferences or privileges that are senior to those of the holders of our
other securities, including our common stock. We do not have any contractual
restrictions limiting our ability to incur debt. Any significant indebtedness,
however, could restrict our ability to fully implement our business plan. If we
are unable to repay the debt, we could be forced to cease operating. For further
discussion, see liquidity and capital resources in the section of this
prospectus entitled "management's discussion and analysis or plan of operation"
below.
CHANGES OR INTERRUPTIONS TO OUR ARRANGEMENTS WITH SUPPLIERS MAY DECREASE OUR
PROFITABILITY OR DESTROY OUR BUSINESS
Serving as a market distributor of laboratory instruments, products and supplies
for Toylab Inc. is our initial business. In the case that Toylab fails to meet
delivery, quality and technology requirements of the customer, we would be
exposed to the risk of being held responsible for customers' claims and could
suffer a possible loss of revenue or higher than anticipated costs, which could
seriously harm our operating results and ability to attract new business and
retain existing business. We are also subject to the risk that Toylab may cease
providing their specialized products or may choose not to upgrade their products
and thereby diminish the quality of the products we are able to deliver. If we
are unable to find a replacement manufacturer, those products may be permanently
unavailable. Any of these events could increase our costs and harm our ability
to deliver products on time and to compete. Guardian intends to carry
distributorship liability insurance to protect itself from this risk but has not
yet acquired this insurance.
WE MAY NOT ACHIEVE THE CUSTOMER BASE NECESSARY TO BECOME OR REMAIN PROFITABLE,
WHICH DECREASES THE VALUE OF OUR STOCK
The laboratory supply industry is highly competitive. Most of our competitors
have significantly greater financial, technical, product development and
marketing resources than us. Our primary competitors for customers include
Prodigene, Inc. with respect to molecular farming, <Genx> International Inc.,
VWR-Canlab, Fisher Scientific and Labequip Ltd. with respect to sale of
laboratory supplies and the laboratory services division of the University of
Guelph in Ontario with respect to gmo testing. Many of our competitors have
substantial installed customer bases and the ability to fund significant
production and marketing efforts. There can be no assurance that future
competition will not have a material adverse effect on our results of
operations, financial condition or business. For further discussion, see
competition under the section of this prospectus entitled "Description of
Business" below.
SALES AND DISTRIBUTION NETWORKS ARE NOT IN PLACE, WHICH COULD IMPEDE POTENTIAL
FUTURE REVENUES
Guardian has yet to establish a significant distribution and support network in
its markets. Failure on the part of Guardian to put into place an experienced
and effective marketing infrastructure in a timely manner could act to delay or
negate the realization of anticipated revenues.
MARKET ACCEPTANCE MAY REQUIRE MORE RESOURCES TO ACHIEVE THAN GUARDIAN HAS
AVAILABLE, WHICH COULD LIMIT GUARDIAN'S FUTURE REVENUES
The viability of Guardian is dependent upon the market acceptance of its future
products. There is no assurance that these will attain a level of market
acceptance that will allow for continuation and growth of its business
operations. In addition, Guardian will need to implement new processes and
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develop products to maintain its multi-staged operations. The development and
launching of such processes and products can involve significant expenditure.
There can be no assurance that Guardian will have sufficient financial resources
to fund such programs and whether such undertaking will be commercially
successful.
GUARDIAN'S MARKETS ARE SUBJECT TO RAPID TECHNOLOGICAL CHANGE AND, THEREFORE,
ITS SUCCESS DEPENDS UPON GUARDIAN'S ABILITY TO IDENTIFY AND INTRODUCE NEW
PRODUCTS
The markets for Guardian's products are characterized by:
- - rapidly changing technologies;
- - evolving and competing industry standards;
- - changing customer needs; and
- - frequent new product introductions and enhancements.
To develop new products for its target markets, the Guardian must develop, gain
access to and use leading technologies in a cost-effective and timely manner and
continue to expand its technical and design expertise. In addition, Guardian
must have its products designed into its customers' future products and maintain
close working relationships with key customers in order to develop new products
that meet their changing needs.
Guardian cannot be assured that it will be able to identify new product
opportunities successfully, develop and bring to market new products, achieve
design wins or respond effectively to new technological changes or product
announcements by its competitors. In addition, Guardian may not be successful
in developing or using new technologies or in developing new products or product
enhancements that achieve market acceptance. The pursuit of necessary
technological advances may require substantial time and expense. Failure in any
of these areas could harm Guardian's anticipated operating results.
THE LOSS OF ANY OF OUR KEY PERSONNEL MAY AFFECT OUR ABILITY TO IMPLEMENT OUR
BUSINESS PLAN AND CAUSE OUR STOCK TO DECLINE IN VALUE.
We are dependent on key employees to implement our business plan, and the loss
of any of them may have a negative affect on our ability to timely and
successfully implement our business plan. We have an employment agreement with
Sun Lee, CEO and president and with James Macpherson, director and general
manager. We do not have any written agreements with Paul Arnison, director,
Collette Jako or Malgorzata Nowak. We have not obtained key man insurance with
respect to such persons. The key persons include Dr. Sun Lee, James
Macpherson, Phd, Paul Arnison, Phd, Collette Jako, Phd and Malgorzata Nowak.
GOVERNMENT REGULATION OF THE BIOTECHNICAL INDUSTRY AND GENETIC MODIFICATIONS MAY
NEGATIVELY AFFECT OUR ABILITY TO PROVIDE THE MARKETPLACE WITH OUR PRODUCTS AND
SERVICES.
The laws and regulations applicable to genetically modified species (gmo)
directly affect us because our products and services are dependent on the
biotechnical industry. These laws and regulations are still evolving and
unclear and have the potential of affecting our business. We are not aware of
any current or pending laws that will have a substantial negative impact on our
ability to carry out our business plan.
GUARDIAN MAY BE UNABLE TO PROTECT ITS INTELLECTUAL PROPERTY, TRADE SECRETS AND
KNOW-HOW WHICH WOULD REMOVE A BARRIER TO COMPETITION AND MAY DIRECTLY AFFECT THE
AMOUNT OF REVENUE IT GENERATES.
Guardian depends heavily on its intellectual property and is dependent on its
ability to maintain the confidentiality of its bio technology. Although
Guardian intends to employ various methods, including patents, trademarks,
copyrights and confidentiality agreements with employees, consultants and third
party businesses, to protect its intellectual property and trade secrets, there
can be no assurance that it will be able to maintain the confidentiality of any
of its proprietary technologies, know-how or trade secrets, or that others will
not independently develop substantially equivalent technology. The failure or
inability to protect these rights could have a material adverse effect on
guardian's operations.
IF GUADIAN IS ACCUSED OF INFRINGING THE INTELLECUAL PROPERTY RIGHTS OF OTHER
PARTIES, IT MAY BECOME SUBJECT TO TIME-CONSUMING AND COSTLY LITIGATION. IF
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GUARDIAN LOSES, IT COULD SUFFER A SIGNIFICANT IMPACT ON ITS BUSINESS AND IT MAY
BE FORCED TO PAY DAMAGES
Third parties may assert that the Guardian's products infringe their proprietary
rights, or may assert claims for indemnification resulting from infringement
claims against it. Any such claims may cause Guardian to delay or cancel
shipment of its products or pay damages that could seriously harm its business,
financial condition and results of operations. In addition, irrespective of the
validity or the successful assertion of such claims, Guardian could incur
significant costs in defending against such claims.
GUARDIAN'S LITIGATION MAY BE EXPENSIVE, MAY BE PROTRACTED, AND CONFIDENTIAL
INFORMATION MAY BE COMPROMISED
Whether or not Guardian is successful in any litigation, it expects the
litigation to consume substantial amounts of its financial and managerial
resources. Further, because of the substantial amount of discovery required in
connection with this type of litigation, there is a risk that some of Guardian's
confidential information could be compromised by disclosure.
INVESTMENT RISKS
OUR COMMON STOCK HAS NO PRIOR MARKET AND PRICES MAY DECLINE AFTER THE OFFERING.
The value and transferability of our common stock is currently affected by the
fact that there is no market for the stock. No assurance can be given that a
market for our common stock will develop or that it will be quoted on the
over-the-counter Bulletin Board maintained by the NASD.
OUR ISSUANCE OF ADDITIONAL SHARES MAY HAVE THE EFFECT OF DILUTING THE INTEREST
OF SHAREHOLDERS; OUR COMMON STOCK SHAREHOLDERS DO NOT HAVE PREEMPTIVE RIGHTS.
Any additional issuances of common stock by us from our authorized but unissued
shares may have the effect of diluting the percentage interest of existing
shareholders. The Board of Directors has the power to issue such shares without
shareholder approval. We fully intend to issue additional common shares in order
to raise capital to fund our business operations and growth objectives.
SHAREHOLDERS MAY HAVE LITTLE CONTROL OVER DECISION MAKING DUE TO CONCENTRATION
OF OWNERSHIP IN THE HANDS OF MANAGEMENT AND DIRECTORS.
Our executive officers, directors and one principal shareholder own or exercise
full or partial control over 73.18% of our outstanding common stock. As a
result, other investors in our common stock may not have much influence on
corporate decision making. In addition, the concentration of control over our
common stock in the executive officers, directors and principal shareholder
could prevent a change in control of Guardian.
THERE ARE UNIQUE POLITICAL RISKS ASSOCIATED WITH INVESTING IN COMPANIES FROM
KOREA
Relations between Korea and North Korea have been tense over most of Korea's
history. The level of tension between the two Koreas has fluctuated and may
increase or change abruptly as a result of current or future events. The
occurrence of such events could have a material adverse effect on Guardian's
operations and the price of Guardian's shares.
THIS OFFERING IS SELF UNDERWRITTEN WITH NO MINIMUM, WHICH COULD LEAVE GUARDIAN
UNDER FUNDED AND UNABLE TO COMPLETE ITS BUSINESS PLAN.
There is no offering minimum or escrow provision and Guardian will retain all
subscribed funds, even if funds received are insufficient to execute our
business plan.
GUARDIAN MAY RECEIVE ONLY NOMINAL PROCEEDS OR NO PROCEEDS AT ALL, WHICH COULD
LEAVE GUARDIAN UNDER FUNDED AND UNABLE TO COMPLETE ITS BUSINESS PLAN.
11
Guardian may only receive nominal proceeds or none at all from our
self-underwritten offering. There may be a resultant shortfall in funds
available to Guardian and Guardian would be impaired in its ability to carry out
its business plan.
SELLING SHAREHOLDERS' OFFERING MAY REDUCE THE PROCEEDS GENERATED BY THE PRIMARY
OFFERING BY GUARDIAN.
Concurrent offering by selling shareholders and Guardian may result in
competition for a limited amount of capital, which prospective shareholders will
invest. In case that selling shareholders sell their shares prior to Guardian
and there are not enough investors to purchase all shares offered by Guardian,
the proceeds from the primary offering will reduce. As a result of insufficient
proceeds, Guardian may fail to complete its planned operation and business
strategy successfully.
GUARDIAN'S COMMON STOCK IS CONSIDERED A "PENNY STOCK", WHICH MAKES IT MORE
DIFFICULT TO SELL THAN AN EXCHANGE-TRADED STOCK.
Shares of Guardian's common stock will probably be subject to rules adopted by
the Securities and Exchange Commission that regulate broker-dealer practices in
connection with transactions in "penny stocks." Penny stocks are generally
equity securities with a price of less than $5.00, except for securities
registered on certain national securities exchanges or quoted on the NASDAQ
system, provided that current price and volume information with respect to
transactions in those securities is provided by the exchange or system. The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Securities and Exchange Commission, which
contains the following:
- - a description of the nature and level of risk in the market for penny stocks
in both public offerings and secondary trading;
- - a description of the broker's or dealer's duties to the customer and of the
rights and remedies available to the customer with respect to violation to such
duties or other requirements of securities' laws;
- - a brief, clear, narrative description of a dealer market, including "bid" and
"ask" prices for penny stocks and the significance of the spread between the
"bid" and "ask" price;
- - a toll-free telephone number for inquiries on disciplinary actions;
- - definitions of significant terms in the disclosure document or in the conduct
of trading in penny stocks; and
- - such other information and is in such form, including language, type, size and
format, as the Securities and Exchange Commission shall require by rule or
regulation.
Stockholders should be aware that, according to the Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include:
- - control of the market for the security by one or a few broker-dealers that
are often related to the promoter or issuer;
- - manipulation of prices through prearranged matching of purchases and sales
and false and misleading press releases;
- - "boiler room" practices involving high pressure sales tactics and
unrealistic price projections by inexperienced sales persons;
- - excessive and undisclosed bid-ask differentials and markups by selling
broker-dealers; and
- - the wholesale dumping of the same securities by promoters and
broker-dealers after prices have been manipulated to a desired level, along
with the inevitable collapse of those prices with consequent investor
losses.
WE DO NOT ANTICIPATE PAYING DIVIDENDS TO COMMON STOCKHOLDERS IN THE FORESEEABLE
FUTURE, WHICH MAKES INVESTMENT IN OUR STOCK SPECULATIVE OR RISKY.
We have not paid dividends on our common stock and do not anticipate paying
dividends on our common stock in the foreseeable future. The board of directors
has sole authority to declare dividends payable to our stockholders. The fact
that we have not and do not plan to pay dividends indicates that we must use all
of our funds generated by operations for reinvestment in our business
activities. Investors also must evaluate an investment in Guardian solely on
the basis of anticipated capital gains.
12
LIMITED LIABILITY OF OUR EXECUTIVE OFFICERS AND DIRECTORS MAY DISCOURAGE
SHAREHOLDERS FROM BRINGING A LAWSUIT AGAINST THEM.
Our Articles of Incorporation and Bylaws contain provisions that limit the
liability of directors for monetary damages and provide for indemnification of
officers and directors. These provisions may discourage shareholders from
bringing a lawsuit against officers and directors for breaches of fiduciary duty
and may also reduce the likelihood of derivative litigation against officers and
directors even though such action, if successful, might otherwise have benefited
the shareholders. In addition, a shareholder's investment in Guardian may be
adversely affected to the extent that costs of settlement and damage awards
against officers or directors are paid by us pursuant to the indemnification
provisions of the bylaw. The impact on a shareholder's investment in terms of
the cost of defending a lawsuit may deter the shareholder from bringing suit
against any of our officers or directors. We have been advised that the SEC
takes the position that these Article and Bylaw provisions do not affect the
liability of any director under applicable federal and state securities laws.
SINCE WE ARE A CANADIAN COMPANY AND MOST OF OUR ASSETS AND KEY PERSONNEL ARE
LOCATED IN CANADA, YOU MAY NOT BE ABLE TO ENFORCE ANY UNITED STATES JUDGMENT FOR
CLAIMS YOU MAY BRING AGAINST US, OUR ASSETS, OUR KEY PERSONNEL OR THE EXPERTS
NAMED IN THIS PROSPECTUS.
We have been organized under the laws of Canada. Many of our assets are located
outside the United States. In addition, a majority of the members of our board
of directors and our officers and the experts named in this prospectus are
residents of countries other than the United States. As a result, it may be
impossible for you to effect service of process within the United States upon us
or these persons or to enforce against us or these persons any judgments in
civil and commercial matters, including judgments under United States federal
securities laws. In addition, a Canadian court may not permit you to bring an
original action in Canada or to enforce in Canada a judgment of a U.S. court
based upon civil liability provisions of U.S. federal securities laws. See
"Enforceability of Civil Liabilities."
FORWARD LOOKING STATEMENTS
This prospectus contains forward-looking statements. We intend to identify
forward-looking statements in this prospectus using words such as "anticipates",
"will", "believes", "plans", "expects", "future", "intends" or similar
expressions. These statements are based on our beliefs as well as assumptions we
made using information currently available to us. Because these statements
reflect our current views concerning future events, these statements involve
risks, uncertainties and assumptions. Actual future results may differ
significantly from the results discussed in the forward-looking statements.
Some, but not all, of the factors that may cause these differences include those
discussed in the Risk Factors section. You should not place undue reliance on
these forward-looking statements.
USE OF PROCEEDS
We will not receive any of the proceeds from the selling shareholders sale of
the Guardian Biotechnologies Inc. common stock.
Guardian is offering 5,000,000 shares of its common stock at US$0.10 per share,
with no brokerage expense. There are no minimum or maximum requirements for the
sale of these shares. Should funds be raised they will be made available to
Guardian for its benefit. There are no minimum amounts required to be raised by
Guardian before the funds are available to it nor are there any provisions for
funds to be held in escrow.
(IF ONLY A PORTION IS RAISED)
USE OF PROCEEDS EXPENDITURES PERCENTAGE EXPENDITURES PERCENTAGE
If $500,000 is raised If $250,000 is raised
Plant and equipment US$165,000 33.0% US$ nil 0.0%
Offering expense 22,220 4.4% 22,220 8.9%
Sales and marketing 24,000 4.8% 18,000 7.2%
Travel 100,000 20.0% 75,000 30.0%
13
Sales and marketing salaries 138,780 27.8% 97,780 39.1%
Trade show 36,000 7.2% 27,000 10.8%
Printing 14,000 2.8% 10,000 4.0%
TOTAL US$500,000 100.0% US$250,000 100 %
If $1,000 is raised If $100,000 is raised
Plant and equipment US$ nil 0.0% US$ nil 0.0%
Offering expense 1,000 100.0% 22,220 22.2%
Sales and marketing nil 0.0% 7,200 7.2%
Travel nil 0.0% 16,700 16.7%
Sales and marketing salaries nil 0.0% 39,080 39.1%
Trade show nil 0.0% 10,800 10.8%
Printing nil 0.0% 4,000 4.0%
TOTAL US$ 1,000 100.0% US$100,000 100.0%
DETERMINATION OF OFFERING PRICE
This prospectus is solely for the purpose of allowing certain of our
shareholders to sell their stock and to allow Guardian to sell up to 5,000,000
shares of common stock at US$0.10 per share. The shares may be sold when the
registration statement becomes effective, or each party may elect to sell some
or all of their shares at a later date while the registration statement is
effective.
The offering price of the common stock being offered by the selling shareholders
and by Guardian has been determined arbitrarily and has no relationship to any
established criteria of value, such as book value or earnings per share.
Additionally, because we have no significant operating history and have not
generated any revenues to date, the price of the common stock is not based on
past earnings, nor is the price of the common stock indicative of the current
market value for the assets owned by us. We make no representations as to any
objectively reasonable value of the common stock. Since we have not retained an
underwriter for purposes of this offering, the offering price has not been
subject to evaluation by any third party as would be the case in an underwritten
offering. Prices for the shares of our common stock after this offering will be
determined in the available market and may be influenced by many factors,
including the depth and liquidity of the market for our common stock, the
biotechnology industry as a whole, and general economic and market conditions.
In determining the offering price, Guardian considered the pricing available to
its founding shareholders of $0.0006 per share and the pricing available to its
initial shareholders of $0.063 per share. Guardian also considered that it is in
the preliminary stage of its development and the relative risk of an investment
in Guardian common stock. After making these considerations, Guardian felt that
$0.10 per share of common stock was fair to both existing shareholders and to
new investors.
DIVIDEND POLICY
We intend to retain any earnings for use in our business. We do not intend to
pay dividends on our shares for the foreseeable future. The declaration of
dividends is subject to the discretion of the board of directors and
consequently, no assurance can be given to the amount of dividends per shares or
that any such dividends will be declared. Future cash dividends, if any, will
also depend upon our future operations and earnings, capital requirements and
surplus, general financial condition, contractual restrictions and other factors
as may deem relevant. Loan agreements and contractual arrangements entered into
by Guardian may also restrict distributions of dividends.
DILUTION
Sales of common stock by selling shareholders will not result in any substantial
change to the net tangible book value per share before and after the
distribution of shares by the selling shareholders. There will be no change in
net tangible book value per share attributable to cash payments made by
purchasers of the shares being offered by the selling shareholders.
14
Sales of common stock by Guardian will result in substantial change to the net
tangible book value per share before and after the distribution of shares by
Guardian. There will be a change in net tangible book value per share
attributable to cash payments made by purchasers of the shares being offered.
Prospective investors should be aware, however, that the price of shares covered
by this prospectus may not bear any rational relationship to net tangible book
value per share of Guardian Biotechnologies Inc.
As of October 31, 2002, our net tangible book value was approximately US$218,690
or $0.03 per share. Net tangible book value per share is determined by dividing
our net tangible book value by the number of outstanding shares. Our net
tangible book value is determined by subtracting the value of our intangible
assets and total liabilities from our total assets. Dilution is determined by
subtracting net tangible book value per share as of October 31, 2002 from the
public offering price per share resulting in net proceeds to Guardian without
taking into account any other changes in such net tangible book value after
October 31, 2002. The following table illustrates this per share dilution:
US$
Initial public offering price per share received by Guardian $0.10
Tangible book value per share at October 31, 2002 $0.03
Tangible book value per share at November 30, 2002 $0.0027
Net tangible book value per share after this offering $0.054
Increase in net tangible book value per share from new investors in
this offering $0.03
Decrease in value from offering price $0.04
The following table summarizes on a pro forma basis the differences as of
November 30, 2002, between the existing shareholders and the new investors with
respect to the number of shares purchased from the existing shareholders, the
total consideration paid and the average price per share paid, assuming that all
shares offered are sold:
SHARES TOTAL
PURCHASED CONSIDERATION AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
Existing shareholders 8,200,000 62.12 US$356,597 41.63 US$0.043
Existing shares
offered for sale (2,200,000) (16.67) 0 0 n/a
New investors:
Selling shareholders 2,200,000 16.67 0 0 n/a
8,200,000 62.12 US$356,597 41.63 US$0.043
Maximum
Company sale of shares 5,000,000 37.88 US$500,000 58.37 US$0.10
Total 13,200,000 100.00 US$856,597 100.00 US$0.065
Nominal
Company sale of shares 100,000 1.20 US$ 10,000 2.73 US$0.10
Total 8,300,000 100.00 US$366,597 100.00 US$0.044
Other
Company sale of shares 1,000,000 10.87 US$100,000 21.90 US$0.10
Total 9,200,000 100.00 US$456,597 100.00 US$0.050
Company sale of shares 2,500,000 23.36 US$250,000 41.21 US$0.10
Total 10,700,000 100.00 US$606,597 100.00 US$0.057
Company sale of shares 4,000,000 32.79 US$400,000 52.87 US$0.10
Total 12,200,000 100.00 US$756,597 100.00 US$0.062
Our pro forma net tangible book value at November 30, 2002, assuming the sale of
100 per cent of the shares offered, would be US$718,690 or US$0.054 per
15
outstanding share. This represents an increase in net tangible book value of
US$0.027 per share to existing shareholders and a dilution in net tangible book
value of US$0.041 per share to new purchasers of our shares in this offering.
SELLING SHAREHOLDERS
The following table sets forth the names of the selling shareholders, the number
of shares of common stock beneficially owned by the selling shareholders prior
to the offering, the number of shares of common stock that may be offered for
sale pursuant to this prospectus by such selling shareholders, the number of
shares of common stock beneficially owned by the selling shareholders after the
offering, and the percentage ownership after the offering. The offered shares
of common stock may be offered from time to time by each of the selling
shareholders named below. (See "Plan of Distribution"). However, the selling
shareholders are under no obligation to sell all or any portion of the shares of
common stock offered. Neither are the selling shareholders obligated to sell
such shares of common stock immediately under this prospectus. Particular
selling shareholders may not have a present intention of selling their shares
and may offer less than the number of shares indicated. Because the selling
shareholders may sell all or part of the shares of common stock offered hereby,
the following table assumes that all shares offered under this prospectus have
been sold by the selling shareholders.
NAME NUMBER OF SHARES PERCENTAGE OF THE NUMBER OF SHARES
BENEFICIALLY OWNED CLASS BENEFICIALLY NUMBER OF SHARES BENEFICIALLY OWNED
PRIOR TO THE OWNED PRIOR TO THE OFFERED AFTER THE OFFERING**
OFFERING OFFERING
- --------------------------------------------------------------------------------------------------------------
Penn Capital Canada Ltd. (1) 650,000 7.93 650,000 0
16TH Floor, 543 Granville Street
Vancouver, BC, Canada
V6C 1X8
- ------------------------ ----------------- ------------------ ---------------- ------------------
World Cup Finance Ltd. (2) 550,000 6.71 550,000 0
957 Road Town, Tortula, British
Virgin Islands
- ------------------------ ----------------- ------------------ ---------------- ------------------
Song Do Chung 500,000 6.10 500,000 0
C/o ipclab Co.
1F, Wolpyung-dong 1082
Seo-Gu, Daejeon, Korea
- ------------------------ ----------------- ------------------ ---------------- ------------------
Mi Kyung Youn 500,000 6.10 500,000 0
801-106 Bando Apt.
167 Songpa-gu, Seoul, Korea
- ------------------------ ----------------- ------------------ ---------------- ------------------
TOTAL 2,200,000 26.83 2,200,000 0
- ------------------------ ----------------- ------------------ ---------------- ------------------
** Assumes the sale of all offered shares of common stock under this offering.
(1) Penn Capital Canada Ltd. is beneficially owned equally by Hye Kyung Kim
and Dae C. Jon Penn Capital Canada Ltd. is a Vancouver based financial
consulting firm providing services to Guardian.
(2) World Cup Finance Ltd. is beneficially owned by Jai Woo Lee World Cup
Finance Ltd. is in the process of preparing a business plan for Guardian.
PLAN OF DISTRIBUTION
Dr. Sun Lee will offer and sell up to an aggregate of 5,000,000 common shares
offered by Guardian under this prospectus, on behalf of Guardian, on a self
underwritten basis where he is not required to sell any specific number or
dollar amount of securities but will offer to sell the securities directly to
the public at a price of $0.10 per share until such time as the common stock may
be quoted on the OTC Bulletin Board and thereafter at prevailing market prices
or privately at negotiated prices. Guardian does not anticipate any broker or
underwriter participation in this offering and will receive the proceeds of this
portion of the offering. The offering will close no later than 190 days after
the effective date of the registration statement that includes this prospectus.
Dr. Sun Lee will be selling the shares on behalf of Guardian in reliance on the
safe harbor provisions under a(4)(ii)of Rule 3a4-1 under the Securities Exchange
Act.
16
We are unaware of any intention on the part of management or affiliated parties
to purchase any shares in this offering.
Guardian believes that shares registered by this prospectus may be offered by
selling shareholders for sale in countries other than the United States,
specifically in Canada and Korea, subject to securities regulations in those
jurisdictions.
The selling shareholders may sell some or all of their common stock in one or
more transactions, including block transactions:
1. On such public markets or exchanges as the common stock may from time to time
be trading;
2. In privately negotiated transactions;
3. Through the writing of options on the common stock;
4. In short sales; or
5. In any combination of these methods of distribution.
The sales price to the public is fixed at US$0.10 per share until such time as
the shares of our common stock become traded on the over-the-counter Bulletin
Board maintained by the NASD or another exchange. Although we intend to apply
for quotation of our common stock on the over-the-counter Bulletin Board, public
trading of our common stock may never materialize. If our common stock becomes
quoted on the over-the-counter Bulletin Board or another exchange, then the
sales price to the public will vary according to the selling decisions of each
selling shareholder and the market for our stock at the time of resale. In these
circumstances, the sales price to the public may be:
1. The market price of our common stock prevailing at the time of sale;
2. A price related to such prevailing market price of our common stock; or
3. Such other price as the selling shareholders determine from time to time.
The shares may also be sold in compliance with the Securities and Exchange
Commission's Rule 144. The selling shareholders may also sell their shares
directly to market makers acting as principals or brokers or dealers, who may
act as agent or acquire the common stock as a principal. Any broker or dealer
participating in such transactions as agent may receive a commission from the
selling shareholders, or, if they act as agent for the purchaser of such common
stock, from such purchaser. The selling shareholders will likely pay the usual
and customary brokerage fees for such services. Brokers or dealers may agree
with the selling shareholders to sell a specified number of shares at a
stipulated price per share and, to the extent such broker or dealer is unable to
do so acting as agent for the selling shareholders, to purchase, as principal,
any unsold shares at the price required to fulfill the respective broker's or
dealer's commitment to the selling shareholders. Brokers or dealers who acquire
shares as principals may thereafter resell such shares from time to time in
transactions in a market or on an exchange, in negotiated transactions or
otherwise, at market prices prevailing at the time of sale or at negotiated
prices, and in connection with such re-sales may pay or receive commissions to
or from the purchasers of such shares. These transactions may involve cross and
block transactions that may involve sales to and through other brokers or
dealers. If applicable, the selling shareholders may distribute shares to one or
more of their partners who are unaffiliated with us. Such partners may, in turn,
distribute such shares as described above. We can provide no assurance that all
or any of the common stock offered will be sold by the selling shareholders.
We are bearing all costs relating to the registration of the common stock,
estimated to be US$22,220.00. The selling shareholders, however, will pay any
commissions or other fees payable to brokers or dealers in connection with any
sale of the common stock.
The selling shareholders must comply with the requirements of the Securities Act
of 1933 and the Securities Exchange Act of 1934 in the offer and sale of the
common stock. In particular, during such times as the selling shareholders may
be deemed to be engaged in a distribution of the common stock, and therefore be
considered to be an underwriter, they must comply with applicable law and may,
among other things:
1. Not engage in any stabilization activities in connection with our common
stock;
2. Furnish each broker or dealer through which common stock may be offered, such
copies of this prospectus, as amended from time to time, as may be required by
such broker or dealer; and
3. Not bid for or purchase any of our securities or attempt to induce any person
to purchase any of our securities other than as permitted under the Securities
Exchange Act.
There is no assurance that any of the selling shareholders will sell any or all
17
of the shares offered by them. Under the securities laws of certain states, the
shares may be sold in such states only through registered or licensed brokers or
dealers. In addition, in certain states the shares may not be sold unless they
have been registered or qualified for sale in that state or an exemption from
registration or qualification is available and is met.
The offer and sale of the common stock offered by Guardian under this prospectus
will commence after the registration statement that includes this prospectus
becomes effective. There are no pre-existing contractual agreements for any
person to purchase the shares. Dr. Sun Lee will offer and sell the shares, on
behalf of Guardian, at a price of US$0.10 per share until such time as its
common stock may be quoted on the over-the-counter Bulletin Board and thereafter
at prevailing market prices or privately at negotiated prices. Guardian does
not anticipate any broker participation in this offering and will receive the
proceeds of this portion of the offering. The offering will close no later than
190 days after the effective date of the registration statement that includes
this prospectus. Dr. Sun Lee will be selling the shares on behalf of Guardian in
reliance on the safe harbor provisions under a(4)(ii)of Rule 3a4-1 under the
Securities Exchange Act. Prospective shareholders will be required to complete
and return to Guardian a signed subscription agreement, the material terms of
which are as follows (the subscription agreement is included as an exhibit to
this prospectus):
- - The offering will begin after the registration statement that includes
this prospectus become effective and will close no later than 190 days after the
effective date of the registration statement.
- - All funds paid in settlement of the subscription for US$ 0.10 per share
will be immediately available to Guardian.
Guardian estimates that the expenses for the offer and sale of the shares
registered by this prospectus to be US$22,220.00, all costs to be borne by
Guardian.
EXCHANGE RATES
Guardian records its financial transactions in Canadian (Cdn) dollars. The
functional currency of Guardian is the Canadian Dollars ("Cdn" or "CDN"). The
primary economic environment in which Guardian operates is Canada. However, the
financial statements of Guardian have been reported in United States dollars and
have been prepared in a manner, and reflects the adjustments which management
believes are necessary, to conform to accounting principles generally accepted
in the United States of America. Fluctuation in the exchange rate between the
Cdn dollar and the US dollar will affect the amount of dollars received in
respect of cash dividends or other distributions paid in Cdn dollars by us.
The following table sets forth, for the periods and dates indicated, certain
information concerning the noon buying rate. No representation is made that the
Cdn dollar amounts referred to herein could have been or could be converted into
US dollars at any particular rate, or at all.
YEARS ENDED OCTOBER 31 (CDN$ PER US$1.00)
AVERAGE RATE(1) YEAR END HIGH LOW
1998 1.4721 1.5432 1.5770 1.4005
1999 1.4948 1.4720 1.5557 1.4512
2000 1.4771 1.5273 1.5311 1.4350
2001 1.5411 1.5905 1.5905 1.4933
2002 1.5718 1.5610 1.6128 1.5108
June, 2002 1.5499 1.5108
July, 2002 1.5880 1.5145
August, 2002 1.5963 1.5523
September, 2002 1.5863 1.5545
October, 2002 1.5943 1.5607
November, 2002 1.5903 1.5528
December, 2002 1.5800 1.5478
January, 2003 1.522 1.575
February, 2003 1.488 1.5315
18
(1) The average of the noon buying rates on the last date of each month (or a
portion thereof) during the period.
CAPITALIZATION
The following table sets forth our capitalization as of October 31, 2002. Our
capitalization is presented:
on an actual basis; and on a pro forma basis as adjusted to reflect the issuance
during November, 2002 of 1,200,000 shares for services and to reflect the
successful sale of 5,000,000 of its common shares by Guardian.
You should read this table in conjunction with ''Management's Discussion and
Analysis of Financial Condition and Results of Operations'' and our financial
statements and the notes thereto, included elsewhere in this prospectus. On a
pro forma as adjusted basis, cash equivalents will be US$759,186, total shares
issued and outstanding will be 13,200,000 and total stockholders' equity will be
US$718,690.
AS OF OCTOBER 31, 2002 AS ADJUSTED (AMOUNTS IN US DOLLARS)
PRO FORMA ACTUAL PRO FORMA
Cash $259,186 $ 759,186
Long-term debt, including capital lease obligations
less current portion $ nil $ nil
Guaranteed or secured debt $ nil $ nil
Unguaranteed or unsecured debt $ nil $ nil
Stockholders' equity:
Common stock: no par value;
100,000,000 authorized;
7,000,000 shares issued and outstanding on
an actual basis, $318,569
8,200,000 shares issued and outstanding on
a pro forma basis, $ 356,597
13,200,000 shares issued and outstanding on
a pro forma as adjusted basis: $ 856,597
Additional paid-in capital $ nil $ nil
Loans to employees to acquire common stock $ nil $ nil
Accumulated earnings (deficit) $(98,207) $(136,235)
Accumulated other comprehensive income (loss) $ (1,672) $ (1,672)
Total stockholders' equity $218,690 $ 718,690
SELECTED FINANCIAL AND OTHER DATA
The selected financial and other data set forth below should be read in
conjunction with the financial statements of Guardian Biotechnologies Inc.,
including the notes thereto, and ''Management's Discussion and Analysis of
Financial Condition and Results of Operations'' included in this prospectus. The
statement of operations data set forth below for the period ended October 31,
2002 and the balance sheet data as of October 31, 2002 are derived from the
audited financial statements of Guardian included elsewhere in this prospectus,
which have been audited by Pannell Kerr Forster (whose partners are members of
The Canadian Institute of Chartered Accountants). Our financial statements are
prepared in accordance with accounting principles generally accepted in the
United States of America.
FROM INCEPTION AUGUST 15, 2002 TO OCTOBER 31, 2002
(AMOUNTS IN US DOLLARS EXCEPT NUMBER OF SHARES)
STATEMENT OF OPERATIONS DATA:
Revenues: $ nil
Costs and expenses:
Consulting fees $ 92,253
Other $ 5,954
Depreciation and amortization $ nil
Operating income (loss) $ (98,207)
Weighted average number of shares outstanding 3,831,169
Basic and diluted loss per share of common stock $ 0.026
19
AS OF OCTOBER 31, 2002(1)
BALANCE SHEET DATA:
Cash $ 259,186
Working capital $ 218,690
Total assets $ 259,186
Long-term debt, excluding current portion $ nil
Total stockholders' equity $ 218,690
(1) Reflects the period from August 15, 2002 (inception) to October 31, 2002.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
As a newly incorporated company, Guardian Biotechnologies Inc. has no previous
business activity. The following discussion and analysis should be read in
conjunction with our audited financial statements and notes thereto for the
period from inception, August 15, 2002, through October 31, 2002 and other
financial information included elsewhere in this prospectus. This prospectus
contains, in addition to historical information, forward-looking statements that
involve risks and uncertainties. Guardian's actual results may differ
materially from the results discussed in the forward-looking statements.
Examples of these forward looking statements include the ability of Guardian to
reach contractual terms with its parent company, the ability of Guardian to
achieve sales of Toylab products and to generate fees for services, and the
ability of Guardian to raise sufficient funds to carry out its business plan.
OVERVIEW
Guardian Biotechnologies Inc. (Guardian) is a Canadian corporation formed
federally on August 15, 2002. Nexgen Biotechnologies, Inc. (Nexgen) is a 60.98%
shareholder (before this offering) and parent company of Guardian. Sun Lee, PhD,
is a director, officer and 12.2% shareholder (before this offering) of Guardian
and is a director, officer and shareholder of Nexgen. Guardian and Nexgen have
two agreements and a Memorandum of Understanding in place to define their
business relationship and responsibilities between the two companies, and
summarized as follows: 1. Guardian expects to utilize proprietary molecular
farming technology developed by Nexgen to develop advanced protein products.
Nexgen intends to transfer to Guardian its synthetic gene design, a host system
technology(1) using vegetables such as cucumbers and oriental melons, access to
ten proprietary genetic on/off switches (promoters) and access to Nexgen's Asian
and European markets. As a start of many transfer agreements to follow after
entering into a Memorandum of Understanding, Nexgen agreed to transfer one of
its proprietary gene designs (Hyperthyroidism Diagnostic Assay System) to
Guardian at no cost during the test period. Nexgen and Guardian will negotiate
to develop a license agreement for the distribution of a hyperthyroidism assay
test kits should the research be successful. 2. Nexgen intends to provide GMO
testing kits to be distributed by Guardian plus proprietary technology developed
by Nexgen to be utilized in the GMO testing techniques. 3. Nexgen has
transferred to Guardian its exclusive distribution rights in North America,
pursuant to an agreement with Toylabs, Inc., to Guardian.
(1) Host system technology is a term that simply refers to Guardian choosing the
type of plant that makes the most protein. For example, making a protein in
tobacco plants may not make as much protein as using a Korean melon plant.
(2) Hyperthyroidism is a condition resulting from excessive activity of the
thyroid gland
(3) GMO - genetically modified organism's
Guardian Biotechnologies Inc. is a development stage company engaged in the
field of molecular farming to harvest useful proteins and enzymes for cosmetics,
industry, medical and veterinary use. These derived proteins will be formed
through the use of plants as the production system within the biotechnology
arena referred to as molecular farming. We intend to recruit recognized leaders
in scientific research who will aid Guardian in its research goals by
participating on the advisory board of scientific directors for Guardian. We
20
expect to develop relations with North American pharmaceutical, cosmetic and
other industrial partners to distribute medical, cosmetic and industrial enzymes
to a variety of commercial markets. Guardian hopes to utilize a host plant that
has no relation to food crops in America, thus achieving a unique status of
product that will be uncontaminated and less regulated. This is expected to be
an advantage in achieving a position in the molecular farming industry.
Short term revenue streams are expected to be generated from the sales of lab
equipment and supplies and from fees for a service program that will test
genetically modified species (GMO).
A brief history of Nexgen Biotechnologies, Inc. follows:
1999 Nov. 4 Incorporated
2000 Apr. 21 Registered as a venture company
(Small and Medium Business Administration, Article
2000142271-0542)
2000 May. 23 First Korean company to develop and distribute GMO
Detection Kit
2000 Jun. 26 GMO Detection Kit: Certificates by Korea Research
Institute of Bioscience and Biotechnology
2000 Jul. 3 GMO Detection Kit: Certificates by Korea Food Research
Institutes
2000 Dec. 1 GMO Detection Kit: One of the top 10 researches of the year
according to Popular Science
2001 Feb. 12 Accredited ISO 9001 for GMO Kit
2001 Mar. 05 First Korean company to develop and distribute GMO
Diagnosis Kit
2001 Mar. 22 GMO Detection Kit is approved by the US FDA
2001 Jul. 12 GMO Diagnosis Kit is approved by the US FDA
2001 Sep. 26 First Korean company to be accredited with ISO 9001
for GMO Search Engine (ISO: International Standards
Organization. Companies can apply to various certifying
agencies who review the standard operating procedures of a
company and can then certify that the company follows good
laboratory practices and their results will be the best
possible.)
Nexgen is a biotech company in the molecular farming business with a dedicated
focus on developing and mass-producing recombinant proteins used in
pharmaceuticals, industrial enzymes and cosmeceuticals. A recombinant protein is
a protein where the amino-acid sequence is altered in any way to make a protein
that is different form the original. Alongside with its molecular farming
business, Nexgen is developing a position in the GMO detection kit market
against international and local competitors. Nexgen commercialized its GMO
detection kits in mid 2000 and established a 'Korea GMO Detection Center'. The
center provides not only qualitative determination services, which determine
whether or not the organism is genetically modified, but also provides
quantitative determination services of GM foods, which show how much of the
organism is genetically modified, to institutions, government and businesses.
The GMO Detection Kit was awarded a Korea Millennium Product 2000 by the
Ministry of Commerce, Industry and Energy. Nexgen's main business, molecular
farming, involves producing useful proteins for cosmetics, industrial process,
and edible human vaccines for oral vaccination. Its principal research
institute was opened in February 2000. 70% of Nexgen's employees are R&D staff
of which six have Ph.D's in related fields. Nexgen cooperates with a number of
research and educational institutes in Korea, and also holds international ties
with major scientific institutes, such as National Research Center/Plant
Biotechnology Institutes ("NRC/PBI") of Canada. Nexgen was designated as a
bio-venture company by the Korean Government. Nexgen has generated modest
revenues to date but has not as yet become profitable and is operating on
shareholder investments to pursue its business plan.
PLAN OF OPERATION
At October 31, 2002, Guardian had US$259,186 of cash. Guardian holds the
majority of its cash in Canadian currency, and pays most of its expenses in
Canadian currency. Guardian does not engage in any hedging transactions against
exchange rate fluctuations.
21
Guardian plans to schedule its business operation by meeting the following
Phases:
Phase 1
Present ~ June 2003: Raise Funds and Conduct Market Survey
Guardian will focus on raising Cdn$500,000 to continue its research and cover
operation costs until Guardian generates self sustaining revenues. Guardian has
currently three employees to coordinate the process of raising funds, to conduct
market surveys and to advance its molecular farming. Guardian has conducted
research into various potential target markets, focusing on three or four of the
core target markets in the United States and Canada, such as VWR in Philadelphia
(a distributor of lab equipment). Guardian estimates that it will expend
Cdn$20,000 to complete Phase 1, from funds on hand.
Phase 2
Toylab Products: Guardian will hire a sales person who will be in charge of
distribution of Toylab products in Canada at an annual salary of Cdn $40,000.
Guardian anticipates carrying the products in the next two to three months.
GMO Screening Services: Guardian already has two PCR machines with which it will
perform the standard or qualitative GMO testing (yes or no test). A real time
PCR machine will be sent from Nexgen so that Guardian can perform the
quantitative GMO testing (level test). The cost of the technical person is
actually absorbed in the molecular farming projects (see below). It will take
approximately two months to have the system ready in Canada. During this time,
Guardian will focus its efforts to find clients who want to take advantage of
these services. Molecular Farming: We are currently engaged in this project with
the literature research and patent searches to determine what genes or fragments
of genes are available for our use. The plan is that we will make several
constructs that include the best parts of the proteins and put them all together
as a single protein that will be expressed in the plant. We have made these
sequences analysis over the last month and they have been sent to Nexgen for
bioinformatics analysis. The cost for this has been a month's wage of a
scientist at Cdn$4,200.00 per month. The next step is to send the sequence
information to a laboratory and they will make synthetic gene constructs for us.
Assuming that we make all 5 synthetic genes the total cost for this synthesis
would be Cdn$23,107.00., for which we have applied to the Industrial Research
Assistance Program for a grant to recover Cdn$23,000.00
Phase 3
Molecular Farming: The next step is to make specific plant DNA vectors that we
can use to put the synthetic genes into a suitable plant. This will take about
3 months of tech time at Cdn$3,400.00 per month. This is followed by plant
transformation. If we use canola as a host system it will take about 9 months
to get transformed plants. This will involve a second tech at Cdn$3,400.00 per
month. We also assume that an average lab will spend about Cdn$1000 per month
on supplies and consumables. Further biochemical analysis will involve a tech at
Cdn$3,000.00 for about 3 months, totaling Cdn$61,000.00, which funds are on
hand.
Phase 4
Molecular Farming: The next phase will involve actual immunization of chickens
using a purified protein that will come from the biochemical analysis in the
above section. This will involve housing chickens and making use of an animal
technician from the University of Saskatchewan. It is estimated that this will
cost tech time for 6 months at Cdn$3,000.00 per month salary. The cost of
housing the birds would be about $300 a month for 6 months, for a total cost of
Cdn$19,800.00, which funds are on hand.
Phase 5 (upon the successful completion of Phase 4)
Molecular Farming: The final aspect of this initial project will be to make as
many plant lines as possible to get the best protein expressing plants. Assume
9 months with a tech at Cdn$3,400.00 per month salary. These lines will then
have to be grown out to seed and then amplified. This will take a full year at
an annual tech salary of Cdn$35,000 and a greenhouse cost of about Cdn$1000 a
month. Detailed bird analysis will then have to be conducted over a six month
period at a salary of Cdn$3,400.00 per month for a total cost of Cdn$98,000.00.
The primary cost with any small biotech business is the cost of salaries.
22
The above program is anticipated to cost Cdn$266,100.00 plus the two-year annual
salaries to Dr's Sun Lee (Cdn$80,000.00) and Jim Macpherson (Cdn$66,000.00) for
a total cost over two years (Phases 1 to 5) of Cdn$558,100.00.
No commitments to provide additional funds have been made by management,
stockholders or anyone else. Accordingly, there can be no assurance that any
additional funds will be available on terms acceptable to Guardian or at all.
The absence of funding would make the successful completion of any of the Phases
of Guardian's business plan doubtful.
We will record revenue in two categories over the next year: laboratory supplies
and new product sales and fees for service. We plan to sell products into the
market using salaried sales agents. We are targeting to generate Cdn$800,000 in
gross sales of Toylab products and GMO services in the next 12 months.
Generating this projected revenue will depend upon our ability to successfully
launch our business over the next two quarters.
We plan to begin realizing revenue in the first quarter of 2003. We have not
received any sales orders to date.
Investors are cautioned against attributing undue certainty to our projections
for generating revenue due to potential contract negotiation difficulties,
budget uncertainties, delays in planned completion dates and market acceptance.
LIQUIDITY AND CAPITAL RESOURCES
Our initial sources of liquidity is expected to be existing cash, cash from the
proceeds of this offering, sales from Toylab products, fees from GMO testing
services and cash from operations. Since we have no operating history, we must
first rely on equity and/or debt financing to launch our business. Guardian has
on hand as at October 31, 2002, US$ 259,186.00 (approximately Cdn $ 405,000) and
anticipates expending Cdn $ 274,100.00 to complete four out of five phases,
which are described in details in Business Strategy section below, over the next
year of its business plan inclusive of Cdn $ 146,000 in salaries for the year to
two of Guardian's directors. We will need additional funding in order to
produce and distribute our products that are under development. There can be no
assurances that financing, whether debt or equity, will be available to us in
the amounts required at any particular time or for any particular period, or if
available, that it can be obtained on satisfactory terms. We have made no
arrangements with our officers, directors or affiliates to provide liquidity to
us.
We anticipate that we will need to raise additional capital within the next 12
months in order to continue implementing our business plan and commence full
operations. We will need to raise the funds through debt or equity financing or
a combination of both. To the extent that additional capital is raised through
the sale of equity or equity-related securities, the issuance of such securities
is likely to result in dilution to our shareholders. There can be no assurance
that sources of capital will be available to us on acceptable terms, or at all.
If we are unable to raise additional capital, we may not be able to continue as
a going concern, and might have to reorganize under bankruptcy laws, liquidate
or enter into a business combination. We have not presently identified any
probable business combination. If adequate funds are not available within the
next 12 months, we may be required to significantly curtail our operations or
no longer be able to operate.
QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
We are subject to market risk exposures due to fluctuations in exchange rates
and interest rates. Changes in the foreign exchange rate between the Cdn$ and
the US$ may affect us due to the effect of such changes on any shareholder
distributions to US residents. Guardian denominates its financial statements in
United States dollars but conducts its daily affairs in Canadian dollars.
We are not currently carrying significant amounts of short term or long term
debt. Upward fluctuations in interest rates increase the cost of additional debt
and the interest cost of outstanding floating rate borrowings.
INFLATION
We do not consider that inflation in Canada has had a material impact on our
results of operations. Inflation in Canada in 2000 and 2001 was 2.7% and 2.6%,
respectively.
23
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 138 (amendment of SFAS No. 133 issued June, 1998),
''Accounting for Derivative Instruments and Hedging Activities.'' Statement No.
138 establishes methods of accounting for derivative financial instruments and
hedging activities related to those instruments as well as other hedging
activities. Because we currently hold no derivative financial instruments and do
not currently engage in hedging activities, adoption of Statement No. 138 is not
expected to have a material impact on our financial condition or results of
operations.
BUSINESS
OVERVIEW
Guardian was federally incorporated on August 15, 2002 under the Canada Business
Corporation Act as a privately owned company that operates from its corporate
headquarters located in Saskatoon, Saskatchewan, Canada.
Guardian is a Canadian affiliate of the Korean based company Nexgen
Biotechnologies, Inc. (Nexgen) that was founded in 1999 by Dr. Sun Lee, who also
founded and is a president and director of Guardian.
Nexgen was the first company in Korea to begin to develop the second generation
of plant biotechnology. Nexgen aims to produce highly valuable proteins for
medicine, agriculture, and industry. Nexgen's proficiency expands to the fields
of molecular farming of useful proteins for cosmetics and industrial process,
edible human vaccine for oral vaccination, phytoremediation for the cleaning of
contaminated environments, and the development of transgenic plants. Nexgen has
several alliances with domestic and foreign companies that include
pharmaceutical (Green Cross Pharmaceuticals), cosmetic (Coreana Cosmetic Co.)
and animal feed (Dodram Feed Inc.). Guardian will have access to alliances
provided through Nexgen according to their agreed upon arrangements.
In Canada, there is a potential for increased investment in biotechnology,
because overall, funds for knowledge-based technologies have become accessible
with the growth of the public and private equity markets. In addition, federal
and provincial governments are offering strategic funding through programs, such
as the federal government's new Technology Partnerships Canada program, which
offers financial support for innovative technologies at the near-market stage of
development. We intend to apply for funding although there can be no assurance
that our applications will be successful.
Guardian intends to lead in the development of proprietary therapeutic proteins
for medical and veterinary use and in the production of industrial and cosmetic
enzymes. These proteins will be made through the use of plants as the production
system within the biotechnology arena now referred to as Molecular Farming.
Guardian has entered an agreement to be a distributor of laboratory instruments,
products and supplies manufactured in Korea by Toylab, Inc. It is anticipated
that the sale of laboratory products will complement the long term scientific
endeavors of Guardian and will engender links to the scientific community. The
expected sales from Toylab products will generate current revenues for Guardian
that will enhance its operational budget. There is a distributorship agreement
in place between Nexgen Biotechnologies, Inc. and Toylab, Inc., which has been
assigned to Guardian by Nexgen. Long term, Guardian intends to invest in
molecular farming for the development of valuable proteins. Guardian intends to
form strategic alliances with Canadian and North American pharmaceutical,
neutraceutical, cosmetic and animal industry companies to facilitate the
manufacture, marketing and distribution of these protein products within Canada
and the United States. Guardian's association with its parent company, Nexgen
Biotechnologies, Inc., a Korean based company, (a 60.98% shareholder of
Guardian) will enable Guardian to have access to Asian and European markets. As
well, products developed by Nexgen will have North American market penetration
via Guardian. Guardian has in place a Memorandum of Understanding about general
business cooperation with respect to molecular farming with its parent company,
Nexgen. Nexgen has developed and owns certain proprietary technology pertaining
to molecular farming. Guardian intends also to develop a fee for service program
which will focus on screening genetically modified species and crop products for
external clients. This service will be based upon proprietary technology
developed and owned by Nexgen Biotechnologies, Inc.
To date, Guardian has created no revenue from sales and has not recorded any
sales or purchase orders.
24
OUR SERVICES
LAB EQUIPMENT
Guardian intends to be a distributor of laboratory instruments, products and
supplies manufactured in Korea by Toylab Inc. These products are complementary
to the scientific endeavors of Guardian and, while providing profits, the sale
of lab equipment simultaneously engenders strong links to the scientific
community. Guardian intends to recruit sub distributors for these products
whereby distribution and sales will take place through established laboratory
supply companies. Guardian will purchase the product from Toylab at an agreed
upon price and will in turn sell to an established sub distributor for an agreed
upon price. The Toylab agreement is included as an exhibit to this registration
document. The Toylab products which Guardian intends to distribute are described
as follows:
- - test tube shakers and mixers (battery operated)
- - flask shakers and mixers (battery operated)
- - centrifuge (battery operated)
- - terminal splitter
- - water bath and drybath (battery operated)
- - culture dishes, acrylic boxes and bottles, tissue holders, scoops and
waste bags
GMO* DETECTION KITS
Guardian will develop a fee for service program, which will focus on screening
genetically modified species and their crop products. This service will utilize
proprietary technology developed by the parent company, Nexgen. The operation of
a fee for service program will develop secondary revenues for Guardian that will
enhance its yearly operational budget and create shareholder value. Should a
client conduct its own testing, Guardian will then endeavour to sell the client
its GMO detection kit.
* GMO is the acronym for "genetically modified organisms".
MOLECULAR FARMING
In a practice known as molecular farming, scientists raise crops in a controlled
environment. The crops are used to derive proteins which have medical and
industrial applications. Recent advances allow scientists to utilize low cost
production methods to modify plants for the creation of specialized proteins
that can be used in beneficial applications in medicine and industry. These
advances make possible the production of important value-added products.
Plants can now be used for the large-scale manufacture of proteins of commercial
value, such as enzymes, peptides of medicinal and pharmaceutical value, and
vaccines for human health care and veterinary purposes.
Guardian will work towards being a significant factor in the large-scale
production and the proprietary isolation and recovery of therapeutic proteins
and industrial and cosmetic enzymes.
Guardian's approach is unique in that it will use non-traditional food crops in
its molecular farming programs. The primary production platform that has been
developed is a member of the cucumber family known as the 'Korean melon'. This
species has no sexually compatible wild relatives in North America or commercial
melon production that could contaminate it. Guardian will make use of oriental
melons and cucumbers, which are routinely grown under glass and are not
available for cross contamination of food crops. This unique contamination-free
status gives Guardian an edge compared to other protein farming companies
utilizing corn, potatoes and traditional crops.
Due to its isolation from standard North American crops, this unique production
platform has many commercial and regulatory advantages that allows Guardian to
be in the position of avoiding or reducing issues that surround the use of
North American crop plants in molecular farming. Guardian has the goal of
achieving large-scale production of these valuable proteins and capturing a
significant position in this industry.
Currently, Guardian is in process of developing industrial proteins to be used
as chicken vaccine. We plan to make several constructs that include the best
parts of the proteins and put them all together as a single protein that will be
expressed in the plant. We have made these sequences analysis over the last
month and they have been sent to Nexgen for bioinformatics analysis.
25
BUSINESS STRATEGY
Traditionally, research and development in leading edge technologies can require
years before maturation returns revenues to a company. The common strategy for
past biotechnology companies has been to rely upon investor funding and delay
the introduction of new products or services until later in the development of
the company. In order to circumvent the long wait for a return on investment,
Guardian has a plan to begin sales of complementary products that will generate
profits for Guardian in the short term. The impact of the key short-term
revenues being developed by Guardian through the distribution of Toylab products
and the introduction of a GMO screening service is that less outside investment
will be required to provide financial support for the long-term and potentially
lucrative molecular farming project.
Guardian plans to schedule its business operation by meeting the following
Phases:
Phase 1
Present ~ June 2003: Raise Funds and Conduct Market Survey
Guardian will focus on raising Cdn$500,000 to continue its research and cover
operation costs until Guardian generates self sustaining revenues. Guardian has
currently three employees to coordinate the process of raising funds, to conduct
market surveys and to advance its molecular farming. Guardian has conducted
research into various potential target markets, focusing on three or four of the
core target markets in the United States and Canada, such as VWR in Philadelphia
(a distributor of lab equipment). Guardian estimates that it will expend
Cdn$20,000 to complete Phase 1, from funds on hand.
Phase 2
Toylab Products: Guardian will hire a sales person who will be in charge of
distribution of Toylab products in Canada at an annual salary of Cdn $40,000.
Guardian anticipates carrying the products in the next two to three months.
GMO Screening Services: Guardian already has two PCR machines with which it will
perform the standard or qualitative GMO testing (yes or no test). A real time
PCR machine will be sent from Nexgen so that Guardian can perform the
quantitative GMO testing (level test). The cost of the technical person is
actually absorbed in the molecular farming projects (see below). It will take
approximately two months to have the system ready in Canada. During this time,
Guardian will focus its efforts to find clients who want to take advantage of
these services. Molecular Farming: We are currently engaged in this project with
the literature research and patent searches to determine what genes or fragments
of genes are available for our use. We plan to make several constructs that
include the best parts of the proteins and put them all together as a single
protein that will be expressed in the plant. We have made these sequences
analysis over the last month and they have been sent to Nexgen for
bioinformatics analysis. The cost for this has been a month's wage of a
scientist at Cdn$4,200.00 per month. The next step is to send the sequence
information to a laboratory and they will make synthetic gene constructs for us.
Assuming that we make all 5 synthetic genes the total cost for this synthesis
would be Cdn$23,107.00., for which we have applied to the Industrial Research
Assistance Program for a grant to recover Cdn$23,000.00
Phase 3
Molecular Farming: The next step is to make specific plant DNA vectors that we
can use to put the synthetic genes into a suitable plant. This will take about
3 months of tech time at Cdn$3,400.00 per month. This is followed by plant
transformation. If we use canola as a host system it will take about 9 months
to get transformed plants. This will involve a second tech at Cdn$3,400.00 per
month. We also assume that an average lab will spend about Cdn$1000 per month
on supplies and consumables. Further biochemical analysis will involve a tech at
Cdn$3,000.00 for about 3 months, totaling Cdn$61,000.00, which funds are on
hand.
Phase 4
Molecular Farming: The next phase will involve actual immunization of chickens
using a purified protein that will come from the biochemical analysis in the
above section. This will involve housing chickens and making use of an animal
technician from the University of Saskatchewan. It is estimated that this will
cost tech time for 6 months at Cdn$3,000.00 per month salary. The cost of
housing the birds would be about $300 a month for 6 months, for a total cost of
Cdn$19,800.00, which funds are on hand.
Phase 5 (upon the successful completion of Phase 4)
26
Molecular Farming: The final aspect of this initial project will be to make as
many plant lines as possible to get the best protein expressing plants. Assume
9 months with a tech at Cdn$3,400.00 per month salary. These lines will then
have to be grown out to seed and then amplified. This will take a full year at
an annual tech salary of Cdn$35,000 and a greenhouse cost of about Cdn$1000 a
month. Detailed bird analysis will then have to be conducted over a six month
period at a salary of Cdn$3,400.00 per month for a total cost of Cdn$98,000.00.
The primary cost with any small biotech business is the cost of salaries.
The above program is anticipated to cost Cdn$266,100.00 plus the two-year annual
salaries to Dr's Sun Lee (Cdn$80,000.00) and Jim Macpherson (Cdn$66,000.00) for
a total cost over two years (Phases 1 to 5) of Cdn$558,100.00.
No commitments to provide additional funds have been made by management,
stockholders or anyone else. Accordingly, there can be no assurance that any
additional funds will be available on terms acceptable to Guardian or at all.
The absence of funding would make the successful completion of any of the Phases
of Guardian's business plan doubtful.
INDUSTRY OVERVIEW
The global market size of the biotechnology industry was US $20 billion in 2000.
By 2005, it is expected to reach US $95 billion and by 2010, US $190 billion*.
There are 1,457 biotechnology companies in the United States, of which 342 are
publicly held. Market capitalization, the total value of publicly traded biotech
companies at market prices, was US$224 billion as of early May 2002*. The
biotechnology industry has more than tripled in size since 1992, with revenues
increasing from US$8 billion in 1992 toUS$27.6 billion in 2001*
*(Ernst and Young LLP and Bioworld).
Annual sales in Canada total more than $2 Billion and the number of
biotechnology companies in Canada is over 361(Statistics Canada). More than 75%
are small but rapidly growing companies with 50 or fewer employees. One quarter
of the companies are publicly traded. The Health and Agriculture sectors
together account for more than 75% of the overall biotech revenues.
Despite the many advances that have been made and the products that have become
a commercial reality, only a modest fraction of the potential of biotechnology
has been realized to date. The international effort focused on biotechnology
continues to expand as products of research assume prominent positions in the
international market place.
Source: Ernst & Young LLP, annual biotechnology industry reports, 1993-002.
Financial data based primarily on fiscal-year financial statements of publicly
traded companies.
MARKETING AND SALES
The strength of long standing strategic relationships with the parent company,
Nexgen, and the NRC (the acronym for the National Research Council which is
operated by the Canadian government) will assist in marketing efforts and the
establishment of a strong industry reputation. Guardian plans to concentrate its
marketing efforts in Canada and in the United States for its Toylab Products
while primary markets for GMO testing kits and therapeutic proteins will be in
Saskatchewan and Ontario in Canada. Nexgen was the first company in Korea to
develop the second generation of plant biotechnology and has an established
history in the field of molecular farming of advanced proteins. Guardian will
function closely with Nexgen in order to share the workload, to increase
productivity, to take advantage of each company's strengths, and to increase the
speed of new product development. Sharing of the workload will prevent costly
research and facility duplication for both Guardian and Nexgen. Guardian derives
benefit and positioning from industry relationships that have been established
by its parent company. Additional alliances include the National Research
Council of Canada and the FARR Technology Group, in Ontario, Canada.
MOLECULAR FARMING PRODUCTS MARKETING
Alliances and licensing will be the key marketing operatives for molecular
farming products. The customers will be larger pharmaceutical, industrial,
agricultural and cosmetic companies that will receive licenses from Guardian to
use its products.
GMO TESTING SERVICES MARKETING
Direct mail to industry players, attendance at trade shows and general
advertising will attract customers for the GMO testing service. Major food
corporations, importers of crops and processed crops and other companies will be
the target market as the regulatory requirements for GMO testing are increased.
27
TOYLAB EQUIPMENT
Industry contacts coupled with direct mail, attendance at trade shows and
general advertising will develop clients for Toylab sales. Customers for these
products are the numerous labs on campuses, in secondary schools and in
independent scientific corporations. Currently, Guardian is finalizing
negotiation with VWR international, one of the biggest distributors of
scientific instruments in Philadelphia, with regard to distribution of Toylab
products in the United States.
COMPETITION
Currently, Prodigene is the number one player in the field of molecular farming.
They have several patents. However, there are 800 types of proteins and many
kinds of host systems that can be used to produce them. Guardian, with its
parent partner, Nexgen, and the technologies already developed by Nexgen,
proposes to utilize a host system that has no relation to crops in America, thus
achieving a unique status of product that will be uncontaminated and less
regulated. With proper management and the ongoing R&D planned by the company,
Guardian has the potential for being a significant factor in the molecular
farming industry.
INTELLECTUAL PROPERTY
Guardian holds no patents and has not as yet applied for any patents and holds
no other registered proprietary knowledge or assets.
Guardian has proprietary plant transformation technology and host plant systems
to facilitate product development in conjunction with its parent company,
Nexgen. Nexgen's proprietary technology will be shared with Guardian. Much of
the proprietary technology available to Guardian has been developed by the
parent company, Nexgen, and will ultimately benefit the operations of Guardian.
Guardian Biotechnologies Inc. is developing a portfolio of components which will
include its own proprietary technology and appropriate licenses from other
research institutions or Universities. Guardian intends to become a significant
factor in the development of proprietary therapeutic proteins for medical and
veterinary use. Guardian also intends to become a significant factor in the
production of industrial and cosmetic enzymes. These proteins will be made
through the use of plants as the production system within the biotechnology
arena now referred to as Molecular Farming for which Guardian expects to apply
for patent protection in the future. There can be no assurance that the patents
will be granted
GOVERNMENT REGULATION
In 1993, the Organization of Economic Cooperation and Development published the
first general principles to govern the production and commercialization of
transgenic plants. Essentially these rules regulate how risk assessment should
be conducted and documented. Ironically, these rules do not necessarily apply to
the transgenic trait but rather to the host plant system. Changes to the plant
that make it more "weedy" are the major concern in that the new plant (termed a
PNT, or Plant with a Novel Trait) may be able to grow other plants in its
environment and become a new weed.
Guardian is familiar with the guidelines for PNT's and it will conduct its
research using the recommended safety guidelines. Guardian does not foresee
having to go beyond safety protocol BL-2.
At the present time we do not have in force, in Canada, regulations that are
specifically directed to "molecular farming". In the future it is anticipated,
that modifications to existing regulations, (Regulatory Directive 2000-07), will
allow small scale field testing under confined conditions to proceed on a
routine basis. At present such small scale tests are subject to individual
review and may be denied if the CFIA feels that there is sufficient
justification for additional caution. (NB - the CFIA can deny any field trial
application, not just molecular farming, if they feel there is sufficient cause)
As a result of a recently held workshop on molecular farming the CFIA has
proposed draft amendments to Regulatory Directive 2000-07 to accommodate
confined research trials of PNTs for pharmaceutical production. It is important
to note that the CFIA and other regulatory agencies intend to modify existing
regulations and not to try formulating a new set of regulations for molecular
farming.
Points to note: isolation distances may be greater than those required for other
PNTs, disposal and destruction of all harvested plant materials must be
witnessed by a CFIA inspector and human toxicity and allergenicity data may be
28
required. At present these suggested modifications have not been officially
adopted and all proposed confined field trials are assessed on an individual
basis. Further consultations between AAFC and CFIA are planned.
The commercial release of plants for larger scale molecular farming activities
is not expected for several years. The CFIA has not yet disclosed any
information concerning how such activities may be regulated.
The regulatory situation in the USA is somewhat more advanced and some larger
scale trials have been completed. A few companies have begun commercial
production of novel products from plants and have achieved a regulatory status
that allows production on commercial scale. The oversight of
biotechnology-derived plants rests with the USDA's Animal and Plant Health
Inspection Service, (APHIS), the Food and Drug Administration, (FDA) and the
Environmental Protection Agency (EPA). An APHIS document that describes the
terms and conditions imposed on confined trials of plants tested in 2002,
(barley, corn, rice, sugarcane, tobacco and tobacco mosaic virus) has been
published.
As described in the Federal Register, (vol 67, No 149, Aug 2, 2002) an expansion
of biotechnology-based crops is anticipated and up-dated field testing
requirements and early food safety assessments for new proteins to be produced
by plants are suggested. Any new proposals would be implemented through the
coordinated activities of the FDA, USDA, and EPA and be based on the following
principles:
1. The level of confinement under which a field test of a biotechnology-derived
plant is conducted should be consistent with the level of environmental, human
and animal health risk associated with the introduced protein and trait.
2. If a trait or protein presents an unacceptable risk or the risks cannot be
determined adequately, field test confinement requirements would be rigorous to
restrict out-crossing and commingling of seed and the occurrence at any level of
biotechnology-derived genes and gene products from these field tests would be
prohibited in commercial seed, commodities, and processed food and feed.
3. Even if a trait or protein does not present an unacceptable risk to the
environment or public health, field test requirements should still minimize the
occurrence of out-crossing and commingling of seed from these field tests, but
intermittent, low levels of biotechnology-derived genes and gene products from
such field tests could be found acceptable based on data and information
indicating the newly introduced traits and proteins meet the applicable
regulatory standards.
In our opinion, our planned molecular farming will conform to restrictions
currently in place and reasonably anticipated.
EMPLOYEES
We currently employ three full-time persons. Guardian expects to additionally
engage two in the area of sales and marketing, one in administration and
finance, and two in technical research and production. We expect our labor
relations to be good. None of our employees are covered by a collective
bargaining agreement.
TRANSACTIONS WITH AFFILIATES
The following details the transactions with affiliates which mean directors,
executive officers or nominees thereof of Guardian Biotechnologies Inc., and
owners of five percent or more of Guardian's outstanding shares or any member
of their immediate family. A consulting agreement was entered between Guardian
and Dr. Sun Lee whereby Guardian has agreed to pay Cdn$80,000.00 annually to Dr.
Lee in return for Dr. Lee's efforts in developing and furthering the affairs of
Guardian. Guardian has also entered into a one year employment agreement
commencing October 1, 2002, with Dr. James Macpherson, a director of Guardian,
whereby Mr. Macpherson will perform the duties of general manager of Guardian
and will be compensated Cdn$66,000.00 annually by Guardian. Transactions with
Nexgen are anticipated as a Memorandum of Understanding defining a general
cooperative business relationship between Guardian and Nexgen is in place and
Dr. Sun Lee, who is a director and major shareholder of Guardian, is also
president and a major shareholder of Nexgen.
CERTAIN BUSINESS RELATIONSHIPS
No director or nominee for director is or has been during Guardian's last fiscal
year an executive officer or beneficial owner of more than 10% of any other
29
entity that has engaged in a transaction with Guardian in excess of 5% of either
its revenues or assets with the exception of Dr. Sun Lee who is a director and
principal shareholder of Nexgen Biotechnologies, Inc., Guardian's parent
company.
INDEBTEDNESS OF MANAGEMENT
There are no persons who are directors, executive officers of Guardian
Biotechnologies Inc., nominees for election as a director, immediate family
members of the foregoing, corporations or organizations (wherein the foregoing
are executive officers or partners, or 10% of the shares of which are directly
or beneficially owned by the foregoing), trusts or estates (wherein the
foregoing have a substantial beneficial interest or as to which the foregoing
serve as a trustee or in a similar capacity) that are indebted to Guardian in
an amount in excess of US$60,000.
TRANSACTIONS WITH PROMOTERS
Nexgen Biotechnologies, Inc. founded Guardian Biotechnologies Inc. on August 15,
2002 with an initial capitalization of a cash infusion of US$318,569
(Cdn$500,000.00), for which it received 5,000,000 shares of common stock. Dr.
Sun Lee, President and director of Guardian Biotechnologies Inc., is a principal
shareholder, president and a director of Nexgen Biotechnologies, Inc. with which
Guardian Biotechnologies Inc. has a business relationship. Nexgen
Biotechnologies, Inc. is also the parent company of Guardian. Dr. Sun Lee also
received 2,000,000 shares of common stock from Guardian for Cdn$2,000.00.
FACILITIES
Guardian rents on a month to month basis its current principal executive offices
and technical facilities located at 4th Floor, IPW, 110 Gymnasium Place,
Saskatoon, Saskatchewan, Canada for Cdn$330.00 per month. There is no security
deposit.
We are temporarily renting our present facilities until the end of this year at
which time we anticipate leasing an office space in January 2003 within the
newly developed Industrial Partnership Wing (IPW) of the National Research
Council Canada, Plant Biotechnology Institute (NRC/PBI).
The current office facilities are leased from the property owners. We do not
carry tenants insurance for office contents but intend to carry insurance of
Cdn$2,000,000 comprehensive general liability once our lab is in place.
LITIGATION
We are not party to any material legal proceedings.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name, age, and position of each Director and
Executive Officer of Guardian Biotechnologies Inc.
NAME AGE POSITION
---- --- --------
Sun Lee, PhD 44 President, Treasurer and Director
- -------------- -- ------------------------------------
James Macpherson, PhD 42 Secretary and Director
- ----------------------- -- ------------------------
Paul Arnison, PhD 51 Director
- ------------------- -- --------
Scott Lee 32 Former Director -
August 14,2002 to December 3, 2002
- ---------- -- -------------------------------------
Dr. Sun Lee represented the first Board of Directors of Guardian and was
appointed to the Board of Directors on August 15, 2002 and will serve a term of
three years until any successors are elected and qualified. Officers will hold
their positions at the pleasure of the Board of Directors, absent any employment
agreement.
There are no arrangements or understandings between the directors and officers
of Guardian Biotechnologies Inc. and any other person pursuant to which any
director or officer was or is to be selected as a director or officer. In
addition, there are no agreements or understandings for the officers or
directors to resign at the request of another person and the above-named
officers and directors are not acting on behalf of nor acting at the direction
of any other person. Scott Lee, a former director of Guardian, is not related to
Dr. Sun Lee.
30
The following summary outlines the professional background of the directors,
executive officers and significant employees over the past five years.
DIRECTORS AND EXECUTIVE OFFICERS
SUN LEE, PHD, PRESIDENT, TREASURER AND A DIRECTOR
Dr. Lee was appointed a director August 14, 2002 and brings extensive research
experience in the field of molecular farming. His past positions include
Director of the Plant Biotechnology Institute at Dongbu Chemical Co.
(1998-1999), assistant research officer at Canada National Research Council
(1996-1997), and research assistant at both the Natural Science and Engineering
Research Council of Canada and the Department of Plant Science, University of
Saskatchewan. Dr. Lee has written several theses on plant biotechnology: Genetic
transformation of broccoli; Genetic transformation of B.oleracea varieties;
Genetic transformation of recalcitrant genotypes of B.napus; Speed
transformation of Brassicas; and Development of plant promoters from Brassicas.
Dr. Lee is currently a director, officer and shareholder of Nexgen
Biotechnologies, Inc., Guardian's parent company (1999 to present).
JAMES MACPHERSON, PHD, GENERAL MANAGER, SECRETARY AND A DIRECTOR
Dr. Macpherson was appointed a director November 5, 2002, has three patents for
plant cell transformation and has published many articles on molecular cloning
and related subjects. He has worked as research manager and senior scientist at
Performance Plants Inc. (1997-2001). In his capacity as a consultant (2001-2002)
to Nexgen Biotechnologies, Inc. (parent company of Guardian Biotechnologies
Inc.) he was a facilitator for the new biotechnology company (Guardian
Biotechnologies Inc.). Past experience includes positions as a research
associate at the Plant Biotechnology Institute and the National Research Council
of Canada (1993-1997), and he was the recipient of two outstanding achievement
awards from the National Research Council. Dr. Macpherson is also a member of
the science advisory council for the Saskatchewan Institute of Applied Science
and Technology.
PAUL ARNISON, PHD, SCIENTIFIC ADVISOR AND A DIRECTOR
Dr. Arnison was appointed a director September 17, 2002, holds approximately 175
patents to his name and is a leader in plant biotechnology and business
development strategies. He is currently President of Botanical Alternatives Inc.
(1993 to present), dedicated to the production of environmentally responsible
pest control agents. Past positions include general manager of FARR
Biotechnology Group in Ontario (1992 to present) and general manager of Paladin
Hybrids Inc. (1989-1992) also in Ontario. Dr. Arnison is or has been a board
member of AgriGenomics Inc. and Transplastomic Technologies Inc. and has held
various other industry positions with government granting agencies, plant
breeding, hybrid systems development and novel hybridization systems.
Additionally, he has extensive experience with intellectual property issues and
technology assessment.
COLLETTE JAKO, PHD, RESEARCH SCIENTIST
Dr. Jako is currently associated with Canamera Foods (Saskatoon) as a research
associate (2001 to present). Prior to that, she was a research associate and
post doctorate at the National Research Council and Plant Biotechnology
Institute in Saskatoon (1997 to 2001) with a project focused on producing plant
derived pigments of value to the food industry in oilseed plants and in
conducting EST screening for new enzymes. She has also held a post doctoral
position in Singapore (1995) and worked in France (1990 to 1994) where she
researched the characterization and cloning of cDNA coding for small GTP binding
proteins in Petunia hybrida. Dr. Jako has a patent pending, won four industry
awards and published several papers on biotechnology topics.
MALGORZATA NOWAK, SENIOR TECHNICIAN
Mrs. Nowak served as the technical officer of the Brassica Biotechnology Group
at the National Research Council in Saskatoon (1993 to 2002) where some of her
projects were molecular farming, sub genomic library screening for root
promoters, the development of zero transformation methods for recalcitrant
Brassica napus seed, the transformation of Arabidopsis thaliana by vacuum
infiltration and the development of regeneration and transformation protocols
31
for horseradish, Nigela, oilseed radish, Crambe and false flax.
BOARD OF DIRECTORS
The board of directors has the ultimate responsibility for the administration of
the affairs of Guardian. Our bylaws, as currently in effect, provides for a
board of directors of not less than three directors and not more than ten
directors. Under our bylaws, all directors serve a three year term but may be
replaced at the ordinary general meeting of shareholders convened with respect
to the last fiscal year. It is expected that all current directors will
continue to serve after this offering. The directors are elected at a general
meeting of shareholders by a majority vote of the shareholders present or
represented by proxy, subject to quorum requirements of at least one-quarter of
all issued and outstanding shares having voting rights. Our bylaws also provide
for the establishment of an Audit Committee which shall consist of one or more
directors, appointed each year by the Board of Directors a majority of which
cannot be comprised of non-independent directors. The Audit Committee shall
review the financial statements of the Corporation prior to their approval by
the Board of Directors and shall perform all the other duties the latter may
establish. The meetings of the Audit Committee shall be convened by one of its
members or by the Auditor.
The remuneration of all committee members shall be fixed by the Board of
Directors.
INDEPENDENT AUDITOR
Our bylaws provide for the appointment by the shareholders of Guardian of an
independent auditor. The independent auditor's term expires at the close of the
ordinary general meeting of shareholders convened with respect to the last
fiscal year from the date of acceptance by the independent auditor. Currently,
Pannell Kerr Forster is our independent auditor.
INDEPENDENT DIRECTORS
Mr. Paul Arnison, PhD serves on the board as an independent director. We intend
to appoint one additional independent director within 90 days following this
offering.
EXECUTIVE COMPENSATION
We paid an aggregate amount of compensation during fiscal 2002 to our directors
and officers as a group equal to US$6,343. The amount of retirement and
severance benefits accrued for our executive officers and directors in 2002 was
$nil. There were no pension, retirement or other similar benefits set aside for
our executive officers and directors in 2002. Guardian has entered into a one
year employment agreement commencing October 1, 2002, with James Macpherson, a
director of Guardian, whereby Mr. Macpherson will perform the duties of general
manager of Guardian and will be compensated Cdn$66,000.00 annually by Guardian.
The agreement may be renewed year by year.
STOCK OPTION PLAN
Under our bylaws, we may grant options for the purchase of our shares to certain
qualified officers and employees. There are no stock options or warrants or
other securities convertible into Guardian Biotechnologies Inc. common stock
outstanding as at November 30, 2002. We may file a registration statement on
Form S-8 after the effective date hereof that would permit and facilitate the
offering of options to acquire shares of common stock of Guardian by employees,
directors and consultants at prices per share at variance with any market
quotations at the time. There were no warrants or other securities convertible
into Guardian Biotechnologies Inc. common stock outstanding as of November 30,
2002.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of November 30, 2002, our outstanding common
stock owned of record or beneficially by each executive officer and director and
by each person who owned of record, or was known by us to own beneficially, more
than 5% of our common stock, and the shareholdings of all executive officers and
directors as a group. As of November 30, 2002, we had 8,200,000 shares of
common stock issued and outstanding. All shares set forth in the following
table are held directly and each shareholder has sole voting and investment
power concerning their shares.
32
SHARES PERCENTAGE OF
NAME OWNED SHARES OWNED (2)
- ----------------------------------------------- ------------- ----------------
Sun Lee - President, Treasurer and a Director 1,000,000 12.20%
- ----------------------------------------------- ------------- ----------------
Nexgen Biotechnologies, Inc. (1) 5,000,000 60.98%
- ----------------------------------------------- ------------- ----------------
James Macpherson, Secretary and Director 0 0.00%
- ----------------------------------------------- ------------- ----------------
Paul Arnison, Director 0 0.00%
- ----------------------------------------------- ------------- ----------------
Penn Capital Canada Ltd. 650,000 7.93
- ----------------------------------------------- ------------- ----------------
World Cup Finance Ltd. 550,000 6.71
- ----------------------------------------------- ------------- ----------------
Song Do Chung 500,000 6.10
- ----------------------------------------------- ------------- ----------------
Mi Kyung Youn 500,000 6.10
- ----------------------------------------------- ------------- ----------------
All Executive Officer and Directors as a Group 1,000,000 12.20%
- ----------------------------------------------- ------------- ----------------
(1) Sun Lee is President and a major shareholder of Nexgen
Biotechnologies, Inc.
(2) None of the directors named above are currently considering
participating in the share offerings detailed in this prospectus.
Each of Guardian Biotechnologies Inc.'s officers and directors may be reached at
its executive offices located at 4th Floor, IPW, 110 Gymnasium Place, Saskatoon,
Saskatchewan, Canada S7N 0W9. Sun Lee may be reached at his office located at
65-1, Wonchon - Dong, Yusung - Gu, Daejon City, South Korea.
There are no arrangements known to us, the operation of which may result in a
change of control of the Company.
DESCRIPTION OF SHARE CAPITAL
The following is a description of the material terms of our capital stock. This
description does not purport to be complete and is subject to and qualified in
its entirety by our articles of incorporation and bylaws, which are included as
exhibits to the registration statement that include this prospectus, and by the
applicable provisions of Canadian law.
Our authorized capital stock consists of unlimited number of shares of common
stock, without par value. At November 30, 2002, there were 8,200,000 shares of
common stock issued and outstanding.
COMMON STOCK
Each record holder of common stock is entitled to one vote for each share held
on all matters properly submitted to the shareholders for their vote. The
articles of incorporation do not permit cumulative voting for the election of
directors, and shareholders do not have any preemptive rights to purchase shares
in any future issuance of Guardian's common stock.
Because the holders of shares of Guardian's common stock do not have cumulative
voting rights, the holders of more than 50% of the outstanding shares, voting
for the election of directors, can elect all of the directors to be elected, if
they so choose. In such event, the holders of the remaining shares will not be
able to elect any directors.
The holders of shares of common stock are entitled to dividends, out of funds
legally available therefore, when and as declared by the Board of Directors.
The Board of Directors has never declared a dividend and does not anticipate
declaring a dividend in the future. In the event of liquidation, dissolution or
winding up of our affairs, holders are entitled to receive, ratably, the net
assets of Guardian available to shareholders after payment of all creditors.
Under the bylaws, only the Board of Directors has the power to call a special
meeting of the shareholders, thereby limiting the ability of shareholders to
effect a change in control of Guardian by changing the composition of its Board.
33
All of the issued and outstanding shares of common stock are duly authorized,
validly issued, fully paid, and non-assessable (based on the opinion of legal
counsel, Alixe B. Cormick, Exhibit 5.1). In the future Guardian may issue
additional shares of common stock, in which event the relative interest of the
existing shareholders and shareholders who purchase under this offering may be
diluted.
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no market for our shares, and there can
be no assurance that a significant public market for our shares will develop or
be sustained after this offering. Future sales of substantial amounts of our
shares (including shares issued upon exercise of outstanding options and
warrants) in the public market following this offering could adversely affect
market prices prevailing from time to time and could impair our ability to raise
capital through sale of our equity securities.
This registration statement and prospectus will permit some of our shareholders
to sell up to an aggregate of 2,200,000 shares of our common stock from time to
time, as long as we maintain the effectiveness of the registration statement and
update the prospectus. The offering will close no later than 190 days after the
effective date of the registration statement that includes this prospectus,
which also offers for sale up to 5,000,000 shares of its common stock by
Guardian to the public.
On September 20, 2004, all 8,200,000 of our common shares that are outstanding
as of November 30, 2002 will be eligible to be sold pursuant to Rule 144,
subject to the public information, volume limitation, manner of sale and notice
conditions of the rule. On September 20, 2003, 1,000,000 of these shares will
be eligible for sale without condition under Rule 144(k). 6,000,000 of these
shares are held by affiliates and may be sold under Rule 144 only in compliance
with the public information, volume limitation, manner of sale and notice
conditions of the rule. The remaining 1,200,000 of these shares will be eligible
for sale without condition under Rule 144(k) on November 4, 2003.
In general, a sale under Rule 144 after holding shares for more than one year
but less than two years requires compliance with the following material
conditions:
- - public information-we must be current in our requirement to file our
quarterly and annual reports with the SEC, as well as any reports required
to be filed on Form 8-K for material events;
- - volume limitation-during any three-month period, a shareholder may not sell
more than one percent of our total outstanding shares, as shown on our most
recent quarterly or annual report;
- - manner of sale-the shares must be sold in a market transaction through a
broker or market maker, generally without solicitation of a buyer; and
- - notice-except for certain de minimis sales, the seller must file a Form 144
with the SEC.
Sales of unregistered securities by an affiliate must always comply with these
four conditions. After holding their shares for more than two years,
shareholders who are not affiliates may sell their shares without having to
comply with these conditions. Rule 144 has a number of exceptions and
complications, and any sale under Rule 144 requires an opinion of counsel
reasonably satisfactory to us.
There are no contractual restrictions prohibiting the sale of any of our
outstanding shares.
TAX CONSIDERATIONS
UNITED STATES TAXATION
POTENTIAL PURCHASERS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE
PARTICULAR CONSEQUENCES TO THEM UNDER U.S. FEDERAL, STATE, LOCAL AND APPLICABLE
FOREIGN TAX LAWS OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF COMMON
SHARES. IT IS THE BELIEF OF GUARDIAN THAT THERE IS A RECIPROCAL TAX TREATY
BETWEEN THE UNITED STATES AND CANADA.
34
UNDERWRITING
Guardian is offering the shares for sale on behalf of its shareholder holdings
and has not contracted with an underwriter or broker to assist the holders to
dispose of their shares. Accordingly, there will be no Underwriter discounts or
broker commissions paid out by Guardian and Guardian will receive no proceeds
from any sale of the shares offered by the selling shareholders.
This prospectus is not, and under no circumstances is to be construed as, an
advertisement or a public offering of the shares in Canada or any province or
territory thereof or in the United States or any state. Any offer or sale of the
shares in Canada or the United States may only be made pursuant to registration
or to an exemption from the requirement to file a prospectus in the province or
territory of Canada or any state in the United States in which such offer or
sale is made.
Prior to the offering, there has been no public market for the shares. The
initial public offering price for the shares will be determined by negotiation
between individual holders, their representatives and the purchaser. Among the
factors to be considered in such negotiations are:
.. Prevailing market conditions;
.. The market values of publicly traded companies that the parties believe to
be comparable to Guardian;
.. The current state of Guardian's development and its current financial
condition;
.. The history of and prospects for Guardian and the industry in which it
competes;
.. The prospects for future revenues and earnings of Guardian; and
.. Other factors deemed relevant.
Application is to be made to have the shares approved for quotation on the over
the counter Bulletin Board under a symbol to be applied for. Until the
distribution of the shares is completed, rules of the Securities and Exchange
Commission may limit the ability of certain selling group members to bid for and
purchase the shares.
LEGAL MATTERS
Legal matters relating to the legality of issuance of shares, their
transferability and assessability, will be passed upon by Canadian counsel,
Alixe B. Cormick of Venture Law Corporation, Suite 618-688 West Hastings St.
Vancouver BC., Canada V6B 1P1.
EXPERTS
Our financial statements as of October 31, 2002 and for the period from August
15, 2002 (inception) to October 31, 2002 are included in the prospectus in
reliance on the report of Pannell Kerr Forster, independent Chartered
Accountants, issued upon the authority of Pannell Kerr Forster as experts in
accounting and auditing.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than payment by a 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 in the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
35
INFORMATION AVAILABLE TO THE PUBLIC
We have filed with the Securities and Exchange Commission a registration
statement on Form F-1 under the Securities Act with respect to the shares
offered hereby. This prospectus, which forms a part of the registration
statement, does not contain all of the information set forth in the registration
statement, and the exhibits and schedules thereto. You should refer to the
registration statement for further information. Statements contained in this
prospectus as to the contents of any contract or other document that is filed as
an exhibit to the registration statement are not necessarily complete, and each
such statement is qualified in all respects by reference to the full text of
such contract or document.
Upon declaration by the Securities and Exchange Commission of the effectiveness
of the registration statement, we will become subject to the periodic reporting
and other informational requirements of the United States Securities Exchange
Act of 1934, as amended. Under the United States Securities Exchange Act of
1934, as amended, we will be required to file reports and other information with
the Securities and Exchange Commission. Copies of the registration statement,
its accompanying exhibits, as well as such reports and other information, when
so filed, may be inspected without charge and may be obtained at prescribed
rates at the public reference facilities maintained by the Securities and
Exchange Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the Securities and Exchange Commission
located at Seven World Trade Center, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The public
may obtain information regarding the Washington, D.C. Public Reference Room by
calling the Securities and Exchange Commission at 1-800-SEC-0330. As a foreign
private issuer, we are exempt from the rules under the United States Securities
Exchange Act of 1934, as amended prescribing the furnishing and content of proxy
statements, and officers, directors and principal shareholders are exempt from
the reporting and short-swing profit recovery provisions contained in Section 16
of the Exchange Act.
We will furnish our shareholders with our annual reports, which will include a
review of operations and annual audited financial statements prepared in
conformity with accounting principles generally accepted in the United States.
We will also furnish our shareholders with our semi-annual or quarterly reports
submitted to the Securities and Exchange Commission or NASD.
36
INDEX TO FINANCIAL STATEMENTS
GUARDIAN BIOTECHNOLOGIES INC.
(A Development Stage Company)
October 31, 2002
(U.S. Funds)
Page
----
Independent Accountants' Report dated November 28, 2002 38
Balance Sheet as at October 31, 2002 39
Statement of Operations for the period from inception through
October 31, 2002 40
Statement of Cash Flows for the period from inception through
October 31, 2002 41
Statement of Shareholders' Equity for the period from inception
through October 31, 2002 42
Notes to the Financial Statements 43
37
REPORT OF INDEPENDENT CHARTERED ACCOUNTANTS
TO THE BOARD OF DIRECTORS
OF GUARDIAN BIOTECHNOLOGIES INC.
(A Development Stage Company)
We have audited the balance sheet of Guardian Biotechnologies Inc. (A
Development Stage Company) as at October 31, 2002 and the statements of
operations, cash flows and shareholders' equity for the period from
incorporation on August 15, 2002 to October 31, 2002. These financial statements
are the responsibilities 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the financial statements
are free of the 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 out opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at October 31, 2002 and the
results of operations and its cash flows for the period referred to above in
conformity with accounting principles generally accepted in the United States of
America.
These financial statements have been prepared assuming the Company will continue
as a going concern. As discussed in note 1 to the financial statements, the
Company has had no operations and has no established source of revenue and needs
additional financing in order to complete its business plan. This raises
substantial doubt about the ability to continue as a going concern. These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Pannell Kerr Forster
Chartered Accountants
Vancouver, Canada
November 28, 2002
38
GUARDIAN BIOTECHNOLOGIES INC.
- ----------------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
OCTOBER 31,2002
(US DOLLARS)
ASSETS
CURRENT
Cash $ 259,186
----------
LIABILITIES
CURRENT
Accounts payable and accrued liabilities (note 5(a))$ 40,496
----------
STOCKHOLDERS' EQUITY
SHARE CAPITAL
Authorized
100,000,000 Common shares without par value
Issued
7,000,000 Common shares (note 5(a)) 318,569
OTHER COMPREHENSIVE LOSS (1,672)
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE (98,207)
----------
218,690
----------
$ 259,186
----------
See notes to financial statements.
39
GUARDIAN BIOTECHNOLOGIES INC.
- --------------------------------
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCORPORATION ON AUGUST 15, 2002 TO OCTOBER 31, 2002
(US DOLLARS)
EXPENSES
Consultants fees $ 92,253
Wages and benefits 2,118
Accounting and legal 1,903
Travel 946
Rent 460
Insurance 254
Office and miscellaneous 213
Licenses and dues 60
------
NET LOSS FOR PERIOD $ (98,207)
BASIC LOSS PER SHARE $ (0.026)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 3,831,169
See notes to financial statements.
40
GUARDIAN BIOTECHNOLOGIES INC.
- --------------------------------
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCORPORATION ON AUGUST 15, 2002 TO OCTOBER 31, 2002
(US DOLLARS)
OPERATING ACTIVITIES
Net loss $ (98,207)
----------------
CHANGES IN NON-CASH WORKING CAPITAL
Accounts payable and accrued liabilities 40,496
----------------
CASH USED IN OPERATING ACTIVITIES (57,711)
----------------
FINANCING ACTIVITY
Issuance of common shares 318,569
----------------
INFLOW OF CASH 260,858
EFFECT OF FOREIGN CURRENCY TRANSLATION ON CASH (1,672)
----------------
CASH, END OF PERIOD $ 259,186
----------------
See notes to financial statements.
41
GUARDIAN BIOTECHNOLOGIES INC.
- -------------------------------------------------------------------------
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM INCORPORATION ON AUGUST 15, 2002 TO OCTOBER 31, 2002
(US DOLLARS)
Per Share Common Shares Deficit During Shareholders'
--------------------- the Comprehensive
Development loss
Amount Consideration Number Amount Stage Equity
--------- ------------- ---------- -------- -------------- ------------- -------------
Shares Issued
September 16, 2002 $ 0.0006 Cash 2,000,000 $ 1,269 $ 1,269
September 20, 2002 $ 0.063 Cash 5,000,000 317,300 317,300
Other Comprehensive Loss (1,672) (1,672)
Loss for Period (98,207) (98,207)
--------- ------------- ---------- -------- -------------- ------------- -------------
Balance
October 31, 2002 7,000,000 $318,569 $ (98,207) $ (1,672) $ 218,690
--------- ------------- ---------- -------- -------------- ------------- -------------
See notes to financial statements.
42
GUARDIAN BIOTECHNOLOGIES INC.
(A Development Stage Company)
Notes to Financial Statements
For the Period from Incorporation on August 15, 2002 to October 31, 2002
(US Dollars)
1. NATURE OF OPERATIONS
The Company was incorporated August 15, 2002 under the Canada Business
Corporation Act and is registered under the Business Corporation's Act of
Saskatchewan. Planned principal operations have not commenced and most of the
Company's efforts have been devoted to financial planning, raising capital and
developing a business plan. There has been no revenue generated to October 31,
2002. The Company's principal business activities will include the development
of therapeutic proteins for medical and veterinary use and the production of
industrial and cosmetic enzymes. The Company will also distribute lab equipment,
plastic consumable products, and genetically modified organism testing kits.
The Company is a development stage company. To date, the Company has generated
no revenues from operations. The ability of the Company to emerge from the
development stage with respect to its planned principal business activity
is dependent upon its successful efforts to raise additional equity
financing. There is no guarantee that the Company will be able to raise any
equity financing and there is substantial doubt regarding the Company's ability
to continue as a going concern. Development stage financial reporting will
be used until the Company's principal business activities generate significant
revenues.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The financial statements have been prepared in accordance with accounting
principles generally accepted in the United States of America and are presented
in U.S. Dollars for the convenience of the readers.
(b) Currency translation
Amounts recorded in Canadian dollars, the functional currency of the Company,
are translated into United States dollars for reporting purposes as follows:
(i) Monetary assets and liabilities are translated at the rate of exchange
in effect at the balance sheet date; and
(ii) Revenues and expenses at the average rate of exchange for the year.
Gains and losses arising from this translation of foreign currency are excluded
from net loss for the period and are accumulated as a separate component of
stockholders' equity
(c) Comprehensive Income (loss)
Other comprehensive income (loss) includes revenues and expenses and unrealized
gains and losses that under accounting principles generally accepted in the
United States are excluded from net income (loss) and are recorded directly as
an adjustment to stockholders' equity, net of tax. When the unrealized gains and
losses are realized they are reclassified from other comprehensive income and
included in net income. The Company's other comprehensive income (loss) is
composed of unrealized gains and losses from foreign currency translation
adjustment.
43
(d) Revenue recognition
The Company recognizes revenue when pervasive evidence of an arrangement exists,
delivery has occurred, the sales price is fixed or determinable, and
collectibility is assured. This policy is in compliance with SAB 101. Product
and commodity revenues are recognized, net of trade discounts and allowances,
upon shipment and when all significant contractual obligations have been
satisfied and collection is reasonably assured. Service fees are recognized
ratably over the contractual period or when rendered in accordance with all
terms and conditions of customer contracts, upon acceptance by the customer, and
when collection is reasonably assured.
3. RELATED PARTY TRANSACTIONS
During the period, the Company paid a total of $6,343 to two officers and
directors for consulting fees and wages.
At October 31, 2002 there were 5,000,000 common shares owned by Nexgen
Biotechnologies, Inc., a Korean Company, representing 71.4 % of the total
outstanding at that date.
4. SUBSEQUENT EVENTS
(a) On November 4, 2002, the Company issued 1,200,000 common shares valued at $
0.05 CDN per share in settlement of compensation for professional services for $
60,000 CDN provided by unrelated third parties which were included in accounts
payable at October 31, 2002 in the amount of $38,028.
(b) The Company is in the process of filing a form F-1 Registration Statement
with the Securities and Exchange Commission to register for sale 2,200,000
shares of common stock presently held by shareholders and 5,000,000 shares
offered by the Company to net the Company $317,300.
5. COMPREHENSIVE LOSS
Period from
August 15,
2002
to
October 31,
2002
---------------
Net loss $ (98,207)
Other
comprehensive
income (loss) (1,672)
---------------
Comprehensive
loss $ (99,879)
---------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses, other than the
underwriting discounts and commission, payable by the Registrant in connection
with the offering described in the Registration Statement
(all amounts are estimated including the SEC registration fee):
43
ITEM AMOUNT ($)
---- ----------
SEC Registration Fee US$ 720.00
-------------------- ------------
EDGAR Filing Expenses $2,000.00
--------------------- ------------
Transfer Agent Fees $1,500.00
------------------- ------------
Legal Fees $8,000.00
---------- ------------
Accounting Fees $4,000.00
--------------- ------------
Printing Costs $3,000.00
-------------- ------------
Miscellaneous $3,000.00
------------- ------------
TOTAL US$22,220.00
---------------- ------------
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
There is no current provision for the indemnification of the officers and
directors of Guardian pursuant to their involvement with the offering of this
prospectus.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is information regarding the sales and issuances of our
securities without registration since inception, August 15, 2002.
Pursuant to a subscription agreement dated September 16, 2002, we issued
2,000,000 shares of our common stock to Dr. Sun Lee for US$1,269.00.
Subsequently, Dr. Lee transferred 500,000 shares to Song Do Chung and 500,000
shares to Mi Kyung Youn. The selling shareholders in this prospectus include all
those persons who received shares of common stock in connection with the
transfer of the shares.
On September 20, 2002 we completed a private placement offering of 5,000,000
shares of our common stock at an offering price of US$0.063 per share. Gross
proceeds from the offer and sale were US$317,300.00. No commission or other
payment was made with respect to the funds raised.
On November 4, 2002 we issued a total of 1,200,000 shares of our common stock in
exchange for services rendered to Guardian that were valued at US$38,028. The
following entities received the shares for providing the services: Worldcup
Finance Ltd., Penn Capital Canada Ltd. and both are included in the selling
shareholders in this prospectus.
All of the securities described above were offered and issued outside the
United States to individuals or entities who were not citizens or residents of
the United States. Accordingly, the offering and issuance of such securities
were not subject to the registration requirements of the Securities Act of 1933
pursuant to Regulation S under the Securities Act of 1933.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following Exhibits are attached to this registration statement:
3.1 Amended Articles of Incorporation and articles of incorporation
3.2 Bylaws
5.1 Opinion of Law offices of Alixe B. Cormick
7.1 Sole Distribution Agreement for Toylab Small Tools
7.2 Memorandum of Understanding
7.3 Material Transfer Agreement (Hyperthyroidism)
8.1 Subscription Agreement
10.1 Consulting Service Agreement
10.2 Employment Agreement
23.1 Consent of Pannell Kerr Forster, Independent Accountants
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
44
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than payment by a 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 in the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act of 1933 shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-1 and has duly caused this amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Saskatoon, Canada, on March 24, 2003.
GUARDIAN BIOTECHNOLOGIES INC.
/s/ Sun Lee
NAME: SUN LEE
Title: President and Treasurer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James Macpherson, PhD and Paul Arnison, PhD, and
each of them, his or her true and lawful attorneys-in-fact and agents, each 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 or all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
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 amendment to
the Registration Statement has been signed by the following persons on March 24,
2003, in the capacities indicated.
SIGNATURE AND TITLE
/s/ Sun Lee
------------
SUN LEE
Director, President and Treasurer
/s/James Macpherson
-------------------
JAMES MACPHERSON
Director and Secretary
/s/ Paul Arnison
-----------------
PAUL ARNISON
Director
46
SIGNATURE OF AUTHORIZED REPRESENTATIVE OF THE REGISTRANT
Pursuant to the Securities Act of 1933, as amended, the undersigned, the duly
authorized representative in the United States of America GUARDIAN
BIOTECHNOLOGIES INC. has signed this Registration Statement or amendment thereto
in the City of Saskatoon, Province of Saskatchewan, on March 24, 2003.
Target Group
/s/ Hyun J. You:
NAME:Hyun J. You
TITLE: MANAGING DIRECTOR
II-5
47
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
3.1 Amended Articles of Incorporation and Articles of Incorporation
3.2 Bylaws
5.1 Opinion of Law offices of Alixe B. Cormick
7.1 Sole Distribution Agreement for Toylab Small Tools
7.2 Memorandum of Understanding
7.3 Material Transfer Agreement (Hyperthyroidism)
8.1 Subscription Agreement
10.1 Consulting Service Agreement
10.2 Employment Agreement
23.1 Consent of Pannell Kerr Forster, Independent Accountants
48