Registration of Securities by a Small-Business Issuer — Form SB-2
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SB-2 Registration of Securities by a Small-Business 71 358K
Issuer
2: EX-4.1 Instrument Defining the Rights of Security Holders 14 54K
3: EX-4.2 Instrument Defining the Rights of Security Holders 15 54K
4: EX-23.2 Consent of Experts or Counsel 2 6K
5: EX-23.3 Consent of Experts or Counsel 2 6K
SB-2 — Registration of Securities by a Small-Business Issuer
Document Table of Contents
As filed with SEC on June 29, 2006,
File No. ___________
Exhibit list can be found on page 50
UNITED STATES SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
IMPLANTABLE VISION, INC.
---------------------------
(Exact name of registrant as specified in its charter)
UTAH 7990 95-4091368
------------------------ ---------------------------- -----------------
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
25730 Lorain Rd., North Olmsted, OH 44070
---------------------------
(Address of principal executive offices) (Zip Code)
Dr. George Rozakis, President
25730 Lorain Rd., North Olmsted, OH 44070
---------------------------
(Agent for Service of Process)
Copy of all communications to:
Michael A. Littman, Attorney at Law
7609 Ralston Road, Arvada, CO 80002
Phone: 303-422-8127 Fax: 303-431-1567
Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.
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 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, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.|X|
(COVER CONTINUES ON FOLLOWING PAGE)
If this form is a post-effective registration statement filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering |_|.
If delivery of the prospectus is expected to be made pursuant to Rule 434;
please check the following box |_|.
CALCULATION OF REGISTRATION FEE
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Title of each class of Proposed Amount to be Proposed Maximum Proposed Maximum Amount of Registration
securities to be registered Registered (1) Offering Price Per Share Aggregate Offering Price Fee
(2) (2)
------------------------- -------------------------- -------------------------- -------------------------- -----------------------
Common Stock 3,797,895 $3.75 $14,242,106 $1,804.47
------------------------- -------------------------- -------------------------- -------------------------- -----------------------
Common Stock Underlying 8,000,000 $3.75 $30,000,000 $3,801.00
"A" Warrants
------------------------- -------------------------- -------------------------- -------------------------- -----------------------
Common Stock Underlying 8,000,000 $3.75 $30,000,000 $3,801.00
"B" Warrants
------------------------- -------------------------- -------------------------- -------------------------- -----------------------
Common Stock to be issued 10,000,000 $3.75 $37,500,000 $4,751.25
upon conversion of Series
"A" Convertible Preferred
------------------------- -------------------------- -------------------------- -------------------------- -----------------------
Total 29,797,895 $111,742,106 $14,157.72
------------------------- -------------------------- -------------------------- -------------------------- -----------------------
(1)Pursuant to Rule 416 promulgated under the Securities Act of 1933, as
amended, there are also registered hereunder such indeterminate number of
additional shares as may be issued to the selling stockholders to prevent
dilution resulting from stock splits, stock dividends or similar transactions.
(2) Estimated solely for purposes of calculating the Registration Fee pursuant
to Rule 457, as amended, based on the average of the bid and ask prices for
Registrants common stock as reported on the OTC Bulletin Board on June 28, 2006.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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Preliminary Prospectus - Subject to Completion Date of Prospectus:
IMPLANTABLE VISION, INC.
25730 Lorain Rd., North Olmsted, OH 44070
(303) 422-8127
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THIS
PROSPECTUS IS INCLUDED IN THE REGISTRATION STATEMENT THAT WAS FILED BY
IMPLANTABLE VISION, INC. WITH THE SECURITIES AND EXCHANGE COMMISSION. THE
SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND NEITHER THE SELLING SECURITY HOLDERS NOR WE ARE NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
29,797,895, SHARES OF COMMON STOCK
Our business plan intends to commercialize the Phakic intraocular Lens
(inside-the-eye contact lens) to capture a portion of the refractive surgery
market. The lens is designed to provide the surgeon and the patient with an
alternative to LASIK that is not only reversible, but also provides a higher
quality of vision. The lens is implanted inside the eye and directly behind the
iris (the colored part of the eye). The procedure takes no longer than 10
minutes and if for some reason the results aren't satisfactory to the patient,
the lens can easily be removed.
We do not currently produce or sell any product based on our technology and may
not market any due to the lack of regulatory approval.
This prospectus relates to
1) The resale by the selling stockholders of 3,797,895 shares of our
existing common stock.
2) The sale of up to 8,000,000 shares pursuant to the exercise of "A"
Warrants at $2.00 per share.
3) The sale of up to 8,000,000 shares pursuant to the exercise of "B"
Warrants at $5.00 per share.
4) The sale of up to 10,000,000 shares pursuant to the conversion to
common of Series "A" Preferred Convertible Stock held by shareholders.
The selling stockholders may sell common stock from time to time in the
principal market on which the stock is traded at the prevailing market price or
in negotiated transactions. Please see the "Selling Stockholders" section in
this prospectus for a complete description of all of the selling stockholders.
We will not receive any proceeds from the sale of shares by the selling
stockholders, but will receive proceeds from the exercise of "A" Warrants and
"B" Warrants.
Our offering is not being underwritten. Our shareholders are offering shares of
common stock owned by them to purchasers directly, or through agents, brokers or
dealers at market or negotiated prices at the time of the sale. The stock
currently trades on the OTCBB under the symbol "IMVS" and prices may be
negotiated variably by each individual shareholder at the time of any sale, in
the public market or in private sales (see "Plan of Distribution.") Our selling
shareholders' shares registered under this prospectus may be sold over an
extended period of time, on a delayed or continuous basis.
WE URGE YOU TO READ THE RISK FACTORS ALONG WITH THIS PROSPECTUS BEFORE YOU MAKE
YOUR INVESTMENT DECISION. SEE "RISK FACTORS" BEGINNING ON PAGE 6. THE SECURITIES
ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SHARES, 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 3
The Offering 7
Selling Shareholders 8
Risk Factors 10
Risks Related to Our Business 13
Our Business 21
Other Government Regulation 25
Competition 25
Marketing and Sales Plan 27
Administrative Offices 29
Employees 29
Legal Proceedings 29
Changes in & Disagreements with Accountants 29
Market Risk 29
Plan of Operation 30
Critical Accounting Policies 31
Management's Discussion and Analysis of Financial Condition and Results of Operations 32
Liquidity and Capital Resources 33
Need for Additional Financing 33
Submission of Matters to a Vote of Security Holders 33
Use of Proceeds 34
Directors and Executive Officers and Significant Members of Management 34
Executive Compensation 38
Summary Compensation Table of Executives 38
Summary Compensation Table of Directors 39
Security Ownership of Certain Beneficial Owners and Management 39
Certain Relationships & Related Transactions 40
Description of Securities 41
Price Range of Our Common Stock & Stockholder Matters 42
Report to Stockholders 43
Transfer Agent and Registrar 43
Limitations on Director Liability 44
Plan of Distribution 44
Determination of Offering Price 45
Experts 45
Legal Matters 45
Where You Can Find Information 45
Financial Statements F-1
4
PROSPECTUS SUMMARY THIS SUMMARY HIGHLIGHTS SIGNIFICANT ASPECTS OF OUR BUSINESS
AND THIS OFFERING, BUT YOU SHOULD READ THE ENTIRE PROSPECTUS, INCLUDING THE
FINANCIAL DATA AND RELATED NOTES, BEFORE MAKING AN INVESTMENT DECISION.
IMPLANTABLE VISION, INC.
25730 Lorain Rd., North Olmsted, OH 44070
(303) 422-8127
IMPLANTABLE VISION, INC.
Implantable Vision, Inc. ("IVI") was formed under Utah law in 1981 under the
name of Arrowhead Energy Corp. It was reorganized in July 1988 as Capital
Television Network, Inc. after a Chapter 11 for Arrowhead Energy Corp. We
amended our name to Royal Casino Group, Inc. and E-Commerce West Corp. and
Internet Business Group, Inc. and Baymark Technologies, Inc. and finally to
Implantable Vision, Inc. from 1996 to date. Our principal place of business is
25730 Lorain Road, North Olmsted, Ohio 44070, telephone (303) 422-8127. Our
website is www.implantablevision.com. We and our officers, directors, and
significant shareholders file reports with the Securities and Exchange
Commission under the Securities Exchange Act of 1934.
CAPITALIZATION
As a result of the Reorganization (described below), we have a complex equity
capital structure. This is summarized in the following table as of June 28,
2006.
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Pro-Forma Fully Diluted Shares as of June 28, 2006
--------------------------------------------------------------------- --------------------------------------------------------------
Common Stock issued and outstanding 22,548,559
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Series A Preferred Convertible Stock (1) 1,000,000
--------------------------------------------------------------------- --------------------------------------------------------------
Convertible to 10 shares of Common 10,000,000
--------------------------------------------------------------------- --------------------------------------------------------------
Eight "A" Warrants exercisable at $2.00 per share (2) 8,000,000
--------------------------------------------------------------------- --------------------------------------------------------------
Eight "B" Warrants exercisable at $5.00 per share (3) 8,000,000
--------------------------------------------------------------------- --------------------------------------------------------------
Total Common Stock Issued and Outstanding assuming conversion of 48,548,559
all Series "A" Preferred and exercise of all warrants
--------------------------------------------------------------------- --------------------------------------------------------------
1. The Series A Preferred Stock is entitled to vote. When we use the term
"Series A" in this Prospectus, we intend to refer only to the Series A
Preferred Stock. There are one million shares of Series "A" Preferred Stock
authorized and outstanding. See "Description of Securities" below.
2. These Warrants expire December 31, 2006.
3. These warrants expire March 31, 2007 unless exercised.
We cannot offer any assurance that any warrants will be exercised.
We completed a reorganization by which we acquired 100% of the outstanding
interests of JIGJIG, LLC ("Jig"), a privately held Ohio company that was formed
in 2004 (the "Reorganization"). In the Reorganization:
We issued 30,000,000 shares of our Common Stock (representing about 90% of our
outstanding Common Stock after the Reorganization) (not including preferred
stock - Series A) to seven persons or entities for their ownership interest in
Jig. We received $475,000 in new capital for debt payments as part of the
Closing.
5
After the completion of the Reorganization, we raised additional capital through
the issuance of common stock in a private placement to accredited investors at
$1.19 per share to accredited investors.
In addition, two investors have subscribed to purchase 2,310,924 shares at $1.19
per share subject to this Registration Statement becoming effective.
In order to revalue the acquisition, the Company retired 9,300,000 shares of
Common Stock from seven persons or entities from their ownership interest in Jig
We intend to commercialize the Phakic Ocular Lens (inside-the-eye contact lens)
to capture a portion of the refractive surgery market. Our lens is designed to
provide the surgeon and the patient with an alternative to LASIK that is not
only reversible, but also provides a higher quality of vision. Our lens is
designed to be implanted inside the eye and directly behind the iris (the
colored part of the eye). The procedure takes no longer than 10 minutes and does
not require an iriditomy (a surgical procedure required in all phakic lens
implantations). In addition, if the results aren't satisfactory to the patient,
the lens can be easily removed.
The technology was developed by internationally renowned refractive surgery and
phakic lens pioneer, George W. Rozakis MD, and one of the original inventors of
phakic lenses, Igor Valyunin. Since then, Dr. Rozakis, our CEO, has created a
solid foundation by combining a robust product pipeline with expertise in
research, clinical trial, manufacturing, regulatory and finance to make this
company a force in the ophthalmic marketplace.
We have entered into a Manufacturing & Product Development agreement with
Millennium BioMedical, Inc., where one of our directors, Jerry Kaeni, is the
president and chief executive officer. This relationship brings over 22 years
experience in lens design and manufacturing and also brings significant
experience in marketing, clinical trials and distribution with the ophthalmic
marketplace. We are finalizing product development and plans to start clinical
trials, and obtain CE Mark approval to enter the European and Rest of World
markets in Q3-2007.
In addition to our current product portfolio, we have entered into a Definitive
Agreement in the form of an Asset Purchase Agreement with Ciba Vision Inc. on
June 23, 2006 to purchase intellectual property, patents, trademarks and assumed
the Phase III FDA trial sponsorship for the Phakic Refractive Lens ("PRL"), a
proprietary ocular lens technology. We paid $1,000,000 plus a royalty on future
sales for the conveyance of the assets.
The closing of the PRL deal was subject to our due diligence on the Food and
Drug Administrations' ("FDA") requirements for its subsequent approval. Dr.
Rozakis and Mr. Valyunin originally designed the PRL and the product is
currently in Phase III of the FDA trial process. Management hopes to have it
approved for sale in the US within three years.
We are also actively seeking additional technologies to expand its current
product offering and develop a robust pipeline. Our two areas of focus within
these efforts is the development of a lens to target the presbyopic (bifocals)
market and to introduce our current lens portfolio in acrylic material.
Presbyopia is a natural condition that arises in people over 40 years
of age that is currently treated with reading glasses. An estimated 90
million baby boomers in America will develop this condition in the next
10 years - approximately 40% of the entire American population. There
are a few technologies currently available, however they do not produce
high quality results and do not provide the physician or the patient
the reversibility option that our design allows.
Acrylic is considered by many to be the gold standard material for
intraocular lenses. There is no phakic acrylic lens available on the
market today and we believe that the introduction of such lens would
provide a substantial advantage over our competition.
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Our ability to grow depends significantly on our ability to achieve regulatory
approval of our product and commence sales and marketing which require
significant capital resources. We may need to seek additional capital from
public or private equity or debt sources to fund our growth and operating plans
and respond to other contingencies such as:
o shortfalls in anticipated revenues or increases in expenses;
o the development of new services; or
o the expansion of our operations, including the recruitment of
additional personnel.
There can be no assurance that any additional funds will be available to us to
allow us to cover operations expenses or development in the future. After the
effective date of this Registration Statement we intend to seek capital and
loans to cover operating and expansion expenses of approximately $12,000,000,
and we have subscriptions for $2,750,000 in capital, to be funded upon the
effectiveness of this Registration Statement.
If revenue from sales is not commenced or operations are unprofitable after
sales are commenced, or our product does not achieve regulatory approval, we may
need to develop another line of business, or to finance our operations through
the sale of assets we have, or enter into the sale of stock for additional
capital, none of which may be feasible when needed. As to whether we can
continue toward our business goals as set forth herein, we may use all of our
available capital without ever generating a profit or sales.
Our products require FDA approval for marketing in the United States and CE Mark
approval for marketing in Europe and several other countries. We have not yet
applied for either approval. Based on management's experience, we estimate that
it may take up to three years to obtain FDA approval and up to 18 months for CE
Mark approval of our technology after effectiveness of this registration
statement. If these approvals are not achieved, we would not have a product to
sell, and we could not develop the new business we are pursuing. We believe we
can achieve regulatory approval because our product is similar to existing lens
technology which our design may use as a corollary and that we have confirmed
its safety and efficacy via initial clinical trials and testing.
THE OFFERING
Our selling shareholders propose to offer 3,797,895 shares of our common stock
and subscribers and persons who hold Series "A" Convertible Preferred upon
conversion may offer at market prices as quoted on the OTC Bulletin Board or
other trading venues or privately negotiated prices, continuously, upon
effectiveness of the Registration Statement. There is currently a market price
for our stock of $3.75 as of June 16, 2006, and market price may not bear any
relation to factors such as a value determination, price earnings ratio, book
value, or any other objective criteria, since we have sustained continuing
losses and have no positive net book value. (See "Plan of Distribution" for
information concerning the offering.)
Our common stock is currently trading on the OTCBB.
WE WILL RECEIVE NONE OF THE NET PROCEEDS TO THE SELLING SHAREHOLDERS BUT WE WILL
RECEIVE PROCEEDS OF THE EXERCISE OF THE "A" WARRANTS AND THE "B" WARRANTS OF UP
TO $56,000,000 IF SOLD, AND WE WILL RECEIVE $2,750,000 FROM THE SUBSCRIPTION FOR
WHICH SHARES ARE BEING REGISTERED HEREBY.
Common stock offered by our selling shareholders and subscribers 3,797,895
Common stock to be issued in conversion of Series "A"
Convertible Preferred Stock Selling Shareholders 10,000,000
Common stock underlying "A" Warrants 8,000,000
Common stock underlying "B" Warrants 8,000,000
Common stock outstanding on June 28, 2006 (not including 22,548,559
Subscription for 2,310,924 shares)
7
Use of Proceeds We will not receive any proceeds from
the sale of shares of common stock by
our selling stockholders, however, we
will receive up to $16,000,000 if "A"
Warrants are exercised, and up to
$40,000,000 if "B" Warrants are
exercised.
OTC Bulletin Board Symbol IMVS.OB
SELLING SHAREHOLDERS
Our selling shareholders (including subscribers) are offering up to 3,797,895
common shares for sale, which they previously purchased, and are registering
10,000,000 shares which holders will receive upon conversion of Series "A"
Convertible Preferred Stock received. (See "Selling Shareholders" and "Plan of
Distribution.")
Shares are also being registered for a total of 11 shareholders -- who paid or
subscribed for shares at $1.19 per share for 3,787,895 shares for total cash
consideration of $4,507,595.05. All the share purchases and subscriptions being
registered occurred within the last year.
SELLING STOCKHOLDERS
Our Registration Statement has been filed pursuant to Rule 415 under the
Securities Act to afford our holders of shares of common stock being registered,
and Warrant holders and Series "A" Preferred Shareholders the opportunity to
sell the shares of common stock in a public market transaction rather than
pursuant to an exemption from the registration and prospectus delivery
requirements of the Securities Act.
We are registering:
1) 3,797,895 outstanding shares of common stock owned by selling
shareholders or subscribers under the Securities Act.
2) The sale of up to 8,000,000 shares pursuant to the exercise of "A"
Warrants.
3) The sale of up to 8,000,000 shares pursuant to the exercise of "B"
Warrants.
4) The sale of up to 10,000,000 shares pursuant to the conversion to
common of Series "A" Preferred Convertible Stock.
The registration fee related to the registration of these shares is being paid
by us. The selling shareholders will be responsible for their own accounting
expenses, brokerage commissions or underwriting discounts, and transfer fees
incurred in the sale of their shares. The selling security holders intend to
sell their shares directly, through agents, dealers, or underwriters in the
public market or otherwise on terms and conditions and at prices determined at
the time of sale by the selling security holders or as a result of private
negotiations between buyer and seller. We will not be assisting the selling
security holders in selling their shares. We intend to deliver to the selling
security holders copies of a current prospectus to be used in connection with
their sales. They will be advised as to the date as of which this prospectus
will no longer be current. Expenses of any sale will be borne by the parties as
they may agree. We will realize no proceeds from the sale of any of the shares
now held by selling shareholders, or Series "A" Preferred shareholders who
convert, but will receive proceeds upon exercise of the Class "A" Warrants
($2.00/share) and Class "B" Warrants ($5.00/share).
All of our selling security holders are listed below. We are registering the
specified shares owned by each selling security holder (concurrent with the
effectiveness of the Registration Statement). If all of the selling security
holders are successful in offering all of their shares currently owned, they
will own no shares.
The following table also sets forth the name of each person who is offering the
resale of shares of common stock by this prospectus, the number of shares of
common stock beneficially owned by each person, the number of shares of common
stock that may be sold in this offering and the number of shares of common stock
each person will own after the offering, assuming they sell all of the shares
offered.
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Name Beneficial Beneficial Percentage Beneficial Percentage Percentage
Ownership prior ownership prior to Ownership after after assuming full
to Offering assuming full Offering Offering (Shares) Offering conversion of
conversion of warrants and
Series A preferred
Preferred
--------------------------- ----------------- ---------------- -------------- --------------------- --------------- ----------------
--------------------------- ----------------- ---------------- -------------- --------------------- --------------- ----------------
Wesley Whiting, Former 5,000 * 5,000 * *
Director
--------------------------- ----------------- ---------------- -------------- --------------------- --------------- ----------------
Redgie Green, Former 5,000 * 5,000 * *
Director
--------------------------- ----------------- ---------------- -------------- --------------------- --------------- ----------------
Eric Malinski 256,303 * 256,303 * *
--------------------------- ----------------- ---------------- -------------- --------------------- --------------- ----------------
Larry Cahill 1,680,672 6.8% 1,470,588 6.8% 3.3%
--------------------------- ----------------- ---------------- -------------- --------------------- --------------- ----------------
David Clarkson 42,500 * 42,500 * *
--------------------------- ----------------- ---------------- -------------- --------------------- --------------- ----------------
Richard L. Clarkson 42,500 * 42,500 * *
Joanne Clarkson JTWROS
--------------------------- ----------------- ---------------- -------------- --------------------- --------------- ----------------
Richard L Clarkson TTEE 42,500 * 42,500 * *
FBO
Lucille S. Ball
--------------------------- ----------------- ---------------- -------------- --------------------- --------------- ----------------
Richard D. Clarkson 42,500 * 42,500 * *
--------------------------- ----------------- ---------------- -------------- --------------------- --------------- ----------------
John Walz 42,500 * 42,500 * *
--------------------------- ----------------- ---------------- -------------- --------------------- --------------- ----------------
Providence Investment 168,000 * 168,000 * *
Management Group
--------------------------- ----------------- ---------------- -------------- --------------------- --------------- ----------------
H. Thomas Monroe 210,000 * 210,000 * *
--------------------------- ----------------- ---------------- -------------- --------------------- --------------- ----------------
Theon Enderle 210,000 * 210,000 * *
--------------------------- ----------------- ---------------- -------------- --------------------- --------------- ----------------
Maurice Bennett 1,050,420 4.2% 1,260,504 4.2% 2.1%
--------------------------- ----------------- ---------------- -------------- --------------------- --------------- ----------------
The Regency Group, LLC * 10,000,000 * * * 19.7%
--------------------------- ----------------- ---------------- -------------- --------------------- --------------- ----------------
--------------------------- ----------------- ---------------- -------------- --------------------- --------------- ----------------
Total Shares Subject to 29,797,895
Registration
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A NOTE ABOUT FORWARD-LOOKING STATEMENTS
In our effort to make the information in this Prospectus more meaningful, this
Prospectus contains both historical and forward-looking statements. All
statements, other than statements of historical fact, are forward-looking
statements within the respective meanings of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements in this Prospectus reflect the current expectations of our management
concerning future results and events.
The forward-looking statements are not statements of historical fact, but may
use such terms as "may," "expects to" and other terms denoting future
possibilities. Forward-looking statements include, but are not limited to, those
statements relating to our future development, development of our intellectual
property or products we expect to be developed from our intellectual property,
financial condition, and our ability to acquire the additional financing
necessary to undertake business operations as contemplated in this Prospectus.
The accuracy of these and other statements in this Prospectus cannot be
guaranteed as they are subject to a variety of risks which are beyond our
ability to predict or control; these "Risk Factors" and the other factors
described in this Prospectus and information incorporated by reference may cause
actual results to differ materially from our estimates contained in this
Prospectus or in the documents incorporated by reference herein.
9
Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause our actual results, performance or achievements to
be different from any future results, performance and achievements expressed or
implied by these statements. You should review carefully all information,
including the financial statements and the notes to the financial statements
included in this Prospectus. In addition to the factors discussed under "Risk
Factors," the following important factors could affect future results, causing
the results to differ materially from those expressed in the forward-looking
statements in this Prospectus:
- Our inability to achieve regulatory approvals;
- Our inability to raise subsequent funds to execute our business plan;
- The impact of competitive products and/or technologies;
- The validity of our intellectual property rights;
- Our dependence on key personnel;
- The volatility of our stock price and the potential adverse impact on
our market which may be caused by future sales of restricted
securities;
- The impact of new technologies;
These factors are not necessarily all of the important factors that could cause
actual results to differ materially from those expressed in the forward-looking
statements in this Prospectus. Other unknown or unpredictable factors also could
have material adverse effects on our future results. The forward-looking
statements in this Prospectus are made only as of the date of this Prospectus
and we do not have any obligation to publicly update any forward-looking
statements to reflect subsequent events or circumstances. We cannot assure you
that projected anticipated events, objectives, goals or other planned or desired
results will occur or otherwise be achieved.
RISK FACTORS
Any investment in our stock has a high degree of risk. Before you invest you
should carefully consider the risks and uncertainties described below and the
other information in this prospectus. If any of the following risks actually
occur, our business, operating results and financial condition could be harmed
and the value of our stock could go down. This means you could lose all or a
part of your investment as a result of any of these risks.
RISK FACTORS RELATED TO OUR COMPANY
OUR AUDITORS HAVE ISSUED A "GOING CONCERN" QUALIFICATION TO THE AUDIT REPORT DUE
TO THE CONTINUING LOSSES ON OPERATIONS, WHICH INDICATES THE POTENTIAL FOR
BUSINESS FAILURE OF IMPLANTABLE VISION, INC.
A going concern qualification, which, in effect, reflects that we could fail to
continue, has been included in the Auditor's report for years ending July 31,
2005 and 2004. We have incurred significant losses from operations for the years
ended December 31, 2005 and 2004 and year to date 2006, and such losses are
expected to continue. In addition, we have limited working capital. Such factors
raise substantial doubt about our ability to continue as a going concern. We
cannot assure or guarantee that additional capital and/or debt financing will be
available when and to the extent required by us, or that if available, it will
be on terms favorable or acceptable to us. Our consolidated financial statements
do not include any adjustments that might result from the outcome of this
uncertainty. This may be an indicator of our inability to continue in business,
which could cause loss of investment. (See "Management's Discussion and
Analysis.")
RULES OF THE SEC ABOUT PENNY STOCKS APPLY TO US AND MAY IMPAIR OUR SHARE PRICE
AND MARKETABILITY.
The Securities and Exchange Commission has adopted a number of rules to regulate
"penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4,
15g-5, 15g-6, 15g-7, and 15g-9 under the Securities Exchange Act of 1934, as
amended. Because our securities constitute "penny stocks" within the meaning of
the rules, the rules apply to us and our securities. (See "Description of
Securities Penny Stock Classification.")
"Penny Stocks" are stocks:
o with a price of less than $5.00 per share;
o that are not traded on a "recognized" national exchange;
o whose price are not quoted on the NASDAQ automated Quotation at not
less than $5.00 per share;
o issuers with net tangible assets of less than $2 million (if the
issuer has been in continuous operation less than three years as is
our situation).
10
The requirements affecting brokers affecting trades in our shares, which are
discussed in the Risk Factors immediately following, reduce the potential market
for our shares by reducing the number of potential investors. This will make it
more difficult for investors in our common stock to sell shares to their parties
or to otherwise dispose of them. This, in turn, could cause our stock price to
decline, and this impediment to trading could cause difficulty to our stock to
ever develop any consistency in volume, or any substantial volume, which
negatively affects liquidity of the shares and which may affect our share price
negatively.
REGULATIONS REGARDING PENNY STOCKS MAY IMPAIR OUR SHARES' TRADABILITY IN THE
MARKET IF ONE EVER DEVELOPS.
Our securities, if and when available for trading, will be subject to a
Securities and Exchange Commission rule that imposes special sales practice
requirements upon broker-dealers who sell such securities to persons other than
established customers or accredited investors. For purposes of the rule, the
phrase "accredited investors" means, in general terms, institutions with assets
in excess of $5,000,000, or individuals having a net worth in excess of
$1,000,000 or having an annual income that exceeds $200,000 (or that, when
combined with a spouse's income, exceeds $300,000). For transactions covered by
the rule, the broker-dealer must make a special suitability determination for
the purchaser and receive the purchaser's written agreement to the transaction
prior to the sale. Consequently, the rule may adversely affect the ability of
investors and broker-dealers to sell our securities and also may adversely
affect the ability of purchasers in this offering to sell their securities in
any market that might develop therefore. (See "Description of Securities.")
INVESTORS SHOULD BE AWARE OF THE RISKS IN THE MARKET FOR PENNY STOCKS AND THE
POSSIBILITIES OF FRAUD AND ABUSE.
We want shareholders to be aware that, according to Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the security by one or a few broker-dealers that are often related to the
promoter or issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses. Our
management is aware of the abuses that have occurred historically in the penny
stock market. We will not be able to control any of such patterns.
WE EXPECT OUR STOCK PRICE TO BE VOLATILE WHICH COULD CAUSE INVESTMENT LOSSES TO
PURCHASERS OF OUR STOCK.
The trading price of our common stock is likely to be highly volatile. Our stock
price could fluctuate widely in response to many factors, including the
following:
o our historical and anticipated quarterly and annual operating results;
o announcements of new products or services by our competitors or new
competing technologies;
o investor perceptions of us and investments relating to ocular lenses
or eye products and technologies;
o developments in the ophthalmic industry;
o technological innovations;
o changes in pricing made by us, our competitors or providers of
alternative services;
o the addition or loss of business customers;
o variations between our actual results and analyst and investor
expectations;
o conditions or trends in the ophthalmic surgery industry, including
regulatory developments;
o announcements by us of significant developments, strategic
partnerships, joint venture or capital commitments;
o additions or departures of key personnel;
o general market and economic conditions.
In addition, in recent years the stock market in general, and the NASDAQ
National Market and the market for internet and technology companies in
particular, have experienced extreme price and volume fluctuations. These
fluctuations have often been unrelated or disproportionate to the operating
performance of these companies. These market and industry factors may materially
and adversely affect our stock price, regardless of our operating performance.
11
OUR FAILURE TO MAINTAIN CURRENT REPORTS UNDER SECTION 12(G) IN THE PAST YEARS IS
A NEGATIVE INDICATION OF OUR FUTURE ABILITY TO MAINTAIN SUCH REPORTS WHICH WE
ARE REQUIRED TO FILE UNDER SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.
We were a Reporting Company under Section 12(g) of the Securities & Exchange Act
of 1934 since the 1980's but failed to keep up our filings until 2004 when
filings were brought current. A failure to file current reports when due will
preclude us from being eligible to use Form S-3, if we otherwise are qualified
to use it, for registration statements for a period of one year. In addition, if
we were to seek an exchange listing, this factor could be viewed negatively in
the listing process. Our failure to maintain current reports in the past may
also be indicative of the inability of our Company to meet the Reporting
requirements of the Exchange Act in the future.
SHARE PURCHASERS COULD SUFFER DILUTION FROM ISSUANCES OF SHARES IN THE FUTURE
FOR CONSIDERATION LESS THAN THAT PAID BY OUR CURRENT INVESTORS.
We may issue additional shares to finance our future capital and operations
requirements and for research and development of our proposed products. Any
issuance will reduce the present percent of ownership of previous investors and
will result in additional dilution to investors purchasing shares in the market.
(See "Need for Additional Financing.")
FUTURE SALES OF OUR COMMON STOCK BY RESTRICTED SHAREHOLDERS COULD HAVE A
DEPRESSIVE EFFECT ON THE MARKET PRICE FOR OUR STOCK.
We will have 50,859,483 outstanding shares of common stock after sales of shares
registered hereby, including those being offered for resale in this registration
and those being registered for conversion from Preferred, and for Warrant
exercise. The 29,797,895 shares of common stock offered by the selling
shareholders, including the subscription shares and the shares registered for
conversion from Series "A" Preferred and for Warrant exercise will be freely
tradable without restriction under the Securities Act when our registration
statement becomes effective. Subject to restrictions on transfers referred to
below, all other shares of common stock which we have not registered are treated
as "restricted securities" as defined under the Securities Act (20,700,000
shares) and in the future may be sold in compliance with Rule 144 under the
Securities Act or pursuant to a registration statement filed under the
Securities Act. Rule 144 generally provides that a person holding restricted
securities for a period of one year may sell every three months in brokerage
transactions or market-maker transactions an amount equal to the greater of (i)
one percent (1%) of our issued and outstanding common stock or (ii) the average
weekly trading volume of the common stock during the four calendar weeks prior
to the sale. Rule 144 also permits, under certain circumstances, the sale of
shares without any quantity limitation by a person who is not an affiliate of us
and who has satisfied a two year holding period. The sale of substantial numbers
of these shares, whether pursuant to Rule 144 or pursuant to a registration
statement, may have a depressive effect on the market price of our common stock
by causing the supply to exceed demand.
In addition, sales of significant amounts of shares upon conversion of Series
"A" Convertible Preferred shareholders who may own 10,000,000 common shares in
increments, or the prospect of these sales, could adversely affect the market
price of our common stock.
WE MAY ISSUE SHARES TO RAISE CAPITAL OR FOR SERVICES IN THE FUTURE AT A PRICE
LOWER THAN THAT PAID BY CURRENT INVESTORS AND SUCH ACTIONS WOULD BE DILUTIVE,
EVEN HIGHLY DILUTIVE, OF CURRENT OUTSTANDING SHARES, WHICH WOULD ADVERSELY
AFFECT MARKET VALUES.
We will need to raise substantial additional capital and may issue shares for
cash, services, or acquisitions at a price less than that paid by current
owners, as needs arise. This poses a risk for investors in that there is no
protection for them against such dilutive issuances, which could ultimately
adversely affect the market and price for our shares, if a market continues.
OUR OPERATING RESULTS IN FUTURE PERIODS ARE LIKELY TO FLUCTUATE SIGNIFICANTLY
AND MAY FAIL TO MEET OR EXCEED THE EXPECTATIONS OF SECURITIES ANALYSTS OR
INVESTORS, AND THIS COULD AFFECT OUR MARKET PRICE, IF ANY.
Our annual and quarterly operating results are likely to fluctuate significantly
in the future due to numerous factors, many of which are outside of our control.
These factors include many of which are discussed in other risk factors; such as
low revenues, competition, failure to achieve regulatory approval of the product
proposed, lack of additional capital, competition, management changes,
intellectual property infringement claims, and extremely high operating costs.
If our operating results are negatively affected by any of these factors, our
12
operating results in future periods could fail to meet or exceed the
expectations of securities analysts or investors. In that event, any trading
price of our common stock would likely decline.
WE MAY BE UNABLE TO OBTAIN THE ADDITIONAL CAPITAL REQUIRED TO GROW OUR BUSINESS.
WE MAY HAVE TO CURTAIL OUR BUSINESS IF WE CANNOT FIND ADEQUATE FUNDING,
RESULTING ULTIMATELY IN BUSINESS FAILURE.
Our ability to grow depends significantly on our ability to expand our
operations through internal growth and by acquiring other companies or assets
that require significant capital resources. We may need to seek additional
capital from public or private equity or debt sources to fund our growth and
operating plans and respond to other contingencies such as:
o shortfalls in anticipated revenues or increases in expenses;
o the development of new services; or
o the expansion of our operations, including the recruitment of
additional personnel.
We cannot be certain that we will be able to raise additional capital in the
future on terms acceptable to us or at all. If alternative sources of financing
are insufficient or unavailable, we may be required to modify our growth and
operating plans in accordance with the extent of available financing. Any
additional equity financing may involve substantial dilution to our then
existing shareholders.
RISKS RELATED TO OUR BUSINESS
OUR PRINCIPAL OFFICERS AND DIRECTORS OWN APPROXIMATELY 92% OF OUR STOCK WHICH,
IF VOTED IN A BLOCK, WILL BE A CONTROLLING INTEREST AND INVESTORS WILL HAVE A
LIMITED VOICE IN OUR MANAGEMENT.
Five of our officers and/or directors, Dr. George Rozakis, Igor Valyunin,
William Rozakis, Jerry Kaeni and Dr. Alex Hatsis beneficially own approximately
92% of our outstanding common stock. As a result, they have the ability to
control substantially all matters submitted to our stockholders for approval,
including:
o election of our board of directors;
o removal of any of our directors;
o amendment of our certificate of incorporation or bylaws; and
o adoption of measures that could delay or prevent a change in control
or impede a merger, takeover or other business combination involving
us.
THERE IS NO ASSURANCE THAT WE WILL BE SUCCESSFUL IN EXPANDING OUR OPERATIONS
AND, IF SUCCESSFUL, MANAGING OUR FUTURE GROWTH. As a result of the funds
available from the completion of our recent private placement of Common Stock,
we will substantially increase the scale of our operations. This increase in
scale and expansion of our operations will result in higher operating costs. If
we are unable to generate revenues that are sufficient to cover our increased
costs, our results of operations will be materially and adversely affected. In
addition, we may experience periods of rapid growth, including increased
staffing levels. Any such growth will place a substantial strain on our
management, operational, financial and other resources, and we will need to
train, motivate and manage employees, as well as attract sales, technical, and
other professionals. Any failure to expand these areas and implement appropriate
procedures and controls in an efficient manner and at a pace consistent with our
business objectives would have a material adverse effect on our business,
financial condition and results of operations.
13
GOVERNMENT REGULATORS AND REGULATIONS COULD ADVERSELY AFFECT OUR BUSINESS.
The manufacturing, packaging, labeling, advertising, distribution, and sale of
our product, as well as other medical devices, are subject to regulation by a
number of federal, state, and local agencies, including but not limited to the
FDA and the Federal Trade Commission (FTC). These agencies have a variety of
procedures and enforcement remedies available to them, including but not limited
to:
o Initiating investigations;
o Issuing warning letters and cease and desist orders;
o Demanding recalls;
o Initiating adverse publicity;
o Requiring corrective labeling or advertising;
o Requiring consumer redress and/or disgorgement;
o Seeking injunctive relief or product seizures;
o Initiating judicial actions; and
o Imposing civil penalties or commencing criminal prosecution.
Federal and state agencies have in the past used these types of remedies in
regulating participants in the medical device industry, including the imposition
by federal agencies of monetary redress in the millions of dollars. In addition,
adverse publicity related to medical devices may result in increased regulatory
scrutiny, as well as the initiation of private lawsuits.
If we fail to comply with applicable laws could subject us to severe legal
sanctions that could have a material adverse effect on our business and results
of operations. Specific action taken against us could result in a material
adverse effect on our business and results of operations. Additionally, a state
could interpret claims presumptively valid under federal law as illegal under
that state's regulations.
FUTURE LAWS OR REGULATIONS MAY HINDER OR PROHIBIT THE PRODUCTION OR SALE OF OUR
PRODUCTS.
We may be subject to additional laws or regulations in the future, such as those
administered by the FDA, FTC, or other federal, state, or local regulatory
authorities. Current laws or regulations may be interpreted more stringently. We
are unable to predict the nature of such future laws, regulations or
interpretations, nor can we predict what effect they may have on our business.
Possible effects or requirements could include, but are not limited to, the
following:
o Adaptation of products to meet new standards;
o The recall or discontinuance of products;
o Imposition of additional good manufacturing practices and/or record
keeping requirements;
o Expanded documentation of the properties of products; and
o Expanded or different labeling, or scientific substantiation.
Any such requirements could have material adverse effects on our business or
results of operations.
14
OUR BUSINESS IS SUSCEPTIBLE TO PRODUCT LIABILITY CLAIMS, WHICH COULD ADVERSELY
AFFECT OUR WORKING CAPITAL, SHAREHOLDERS' EQUITY AND PROFITABILITY.
The manufacture and sale of any product for human implant raises the risk of
product liability claims if a customer alleges an adverse reaction after using
the product. These claims may derive from the product itself or a defect found
in the product from the manufacturing, packaging, or sales process. Even with
the product liability/completed operations insurance we intend to obtain, there
will be a risk that insurance will not cover completely or would fail to cover a
claim, in which case we may not have the financial resources to satisfy such
claims, and the payment of claims would require us to use funds that are
otherwise needed to conduct our business and make our products.
We have been subject to product liability claims in the past and continue to be
so. As part of our risk management policy, we will obtain third-party product
liability insurance coverage. Product liability claims against us may exceed the
coverage limits of our insurance policies or cause us to record a self-insured
loss. A product liability claim in excess of applicable insurance could have a
material adverse effect on our business, financial condition and results of
operations. Even if any product liability loss is covered by an insurance
policy, these policies have retentions or deductibles that provide that we will
not receive insurance proceeds until the losses incurred exceed the amount of
those retentions or deductibles. To the extent that any losses are below these
retentions or deductibles, we will be responsible for paying these losses. The
payment of retentions or deductibles for a significant amount of claims could
have a material adverse effect on our business, financial condition, and results
of operations.
Any product liability claim would divert managerial and financial resources and
could harm our reputation with customers. We cannot assure you that we will not
have product liability claims in the future or that such claims would not have a
material adverse effect on our business.
WE HAVE NO MANUFACTURING CAPABILITIES AND WE ARE DEPENDENT UPON OTHER COMPANIES
TO MANUFACTURE OUR PRODUCT.
We are dependent upon our relationship with an independent manufacturer to
fulfill our product needs. We currently only use one manufacturer for the
manufacturing process of our product. Our ability to market and sell our product
requires that the product be manufactured in commercial quantities and in
compliance with applicable federal and state regulatory requirements. In
addition, we must be able to manufacture our product at a cost that permits us
to charge a price acceptable to the customer while also accommodating any
distribution costs or third-party sales compensation. If our current
manufacturer is unable for any reason to fulfill our requirements, or seeks to
impose unfavorable terms, we will have to seek out other contract manufacturers.
While we believe there are other manufacturers available to meet our
requirements, a change could result in us having to obtain additional raw
materials and testing a new manufacturer's quality control standards.
Competitors who perform their own manufacturing may have an advantage over us
with respect to pricing, availability of product, and in other areas through
their control of the manufacturing process.
MANY OF OUR POTENTIAL COMPETITORS ARE LARGER THAN US AND HAVE GREATER FINANCIAL
AND OTHER RESOURCES THAN WE DO AND THOSE ADVANTAGES COULD MAKE IT DIFFICULT FOR
US TO COMPETE WITH THEM FOR SALES, SERVICE, OR WITH NEW PRODUCTS WITH THE RESULT
WE MIGHT NEVER BE PROFITABLE AND OUR BUSINESS COULD FAIL.
Substantial competition can be expected in the future in the areas of ocular or
ophthalmic products and sales. Competitors may have substantial financial,
technical, marketing, and other resources. Competition could result in price
reductions, fewer orders, reduced gross margins, loss of market share or an
overall ability to achieve market penetration of the new product if approved by
FDA or if we receive CE Mark. These companies may use standard or novel imaging
techniques. Other companies may develop products that perform better and/or are
less expensive than our products. Competitors may develop products that are
substantially equivalent to our new proposed products if we get regulatory
approval, thereby using our proposed products as predicate devices to more
quickly obtain regulatory approval for their own. If overall demand for our
products or services should decrease or never develop it will have a material
adverse affect on our sales revenues and operating results which could result in
our business failure.
15
FAILURE TO KEEP PACE WITH THE LATEST TECHNOLOGICAL CHANGES COULD RESULT IN
PRODUCT OBSOLESCENCE, WHICH COULD RESULT IN DECREASING REVENUES.
The market for our products is characterized by rapid change and technological
improvements. Failure to be able to keep pace with new technological
developments could result in serious harm to our business and operating results.
As a result, our success will depend, in part, on our ability to offer products
congruent with the technological advances of our competitors, evolving industry
standards and changing client preferences.
OUR INDUSTRY SEGMENT IS INTENSELY COMPETITIVE, AND THEREFORE, WE MAY NOT BE
SUCCESSFUL IN OUR BUSINESS DUE TO THOSE COMPETITIVE FACTORS.
The segment of the ophthalmic market in which we compete and the area of our
proposed new product is characterized by a number of entrants because of the
potential revenue. In addition, our segment of the industry is developing and
subject to continuing definition and, as a result, our competitors may better
position themselves to compete in our areas of product and services as the
market matures. Many of our existing competitors, as well as a number of
potential new competitors, have much longer operating histories in the
ophthalmic products market, greater name recognition, larger customer bases and
databases and significantly greater financial, technical and marketing resources
than we do. Some of our current competitors are Staar Surgical, and Advanced
Medical Optics (AMO). If we ever are approved to market our proposed new
products, these same competitive factors will or may affect any new product
marketing efforts, to our financial detriment.
We will continue to encounter competition from other companies in our market
segment. Our competitors may develop services or products that provide
significant performance, price, features, creative, financing, or other
advantages, superior to those we offer our customers. This could place our
Company at a significant competitive disadvantage and cause us to either lose
market share and customers for services, or fail to ever achieve significant
sales of the proposed new product and fail to ever be profitable. We may not be
able to compete successfully. If we are unprofitable on a continuous basis, our
business will fail. (See "Plan of Operations.")
WE CANNOT PREDICT OUR SUCCESS BECAUSE WE HAVE A HISTORY OF OPERATING LOSSES, AND
WE ANTICIPATE FUTURE LOSSES WHICH COULD CAUSE A FAILURE OF OUR COMPANY.
Dr. Rozakis incorporated the predecessor of our company on November 15, 2004 and
operated it as a closely held corporation until 2005, and we have a short
operating history as a limited liability company for you to review in evaluating
our business. We have limited historical financial and operating data upon which
you can evaluate our business and prospects. We have no current revenue. We have
incurred continued net losses for the past year and one-half of operation which
could be an indicator of significant potential for failure. (See "Management's
Discussion and Analysis.")
IT IS POSSIBLE THAT OUR OPERATING LOSSES MAY INCREASE IN THE FUTURE AND WE MAY
NEVER ACHIEVE OR SUSTAIN PROFITABILITY.
We anticipate that we will continue to incur operating losses for the
foreseeable future due to a high level of planned operating and capital
expenditures in research and development, increased sales and marketing costs,
additional personnel hires, greater levels of product development and our
general growth objectives related to our proposed new products which we intend
to develop. (See "Management's Discussion and Analysis.")
WE CANNOT PREDICT THE IMPACT OF MARKET FLUCTUATIONS IN MONEY MARKETS ON OUR
OPERATIONS AND FINANCIAL PICTURE AND FINANCING COSTS COULD ADVERSELY AFFECT OUR
PROFITABILITY.
Most of our revenue, expenses, and capital spending will be transacted in US
dollars. Our exposure to market risk for changes in interest rates relate
primarily to our cash and cash equivalent balances, marketable securities,
investment in sales-type leases, and loan agreements. The majority of our
investments may be in short-term instruments and therefore subject to
fluctuations in US interest rates. Our financing arrangements will periodically
renew and increases in interest rates may result in higher interest charges to
us. Due to the uncertain nature of such, we cannot assure that this will not
have a material adverse impact on our financial condition and results of
operations.
16
IF WE ARE UNABLE TO CONTINUE TO RETAIN THE SERVICES OF DR. GEORGE ROZAKIS, IGOR
VALYUNIN, DR. ALEX HATSIS OR JERRY KAENI OR IF WE ARE UNABLE TO SUCCESSFULLY
RECRUIT OR RETAIN QUALIFIED MANAGERIAL AND SALES PERSONNEL HAVING EXPERIENCE IN
BUSINESS, WE MAY NOT BE ABLE TO CONTINUE OUR OPERATIONS.
Our success depends to a significant extent upon the continued service of Dr.
George Rozakis, our Chairman and President, Chief Executive Officer, and member
of the Board of Directors, Igor Valyunin, a Director, Dr. Alex Hatsis, our
Medical Director, and Jerry Kaeni, a Director. Loss of the services of any of
them could have a material adverse effect on our growth, revenues, and
prospective business. We maintain two year agreements expiring March 2008 with
all of these key members of our team. We have key-man insurance on Dr. George
Rozakis in the amount of five million dollars. Our success also depends on the
performance of our officers and key employees. They are Dr. George Rozakis, Igor
Valyunin, Dr. Alex Hatsis, William Rozakis and Jerry Kaeni. Several Members of
our management team have worked together for at least 10 years. We have
employment agreements through March 2008 with all four of our officers and key
employees. Given our early stage of development, we depend on our ability to
retain and motivate high quality personnel, especially our management. We face
intense competition for qualified personnel, particularly in materials science,
optical engineering, manufacturing, financial services, distribution, marketing
and/or operations. In addition, in order to successfully implement and manage
our business plan, we will be dependent upon, among other things, successfully
recruiting qualified managerial and sales personnel having experience in
business. Competition for qualified individuals is so intense that there can be
no assurance that we will be able to find, attract and retain existing employees
or that we will be able to find, attract and retain qualified personnel on
acceptable terms.
PHYSICIANS, HOSPITALS AND CLINICS MAY NOT BUY, OR USE OUR PRODUCTS IN SUFFICIENT
NUMBERS, WHICH COULD RESULT IN DECREASED REVENUES.
Physicians, Hospitals and clinics may not use or accept our proposed new
products as effective, reliable, and cost-effective. Factors that could inhibit
such acceptance include:
o If customers conclude that the costs of these products exceed the cost
savings associated with the use of these products;
o If customers are financially unable to purchase these products;
o If adverse patient events occur with the use of these products,
generating adverse publicity;
o If we lack adequate resources to provide sufficient education and
training to potential customers; and
o If frequent product malfunctions occur, leading clinicians to believe
that the products are unreliable.
If any of these or other factors results in the non-use of our services or
non-purchase of our products, we will have reduced revenues to allow growth or
potential profitability.
AS A RESULT OF BEING IN THE MEDICAL DEVICE INDUSTRY, WE NEED TO MAINTAIN
SUBSTANTIAL INSURANCE COVERAGE, WHICH COULD BECOME VERY EXPENSIVE OR HAVE
LIMITED AVAILABILITY, AND THIS FACTOR COULD LIMIT OUR ABILITY TO OFFER SERVICES
AND PRODUCTS WHICH IN TURN WOULD IMPAIR REVENUES.
Our marketing and sale of products and services related to the medical device
field creates an inherent risk of claims for liability, and most purchasers of
new products will require insurance coverage. As a result, we will carry product
liability insurance with an aggregate limit of $2,000,000 and $1,000,000 per
occurrence and will continue to maintain insurance in amounts we consider
adequate to protect us from claims. We cannot, however, be assured to have
resources sufficient to satisfy liability claims in excess of policy limits if
required to do so. Also, there is no assurance that our insurance provider will
not drop our insurance or that our insurance rates will not substantially rise
in the future, resulting in increased costs to us or forcing us to either pay
higher premiums or reduce our coverage amounts which would result in increased
exposure to claims.
OUR FUTURE SIGNIFICANT GROWTH DEPENDS UPON OBTAINING REGULATORY APPROVAL OF ANY
NEW PRODUCTS WE DEVELOP; AND OUR FAILURE TO ACHIEVE REGULATORY APPROVAL COULD
RESULT IN NEVER GENERATING REVENUE FROM NEW PRODUCTS, WHICH WOULD JEOPARDIZE OUR
BUSINESS.
Before marketing any new products, we may be required to complete one or more
clinical investigations of each product by the FDA or CE Mark regulating bodies.
For our proposed intraocular product we estimate that it will take up to three
years for the device to be FDA approved and 18 months to receive CE Mark after
effectiveness of this registration statement. There can be no assurance that the
results of such clinical investigations will be favorable to us. We will not
know the results of any study, whether favorable or unfavorable, until after the
17
study has been completed. Such data must be submitted to the regulating body as
part of any regulatory filing seeking approval to market the product. Even if
the results are favorable, the regulating body may dispute any claims of safety,
efficacy, or clinical utility and not allow the product to be marketed. Also,
the sale price of the proposed product may not be enough to recoup the amount of
our investment in conducting the investigative studies. If we are unable to
achieve FDA approval and/or CE Mark of our proposed product, we will have
invested substantial R&D capital without result, and we have no other existing
products for revenues or growth of our Company. (See "Regulatory Approval
Process" at p. 20.)
WE WILL INCUR SUBSTANTIAL EXPENSES AND CAN BE EXPECTED TO INCUR LOSSES IN
DEVELOPING NEW PRODUCTS, AND THE CONTINUATION OF SUCH LOSSES WITHOUT MORE
CAPITAL TO OVERCOME THE NEGATIVE OPERATING CASH FLOW WOULD CAUSE OUR COMPANY TO
FAIL.
The area of medical device research is subject to rapid and significant
technological changes. Developments and advances in the medical industry by
either competitors or neutral parties can affect our business in either a
positive or negative manner. Developments and changes in technology that are
favorable to us may significantly advance the potential of our research while
developments and advances in research outside of the methods we are using may
severely hinder, or halt our development completely.
We are a small company in terms of employees, technical and research resources
and capital. We expect to have significant research and development, sales and
marketing, and general and administrative expenses for several years. These
amounts may be expended before any commensurate incremental revenue from these
efforts may be obtained. These factors could hinder our ability to meet changes
in the medical industry as rapidly or effectively as competitors with
substantially more resources.
WE MAY BE UNABLE TO PROTECT OUR TRADEMARKS, TRADE SECRETS AND OTHER INTELLECTUAL
PROPERTY RIGHTS THAT ARE IMPORTANT TO OUR BUSINESS WITH THE RESULT THAT OUR
REVENUES COULD BE ADVERSELY AFFECTED, OUR UNPROFITABILITY WOULD CONTINUE, AND
OUR BUSINESS COULD FAIL.
We regard our trademarks, trade secrets and other intellectual property as an
integral component of our success. We rely on trademark law, trade secret
protection and confidentiality and/or license agreements with employees,
customers, partners and others to protect our intellectual property. Effective
trademark and trade secret protection may not be available in every country in
which our products are available. We cannot be certain that we have taken
adequate steps to protect our intellectual property. In addition, if our
third-party confidentiality agreements are breached there may not be an adequate
remedy available to us. If our trade secrets become publicly known, we may lose
our competitive position, if any, which could contribute to our unprofitability
and result in failure.
SUBSTANTIAL COSTS COULD BE INCURRED DEFENDING AGAINST CLAIMS OF INTELLECTUAL
PROPERTY INFRINGEMENT WHICH WOULD HARM THE CASH AND CAPITAL POSITION OF
IMPLANTABLE VISION, INC. AND THE INTERESTS OF OUR SHAREHOLDERS.
Other companies, including competitors, may hold or obtain patents or other
proprietary rights that would limit, interfere with, or otherwise circumscribe
our ability to make, use, or sell products and such others could bring
infringement actions against us. Should there be a successful claim of
infringement against us and if we could not license the alleged infringed
technology, business, revenue, and operating results could be adversely
affected. There has been substantial litigation regarding patent and other
intellectual property rights in the medical device industry. The validity and
breadth of claims covered in medical technology patents involve complex legal
and factual questions for which important legal principles remain unresolved.
Any litigation claims against us, independent of their validity, may result in
substantial unrecoverable costs and the diversion of resources with no assurance
of our success.
Intellectual property claims could cause us to:
o cease selling, incorporating, or using products that incorporate the
challenged intellectual property,
o obtain a license from the holder of the infringed intellectual
property right on difficult terms, if at all, and
o re-design our products to delete the infringed intellectual property
which might cause non-approval by FDA or inability to feasibly produce
a product.
18
COMMERCIALIZATION OF OUR PROPOSED NEW PRODUCTS COULD FAIL IF IMPLEMENTATION OF
OUR SALES AND MARKETING STRATEGY IS UNSUCCESSFUL.
A significant sales and marketing effort will be necessary to achieve the level
of market awareness and sales needed to achieve profitability from sales of our
proposed new product. We currently have only limited sales and marketing
experience, both in the US and abroad, which may limit our ability to
successfully develop and implement our sales and marketing strategy. We may need
to:
o hire and train sales specialists;
o build a strong direct sales force;
o manage geographically dispersed operations; and
o encourage customers to rent or purchase products.
The failure to successfully create and implement a sales and marketing strategy
could result in increased costs and net losses with resulting potential failure
of our company.
THE FDA ALSO REQUIRES ADHERENCE TO GOOD MANUFACTURING PRACTICES (GMP)
REGULATIONS, WHICH INCLUDE PRODUCTION DESIGN CONTROLS, TESTING, QUALITY CONTROL,
STORAGE, AND DOCUMENTATION PROCEDURES, AND THE FDA, IF IT FOUND THAT OUR OR OUR
MANUFACTURER'S PRACTICES ARE NOT COMPLIANT, WOULD CAUSE OUR INABILITY TO MARKET
NEW PRODUCTS, WHICH COULD IMPACT OUR SERVICE BUSINESS NEGATIVELY WITH THE RESULT
THAT REVENUE AND CASH FLOW COULD BE IMPAIRED TO THE POINT THAT WE COULD FAIL.
To determine whether adequate compliance has been achieved, the FDA may inspect
our or our manufacturer's facilities at any time. Such compliance can be
difficult and costly to achieve. Our compliance status may change due to future
changes in, or interpretations of, FDA regulations or other regulatory agencies.
Such changes may result in the FDA withdrawing marketing clearance or requiring
product recall. In addition, any changes or modifications to a device or its
intended use may require us to reassess compliance with Good Manufacturing
Practices guidelines, potentially interrupting the marketing and sale of
products. Failure to comply with regulations could result in enforceable
actions, including product seizures, product recalls, withdrawal of clearances
or approvals, and civil and criminal penalties. All of these untoward situations
could cause losses of revenue, expenses, fines, penalties resulting in business
failure.
THERE MAY BE NO MARKET FOR OUR PRODUCTS IF THEY ACHIEVE REGULATORY APPROVAL.
Our intraocular lenses are proposed products. Even though there is now a
perceived market for this product, we may not succeed in building sufficient
market share. Too low a market share could eventually prevent profitability in
new products.
WE WILL NEED SIGNIFICANT ADDITIONAL FUNDS FOR OPERATIONS AND PRODUCT
MARKETING/DEVELOPMENT, WHICH WE MAY NOT BE ABLE TO OBTAIN.
The development of our products will require significant additional capital. We
intend to seek substantial additional financing in the future to fund the growth
of our operations, including funding the significant capital expenditures
necessary for us to provide sales in our targeted markets if our product is
approved by the FDA. We may be unable to obtain any future equity or debt
financing on acceptable terms or at all. Recently the financial markets have
experienced extreme price fluctuations. A market downturn or general market
uncertainty will adversely affect our ability to secure additional financing. If
we are unable to obtain additional capital or are required to obtain it on terms
less satisfactory than what we desire, we will need to delay deployment of our
new products or take other actions that could adversely affect our business,
prospects, operating results and financial condition. To date, our cash flow
from operations has been insufficient to cover our expenses and capital needs.
Please see "Management's Discussion and Analysis" and "Results of Operations"
and "Liquidity and Capital Resources."
WE MAY BE UNABLE TO EFFECTIVELY SELL OUR PROPOSED NEW PRODUCTS AND PROVIDE
SUBSTANTIAL REVENUE FROM PRODUCT SALES, WHICH MAY RENDER US UNABLE TO EVER BE
PROFITABLE.
Due to the need to further develop our new products and receive FDA clearance,
we may not be able to bring these products to market and attract buyers.
Accordingly, we may always be unprofitable. We will be dependent upon both
revenue generation and additional capital to continue operations and failure to
achieve either for new products may cause failure of the business.
19
WE MAY BE INVOLVED IN FUTURE DISPUTES WITH RESPECT TO OUR USE OF TECHNOLOGY
RIGHTS WHICH COULD ADVERSELY AFFECT OUR BUSINESS.
As we continue to develop products that require new technology, we anticipate
that we may need to license third-party technology. We cannot provide assurance
that these technology licenses will be available to us on commercially
reasonable terms, if at all. In addition, it is possible that in the course of
using new technology, we may inadvertently breach the technology rights of
others and face liabilities for the breach. Our inability to obtain technology
licenses or inadvertent breach of others' technology rights could delay or
compromise the introduction of new products and could materially and adversely
affect our business and financial condition by causing us to not be able to sell
a product at all or profitably. Either the lack of availability of license
rights at a reasonable price or disputes about licenses could adversely impact
our business by limiting our sale of products to customers or making the price
of products offered non-competitive, thereby contributing to a lack of
profitability.
OUR NEW PRODUCT REQUIRES REGULATORY APPROVAL, WHICH HAS NOT YET BEEN APPLIED FOR
AND MAY NEVER BE GRANTED WHICH COULD CAUSE US TO NEVER HAVE A NEW PRODUCT TO
MARKET.
Our primary governmental regulation area is FDA approval and CE Mark approval.
We believe we can achieve these approvals because our product uses approved and
accepted surgical techniques to which we have added several enhancements. We
estimate it will take up to three years for our proposed intraocular lens
product to be approved by the FDA and 18 months for CE Mark approval from
effectiveness of this registration statement. If these approvals are not
achieved, we would not have a new product to sell in the marketplace. (See
"Regulatory Approval Status" and "Regulatory Approval Process.")
WE DEPEND ON THIRD PARTIES FOR SUPPLIES AND NON-PERFORMANCE OR DELAYS COULD
ADVERSELY EFFECT OPERATIONS AND REVENUES, RESULTING IN CONTINUED UNPROFITABILITY
FROM WHICH WE MIGHT NOT BE ABLE TO RECOVER AND OUR BUSINESS COULD FAIL.
We currently plan to purchase lenses from vendors. Our reliance on third party
vendors involves a number of risks, including the absence of guaranteed capacity
and reduced control over delivery schedules, quality assurance, delivery and
costs. If any of our suppliers reduces or interrupts its supply, this reduction
or interruption could disrupt our business. Although several manufacturers
currently produce lenses, no lens is now produced which will meet our current
and anticipated requirements, our suppliers may be unable to manufacture and
deliver the lens design we order on time, or the available supply if produced
may be insufficient to meet our demand. If our suppliers or licensors enter into
competition with us, or if our competitors enter into exclusive or restrictive
arrangements with the suppliers or licensors, or if we encounter delays in
supply, then these events may materially and adversely affect the availability
and pricing of the product offered, and our services to customers. The result
would be reduced or lost revenues and unprofitability.
A NATURAL DISASTER COULD CAUSE DELAYS OR INTERRUPTIONS OF SALES AND SERVICE TO
OUR CUSTOMERS WHICH WOULD NEGATIVELY IMPACT OUR OPERATING RESULTS.
Our operations depend on our ability to avoid disruption and damages from fires,
earthquakes, floods and power losses. A natural disaster or other unanticipated
problem at our or our manufacturer's leased facilities could interrupt our sales
and product development and adversely affect our revenues.
OUR FORWARD-LOOKING STATEMENTS CONTAINED IN OUR PROSPECTUS MAY NOT BE ACCURATE
FOR MANY OF THE REASONS DISCUSSED IN OUR RISK FACTORS.
Some of the information in this prospectus contains forward-looking statements
that involve substantial risks and uncertainties. You can identify these
statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "estimate" and "continue," or similar words. You should
read statements that contain these words carefully because they:
o discuss our future expectations;
o contain discussions of our future results of operations or of our
financial condition;
o state other "forward-looking" information;
o our goals and strategies;
o the importance and expected growth of medical ophthalmic market;
o the pace of change in healthcare industry; the demand for ophthalmic
products; and
o revenues.
20
We believe it is important to communicate our expectations. We are subject to a
number of risks and uncertainties, including but not limited to, changes in the
economic and political environments worldwide, changes in technology and changes
in the healthcare industry. In light of the many risks and uncertainties
surrounding the medical ophthalmic marketplace and the healthcare industry,
prospective purchasers of the shares should keep in mind that we cannot
guarantee that the forward-looking statements described in this registration
statement will transpire. The risk factors listed in this section, as well as
any cautionary language in this prospectus, provide examples of risks,
uncertainties and events that may cause our actual results to differ materially
from the expectations we may describe in our forward-looking statements. You
should be aware that the occurrence of the events described in these risk
factors could have an adverse effect on our business, results of operations and
financial condition.
OUR BUSINESS
HISTORY
Implantable Vision, Inc., a Utah Corporation, was incorporated on March 21, 1981
as Arrowhead Energy Corp. which went into a Chapter 11 emerging in 1988 as
Capital Television Network, Inc. Since incorporation, we have undergone several
name, ownership, directional and management changes. In July, 1998 we changed
our name to E-Commerce West Corp. from Royal Casino Group reflecting a shift in
its primary business focus from gaming to e-Commerce. We changed our name to
IBNG in 2001 and then changed our name to Baymark Technologies, Inc. in 2002,
concurrent with a 1 for 6 reverse split of our common stock. From 2001 to 2005
we had no revenues or business operations. We stock traded on the OTCBB and on
the "Pink Sheets" under the symbol "BYMT" in the fiscal year and after fiscal
year end. After September 30, 2005, our symbol was changed to "BYMR" on the
OTCBB, and we now trade under the symbol "IMVS" on the OTCBB.
On December 16, 2005, we entered into a Plan and Agreement of Reorganization
with JIGJIG, LLC (JIG) and its interest holders whereby the interest holders of
JIG received 30,000,000 shares of Common Stock in exchange for 100% interest in
JIG. JIG merged into BT Acquisitions, Inc. a newly formed subsidiary of
Registrant. As a result of the Plan and Agreement of Reorganization, we received
$475,000 in capital with which we settled all of the existing outstanding debt
of Implantable Vision, Inc. Concurrently, we purchased 300,000 shares of common
stock from Jon & Cathy Elliott for retirement to treasury. In order to revalue
the acquisition, the Company retired 9,300,000 shares of Common Stock from seven
persons or entities from their ownership interest in JIG.
JIG held intellectual property regarding implantable ocular lenses, which
correct vision and which, in application; avoid many of the disadvantages or
limitations of laser alterations of the cornea. The intellectual property has
not yet been FDA approved nor is it commercialized, and we have raised
$1,757,595.49 and have another $2,750,000 subscribed for and equity to
capitalize our plan to commercialize our intellectual property and to achieve
FDA approvals required.
IMPLANTABLE VISION, INC.
We intend to commercialize the Phakic Ocular Lens (inside-the-eye contact lens)
to capture a portion of the refractive surgery market. Our lens is designed to
provide the surgeon and the patient with an alternative to LASIK that is not
only reversible, but also provides a higher quality of vision. Our lens is
implanted inside the eye and directly behind the iris (the colored part of the
eye). Our procedure takes approximately 10 minutes and if for some reason the
results aren't satisfactory to the patient, then the lens can be easily removed.
The technology was developed by refractive surgery and phakic lens pioneer,
George W. Rozakis MD, and one of the original inventors of phakic lenses, Igor
Valyunin. Dr. Rozakis, our CEO, has created a solid foundation by combining a
robust product pipeline with expertise in ophthalmic surgery, research, clinical
trial, manufacturing, FDA regulatory and finance. We have entered (this is not
done yet) into a Manufacturing & Product Development agreement with Millennium
BioMedical, Inc. ("MBI"), of where one of our directors, Jerry Kaeni, is the
president and CEO. This relationship brings 22 years experience in lens design
and manufacturing and significant experience in marketing, clinical trials and
distribution with the ophthalmic marketplace. We have also hired Alex Hatsis as
our medical director. Alex is an extremely experienced phakic lens surgeon in
the United States and has been a pioneer in refractive surgery since 1992. We
are finalizing product development and plan to start clinical trials to enter
the European and Rest of World markets in Q2-2007.
21
In addition to our current product portfolio, we have entered into a Definitive
Agreement in the form of an Asset Purchase Agreement with Ciba Vision Inc. on
June 23, 2006 to purchase intellectual property, patents, trademarks and assumed
the Phase III FDA trial sponsorship for the Phakic Refractive Lens ("PRL"), a
proprietary ocular lens technology. We paid $1,000,000 plus a royalty on future
sales for the conveyance of the assets.
The closing of the PRL deal was subject to our due diligence on the Food and
Drug Administrations' ("FDA") requirements for its subsequent approval. Dr.
Rozakis and Mr. Valyunin originally designed the PRL and the product is
currently in Phase III of the FDA trial process. Management hopes to have it
approved for sale in the US within three years.
We are also actively seeking additional technologies to expand its current
product offering and develop a robust pipeline. Our two areas of focus within
these efforts is the development of a lens to target the presbyopic (bifocals)
market and to introduce our current lens portfolio in acrylic material.
Presbyopia is a natural condition that arises in people over 40 years
of age that is currently treated with reading glasses. An estimated 90
million baby boomers in America will develop this condition in the next
10 years - approximately 40% of the entire American population. There
are a few technologies currently available, however they do not produce
high quality results and do not provide the physician or the patient
the reversibility option that our design allows.
Acrylic is considered by many to be the gold standard material for
intraocular lenses. There is no phakic acrylic lens available on the
market today and we believe that the introduction of such lens would
provide a substantial advantage over our competition.
REGULATORY APPROVAL STATUS - NEW PROPOSED PRODUCT
Our new product requires FDA approval for marketing within the United States,
and CE Mark approval for marketing in Europe and several other countries
worldwide. We have not applied for either approvals, and we anticipate that it
could take up to three years to receive FDA approval and 18 months to receive CE
Mark approval after the effectiveness of this registration statement. If we do
not receive either of these regulatory approvals, there is a chance that we
would not be able to continue in the phakic lens business. We have spent
approximately $700,000 in the last year on research and development of our
products. No costs of research and development have been borne by customers. We
do not have any cost of compliance with federal, state, or local environmental
laws.
At this time our planned product is not developed enough to apply for regulatory
approval, but once developed an application will be processed through the FDA
and the CE Mark regulating bodies. Again, we estimate that it could take up to
three years to receive FDA approval and 18 months to receive CE Mark approval
after the effectiveness of this registration statement. We will, if approved, be
listed as a new device manufacturer with the FDA, and the management has been
involved in or directly received seven FDA 510K approvals.
REGULATORY APPROVAL PROCESS
All our products are classified as Class III devices by the FDA and clinical
studies with our products will be based on this classification. Our business is
governed by the FDA and all implantable devices require Pre-market Approval
(PMA) before they can be put in commercial distribution in the US. The
commercial distribution for Europe and many other markets in the rest of the
world will be regulated by a European Notifying Body under ISO 13485, 2003
certification. All our products currently in production or manufactured by other
vendors are regulated in the same way.
All of our products will be Class III devices, FDA approved through OEM for
marketing. Once approved the FDA will not require the manufacturer to resubmit
an application or change the classification. They may however, request further
information about the product(s), manufacturer and GMP requirements. We will not
manufacture our products, however they will be manufactured under contract by
Director Jerry Kaeni's company, Millennium Biomedical, Inc., which is a FDA
approved ocular lens manufacturer and marketer.
Class III devices are usually (1) those that support or sustain human life, (2)
are of substantial importance in preventing impairment of human health, or (3)
present a potential, unreasonable risk of illness or injury. Examples of Class
III devices which require a Premarket approval include replacement heart valves,
silicone gel-filled breast implants, implanted cerebella stimulators and
intraocular lenses.
22
Our intraocular lens is a Class III device and a PMA application must be filed.
PMA is the most stringent type of device marketing application required by the
FDA. The applicant must receive FDA approval of its PMA application prior to
marketing the device. PMA approval is based on a determination by the FDA that
the PMA contains sufficient valid scientific evidence to assure that the device
is safe and effective for its intended use(s). An approved PMA is, in effect, a
private license granting the applicant (or owner) permission to market the
device. The PMA owner, however, can authorize use of its data by another.
The PMA applicant is usually the person who owns the rights, or otherwise has
authorized access, to the data and other information to be submitted in support
of FDA approval. This person may be an individual, partnership, corporation,
association, scientific or academic establishment, government agency or
organizational unit, or other legal entity. The applicant is often the
inventor/developer and ultimately the manufacturer.
FDA regulations provide 180 days to review the PMA and make a determination. In
reality, the review time is normally longer. Before approving or denying a PMA,
the appropriate FDA advisory committee may review the PMA at a public meeting
and provide FDA with the committee's recommendation on whether FDA should
approve the submission. After FDA notifies the applicant that the PMA has been
approved or denied, a notice is published on the Internet (1) announcing the
data on which the decision is based, and (2) providing interested persons an
opportunity to petition FDA within 30 days for reconsideration of the decision.
A PMA application is a scientific, regulatory documentation by the FDA to
demonstrate the safety and effectiveness of the class III device. There are
administrative elements of a PMA application, but good science and scientific
writing is a key to the approval of PMA application. If a PMA application lacks
elements listed in the administrative checklist, the FDA will refuse to accept a
PMA application and will not proceed with the in-depth review of scientific and
clinical data. If a PMA application lacks valid clinical information and
scientific analysis based on sound scientific reasoning, it will delay the FDA's
review and approval. PMA applications that are incomplete, inaccurate,
inconsistent, omit critical information, and are poorly organized have resulted
in delays in consideration of PMA applications.
Three categories of the PMA application are very important:
o Technical Sections. The technical sections containing data and
information should allow the FDA to determine whether to approve or
disapprove the application. These sections are usually divided into
non-clinical laboratory studies and clinical investigations.
o Non-clinical Laboratory Studies' Section. Non-clinical laboratory
studies' section includes information on microbiology, toxicology,
immunology, biocompatibility, stress, wear, shelf life, and other
laboratory or animal tests. Non-clinical studies for safety evaluation
must be conducted in compliance with 21CFR Part 58 (Good Laboratory
Practice for Non-clinical Laboratory Studies).
o Clinical Investigations Section. Clinical investigations section
includes study protocols, safety and effectiveness data, adverse
reactions and complications, device failures and replacements, patient
information, patient complaints, tabulations of data from all
individual subjects, results of statistical analyses, and any other
information from the clinical investigations. Any investigation
conducted under an Investigational Device Exemption (IDE) must be
identified as such.
MBI, the company that will manufacture the intraocular lenses is an FDA
registered manufacturing site. The registration number is 2031928 and
owner/operator number 9036507. We will probably be applying for FDA listing as a
new device manufacturer. Though we do not currently manufacture new devices, the
FDA will probably require our registration.
MBI must be in compliance with Good Manufacturers Practices, Quality Control and
Medical Device Reporting. The FDA may from time to time, usually every 2 to 3
years, audit the company for compliance. In these audits the FDA reviews
documents, interviews management and reviews all procedures.
The current Good Manufacturing Practice (GMP) requirements set forth in the
Quality System (QS) regulation are promulgated under section 520 of the Food,
Drug and Cosmetic (FD&C) Act. They require that domestic or foreign
manufacturers have a quality system for the design, manufacture, packaging,
labeling, storage, installation, and servicing of finished medical devices
intended for commercial distribution in the United States. The regulation
requires that various specifications and controls be established for devices;
that devices be designed under a quality system to meet these specifications; be
manufactured under a quality system meet these specifications; be correctly
installed, checked and serviced; be analyzed for quality data to identify and
correct quality problems; and that complaints be processed. Thus, the QS
23
regulation helps assure that medical devices are safe and effective for their
intended use. The FDA monitors device problem data and inspects the operations
and records of device developers and manufacturers to determine compliance with
the GMP requirements in the QS regulation.
The MDR regulation provides a mechanism for FDA and manufacturers to identify
and monitor significant adverse events involving medical devices. The goals of
the regulation are to detect and correct problems in a timely manner. Although
the requirements of the regulation can be enforced through legal sanctions
authorized by the Federal Food Drug & Cosmetic (FFD&C) Act, the FDA relies on
the goodwill and cooperation of all affected groups to accomplish the objectives
of the regulation.
The statutory authority for the MDR regulation is section 519(a) of the FFD&C
Act as amended by the Safe Medical Devices Act (SMDA) of 1990. The SMDA requires
user facilities to report:
o Device-related deaths to the FDA and the device manufacturer;
o Device-related serious injuries to the manufacturer, or to the FDA if
the manufacturer is not known; and
o Submit to the FDA on an annual basis a summary of all reports
submitted during that period
When a problem arises with a product regulated by the FDA, the Agency can take a
number of actions to protect the public health. Initially, the agency works with
the manufacturer to correct the problem voluntarily. If that fails, legal
remedies include asking the manufacturer to recall a product, having federal
marshals seize products if a voluntary recall is not done, and detaining imports
at the port of entry until problems are corrected. If warranted, the FDA can ask
the courts to issue injunctions or prosecute those that deliberately violate the
law. When warranted, criminal penalties including prison sentences are sought.
Postmarket Requirements: Quality System, Medical Device Reporting. Once on the
market, there are postmarket surveillance controls with which a manufacturer
must comply. These requirements include the Quality Systems (QS) (also known as
Good Manufacturing Practices, GMPs) and Medical Device Reporting (MDR)
regulations. The QS regulation is a quality assurance requirement that covers
the design, packaging, labeling and manufacturing of a medical device. The MDR
regulation is an adverse event reporting program.
We are also required to report under the Medical Device Reporting requirements,
which are for injuries and deaths, of which we have had none since our
registration.
For all devices manufactured or remanufactured by IVI or MBI, the FDA may
request updated information regarding any device with a previously approved
510(k) or PMA submission. If any substantial changes are made to existing
approved devices the FDA may require a 510(k) supplement submission, which, in
most cases, does not require the manufacturer to delay production or marketing
of the modified device. As with all applications, this determination lies
entirely with the FDA.
We have not had an audit with the FDA for intraocular lens manufacturing. We
expect a new audit to take place shortly after our new device is submitted for
PMA. In an audit performed by the FDA, our records for delivery, quality
control, device labeling and serial number tracking are reviewed. If the FDA
finds issues of non- compliance, they issue a letter requesting correction,
giving us 30 days to correct the non- compliance. Extensions can be requested,
but most issues can be handled in a 30 day period. We anticipate the majority,
if not all of the auditing to take place at MBI.
Our manufacturer, owned by Director Jerry Kaeni, is licensed with the FDA and
state of California as a Device Manufacturer, registration number 2031928 and
owner/operator number 9036507. Since their registration with the FDA in 1997,
MBI has been audited by both local and national FDA agencies. There were no non-
compliances. They have not received any notice or correspondence of
non-compliance. Therefore, we and MBI, to our knowledge, have been in good
standing with the FDA, receiving no actions or correspondence. The State of
California currently follows the FDA standards and requirements.
We estimate it will take up to three years to obtain FDA approval after the date
of this registration statement. Our estimate of three years for FDA approval is
based on Dr. Rozakis' and Mr. Kaeni's past experiences with PMA submissions. All
of our domestic marketing efforts for the new device must start from the date
the FDA approves the device to be marketed. Since the company is already
registered with the FDA as a new device manufacturer, and has been through an
audit performed by the FDA, the FDA is already familiar with MBI and its
processes. The FDA may wish to obtain updated information about us or MBI and
may require more time to process the PMA submission than estimated.
24
MBI has had several 510(k) approvals with FDA and currently has a regulatory
staff experienced in CE Mark and FDA submissions and regulatory compliance. We
believe our experience in regulatory and compliance will help speed up the
approval process and reduce our need for outside consultants which can impact
approval process cost.
Dr. Rozakis has familiarity with the IDE process for class III devices having
been a manufacturer for his own excimer laser and an investigator for a phakic
implant company. Jerry Kaeni also brings 22 years of manufacturing experience to
the process and has his own internal regulatory competency within MBI. With Dr.
Rozakis and Mr. Kaeni, we should not have to seek extensive help in this
process. Having a person in-house is a distinct advantage and should allow us to
complete the process within the estimated time.
To enter the European market, our product will go through clinical investigation
outside of US, and then a technical file, which will include the clinical trial
data, will be submitted to the BSI who is the Notifying Body for MBI for
approval. The approval process will require a review of all pre-clinical,
Quality System and the technical file by BSI. Since MBI is currently ISO 13485
Certified, the CE Mark Certificate will be issued to MBI. MBI can then begin
commercial sales of the product to Europe and those markets where the CE Mark is
accepted for product registration.
OTHER GOVERNMENT REGULATION
The delivery of health care services has become one of the most highly regulated
professional and business endeavors in the United States. Both the federal
government and individual state governments are responsible for overseeing the
activities of individuals and businesses engaged in the delivery of health care
services. Federal law and regulations are based primarily upon the Medicare and
Medicaid programs. Each of these programs is financed, at least in part, with
federal funds. State jurisdiction is based upon the state's interest in
regulating the quality of health care in the state, regardless of the source of
payment. We believe we are materially complying with applicable laws; however,
we have not received or applied for a legal opinion from counsel or from any
federal or state judicial or regulatory authority. Additionally, many aspects of
our business have not been the subject of state or federal regulatory
interpretation. The laws applicable to us are subject to evolving
interpretations. If our operations are reviewed by a government authority, it
may receive a determination that could be adverse to us. Furthermore, laws that
are applicable to us may be amended in a manner that could adversely affect us.
A significant portion of our revenues could eventually come through this system
if our product is approved. We may then be subject to Medicare, Medicaid, or
other federally funded health care program guidelines and limitation as to our
lens pricing.
COMPETITION
The healthcare industry in general and the market for refractive surgery in
particular is highly competitive. We compete with a number of companies, many of
which have substantially greater financial, marketing, and other resources than
us. Our current competitors include large companies such as Carl Zeiss
International, Advanced Medical Optics (AMO) and Staar Surgical, who have
competing phakic lenses and the LASIK industry.
OTHER COMPETITIVE PRODUCTS OR PROCEDURES
(Note: These competitive products (or Procedures) are being marketed now)
THE LASIK PROCEDURE
The word "LASIK" is an acronym (therefore spelled in capital letters) for LASer
In-situ Keratomileusis:
o Laser: intense, highly concentrated beam of light (an acronym for
Light Amplification by Stimulated Emission of Radiation; however, now
such a common word that it is seldom seen completely capitalized)
o In-situ: Greek word meaning "in place"
o Keratomileusis: combination of two Greek words:
o kerato "the cornea"
o mileusis "to shape"
25
Therefore, LASIK is "a light to shape the cornea in place" LASIK is a quick and
virtually painless procedure, resulting in the majority of patients experiencing
improved vision and a reduced dependency on corrective eyewear. Specifically,
LASIK involves the use of laser light from an excimer laser (a "cool" laser) to
permanently change the shape of the cornea. Ninety percent (90%) of the cornea
is called the stroma, with an overlying layer of cells called the epithelium. A
thin membrane separates the two and is called Bowman's membrane.
A corneal flap is first made and then lifted. The corneal reshaping takes place
in the deeper part of the cornea below, called the stroma. Laser removal of
stroma produces permanent reshaping of the cornea, thereby affecting its
refractive power. After the reshaping step, the flap is then replaced without
the need for sutures.
OTHER PHAKIC LENSES
The leading FDA approved phakic product on the market is AMO's Verisyse lens.
Although it produces high quality of vision, its biggest setback is its
requirement for large incisions that could cause astigmatism. In addition, the
overall implantation process takes approximately 30 minutes and Ophthalmology is
an industry which thrives on quick and simple procedures (our lens takes
approximately 5-10 minutes).
Staar Surgical has a posterior chamber lens which recently gained FDA approval
for which Mr. Valyunin was involved in its development. This lens sits behind
the iris in the posterior chamber; however the problem is its requirement to
mechanically fixate itself by pressing into the periphery of the eye. This
pressure makes it difficult for this lens to properly seat. Furthermore, this
lens touches the natural normal crystalline lens in the periphery and this
pressure may cause derangement of fluid flow inside the eye which subsequently
may cause a cataract.
The PRL, developed by Medennium, is yet another competitor and a worthy
competitor because Mr. Valyunin and Dr. Rozakis originally designed it. This
lens floats inside the eye which makes it, in certain ways, in the opinion of
management, superior to the Staar lens. The "floating" feature means that the
lens does not apply pressure to the structures inside the eye and it rarely, if
ever, touches the natural normal crystalline lens. However, this lens can
produce glare and halo, although rare. We have acquired this product in the
United States and Japanese markets, but it is not approved yet by the FDA. The
PRL product is marketed by Carl Zeiss in the international market.
We believe our lens design is superior to the competition because it meets all
of the criteria of the optimal product: fast, safe and easy to implant while
providing optimal quality of vision. The management team is very experienced
with all of the competition's products and believes that its lens could be a
strong competitive option in the refractive surgery market.
In addition, all of the above phakic lenses require an iriditomy, the creation
of a hole in the iris made with a laser. This procedure typically requires the
patient to come into the doctor's office on a separate day prior to surgery,
which creates an inconvenience to the physician and the patient. And should the
physician elect to perform the iriditomy at the time of surgery, it creates an
additional step that causes bleeding in an otherwise simple, bloodless
procedure.
[Enlarge/Download Table]
Lens vs. LASIK comparison (based upon management and industry experience)
Lens Benefits over LASIK Potential LASIK Complications
------------------------ -----------------------------
o Reversibility (Very Important) o Ectasia - every LASIK patient is
o Quality of vision is better (or at least as susceptible to this even if the procedure
good) as LASIK is done perfectly. This condition causes
o Accuracy the cornea to change its shape
o Simplicity of Future Cataract IOL Calculation uncontrollably. The only treatment for
o Less Dry Eye this is a hard contact lens or a corneal
o Chance of Irreversible Visual Loss Is Less transplant.
with the Lens o Side effects including glare, dry eye,
halos, etc.
LASIK Benefit over Lens o Cataract procedures are more difficult to
----------------------- plan in the future
o Does Not Require Entering the Eye o NO Reversibility
o More LASIK procedures have been performed
o No potential for cataract - but if it
occurs, just have it removed.
o Lens could cause transient pressure elevation
26
MARKETING AND SALES PLAN - PROPOSED NEW PRODUCT
THE MARKET
With approximately 50 Million people (100 Million procedures) who could benefit
from refractive surgery and using a cost per procedure of $2000, the current
total US market for refractive surgery is approximately $200 billion. Applying
this calculation globally, the potential world market is obviously much larger.
Refractive Surgery sales are approximately $3 billion in the US, with total
worldwide sales of almost $6 billion. LASIK is currently the most common
refractive surgery procedure, however it is well known that the procedure is not
as accurate and does not supply high-quality vision in patients who are very
nearsighted or farsighted. An individual's vision ranges from -20 to +20
diopters. Lasik has shown to be very predictable from -6 to +4 diopters, however
once outside this range, there is typically too much irreversible treatment
required - resulting in secondary procedures (enhancements) and the quality of
vision is accompanied with side effects, e.g. halos, night vision difficulty,
dry eye, etc.
Further, many ophthalmologists do not perform LASIK surgery due to high
malpractice insurance premiums, high laser costs and safety concerns. However,
they are constantly seeking alternative revenue streams to combat the rising
malpractice insurance premiums coupled with reduced Medicare reimbursements. The
availability of a reversible, low fixed-cost, predictable and effective
refractive procedure could fill a significant need in the marketplace, in the
opinion of management.
OUR PROPOSED PRODUCT
Our proposed product would be implanted directly behind the iris (colored part
of the eye) and floats above the crystalline lens to induce the change of
vision. The lens has unique features such that it may not require a preparatory
laser surgical procedure called a laser iridotomy and it is completely
reversible. This should make the lens much more convenient for physicians. The
lens centers by way of its proprietary design and we anticipate that it can
develop a one-size-fits-all eyes product. The procedure typically lasts
approximately 10 minutes and is done on an outpatient basis.
Note: Our product is not yet FDA approved. The FDA approval process of the
product could take an indeterminate amount of time and expense, with no
assurance of final approval and commercialization. Based upon management's
experience with other products requiring FDA approval, management believes it
can achieve FDA approval.
ACQUISITION OF PHAKIC REFRACTIVE LENS FROM CIBA VISION
We have signed a Definitive Agreement in the form of an Asset Purchase Agreement
to acquired the United States and Japanese patents to the Phakic Refractive Lens
("PRL") from CIBA Vision. The PRL is the original lens that Dr. Rozakis, Dr.
Hatsis and Mr. Valyunin were involved with back in 1997. The product is
currently in Phase III of FDA studies and with some additional clinical studies;
we believe that the product can be approved in the United States within three
years.
We also believe that the PRL is superior to the competing products on the
market, so in the event that our next generation product takes longer to receive
FDA approval and/or cannot receive FDA approval, then we will still have a very
viable product to market in the United States.
IMPLANTATION PROCEDURE OF PROPOSED PRODUCT
The surgical procedure begins at the point of the consultation with the patient.
Patients who have high degrees of nearsightedness of over 6 diopters (-6) will
be told that the quality of vision to be expected after LASIK will not be as
sharp and clear as an "inside the eye" contact lens. We believe that this range
will drop down to as low as 3 diopters. Other variables may motivate the patient
to also consider inside the eye contact lenses, including dry eye, and the fear
of irreversible damage to the cornea.
On the day of surgery, the patient will report to a surgical facility on an
outpatient basis and have their pupils dilated. Initially, the surgical team
will be very careful in the earlier phases and will sedate the patient and numb
the eye so that there is no movement. With more experience, management
anticipates that the procedure will be performed using only topical anesthesia
and mild sedation.
27
A 3.0-3.2 mm incision is then made on the side of the cornea outside the field
of vision. Additional small incisions are made and the eye will be filled with a
viscous material. An injector will then be used to inject the lens into the eye.
Instruments will then position the lens under the Iris (the colored part of the
eye). Once the lens is positioned, the viscous material is removed and the
procedure is completed.
The pupil is then constricted and antibiotic and steroid drops are used to
expedite the healing process and protect from infection. The incisions do not
require stitches and the procedure takes approximately 5-10 minutes in skilled
hands.
FUTURE PRODUCT DEVELOPMENT
Our scientific team is currently developing additional lenses for the presbyopic
(bifocals) market, a "piggyback lens" for patients who have already had cataract
surgery but do not have sharp vision without glasses, and different material
versions of our current product portfolio. In addition to modifying current
products, we are developing and reviewing new intellectual property to enhance
our patent position in new technology in this large market.
MARKETING & DISTRIBUTION STRATEGY
At the current time, we are focused on the product development and regulatory
strategies. However, it is anticipated that we will seek a marketing &
distribution partner to enter the respective markets for its products, when
necessary regulatory approvals have been achieved. Mr. Kaeni has experience in
marketing and distributing several ophthalmic products both domestically and
internationally. He also currently has a distribution network that we will
probably utilize in its commercialization efforts.
DISTRIBUTION CHANNELS
We plan to sell our products through several channels of distribution,
including:
o International Market - For international sales we will have
distributors in each market to sell the product. There will
either be a distributor price or commission on sales.
o Domestic Market - The majority of our selling efforts to large
accounts will be handled internally through our field sales force
which we must yet develop. We may use a direct sales force
because its product will require considerable customer education
and support -- directly from us. Our product price points,
pricing structure, and potential margin of profit are such that
its cost of sales warrants a "person-to-person" selling strategy.
MARKETING PLANS:
International Sales: We will enter the European market after the CE Mark
approval. We will enter markets other than Europe, which will accept our CE Mark
approval. We may enter other markets where small clinical trials and CE Mark
will complete the regulatory requirement for these markets.
SALES MARGIN STRUCTURE
International market will be through distributors in each market segment.
Distributor - International distribution will be structured through a
distributor price list and suggested retail price providing sales incentive for
distributors, such that distributors will have a 10% commission on the retail
sales price. Incentives for volume sales will also be planned as motivation for
increased market share.
U.S. Sales: We intend to commence marketing after FDA approval is obtained.
US products will be through direct contacts through company sales and marketing
organization who will benefit from salary plus structured commission and/ or
through manufacturers representatives with sale commission of between 10-15% and
incentives for volume sales.
28
TARGET MARKET SEGMENT
The target market for our products is ophthalmologists worldwide who already
perform or wish to perform refractive surgery. The availability of our product
will allow the current refractive surgeons to offer a safe, simple, effective
and reversible alternative to LASIK surgery. In addition to the above benefits,
our product will allow general ophthalmologists (non-refractive surgeons) with
the opportunity to compete in the refractive market without requiring the
purchase of a $500,000 laser and other required devices. Because our surgical
technique is so similar to that of cataract surgery, there should be a rapid
adoption by this segment of the market.
ADMINISTRATIVE OFFICES
We currently maintain a corporate address of 25730 Lorain Rd., North Olmsted, OH
44070, at Dr. Rozakis' medical offices.
EMPLOYEES
We currently employ the following persons:
o George W. Rozakis, MD, CEO and President
o Bill Rozakis, CFO
o Jerry Kaeni, COO, Manufacturing, Marketing and Regulatory Affairs
o Igor Valyunin, Chief Science Officer
o Alexander Hatsis MD, Medical Director
o Theresa Rodgers, Administrative
Dr. Rozakis and Theresa Rodgers work at the Companies offices at 25730 Lorain
Rd. North Olmsted, Ohio. Remaining employees work from home or their offices. It
is expected that Dr. Rozakis, Mr. Valyunin, and Bill Rozakis will have offices
in New York with Jerry Kaeni working from MBI in Los Angeles. We project that
during the next 12 months, our workforce is likely to increase to six, with one
of the new positions being in the administrative, marketing, and sales areas and
the remaining three of the new positions being in research, development, and
regulatory positions.
LEGAL PROCEEDINGS
We are not engaged now in any lawsuits, as a plaintiff or defendant but might be
involved in legal actions in the future, involving matters such as compensation
disputes, employment matters, contract disputes and other matters related to its
business.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Jaspers + Hall, PC completed the audit of the balance sheets as of July 31, 2005
and the related statements of operations, stockholders' equity and cash flows
for the years ended July 31, 2005. Michael B. Johnson & Company completed the
audit of the balance sheets as of July 31, 2004 and 2003 and the related
statements of operations, stockholders' equity and cash flows for the years
ended July 31, 2004 and 2003. In connection with these audits, no disagreement
exists with any former Accountant on any matter of accounting principles or
practices, financial statements disclosure, or auditing scope of procedure,
which disagreement, if not resolved to the satisfaction of the former
Accountant, would have caused the Accountant to make reference in connection
with his report to the subject matter of the disagreement(s).
MARKET RISK
We do not hold any derivatives or investments that are subject to market risk.
The carrying values of any financial instruments, approximate fair value as of
those dates because of the relatively short-term maturity of these instruments
which eliminates any potential market risk associated with such instruments.
29
PLAN OF OPERATION
The fact that we were able to obtain $4,507,595.05 external equity financing
during the current year enabled us to hire our management full time and finalize
product development. This action is beginning to show positive results, i.e.
since this capital infusion, our lens designs have been manufactured and
successfully implanted in patients abroad. Now, product development is being
finalized and management is preparing to organize and initiate our regulatory
approval process in Europe and possibly other international markets. We also
acquired the PRL from CIBA Vision and seek to enter the American markets within
three years.
Dependent on the amount of such additional capital available to us, present
plans are to invest a substantial portion of it in the product development,
manufacturing, inventory and clinical trials to receive our regulatory approval
for our phakic lens product(s). Amounts of up to $4.3 million could be
reasonably employed in this manner this year. In addition, management is
exploring new technologies to possibly acquire and/or joint venture arrangements
to reduce our costs and risks in commercializing our product portfolio.
We currently have four full time employees compared to none during 2005, and two
part-time employees. This increase reflects expansion of our operations made
available through funding that we received since completing private placements
of stock in the last quarter. We hope, subject to adequate financing levels, we
will continue to expand.
ONE YEAR BUDGET
Operation Budget
Licensing Fees $1,000,000 23%
Product Development $ 360,000 8%
Equipment $ 440,000 10%
Patents $ 180,000 4%
Regulatory $ 430,000 10%
Inventory $ 300,000 7%
Training $ 50,000 63%
Subtotal $2,760,000 63%
Salaries $ 821,670 19%
Administrative $ 48,000 1%
Legal $ 240,000 5%
Consulting $ 130,000 3%
Accounting $ 53,000 1%
Marketing $ 216,000 5%
Rent $ 70,000 2%
Travel & Ent. $ 60,000 1%
---------- ----
Total $4,398,670 100%
30
MILESTONES AND GOALS
We have developed the following milestones and goals by quarter. We intend to
pursue attaining these goals so that attainment is a milestone that will allow
progress into the following goals:
Q 2 2006
-----------------------------------
Enter into a CIBA Definitive Agreement for PRL
Close CIBA PRL acquisition
Continue testing of lens design
Develop FDA protocols for clinical trials
Q 3 2006
-----------------------------------
Develop surgical procedure training manual and videos
Prepare investigational sites for CE Mark studies
Refine & Finalize Lens design
Test run of manufacturing for quality
Q 4 2006
-----------------------------------
Begin CE Mark studies
Finalize FDA trial process for PRL
Develop international marketing plans
Q 1 2007
-----------------------------------
Commence FDA Trial approval process
Prepare CE Mark submission
Finalize training materials and processes in preparation
for international launch
Prepare manufacturing & inventory for international launch
Begin FDA Process for PRL
CRITICAL ACCOUNTING POLICIES
Our discussion and analysis of our financial condition and results of operations
are based upon our financial statements, which have been prepared in accordance
with accounting principles generally accepted in the United States of America.
The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent assets and liabilities. We
monitor our estimates on an on-going basis for changes in facts and
circumstances, and material changes in these estimates could occur in the
future. Changes in estimates are recorded in the period in which they become
known. We base our estimates on historical experience and other assumptions that
we believe to be reasonable under the circumstances. Actual results may differ
from our estimates if past experience or other assumptions do not turn out to be
substantially accurate.
We have identified the policies below as critical to our business operations and
the understanding of our results of operations.
REVENUE RECOGNITION.
We will recognize revenue in accordance with the Securities and Exchange
Commission ("SEC") Staff Accounting Bulletin No. 104, "Revenue Recognition in
Financial Statements" ("SAB 104"). We will recognize revenue upon shipment,
provided that evidence of an arrangement exists, title, and risk of loss have
passed to the customer, fees are fixed or determinable, and collection of the
related receivable is reasonably assured. We will record revenue net of
estimated product returns, which is based upon our return policy, sales
agreements, management estimates of potential future product returns related to
current period revenue, current economic trends, changes in customer composition
and historical experience. We will accrue for warranty costs, sales returns, and
other allowances based on our experience which tells us we should allocate 2% of
sales per year for warranty returns and allowances. Generally, we extend credit
31
to our customers and do not require collateral. We will perform ongoing credit
evaluations of our customers and monitor credit losses to be within our
expectations. We will not ship a product until we have either a purchase
agreement or rental agreement signed by the customer with a payment arrangement.
This is a critical policy, because we want our accounting to show only sales
that are "final" with a payment arrangement. We will not make consignment sales,
or inventory sales subject to a "buy back" or return arrangement from customers.
Provision for Sales Returns, Allowances and Bad Debts. We will maintain a
provision for sales allowances, returns and bad debts. Sales returns and
allowances result from product damaged or lost in delivery or customer
dissatisfaction, as provided by the agreement. The provision will be provided
for by reducing gross revenue by a portion of the amount invoiced during the
relevant period. The amount of the reduction will be estimated based on
historical experience.
Reserve for Obsolete/Excess Inventory. Inventories are stated at the lower of
cost or market. We will regularly review our inventories and, when required,
will record a provision for excess and obsolete inventory based on factors that
may impact the realizable value of our inventory including, but not limited to,
technological changes, market demand, regulatory requirements and significant
changes in our cost structure. If ultimate usage varies significantly from
expected usage, or other factors arise that are significantly different than
those anticipated by management, inventory write-downs or increases in reserves
may be required.
OTHER ACCOUNTING FACTORS
The effects of inflation have not had a material impact on our operation, nor
are they expected to in the immediate future.
Although we are unaware of any major seasonal aspect that would have a material
effect on the financial condition or results of operation, the second quarter of
each fiscal year is always a financial concern due to slow collections after the
holidays.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The information presented here should be read in conjunction with our
consolidated financial statements and related notes.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED APRIL 30, 2006 COMPARED TO THE SAME
PERIOD IN 2005.
During the quarters ended April 30, 2006, and 2005, no operating revenues were
generated. We had no other operating income during the quarter.
We had administrative expenses in the quarter in 2006 of $320,401 and none in
2005. We incurred no operating expenses in 2006 and 2005, in the quarter. The
net operating loss was ($320,401) in the quarter in 2006 compared to none in the
quarter in 2005.
The loss per share was ($.02) in the quarter in 2006 and none in 2005.
We expect the trend of operating losses to continue into the future at an
increasing rate, until we achieve sales of which there is no assurance.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED APRIL 30, 2006 COMPARED TO SAME
PERIOD IN 2005.
We experienced a total of $453,519 in administrative expenses in the nine month
period ended April 30, 2006 as compared with none in the same period a year
earlier. We had no operating expenses in the period in 2006 or 2005. In the nine
month period ended April 30, 2006 we settled our outstanding payables and
recorded $134,396 in forgiveness of debt as other income and incurred
acquisition costs of $24,810 and had interest income of $30 for net other income
of $109,616. We incurred a net loss of ($343,903) in the period in 2006 compared
to no loss in the period in 2005.
The profit/loss per share was ($.02) in the nine months ended April, 2006,
compared to none in the same period in 2005.
32
We expect the trend of operating losses to continue into the future at an
increasing rate, until we achieve sales of which there is no assurance.
LIQUIDITY AND CAPITAL RESOURCES
Year to date, we had no revenue, but have increased our cash position to
$1,296,761 approximately through accomplishment of a private placement. We had
no other assets of any value at period end.
Our only capital resources are our common stock which might be sold to raise
capital.
NEED FOR ADDITIONAL FINANCING
We have capital sufficient to meet our current cash needs, including the costs
of compliance with the continuing reporting requirements of the Securities
Exchange Act of 1934. We will seek loans or equity placements to cover future
cash needs. Lack of our capital may be a sufficient impediment to prevent it
from accomplishing the goal of expanding our operations.
We will need to raise additional funds to carry out our business activities in
the next twelve months.
Irrespective of whether our cash assets prove to be inadequate to meet our
operational needs, we might seek to compensate providers of services by
issuances of stock in lieu of cash.
There can be no assurance that any additional funds will be available to us, in
the future, to allow us to cover operations expenses or development. After the
effective date of this Registration Statement we intend to seek capital through
the exercise of warrants and loans to cover operating and product development
expenses of approximately $4,000,000, and we have subscriptions for $2,750,000
in capital, to be funded upon the effectiveness of this Registration Statement.
If revenues are not realized, or operations continue to be unprofitable, we may
need to develop another line of business, or to finance our operations through
the sale of any assets we have, or enter into the sale of stock for additional
capital, none of which may be feasible when needed. From the aspect of whether
we can continue toward our business goals as set forth herein, we may use all of
our available capital without ever generating a profit.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
We submitted the following matters to security holders in September 2005:
NAME CHANGE: Shareholders authorized a change in the name of this corporation to
a new name in the discretion of the Board of Directors.
REVERSE SPLIT OF COMMON STOCK AS ISSUED AND OUTSTANDING: Shareholders approved a
pro-rata reverse split of the issued and outstanding common stock, by which each
ten shares would become one share. Fractional shares were to be rounded up to
the next whole share. The effective date of the reverse split was September 30,
2005 with record date of September 9, 2005.
INDEPENDENT PUBLIC ACCOUNTANTS
Jaspers + Hall, PC, Independent Public Accountants, of Denver, Colorado have
been ratified as the Certifying accountants for the period through fiscal year
2004 (ended July 31, 2005). Jaspers + Hall, PC is the successor auditor by
virtue of the merger of Michael Johnson & Co. and Jaspers + Hall.
33
USE OF PROCEEDS
OF WARRANTS, IF EXERCISED
We will not receive any of the proceeds of the sale of 13,797,895 shares by
selling shareholders, or sales by shareholders converting Series "A" Preferred
Stock.
A Warrants $16,000,000
B Warrants $40,000,000
Total $56,000,000
As a general principle, to commercialize a lens from start to finish requires
approximately $30 million. IVI plans to commercialize a portfolio of two
refractive lenses and to also develop and/or acquire lenses in the presbyopic
markets. We do not believe that we can generate enough short term revenues to
capitalize all of these activities from the initial sales of the refractive
lenses; therefore we plan on utilizing the above mentioned warrants to fund
these activities.
Milestone (per lens) Amount (000's)
----------------------------------------------------- ----------------------
Development $ 1,000.00
Pre-Clinical Studies $ 1,000.00
International Trials $ 2,000.00
International Marketing $ 5,000.00
FDA Trials $ 3,000.00
Domestic Marketing $15,000.00
----------------------------------------------------- ----------------------
Sub Total $27,000.00
----------------------------------------------------- ----------------------
The above chart illustrates the high end costs required to commercialize a lens.
In addition to the above $27M per lens, we anticipate several million dollars in
mergers & acquisition costs in acquiring the necessary patent rights to enter
the given market.
DIRECTORS AND EXECUTIVE OFFICERS AND SIGNIFICANT MEMBERS OF MANAGEMENT
(a) The following table furnishes the information concerning our directors
and officers as of the date of this report. The directors of the Registrant are
elected every year and serve until their successors are elected and qualify.
Name Position Held Tenure
-------------------- ---------------------- -------------------------
Dr. George Rozakis President and Director Two years commencing 2006
William Rozakis Secretary Two years commencing 2006
Igor Valyunin Director Two years commencing 2006
Jerry Kaeni Director Two years commencing 2006
Dr. Alex Hatsis Medical Director Two years commencing 2006
The following table sets forth the portion of their time the directors devote to
Implantable Vision, Inc.:
Dr. George Rozakis 90%
Igor Valyunin 100%
Jerry Kaeni 60%
William Rozakis 80%
The term of office for each director is one (1) year, or until his/her successor
is elected at our annual meeting and is qualified. The term of office for each
of the officers is at the pleasure of the Board of Directors.
(b) Identification of Certain Significant Employees. Our success depends on
the performance of our officers and key employees. They are Dr. George Rozakis,
William Rozakis, Igor Valyunin, Jerry Kaeni and Dr. Alex Hatsis. Members of our
management team have worked together for 10 years, and some for 15 years. We
have a $5 million "key man" insurance policy on George Rozakis. We have
agreements through 2008 with all of our key personnel. Given our early stage of
development, we depend on our ability to retain and motivate high quality
personnel, especially our management. Our future success also depends on our
continuing ability to identify, hire, train and retain highly qualified
technical, sales, marketing and customer service personnel. Moreover, the
industry in which we compete has a high level of employee mobility and
34
aggressive recruiting of skilled personnel. We may be unable to continue to
employ our key personnel or to attract and retain qualified personnel in the
future. We face intense competition for qualified personnel, particularly in
software development, qualified personnel and product support. Please see
"Management."
(c) Family Relationships. George Rozakis and William Rozakis are Father and
Son, respectively.
(d) Business Experience. The following is a brief account of the business
experience during the past five years of each of our directors and executive
officers, including principal occupations and employment during that period and
the name and principal business of any corporation or other organization in
which such occupation and employment were carried on.
GEORGE W. ROZAKIS, MD - Dr. George W. Rozakis studied biomedical engineering at
Case Western Reserve University and attended medical school at the Cornell
Medical College and studied ophthalmology at the Duke Eye Center. He graduated
from his residency program in 1987.
Soon after graduation, Dr. Rozakis became the second surgeon in United States to
perform PRK surgery (LASIK's predecessor). This is a form of laser refractive
surgery involving the lasering of the eye starting at its surface. He became
involved in this project as a clinical investigator with Summit technologies and
found that the procedure was effective, however produced a substantial amount of
pain for the patient and the quality of vision was not as good as desired by the
industry.
In 1992, he became aware of the new procedure call refractive lamellar
keratoplasty. This procedure was the forerunner of LASIK refractive surgery. Dr.
Rozakis learned this procedure from Dr. Ruiz in Bogota Colombia and brought it
to the United States. He published a book on this subject call Refractive
Lamellar Keratoplasty.
In 1994, he developed his own excimer laser to perform LASIK refractive surgery
after seeing how refractive lamellar keratoplasty and the excimer laser could
nicely combine forces to produce the LASIK procedure. During this time he
patented certain methods and apparatuses surrounding the LASIK procedure,
including a method to use the laser to treat the problem of bifocals. His
colleagues, seeing his expertise in LASIK refractive surgery purchased lasers
from him to also begin this exciting procedure. Together with these colleagues
he helped establish the Keratomileusis Study Group, an international study group
dealing with these types of procedures. Furthermore, during this period he
worked extensively with the Food and Drug Administration regarding his research
with LASIK.
In 1996, he reasoned that LASIK would not be the ideal surgical procedure for
the very nearsighted. He identified a scientist in Moscow named Igor Valyunin.
He teamed up with a group of business people as their medical director to take
Mr. Valyunin's technology into the marketplace. In order to help fund this
venture he formed the Vision Venture Fund (VVFI), an international group of
physicians investing in early-stage ophthalmic technologies. Under his guidance
VVF1 invested in International Vision, Inc., the company structure to bring
Igor's Russian phakic lens technology to the marketplace.
International Vision, Inc. transferred the technology to the United States and
acquired a California based manufacturing facility called Medennium. The Company
utilized international data generated by Dr. Rozakis and his colleagues to
bypass FDA Phase 1 and obtain a CE Mark in Europe. The technology was sold to
Ciba Vision. Today we own the United States and Japanese marketing rights and
the international rights are licensed to IOLTECH - Zeiss.
In 1998, he was voted by his peers to receive the Prof. Jose Ignacio Barraquer
Award - an international award for his contribution to LASIK refractive surgery.
He was also the national medical director of Lasersight Centers and has written
and published multiple textbooks on refractive surgery. Dr. Rozakis is also a
member of the American Society of Cataract and Refractive Surgery, American
Society of Ophthalmic Administrators, American Academy of Ophthalmology
(Fellow), Research to Prevent Blindness, Ohio Ophthalmological Society,
Cleveland Ophthalmological Society, European Society of Refractive Surgeons,
Association for Research in Vision and Ophthalmology, American Medical
Association, North Carolina Medical Society, International Society of Refractive
Surgery, and the International Society of Ocular Surgeons. He has authored many
publications in the areas of LASIK, phakic lenses and general refractive
surgery. In addition, he has been a keynote speaker in all of the above areas
and has trained or consulted hundreds of physicians in refractive surgery
techniques and patient complications.
Dr. Rozakis is terminating his practice of laser refractive and phakic
refractive lens surgery to focus on Implantable Vision Inc. His goals are to
continue to champion phakic refractive lenses in the field of refractive
surgery. He also has interests in the world of AntiAging medicine and is seeking
ways to integrate Refractive Surgery with AntiAging Medicine. He is awaiting
final patent approval of a novel method of treating patients who need to wear
bifocals.
35
WILLIAM ROZAKIS - Mr. Rozakis has spent the last six years involved in early
staged medical device, biotechnology and information technology companies. He
has raised several million dollars for multiple ventures and has assisted in the
structuring, planning and documentation for each organization. He has also been
involved in the clinical trial data organization process and developed a
web-based trial & medical record expert software system. This robust platform
has been exclusively licensed to Medical Logics, LLC and it is currently used
for AntiAging evaluations and facilitating medical decisions made between
experts and physicians for their patients. In addition, he has been involved in
refractive surgery since 1995 and participated with Dr. Rozakis in the
development of his laser and subsequent algorithms for customized LASIK
treatments.
Mr. Rozakis graduated from Duke University with a degree in biomedical
engineering and economics. At Duke, he has performed research in the areas of
topography-guided LASIK, developed phakic lens clinical trial protocols, and
designed an infant x-ray monitor to minimize radiation exposure in neonates. He
has extensive experience in ASP, PHP, Linux, VBScript, JavaScript, SQL, database
management and HTML programming.
IGOR VALYUNIN - Mr. Valyunin was Chief Biopolymer Engineer at the Dr. Federov
Eye Institute (MNTK) in Moscow, Russia and a key member of the group that
invented phakic refractive lenses in the 1980's. He has over 20 years of
experience in developing and manufacturing the lenses and has developed and
patented in conjunction with Dr. Rozakis, the design of our lens.
In 1997, he held the patent on the PRL phakic lens that was licensed by
International Vision, Inc. The company transferred the technology to the United
States and subsequently acquired Medennium, Inc., a California manufacturing
facility. The lens utilized international data to bypass Phase I FDA studies and
is currently in FDA Phase III trials. The marketing rights were licensed to CIBA
Novartis in the United States, and Zeiss Inc. internationally. Since that time,
we have acquired the U.S. and Japanese patents and Igor developed a new
generation of lenses, including product line extensions, to be commercialized by
our company, Implantable Vision, Inc.
He received his degree from the Leningrad Technology Institute in Russia with a
specialization in Chemistry, technology of organic synthesis. He also remained
at the university and received an MBA equivalent degree.
JERRY KAENI - Mr. Kaeni is the founder, CEO and President of Millennium
Biomedical, Inc. (MBI), a California Corporation engaged in the business of
developing, manufacturing, and marketing ophthalmic medical devices since July
of 1997. During his tenure, the company has successfully developed intraocular
lenses (IOL's), provided contract manufacturing, manufactured and marketed FDA
and CE Mark approved ophthalmic devices domestically and internationally. The
company is FDA registered and ISO 13485, 2003 Certified and has obtained five
FDA 510(k) approvals for its ophthalmic devices.
Mr. Kaeni has 22 years of experience in Research and Development, and
manufacturing of ophthalmic devices. Prior to founding MBI he worked at IOLAB
Corporation, a Johnson & Johnson company, for over 14 years managing projects
vital to the success of the company including manufacturing process transfer and
scale up internationally, Supplier Management, Product management, product and
process development.
Prior to joining IOLAB Corporation Jerry Kaeni was the Engineering Manager at
ESCO Corporation in Portland, Oregon. He was engaged in productivity
improvements and product cost reduction projects, process development and
costing. Jerry Kaeni has a Bachelor of Science degree in Engineering from Oregon
Sate University.
DR. ALEX HATSIS - Graduated from Fordham University with a Bachelors of Science
degree in Biology in 1972. To reduce the additional expense of a medical
education he chose to accept a full academic scholarship to the School of
Medicine and Surgery at the University of Bologna, Bologna, Italy where he
graduated first in his class in 1978. During his medical education he
complimented his International training by simultaneously studying medicine and
surgery in Brooklyn, New York and was awarded an additional diploma from The
Brooklyn Hospital, an affiliate of The State University of New York at
Downstate. He chose to begin his post-graduate education within the New York
State Hospital system by accepting a General Surgery Residency at The Nassau
County Medical and Trauma Center, an affiliate of the State University of New
York. After two years of General Surgery he accepted an invitation to specialize
in Ophthalmology at the Nassau County Medical Center where, after completing his
residency, he graduated in 1983. A progressive thinker even as a resident, Dr.
Hatsis recognized the potential of the Argon Blue-Green laser which had recently
been approved by the FDA. He began treating glaucoma, a blinding disease which
affected many of the minority patients he cared for by directly ablating the
ciliary body. In 1981, as a resident, he was instrumental in developing one of
the first protocols and a treatment plan for ciliary body ablation of the eye to
36
reduce the glaucoma pressure. Today this FDA approved treatment is routinely
done in association with cataract extraction and has gained acceptance among the
ophthalmic community.
Dr. Hatsis became licensed in both New York and Florida and began his private
clinical practice soon after graduation. He began focusing on refractive surgery
in 1985 in an effort to eliminate his patient's dependence on glasses. He felt
limited by the accepted procedures of the time and in 1992 began attending
conferences on and then performing refractive lamellar keratoplasty. At these
conferences he and Dr. George Rozakis met and exchanged ideas about the future
of refractive surgery. In an effort to perfect lamellar surgery in 1995 Dr.
Hatsis traveled to Bogata, Columbia to study under Luis Ruiz, MD who blended
lamellar corneal surgery with the precision of the Excimer laser in a procedure
called LASIK. Knowing lamellar Excimer surgery and being aware of the
deficiencies of the accepted Excimer surface procedure called PRK, Dr. Hatsis
performed the first LASIK in the northeast once the Summit laser was approved in
1995. Again he realized the limitations of the Excimer laser and in June 1996
with the assistance of Dr. Rozakis he implanted the first posterior chamber
phakic implant lens in North America. Dr. Hatsis is certified by the American
Board of Ophthalmology and is a Fellow of the American College of Surgeons. He
was awarded additional specialization certifications by the American Board of
Eye Surgeons in Incisional Keratorefractive Surgery and also Lamellar Refractive
Surgery. Dr. Hatsis is a member of the American Academy of Ophthalmology, the
New York State Ophthalmology Society, the International Keratomeilusis Study
Group, the American Society of Cataract and Refractive Surgeons and is the past
Vice President of the New York Keratorefractive Society. Dr. Hatsis has been
participating for several years in surgical missionary work where his nursing
staff and a senior resident accompany him traveling abroad to care for the
underprivileged around the world. In 1999 he was awarded the prestigious Anton
Banko Award for Research in Ophthalmology for his work with vision improvement
in amblyopic children. Dr. Hatsis is currently responsible for the education of
12 ophthalmology residents as The Director of Refractive Surgery, Senior
Attending for Resident Training and Assistant Clinical Professor of
Ophthalmology at the State University of New York, Stony Brook, NY as well as
the Northport Veterans Administration Medical Center and the Nassau University
Medical Center. He has been published in four textbooks and has authored over
fifteen articles as well as being invited to speak at many conferences about
refractive surgery and phakic implant lenses in the United States and abroad.
(e) Committees of the Board of Directors
The Board of Directors does not have a nominating committee. Therefore, the
selection of persons or election to the Board of Directors was neither
independently made nor negotiated at arm's length.
Compensation Committee. Our Company established a Compensation Committee on
February 28, 2006, which consists of two directors, William Rozakis and Jerry
Kaeni. The Compensation Committee will be responsible for reviewing general
policy matters relating to compensation and benefits of directors and officers,
determining the total compensation of our officers and directors.
Audit Committee. On February 28, 2006 the Board of Directors established an
Audit Committee, which consists of two directors, Dr. George Rozakis and William
Rozakis. The Audit Committee will be charged with recommending the engagement of
independent accountants to audit Company financial statements, discussing the
scope and results of the audit with the independent accountants, reviewing the
functions of our Company management and independent accountants pertaining to
our financial statements and performing other related duties and functions as
are deemed appropriate by the Audit Committee and the Board of Directors.
(f) Resolution of conflicts of interest
As mentioned earlier, some of our officers and directors will not always devote
100% of their time to the affairs of our Company. There will be occasions when
the time requirements of our business conflict with the demands of their other
business and investment activities. Such conflict may require that we attempt to
employ additional personnel. There is no assurance that the services of such
persons will be available or that they can be obtained upon terms favorable to
our Company.
There is no procedure in place, which would allow our officers or directors to
resolve potential conflicts in an arms-length fashion. Accordingly, they will be
required to use their discretion to resolve them in a manner, which they
consider appropriate.
We have no formal procedure in place with regard to any intellectual property
that an officer or director might develop in another business. The policy and
the expectation is that, if it is related to the current product, it belongs to
us. Although our officers and directors have indicated that they are not
involved in any intellectual property development (IP) directly related to the
37
current product, outside of our company, our policy would be that, if it is not
related to our product, we would not assert any ownership claim to such IP.
We know of no apparent conflict with any other business or venture in which any
employee officer or director may be involved. All of the officers and directors
(except Jerry Kaeni who has been engaged in the intraocular lens development and
contract manufacturing for the past seven years and has contributed in
development and manufacturing of products that may or may not directly or
indirectly compete with this product but has agreed to cease future developments
of products in the posterior refractive segment) have indicated that they have
no business interests in any business, supplier, subcontractor, or sales entity
that directly or indirectly competes with our company, however, we intend to
contract with Millennium BioMedical, Inc. owned by Director Jerry Kaeni and
substantial shareholder to produce lenses for upon FDA approval. Millennium has
agreed to match or beat any arms length bid by any other manufacturer reviewed
annually by an independent biomedical product advisor.
EXECUTIVE COMPENSATION
(a) Officers' Compensation. The following table sets forth the compensation
payable to our Chief Executive Officer and other executive officers of
Implantable Vision, Inc. for services in all capacities to our Company and our
subsidiaries during the two years ended December 31, 2005.
Annual Compensation
[Enlarge/Download Table]
---------------------------- -------------------------- -------------------------- ------------------------ ------------------------
Name and Principal Position Year Salary Bonus Total
---------------------------- -------------------------- -------------------------- ------------------------ ------------------------
Dr. George Rozakis, 2006 $200,000-$250,000 0 $200,000-$250,000
President, Director
2005 0 0 0
---------------------------- -------------------------- -------------------------- ------------------------ ------------------------
William Rozakis, 2006 $120,000 0 $120,000
Secretary, Director
2005 0 0 0
---------------------------- -------------------------- -------------------------- ------------------------ ------------------------
Jon Elliott (1) 2006 0 0 0
2005 0 0 0
2004 0 0 0
---------------------------- -------------------------- -------------------------- ------------------------ ------------------------
Wesley Whiting (2) 2006 0 0 0
2005 0 0 0
2004 0 0 0
---------------------------- -------------------------- -------------------------- ------------------------ ------------------------
Jerry Kaeni, Chief 2006 $150,000 0 $150,000
Manufacturing Officer,
Director
2005 0 0 0
---------------------------- -------------------------- -------------------------- ------------------------ ------------------------
Igor Valyunin, Chief 2006 $120,000 0 $120,000
Development Officer,
Director
2005 0 0 0
---------------------------- -------------------------- -------------------------- ------------------------ ------------------------
Alexander Hatsis, Medical 2006 $100,000 0 0
Director
2005 0 0 0
---------------------------- -------------------------- -------------------------- ------------------------ ------------------------
(1) Former President, resigned December 2005
(2) Former Secretary, resigned December 2005
We have made no Option/SAR grants or exercises in the last fiscal year
reportable under Reg. S-B, 402(c) or (d). Many of the officer's compensation is
anticipated to be in the form of independent contractor agreements.
38
(b) Directors' Compensation
Directors who are also officers of Implantable Vision, Inc. receive no cash
compensation for services as a director. However, the directors will be
reimbursed for out-of-pocket expenses incurred in connection with attendance at
board and committee meetings. We have not granted any options to directors under
Stock Incentive Plan as adopted.
SUMMARY COMPENSATION TABLE OF DIRECTORS
(excludes compensation shown in Executives Table above)
Our directors do not receive any compensation pursuant to any standard
arrangement for their services as directors. Wesley Whiting and Redgie Green,
former Directors, each received 5,000 shares of common stock in 2005 for their
services rendered in 2005.
We have no Option/SAR grants or exercises in the last fiscal year reportable
under Reg. S-B, 402(c) or (d).
Termination of Employment and Change of Control Arrangements: None. Stock
purchase options: None
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Beneficial owners of five percent (5%) or greater, of our common stock:
The following sets forth information with respect to ownership by holders who
are not officers or directors of more than five percent (5%) of its common stock
known by our Company based upon 22,548,559 shares outstanding at June 28, 2006.
[Enlarge/Download Table]
Percent of Class
Title of Name and Address Amount of Percent of Percent of Class Upon Upon Full Warrant
Class of Beneficial Owner Beneficial Interest Class Subscription Funding Exercise
------------------------------------------------------------------------------------------------------------------------------------
Common Stock Alex Hatsis 1,380,000 6.1% 5.6% 2.7%
2 Lincoln Ave
Suite 401
Rockville Centre, NY 11570
Common Stock Kavouria, LLC(2) 1,380,000(2) 6.1% 5.6% 2.7%
25730 Lorain Road
North Olmsted, OH 44070
39
(b) The following sets forth information with respect to our common stock
beneficially owned by each Officer and Director, and by all Directors and
Officers as a group at January 31, 2006.
[Enlarge/Download Table]
Percent of Class Percent of Class
Title of Name and Address Amount of Percent of Upon Funding Upon Full
Class of Beneficial Owner Beneficial Interest Class Subscription Funding Warrant Exercise
------------------------------------------------------------------------------------------------------------------------------------
Common Stock George Rozakis President/Director 2,430,155 10.8% 9.8% 4.8%
25730 Lorain Road
North Olmsted, OH 44070
Common Stock William Rozakis (2), Secretary 3,480,845 15.4% 14.1% 6.8%
25730 Lorain Road
North Olmsted, OH 44070
Common Stock Rozakis Family, LLC (1) 2,415,000 (1) 10.7% 9.7% 4.7%
25730 Lorain Road
North Olmsted, OH 44070
Common Stock Rozy Ventures II (2) 2,100,845 (1) 9.3% 8.5% 4.1%
25730 Lorain Road
North Olmsted, OH 44070
Common Stock Jerry Kaeni, Director 5,980,000 26.5% 24.1% 11.8%
25730 Lorain Road
North Olmsted, OH 44070
Common Stock Igor Valyunin, Director 5,014,000 22.2% 20.2% 9.9%
3862 South Lake Dr.
Apt. 102
St. Francis, WI 53235-5232
Total for officers and directors __________ ______ _______ _______
as a group (6 persons) 20,700,000 91.7% 83.5% 40.7%
(1) Controlled by Betty and George Rozakis, the aggregate of the Rozakis family
beneficial holdings being 21.5% as of date hereof.
(2) Kavouria, LLC and Rozy Ventures LLC are managed by William Rozakis for whom
the aggregate beneficial holdings redeemed to be 15.4% as of date hereof.
Each principal shareholder has sole investment power and sole voting power over
the shares except when husband and wife share it.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 2005 we settled approximately $285,000 in loans from Jon Elliott,
former President and Director, for $100,000 and we paid $5,000 to Jon Elliott to
retire 300,000 common shares to treasury. Wesley Whiting and Redgie Green each
received 5,000 shares as compensation for services in 2005.
On December 16, 2005, we entered into a Plan and Agreement of Reorganization
with JIGJIG, LLC (JIG) and its interest holders whereby the interest holders of
JIG received 30,000,000 shares of Common Stock in exchange for 100% interest in
JIG. JIG is merging into BT Acquisitions, Inc. a newly formed subsidiary of
Registrant. JIG holds intellectual property regarding implantable ocular lenses,
which correct vision and which, in application, avoid many of the disadvantages
or limitations of laser alterations of the cornea. The intellectual property has
not yet been FDA approved nor received CE Mark for its commercialization. As a
result, the shareholders received a total of 30,000,000 shares of company stock
and became officers, directors, and affiliates of our company. In order to
revalue the acquisition, the Company retired 9,300,000 shares of Common Stock
from seven persons or entities from their ownership interest in JIG. The current
shareholder positions are as follows:
40
George Rozakis 2,430,155
Rozakis Family, LLC (beneficially George Rozakis) 2,415,000
Rozy Ventures II (beneficially William Rozakis) 2,100,845
Jerry Kaeni 5,980,000
Igor Valyunin 5,014,000
Alex Hatsis 1,380,000
Kavouria, LLC (beneficially William Rozakis) 1,380,000
---------
Total 20,700,000
As a result of the Plan and Agreement of Reorganization, we received $475,000 in
capital with which we settled all of the existing outstanding debt of
Implantable Vision, Inc. as of December 2005.
DESCRIPTION OF SECURITIES
COMMON STOCK
Our Articles of Incorporation (as amended) authorize the issuance of 100,000,000
shares of common stock at $.001 par value. Each record holder of common stock is
entitled to one vote for each share held on all matters properly submitted to
the stockholders for their vote. Cumulative voting for the election of directors
is not permitted by the Articles of Incorporation. Our shareholders are entitled
to dividends as may be declared from time to time by the Board of Directors out
of legally available funds; and, in the event of liquidation, dissolution or
winding up of our affairs, holders are entitled to receive, ratably our net
assets after distribution is made to our creditors.
Our common shareholders have no preemptive, conversion or redemptive rights. All
of our issued and outstanding shares of common stock are duly authorized,
validly issued, fully paid, and nonassessable. To the extent that additional
shares of our common stock are issued in the future, the relative interests of
then existing stockholders will be diluted.
We have 22,548,559 common shares issued and outstanding at June 28, 2006,
2,310,924 shares subscribed for and being registered herein, 16,000,000 shares
reserved for warrant exercise and 10,000,000 shares reserved for conversion of
Series "A" Convertible Preferred.
Series "A" Convertible Preferred Stock
We have authorized, issued and outstanding, one million shares of Series "A"
Convertible Preferred Stock. Each share of our Series "A" Preferred stock is
convertible into ten units, and each of these units contains ten shares of
common stock together with two and one half "A" warrants to purchase common
stock at $2.00 per share until December 2006 and two and one half "B" warrants
to purchase common stock at $5.00 per share until March 2009. The holders of
Series "A" stock is restricted of the amount they may convert if at the time of
conversion the holder of Series "A" would hold more than 4.999% of our common
stock in the aggregate immediately after such conversion including "A" and "B"
warrants which might be exercisable within 60 days.
In addition, the Series "A" Preferred stock carries liquidation preferences of
$3.00 per share. The Series "A" Preferred also provides for adjustment of the
Conversion Price in the possible events of change of control, changes in par
value, consolidation or merger. The Series "A" is not mandatorily redeemable,
and may not be redeemed before January 1, 2009.
Series "B" Convertible Preferred Stock Authorized: Series "B" was cancelled and
no shares are issued and outstanding. Designation of Rights is revoked, and
there is no current Designation of Series B Rights.
41
PRICE RANGE OF OUR COMMON STOCK & STOCKHOLDER MATTERS
a) Our common stock is traded in the over-the-counter market under the
symbol "IMVS" (OTC Bulletin Board Symbol). The table below sets forth the high
and low bid prices of our common stock for the periods indicated. Such prices
are inter-dealer prices, without mark-up, mark-down or commissions and do not
necessarily represent actual sales.
High Low
---- ----
Year Ended July 31, 2006 (split adjusted)
Third Quarter . . . . . $4.15 $3.00
Second Quarter. . . . . $4.50 $1.00
First Quarter. . . . . $1.10 $0.25
Year Ended July 31, 2005
Fourth Quarter. . . . . $.09 $.019
Third Quarter. . . . . $.10 $.05
Second Quarter. . . . . $.20 $.01
First Quarter. . . . . $.01 $.007
Year Ended July 31, 2004
Fourth Quarter. . . . . $.029 $.019
Third Quarter. . . . . $.029 $.018
Second Quarter. . . . . $.06 $.019
First Quarter. . . . . $.08 $.059
Because of recent changes in the rules and regulations governing the trading of
small issuers securities, our securities are presently classified as "Penny
Stock" This classification places significant restrictions upon broker-dealers
desiring to make a market in these securities. The existence of market
quotations should not be considered evidence of the "established public trading
market."
(b) Shareholders. As of June 28, 2006, we had 495 shareholders of record.
(c) Dividends. We haven't paid any dividends and do not foresee paying
dividends in the next five years.
Since December 2005, we have completed a private placement offering of:
1,476,971 Shares with a total of $1,757,595.49 as follows:
Eric Malinski - 256,303 shares ($305,000.00)
447 Saxon Place
Castle Rock, CO 80108
Larry Cahill - 420,168 shares ($500,000)
- 1,260,504 shares ($1,500,000 subscribed for)
3330 SouthGate Ct.
Cedar Rapids, OH 52406
David Clarkson - 42,500 shares ($50,000)
3403 Apiatan Ct.
Ft. Collins, CO 80524
Richard L. Clarkson
Joanne Clarkson JTWROS - 42,500 shares ($50,000)
7657 San Remo Pl.
Orlando, FL 32835
42
Richard L Clarkson TTEE
FBO Lucille S. Ball - 42,500 shares ($50,000)
7657 San Remo Pl.
Orlando, FL 32835
Richard D. Clarkson - 42,500 shares ($50,000)
11461 Lk Butler Blvd
Windermere, FL 34786
John Walz - 42,500 shares ($50,000)
3209 Town Center Ct.
Ft. Collins, CO 80524
Providence Investment
Management Group - 168,000 shares ($200,000)
525 E. 72nd St., Apt. 37H
New York, NY 10021
H. Thomas Monroe - 210,000 shares ($249,900)
2623 Merlin Dr.
Lewisville, TX 75056
Theon Enderle - 210,000 shares ($249,900)
7594 Lockhart Way
Boynton Beach, FL 33437
Maurice Bennett - 1,050,420 shares ($1,250,000 subscribed for)
164 S. Washington
Denver, CO 80209
All sales were to accredited investors pursuant to an exemption from
Registration under Section 4(6) of the Securities Act of 1933.
PENNY STOCK CLASSIFICATION
Our securities, if and when available for trading, will be subject to a
Securities and Exchange Commission rule that imposes special sales practice
requirements upon broker-dealers who sell such securities to persons other than
established customers or accredited investors. For purposes of the rule, the
phrase "accredited investors" means, in general terms, institutions with assets
in excess of $5,000,000, or individuals have a net worth in excess of $1,000,000
or having an annual income that exceeds $200,000 (or that, when combined with a
spouse's income, exceeds $300,000). For transactions covered by the rule, the
broker-dealer must make a special suitability determination for the purchaser
and receive the purchaser's written agreement to the transaction prior to the
sale. Consequently, the rule may adversely affect the ability of broker- dealers
to sell our securities and also may adversely affect the ability of purchasers
in this offering to sell their securities in any market that might develop
therefore. (See "Risk Factors.")
In addition, due to past abuse in the market, the Securities and Exchange
Commission has adopted a number of rules to regulate "penny stocks." Such rules
include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9
under the Securities Exchange Act of 1934, as amended. Because our securities
constitute "penny stocks" within the meaning of the rules, the rules apply to us
and our securities. The rules further will impair the ability of owners of
shares to sell our securities in any market that might develop for them. (See
"Risk Factors.")
REPORT TO STOCKHOLDERS
We are required to make available annual reports to stockholders containing
audited financial statements reported upon by our independent auditors and
intend to release unaudited quarterly and other interim reports to our
stockholders as is required by Section 13(a) of the Securities and Exchange Act
of 1934.
TRANSFER AGENT AND REGISTRAR
We have engaged Transfer Online, Inc., of 317 SW Alder Street, 2nd Floor,
Portland, Oregon 97204, as our transfer agent.
43
LIMITATIONS ON DIRECTOR LIABILITY
Our bylaws require us to indemnify our directors and officers, and allow us to
indemnify our other employees and agents, to the fullest extent permitted by
Utah law. Our bylaws provide that we indemnify our directors and executive
officers to the fullest extent as allowed by statute. We believe that these
provisions and agreements are necessary to attract and retain qualified
directors and executive officers. Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers or
persons controlling our company pursuant to the foregoing provisions, we have
been informed that, in the opinion of the Securities and Exchange Commission, it
is against public policy and is therefore unenforceable.
Our Board of Directors may alter, amend or repeal our Bylaws by the affirmative
vote of at least a majority of the entire Board of Directors, provided that any
Bylaws adopted by the Board of Directors may be amended or repealed by our
shareholders. Our shareholders may also adopt, repeal, or amend, our Bylaws by
the affirmative vote of at least a majority of the shares that are issued and
outstanding and entitled to vote.
PLAN OF DISTRIBUTION
The selling stockholders and any of their respective non-sale pledgees, non-sale
donees, non-sale assignees and other non-sale successors-in-interest propose to
offer shares for sale at market prices from time to time on an on-going basis.
Selling shareholders may, from time to time, sell any or all of their shares of
common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. There is currently a market price
for our stock, and the market price may bear no relation to factors such as a
value determination, price earnings ratio, book value, or any other objective
criteria, since we have sustained continuing losses and have no positive net
book value. These sales may be at market or negotiated prices. The selling
stockholders may use any one or more of the following methods when selling
shares:
o ordinary brokerage transactions and transactions in which the broker-dealer
solicits the purchaser;
o block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
o an exchange distribution in accordance with the rules of the applicable
exchange;
o privately-negotiated transactions;
o short sales;
o broker-dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share;
o through the writing of options on the shares;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus. The selling
stockholders shall have the sole and absolute discretion not to accept any
purchase offer or make any sale of shares if they deem the purchase price to be
unsatisfactory at any particular time.
The selling stockholders may pledge their shares to their brokers under the
margin provisions of customer agreements. If a selling stockholders defaults on
a margin loan, the broker may, from time to time, offer and sell the pledged
shares.
The selling stockholders may also engage in short sales, puts and calls and
other transactions in our securities or derivatives of our securities and may
sell or deliver shares in connection with these trades.
The selling stockholders or their respective non-sale pledgees, non-sale donees,
non-sale transferees or other non-sale successors in interest, may also sell the
shares directly to market makers acting as principals and/or broker-dealers
acting as agents for themselves or their customers. Such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the selling stockholders and/or the purchasers of shares for whom such
broker-dealers may act as agents or to whom they sell as principal or both,
which compensation as to a particular broker-dealer might be in excess of
customary commissions. Market makers and block purchasers purchasing the shares
will do so for their own account and at their own risk. It is possible that a
selling stockholder will attempt to sell shares of common stock in block
transactions to market makers or other purchasers at a price per share which may
be below the then market price. The selling stockholders cannot assure that all
44
or any of the shares offered in this prospectus will be sold by the selling
stockholders. The selling stockholders and any brokers, dealers or agents, upon
effecting the sale of any of the shares offered in this prospectus, may be
deemed to be "underwriters" as that term is defined under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, or the
rules and regulations under such acts. In such event, any commissions received
by such broker-dealers or agents and any profit on the resale of the shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
We are required to pay all fees and expenses incident to the registration of the
shares, including fees and disbursements of counsel to the selling stockholders,
but excluding brokerage commissions or underwriter discounts.
The selling stockholders, alternatively, may sell all or any part of the shares
offered in this prospectus through an underwriter. No selling stockholder has
entered into any agreement with a prospective underwriter and there is no
assurance that any such agreement will be entered into.
The selling stockholders and any other persons participating in the sale or
distribution of the shares will be subject to applicable provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations under
such act, including, without limitation, Regulation M. These provisions may
restrict certain activities of, and limit the timing of purchases and sales of
any of the shares by the selling stockholders or any other such person.
Furthermore, under Regulation M, persons engaged in a distribution of securities
are prohibited from simultaneously engaging in market making and certain other
activities with respect to such securities for a specified period of time prior
to the commencement of such distributions, subject to specified exceptions or
exemptions. In regard to short sells, the selling stockholder can only cover its
short position with the securities they receive from us upon conversion. All of
these limitations may affect the marketability of the shares.
If the selling stockholders notify us that they have a material arrangement with
a broker-dealer for the resale of the common stock, then we would be required to
amend the registration statement of which this prospectus is a part, and file a
prospectus supplement to describe the agreements between the selling
stockholders and the broker-dealer.
No selling shareholder is a broker-dealer or an affiliate of a broker-dealer.
DETERMINATION OF OFFERING PRICE
There has been a sporadic market for the shares of our common stock. For
purposes of this registration, the offering price will be at market price per
share. The price will be based upon the market price at the time of sale of
shares. There is no direct relation between any market price and the assets,
book value, shareholders' equity or net worth of our company.
EXPERTS
Our financial statements as of July 31, 2004 and July 31, 2005 have been
included in the Registration Statement in reliance upon the reports of Michael
B. Johnson & Company and Jaspers + Hall, PC, independent auditors, and upon the
authority of said firms as experts in accounting and auditing.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
Implantable Vision, Inc. by Michael A. Littman, Attorney at Law, 7609 Ralston
Road, Arvada, Colorado 80002.
WHERE YOU CAN FIND INFORMATION
We have filed a Registration Statement on Form SB-2 under the Securities Act of
1933 with the Securities and Exchange Commission, Washington, D.C., relating to
the securities offered. For further information with respect to us and the
securities offered, and reference is made to such registration statement. This
prospectus constitutes the prospectus of Implantable Vision, Inc., filed as part
of the registration statement, and it does not contain all information in the
registration statement, as certain portions have been omitted in accordance with
the rules and regulations of the Securities and Exchange Commission. You may
review the Registration Statement, including the exhibits, without charge at the
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, or inspected and copied at, and obtained at prescribed rates from, the
Public Reference Section of the Securities and Exchange Commission at its
principal office at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549.
45
IN ADDITION, WE WILL FILE REPORTS, PROXY STATEMENTS AND OTHER INFORMATION WITH
THE SEC. YOU MAY READ AND COPY ANY DOCUMENT WE FILE AT THE SEC'S PUBLIC
REFERENCE ROOMS IN WASHINGTON, D.C., NEW YORK, NEW YORK AND CHICAGO, ILLINOIS.
PLEASE CALL THE SEC AT 1-800-SEC-0330 FOR FURTHER INFORMATION ON THE PUBLIC
REFERENCE ROOMS. OUR SEC FILINGS ARE ALSO AVAILABLE TO THE PUBLIC ON THE SEC'S
WEBSITE AT HTTP://WWW.SEC.GOV.
46
INDEX TO AUDITED FINANCIAL STATEMENTS
BAYMARK TECHNOLOGIES, INC.
INDEX OF FINANCIAL STATEMENTS
PAGES
Auditors Report- Michael Johnson & CO F-1
Balance Sheets for July 31, 2005 and 2004 F-2
Statements of Operations for July 31, 2005 and 2004 F-3
Statements of Stockholders' Equity for July 31, 2005 and 2004 F-4, F-5
Statements of Cash Flow for July 31, 2005 and 2004 F-6
Notes to Financial Statements for July 31, 2005 and 2004 F-7 - F-11
INDEX TO INTERIM FINANCIAL STATEMENTS -
Balance Sheet for April 30, 2006 F-14
Statements of Operations for April 30, 2006 and 2005 F-15
Statements of Stockholders' Equity (Deficit) for April 30, 2006 and 2005 F-16
Statements of Cash Flows for April 30, 2006 and 2005 F-18
Notes to Financial Statements for April 30, 2006 and 2005 F-19
47
BAYMARK TECHNOLOGIES, INC.
(FORMERLY E-COMMERCE WEST CORP)
FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 2005 AND 2004
JASPERS + HALL, PC
CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------
9175 E. Kenyon Avenue, Suite 100
Denver, CO 80237
303-796-0099
REPORT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM
To the Board of Directors of
Baymark Technologies, Inc.
San Diego, CA
We have audited the accompanying consolidated balance sheet of Baymark
Technologies, Inc. as of July 31, 2005, and the related consolidated statements
of operations, stockholders' equity (deficit) and cash flows for the period then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States) per standard No. 1 of the PCAOB
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Baymark Technologies, Inc. as
of July 31, 2005, and the results of its operations and cash flows for the year
then ended in conformity with accounting principles generally accepted in the
United States.
The financial statements for the year ended July 31, 2004 were audited by other
accountants, whose report, dated November 9, 2004, expressed an unqualified
opinion on those statements. They have not performed any auditing procedures
since that date.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 3 to the
financial statements, conditions exist which raise substantial doubt about the
Company's ability to continue as a going concern. The Company lost $9,429,480
from operations through July 31, 2005. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Jaspers + Hall, PC
Denver, Colorado
November 17, 2005
/s/Jaspers + Hall, PC
F-1
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BAYMARK TECHNOLOGIES
Consolidated Balance Sheets
July 31,
2005 2004
--------------- ---------------
ASSETS:
Current Assets:
Cash $ - $ -
--------------- ---------------
Total Current Assets - -
--------------- ---------------
Fixed Assets:
Property & Equipment 33,950 33,950
Less Accumulated Depreciation (33,950) (33,950)
--------------- ---------------
Total Fixed Assets - -
--------------- ---------------
TOTAL ASSETS $ - $ -
=============== ===============
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT):
Current Liabilities:
Accounts Payable $ 298,944 $ 298,944
Accrued Expenses 141,573 141,573
Note Payable - Related Party 168,731 168,731
Discontinued Operations Liability 148 148
--------------- ---------------
Total Current Liabilities 609,396 609,396
--------------- ---------------
Stockholders Equity (Deficit):
Preferred Stock, $.001 par value, 100,000,000 shares authorized Series A
Convertible preferred stock 1,000,000 shares
issued and outstanding 2004 and 2003 1,000 1,000
Series B Convertible preferred stock 100,000 shares
issued and outstanding 2005 and 2004 100 100
Common stock, $.001 par value, 150,000,000 shares authorized
6,621,999 shares issued and outstanding in 2004 and 2005 6,623 6,623
Additional Paid-In Capital 7,812,361 7,812,361
Accumulated deficit (8,429,480) (8,429,480)
--------------- ---------------
Total Stockholders' Equity (Deficit) (609,396) (609,396)
--------------- ---------------
=============== ===============
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT $ - $ -
=============== ===============
The accompanying notes are an integral part of these financial statements.
F-2
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BAYMARK TECHNOLOTIES, INC.
Consolidated Statements of Operations
For the Years Ended July 31,
2005 2004
---------------- ---------------
Revenue:
Sales $ - $ -
---------------- ---------------
Total Income - -
---------------- ---------------
Operating Expenses:
Administrative Expenses - 150,178
---------------- ---------------
Total Expenses - 150,178
---------------- ---------------
Net Loss From Operations - (150,178)
---------------- ---------------
Other Income/Expenses:
Interest Income - -
Loss on Investments - -
Gain/Loss on Discontinued Operations - -
Interest Expense - -
---------------- ---------------
Net Other Income/Expense - -
---------------- ---------------
Net Gain/Loss $ - $ (150,178)
================ ===============
Per Share Information:
Weighted average number
of common shares outstanding 6,621,999 6,621,999
---------------- ---------------
Net Loss per common share * $ (0.02)
================ ===============
*Less than $.01
The accompanying notes are an integral part of these financial statements.
F-3
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BAYMARK TECHNOLOGIES, INC.
Consolidated Statements of Stockholders' Equity (Deficit)
July 31, 2005
PREFERRED STOCK
SERIES A SERIES B
-------- --------
# of Shares Amount # of Shares Amount
----------- ------ ----------- ------
Balance - July 31, 1998 1,000,000 $1,000 100,000 $ 100
Issuance of stock for cash - - - -
Issuance of stock for services - - - -
Issuance of stock for services - - - -
Cancellation of stock - - - -
Net Loss for Year
--------- ------ ------- ---------
Balance - July 31, 1999 1,000,000 1,000 100,000 100
--------- ------- ------- ---------
Issuance of stock for cash - - - -
Issuance of stock for services - - - -
Issuance of stock for services - - - -
Issuance of stock for acquisition - - - -
Issuance of stock for cash - - - -
Stock Option issuance - - - -
Net Loss for Year - - - -
--------- ------ ------- ---------
Balance - July 31, 2000 1,000,000 1,000 100,000 100
--------- ------ ------- ---------
Issuance of stock for services - - - -
Cancellation of stock for acquisition
Net Loss for Year - - - -
--------- ------ ------- ---------
Balance - July 31, 2001 1,000,000 1,000 100,000 100
--------- ------ ------- ---------
Issuance of stock for services - - - -
Issuance of stock for cash - - - -
Issuance of stock for services - - - -
Issuance of stock for services - - - -
Issuance of stock for services - - - -
Issuance of stock for services - - - -
Issuance of stock for services - - - -
Net Loss for Year - - - -
--------- ------ ------- ---------
Balance - July 31, 2002 1,000,000 1,000 100,000 100
--------- ------ ------- ---------
Issuance of stock for services - - - -
Net Loss for Year - - - -
--------- ------ ------- ---------
Balance - July 31, 2003 1,000,000 1,000 100,000 100
--------- ------ ------- ---------
Net Loss for Year - - - -
--------- ------ ------- ---------
Balance - July 31, 2004 1,000,000 1,000 100,000 100
--------- ------ ------- ---------
Net Loss for Year - - - -
--------- ------ ------- ---------
Balance - July 31, 2005 1,000,000 $1,000 100,000 $ 100
--------- ------ ------- ---------
F-4
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BAYMARK TECHNOLOGIES
Consolidated Statement of Stockholders' Equity (Deficit)
July 31, 2005
(continued)
COMMON STOCKS Additional Total
Paid-In Accumulated Stockholders'
# of Shares Amount Capital Deficit Equity
----------- ------ ------- ------- ------
Balance - July 31, 1998 1,440,350 $ 1,440 $ 5,864,959 $ (6,091,217) $ (223,718)
Issuance of stock for cash 116,667 117 92,383 - 92,500
Issuance of stock for services 80,053 80 184,008 - 184,088
Issuance of stock for services 438,889 439 336,166 - 336,605
Cancellation of stock (7,780) (8) (43) - (51)
Net Loss for Year - - - (594,159) (594,159)
--------- ------- ----------- ------------ -----------
Balance - July 31, 1999 2,068,179 2,068 6,477,473 (6,685,376) (204,735)
--------- ------- ----------- ------------ -----------
Issuance of stock for cash 31,133 31 136,469 - 136,500
Issuance of stock for services 68,467 69 152,889 - 152,958
Issuance of stock for services 757,354 757 241,071 - 241,828
Issuance of stock for acquisition 83,333 83 249,917 - 250,000
Issuance of stock for cash 16,667 17 49,983 - 50,000
Stock Option issuance - - 36,000 - 36,000
Net Loss for Year - - - (698,384) (698,384)
--------- ------- ----------- ------------ -----------
Balance - July 31, 2000 3,025,133 3,025 7,343,802 (7,383,760) (35,833)
---------- ------- ----------- ------------ -----------
Issuance of stock for services 1,279,760 1,280 48,627 - 49,907
Cancellation of stock for acquisition (83,333) (83) - - (83)
Net Loss for Year - - - (506,088) (506,088)
---------- ------- ----------- ------------ -----------
Balance - July 31, 2001 4,221,560 4,222 7,392,429 (7,889,848) (492,097)
--------- ------- ----------- ------------ -----------
Issuance of stock for services 731,151 731 215,852 - 216,583
Issuance of stock for cash 100,000 100 9,900 - 10,000
Issuance of stock for services 70,000 70 6,930 - 7,000
Issuance of stock for services 100,000 100 9,900 - 10,000
Issuance of stock for services 1,085,002 1,085 161,665 - 162,750
Issuance of stock for services 100,000 100 9,900 - 10,000
Issuance of stock for services 14,286 15 985 - 1,000
Net Loss for Year - - - (318,935) (318,935)
---------- ------- ----------- ------------ -----------
Balance - July 31, 2002 6,421,999 6,423 7,807,561 (8,208,783) (393,699)
---------- ------- ----------- ------------ -----------
Issuance of stock for services 200,000 200 4,800 - 5,000
Net Loss for Year - - - (70,519) (70,519)
--------- ------- ----------- ------------ -----------
Balance - July 31, 2003 6,621,999 6,623 7,812,361 (8,279,302) (459,218)
--------- ------- ----------- ------------ -----------
Net Loss for Year - - - (150,178) (150,178)
--------- ------- ----------- ------------ -----------
Balance - July 31, 2004 6,621,999 6,623 7,812,361 (8,429,480) (609,396)
--------- ------- ----------- ------------ -----------
Net Loss for Year - - - - -
--------- ------- ----------- ------------ -----------
Balance - July 31, 2005 6,621,999 $ 6,623 $ 7,812,361 $ (8,429,480) $ (609,396)
========= ======= =========== ============ ===========
The accompanying notes are an integral part of these financial statements.
F-5
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BAYMARK TECHNOLOGIES, INC.
Consolidated Statement of Cash Flows
For the Year Ended July 31,
Indirect Method
2005 2004
---------------- ----------------
Cash Flows from Operating Activities:
Net (Loss) $ - $ (150,178)
Issuance of stock for services - -
Depreciation - -
Adjustments to reconcile net loss to cash used
by operating activities
Decrease in prepaid expenses - 178
Increase in Discontinued Operations - -
(Decrease) Increase in accounts payable and accrued expenses - 150,000
---------------- ----------------
Net Cash Used by Operating Activities - -
---------------- ----------------
Payment on Notes Payable - Related Party - -
---------------- ----------------
Net Cash Provided by Financing Activities - -
---------------- ----------------
Net Increase in Cash & Cash Equivalents - -
Beginning Cash & Cash Equivalents - -
---------------- ----------------
Ending Cash & Cash Equivalents $ - $ -
================ ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for Interest $ - $ -
================ ================
Cash paid for Income Taxes $ - $ -
================ ================
NON-CASH TRANSACTIONS
Common stock issued for services $ - $ -
================ ================
The accompanying notes are an integral part of these financial statements.
F-6
BAYMARK TECHNOLOGIES, INC.
Notes to Financial Statements
July 31, 2005
Note 1 - Organization and Summary of Significant Accounting Policies:
------------------------------------------------------------
Organization:
The Company (formerly E-Commerce West Corp.), a Utah Corporation, was
incorporated on March 21, 1981. Since incorporation the Company has undergone
several name, ownership, directional and management changes. All of the prior
subsidiaries have been discontinued, in the year ended July 2001. The most
recent purpose of the Company was the developing and bringing, to market its
business-to-business internet application which failed. The Company has no
current business. The Company's fiscal year end is July 31.
Basis of Accounting:
The accompanying financial statements have been prepared on the accrual basis of
accounting in accordance with generally accepted accounting principles.
Cash and Cash Equivalents:
--------------------------
The Company considers all highly liquid debt instruments, purchased with an
original maturity of three months or less, to be cash equivalents.
Use of Estimates:
The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Net Loss Per Share:
Net loss per share is based on the weighted average number of common shares and
common shares equivalents outstanding during the period.
Property and Equipment
Equipment and property are capitalized at acquisition cost and depreciated
utilizing the straight-line method over its estimated useful life.
Maintenanceand repairs are charged to operations as incurred.
Other Comprehensive Income
The Company has no material components of other comprehensive income (loss), and
accordingly, net loss is equal to comprehensive loss in all periods.
F-7
BAYMARK TECHNOLOGIES, INC.
Notes to Financial Statements
July 31, 2005
Note 2 - Federal Income Taxes:
The Company has made no provision for income taxes because there have been no
operations to date causing income for financial statements or tax purposes.
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards Number 109 ("SFAS 109"). "Accounting for Income
Taxes", which requires a change from the deferred method to the asset and
liability method of accounting for income taxes. Under the asset and liability
method, deferred income taxes are recognized for the tax consequences of
"temporary differences" by applying enacted statutory tax rates applicable to
future years to differences between the financial statement carrying amounts and
the tax basis of existing assets and liabilities.
2005 2004
---------- --------
Deferred tax assets
Net operating loss carryforward $ 8,429,480 $ 8,429,480
Valuation allowance (8,429,480) (8,429,480)
------------- -------------
Net deferred tax assets $ 0 $ 0
============= =============
At July 31, 2005, the Company had net operating loss carryforwards of
approximately $8,429,480 for federal income tax purposes. These carryforwards if
not utilized to offset taxable income will begin to expire in 2010.
Note 3 - Going Concern:
The Company's financial statements have been prepared on the basis that it is a
going concern, which contemplated the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company's current
liabilities exceed the current assets by $609,396 at July 31, 2005.
The Company has not earned any revenue from operations in 2005. The Company's
ability to continue as a going concern is dependent upon its ability to develop
additional sources of capital to ultimately achieve profitable operations. The
accompanying financial statements do not include any adjustments that might
result from the outcome of these uncertainties. Management is seeking new
capital to revitalize the Company.
Note 4 - Capital Stock Transactions:
The authorized capital stock of the Company is 150,000,000 shares of common
stock at $.0001 par value and 100,000,000 shares of preferred stock at $.001 par
value. In January of 2002 the Company authorized a 1 for 6 reverse split for the
common stock. The Company issued 200,000 shares of common stock in 2003 for
services, no shares of common stock were issued in 2004 or 2005. All shares and
per share amounts in the accompanying financial statements of the Company and
notes thereto have been retroactively adjusted to give the effects of the
reverse stock split.
F-8
BAYMARK TECHNOLOGIES, INC.
Notes to Financial Statements
July 31, 2005
Note 5 - Segment Information
Baymark Technologies, Inc. operates primarily in a single operating segment,
business-to business internet applications.
Note 6 - Note Payable - Related Party:
Note payable to Jon Elliott for payment of company
expenses, non-interest bearing due upon demand $168,648
========
In the year 2003 Jon Elliott, president of the Company, paid Company expenses
and advanced the Company the funds. The note holder is considered to be a
related party.
NOTE 7 - Financial Accounting Developments:
Recently issued Accounting Pronouncements
In February 2003, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 150, "Accounting for Certain Financial Instruments with Characteristics of
Both Liabilities and Equity". The provisions of SFAS 150 are effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
are effective at the beginning of the first interim period beginning after June
15, 2003, except for mandatory redeemable financial instruments of nonpublic
entities. The Company has not issued any financial instruments with such
characteristics.
In December 2003, the FASB issued FASB Interpretation No. 46 (revised December
2003), "Consolidation of Variable Interest Entities" (FIN No. 46R), which
addresses how a business enterprise should evaluate, whether it has a
controlling financial interest in an entity through means other than voting
rights and accordingly should consolidate the entity. FIN No. 46R replaces FASB
Interpretation No. 46, "Consolidation of Variable Interest Entities", which was
issued in January 2003. Companies are required to apply FIN 46R to variable
interests in variable interest entities ("VIE") created after December 31, 2003.
For variable interest in VIEs created before January 1, 2004 the interpretation
is applied beginning January 1, 2005. For any VIEs that must be consolidated
under FIN No. 46R that were created before January 1, 2004, the assets,
liabilities and non-controlling interests of the VIE initially are measured at
their carrying amounts with any difference between the net amount added to the
balance sheet and any previously recognized interest being recognized as the
cumulative effect of an accounting change. If determining the carrying value is
not practicable, fair value at the date FIN No. 46R first applies may be used
measure the assets, liabilities and non-controlling interest of the VIE. The
Company does not have any interest in VIEs.
In December 2004, the FASB issued SFAS No. 123R (revised 2004) "Share-Based
Payment" which amends FASB Statement No. 123 and will be effective for public
companies for interim or annual periods beginning June 15, 2005. The new
statement will require entities to expense employee stock options and other
share-based payments. The new standard may be adopted in one of three ways - the
modified prospective transition method, a variation of the modified transition
method or the modified retrospective transition method. The Company is to
evaluate how it will adopt the standard and the evaluation the effect that the
adoption of SFAS 123R will have on the financial position and results of
operations.
F-9
BAYMARK TECHNOLOGIES, INC.
Notes to Financial Statements
July 31, 2005
NOTE 7 - Financial Accounting Developments (Cont):
In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an amendment
of ARB No. 43, Chapter 4." The statement amends the guidance in ARB No. 43,
Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of
idle facility expense, freight, handling costs and wasted material (spoilage).
Paragraph 5 of ARB No. 43, Chapter 4 previously stated that "under some
circumstances, items such as idle facility expense, excessive spoilage, double
freight and rehandling costs may be so abnormal as to require treatment as
current period charges". SFAS No. 151 requires that those items be recognized as
current-period charges regardless of whether they meet the criterion of "so
abnormal". In addition, this statement requires that allocation of fixed
production overhead to the costs of conversion be based on the prospectively and
are effective for inventory costs incurred during fiscal years beginning after
June 15, 2005, with earlier application permitted for inventory costs incurred
during fiscal years beginning after the date this Statement is issued. The
adoption of SFAS No. 151 does not have an impact on the Company's financial
position and results of operations.
In December 2004, the FASB issued SFAS No. 153, Exchange of Non-monetary Assets,
an amendment of APB Opinion No. 29. The guidance in APB opinion No. 29,
Accounting for Non-monetary Transactions, is based on the principle that
exchange of non-monetary assets should be measured on the fair value of the
assets exchanges. The guidance in that Opinion, however, included certain
exceptions to that principle. This Statement amends Opinion 29 to eliminate the
exception for non-monetary exchanges of similar productive assets that do not
have commercial substance. A non-monetary has commercial substance if the future
cash flows of the entity are expected to change significantly as a result of the
exchange. SFAS No. 153 is effective for non-monetary exchanges occurring in
fiscal periods beginning June 15, 2005. The adoption of SFAS No. 153 is not
expected to have an impact on the Company's financial position and results of
operations.
In March 2005, the FASB issued FASB Interpretation No. 47, "Accounting for
Conditional Asset Retirement Obligations" ("FIN 47"). FIN 47 provides guidance
relating to the identification of and financial reporting for legal obligations
to perform an asset retirement activity. The Interpretation requires recognition
of a liability for the fair value of a conditional asset retirement obligation
when incurred if the liability's fair value can be reasonably estimated. FIN 47
also defines when an entity would have sufficient information to reasonably
estimate the fair value of an asset retirement obligation. The provision is
effective no later than the end of fiscal years ending after December 15, 2005.
The Company will adopt FIN 47 beginning the first quarter of fiscal year 2006
and does not believe the adoption will have a material impact on its
consolidated financial position or results of operations or cash flows.
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections" ("SFAS 154") which replaces Accounting Principles Board Opinions
No. 20 "Accounting Changes" and SFAS No. 3, "Reporting Accounting Changes in
Interim Financial Statements-An Amendment of APB Opinion No. 28." SFAS 154
provides guidance on the accounting for and reporting of accounting changes and
error corrections. It establishes retrospective application, or the latest
practicable date, as the required method for reporting a change in accounting
principle and the reporting of a correction of an error. SFAS 154 is effective
for accounting changes and a correction of errors made in fiscal years beginning
after December 15, 2005 and is required to be adopted by the Company in the
first quarter of 2006. The Company is currently evaluating the effect that the
adoption of SFAS 154 will have on its results of operations and financial
condition but does not expect it to have a material impact.
F-10
BAYMARK TECHNOLOGIES, INC.
Notes to Financial Statements
July 31, 2005
NOTE 7 - Financial Accounting Developments (Cont):
In June 2005, the Emerging Issues Task Force, or EITF, reached a consensus on
Issue 05-6, Determining the Amortization Period for Leasehold Improvements,
which requires that leasehold improvements acquired in a business combination or
purchased subsequent to the inception of a lease be amortized over the lesser of
the useful life of the assets or a term that includes renewals that are
reasonably assured at the date of the business combination or purchase. EITF
05-6 is effective for periods beginning after July 1, 2005. We do not expect the
provisions of this consensus to have a material impact on the financial
position, results of operations or cash flows.
F-11
IMPLANTABLE VISION, INC.
(FORMERLY BAYMARK TECHNOLOGIES, INC.)
(UNAUDITED)
FINANCIAL STATEMENTS
NINE MONTHS ENDED APRIL 30, 2006
F-12
JASPERS + HALL, PC
CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------
9175 E. Kenyon Avenue, Suite 100
Denver, CO 80237
303-796-0099
REPORT ON REVIEW BY REGISTED PUBLIC ACCOUNTING FIRM
Board of Directors
Implantable Visions, Inc.
San Diego, CA
We have reviewed the accompanying consolidated balance sheet of Implantable
Vision, Inc., formerly known as Baymark Technologies, Inc., and its subsidiaries
as of April 30, 2006 and the related consolidated statement of operations for
the three and nine-month period ended April 30, 2006, and cash flows for the
nine-month period ended April 30, 2006. These consolidated financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States of America and
standards of the PCAOB, the objective of which is the expression of an opinion
regarding the consolidated financial statements taken as a whole. Accordingly,
we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements for them to be in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 2 to the
financial statements, conditions exist which raise substantial doubt about the
Company's ability to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
/s/Jaspers + Hall, PC
June 19, 2006
F-13
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IMPLANTABLE VISION, INC.
(Formerly Baymark Technologies, Inc.)
Consolidated Balance Sheet
Unaudited Audited
April 30, July 31,
2005 2005
--------------- ---------------
ASSETS:
Current Assets:
Cash $ 1,296,761 $ -
--------------- ---------------
Total Current Assets 1,296,761 -
--------------- ---------------
Fixed Assets:
Property & Equipment 45,114 33,950
Less Accumulated Depreciation (4,512) (33,950)
--------------- ---------------
Total Fixed Assets 40,602 -
--------------- ---------------
TOTAL ASSETS $ 1,337,363 $ -
=============== ===============
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts Payable $ 27,857 $ 298,944
Accruals - 141,573
Note Payable - Related Party - 168,731
Discontinued Operations Liability - 148
--------------- ---------------
Total Current Liabilities 27,857 609,396
--------------- ---------------
Stockholders Equity (Deficit):
Preferred Stock, $.001 par value, 100,000,000 shares authorized 1,000 1,000
Series A Convertible preferred stock 1,000,000 shares
issued and outstanding 2006 and 2005
Series B Convertible preferred stock 100,000 shares - 100
issued and outstanding 2006 and 2005
Common stock, $.001 par value, 150,000,000 shares authorized 30,373 6,623
30,372,200 shares issued and outstanding in April 2006 and
662,200 issued and outstanding in July 2005.
Additional Paid-In Capital 10,050,039 7,812,361
Stock to be Issued 1,477
Accumulated deficit (8,773,383) (8,429,480)
--------------- ---------------
Total Stockholders' Equity (Deficit) 1,309,506 (609,396)
--------------- ---------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) $ 1,337,363 $ -
=============== ===============
See Accountants' Review Report
F-14
[Enlarge/Download Table]
IMPLANTABLE VISION, INC.
(Formerly Baymark Technologies, Inc.)
Consolidated Statement of Operations
Three-Months Ended Nine-Months Ended
April 30, April 30,
------------------------------- -------------------------------
2006 2005 2006 2005
------------- ------------- ------------- -------------
Revenue:
Sales $ - $ - $ - $ -
------------- ------------- ------------- -------------
Total Income - - - -
------------- ------------- ------------- -------------
Operating Expenses:
Administrative Expenses 320,401 - 453,519 -
------------- ------------- ------------- -------------
Total Expenses 320,401 - 453,519 -
------------- ------------- ------------- -------------
Other Income/Expense
Interest Income 30 - 30
Forgiveness of Debt - - 134,396
Acquisition Cost - - (24,810)
------------- ------------- ------------- -------------
Net Other Income/Expense 30 - 109,616 -
------------- ------------- ------------- -------------
Net Loss From Operations (320,371) - (343,903) -
------------- ------------- ------------- -------------
Net Gain/Loss $ (320,371) $ - $ (343,903) $ -
============= ============= ============= =============
Per Share Information:
Weighted average number
of common shares outstanding 20,645,533 6,596,004 10,762,472 6,596,004
------------- ------------- ------------- -------------
Net Loss per common share $ (0.02) $ - $ (0.02) $ -
============= ============= ============= =============
See Accountants' Review Report
F-15
[Enlarge/Download Table]
IMPLANTABLE VISION, INC.
(Formerly Baymark Technologies, Inc.
Consolidated Stockholders' Equity (Deficit)
For Period Ended April 30, 2006
PREFERRED STOCK COMMON STOCKS Additional
SERIES A SERIES B Paid-In
# of Shares Amount # of Shares Amount # of Shares Amount Capital
----------- ------ ----------- ------ ----------- ------ -------
Balance - July 31, 2004 1,000,000 $ 1,000 100,000 $ 100 662,200 $ 663 $ 7,818,321
----------- --------- ----------- --------- ------------ ---------- -------------
Net Loss for Year - - - - - - -
----------- --------- ----------- --------- ------------ ---------- -------------
Balance - July 31, 2005 1,000,000 1,000 100,000 100 662,200 663 7,818,321
----------- --------- ----------- --------- ------------ ---------- -------------
Cancelled Stock - - (100,000) (100) (300,000) (300) 400
Issuance of Stock to Directors - - - - 10,000 10 -
Issuance of Stock for Acquisition - - - - 30,000,000 30,000 475,200
Capital Investment - Stock to
be Issued - - - - - - 752,242
Capital Investment - Stock to be
Issued - - - - - - 1,003,876
Net Loss for Period - - - - - - -
----------- --------- ----------- --------- ------------ ---------- -------------
Balance - April 30, 2006 1,000,000 $ 1,000 - $ - 30,372,200 $ 30,373 $ 10,050,039
=========== ========= =========== ========= ============ ========== =============
See Accountants Review Report
F-16
IMPLANTABLE VISION, INC.
(Formerly Baymark Technologies, Inc.
Consolidated Stockholders' Equity (Deficit)
For Period Ended April 30, 2006
(continued)
Stocks Total
To Be Accumulated Stockholders'
Issued Deficit Equity
------ ------- ------
Balance - July 31, 2004 $ - $ (8,429,480) $ (609,396)
---------- ------------- -------------
Net Loss for Year - - -
---------- ------------- -------------
Balance - July 31, 2005 - (8,429,480) (609,396)
---------- ------------- -------------
Cancelled Stock - - -
Issuance of Stock to Directors - - 10
Issuance of Stock for Acquisition - - 505,200
Capital Investment - Stock to be
Issued 633 - 752,875
Capital Investment - Stock to be
Issued 844 - 1,004,720
Net Loss for Period - (343,903) (303,903)
---------- ------------- -------------
Balance - April 30, 2006 $ 1,477 $ (8,773,383) $ 1,309,506
========== ============= =============
See Accountants Review Report
F-17
[Enlarge/Download Table]
IMPLANTABLE VISION, INC.
(Formerly Baymark Technologies, Inc.)
Consolidated Statement of Cash Flow
Indirect Method
Nine-Months Ended
April 30,
--------------------------------
2006 2005
-------------- --------------
Cash Flows from Operating Activities:
Net (Loss) $ (343,903) $ -
Issuance of stock for services 10 -
Depreciation 4,512 -
Adjustments to reconcile net loss to cash used
by operating activities
Decrease in prepaid expenses - -
Increase in Discontinued Operations (148) -
(Decrease) Increase in accounts payable and accrued expenses (412,660) -
-------------- --------------
Net Cash Used by Operating Activities (752,189) -
-------------- --------------
Cash flows from Investing Activities:
Purchase of Property (45,114) -
-------------- ---------------
Net Cash used for Investing Activities (45,114) -
-------------- --------------
Cash Flows from Financing Activities:
Proceeds from stock issuance 505,200 -
Capital Investment - Stocks to be Issued 1,757,595
Payments to Loans from officers (168,731) -
-------------- --------------
Net Cash Provided by Financing Activities 2,094,064 -
-------------- --------------
Net Increase in Cash & Cash Equivalents 1,296,761 -
Beginning Cash & Cash Equivalents - -
-------------- --------------
Ending Cash & Cash Equivalents $ 1,296,761 $ -
============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for Interest $ - $ -
============== ==============
Cash paid for Income Taxes $ - $ -
============== ==============
NON-CASH TRANSACTIONS
Common stock issued for services $ 10 $ -
============== ===============
See Accountants Review Report
F-18
IMPLANTABLE VISION, INC.
(Formerly Baymark Technologies, Inc.)
Notes to Financial Statements
April 30, 2006
(Unaudited)
NOTE 1 - PRESENTATION OF INTERIM INFORMATION:
In the opinion of the management of Implantable Vision, Inc., the accompanying
unaudited financial statements include all normal adjustments considered
necessary to present fairly the financial position as of April 30, 2006 and the
results of operations for the three and nine-months ended April 30, 2006 and
2005, and cash flows for the nine-months ended April 30, 2006. Interim results
are not necessarily indicative of results for a full year.
The financial statements and notes are presented as permitted by Form 10-QSB,
and do not contain certain information included in the Company's audited
financial statements and notes for the fiscal year ended July 31, 2005.
NOTE 2- CAPITAL STOCK TRANSACTIONS:
The authorized capital stock of the Company is 150,000,000 shares of common
stock at $.001 par value and 100,000,000 shares of preferred stock at $.001 par
value. In September 2005 the Company authorized a 1 for 10 reverse split of all
common stock and cancelled the Preferred B shares of stock. All shares and per
share amounts in the accompanying financial statements of the Company and notes
thereto have been retroactively adjusted to give the effects of the reverse
stock split. The Company has issued an additional 29,710,000 shares of common
stock in the nine months ended April 30, 2006. The Company raised additional
capital for 1,476,971 shares of stock for stocks to be issued $1,477 and
additional paid-in capital of $1,756.118.
NOTE 3 - SUBSEQUENT EVENT:
The Company has received a stock subscription of $2,750,000 for an additional
2,310,925 shares of stock, to be funded upon Registration of the shares.
F-19
PART II
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Articles of Incorporation and Bylaws, as amended, provide to the fullest
extent permitted by Utah law, our directors or officers shall not be personally
liable to us or our shareholders for damages for breach of such director's or
officer's fiduciary duty. The effect of this provision of our Articles of
Incorporation, as amended, is to eliminate our rights and our shareholders
(through shareholders' derivative suits on behalf of our company) to recover
damages against a director or officer for breach of the fiduciary duty of care
as a director or officer (including breaches resulting from negligent or grossly
negligent behavior), except under certain situations defined by statute. We
believe that the indemnification provisions in our Articles of Incorporation, as
amended, are necessary to attract and retain qualified persons as directors and
officers.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forth below is a statement of expenses expected to be incurred by us in
connection with the issuance and distribution of the securities to be
registered, other than underwriting discounts and commissions.
Legal Fees $75,000
SEC Registration Fees $6,590.30
Accounting Fees * $10,000
Filing Fees * $6,000
Printing & Engraving * share certificates and prospectuses $1,000
Non-Accountable Expenses $0
(* Estimates Only)
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Within the last three (3) years, the following sales have been made of our
common stock. Consideration received is shown.
All the purchases occurred within the last three (3) years.
[Enlarge/Download Table]
--------------------------------- ------------ ------------------ ------------------ ----------------
Name & Address Price Per Consideration Date of Number of
Share Purchase Shares
--------------------------------- ------------ ------------------ ----------------- ----------------
Eric Malinski $1.19 $305,000 2/14/2006 256,303
447 Saxon Place
Castle Rock, CO 80108
--------------------------------- ------------ ------------------ ----------------- ----------------
Larry Cahill $1.19 $2,000,000 4/6/2006 1,680,672
330 SouthGate Ct.
Cedar Rapids, OH 52406
--------------------------------- ------------ ------------------ ----------------- ----------------
David Clarkson $1.19 $50,575 1/26/2006 42,500
3403 Apiatan Ct.
Ft. Collins, CO 80524
--------------------------------- ------------ ------------------ ----------------- ----------------
Richard L. Clarkson $1.19 $101,150 1/20/2006 85,000
7657 San Remo Pl.
Orlando, FL 32835
--------------------------------- ------------ ------------------ ----------------- ----------------
48
--------------------------------- ------------ ------------------ ----------------- ----------------
Richard D. Clarkson $1.19 $50,575 1/20/2006 42,500
11461 Lk Butler Blvd
Windermere, FL 34786
--------------------------------- ------------ ------------------ ----------------- ----------------
John Walz $1.19 $50,575 1/20/2006 42,500
3209 Town Center Ct.
Ft. Collins, CO 80524
--------------------------------- ------------ ------------------ ----------------- ----------------
Providence Investment $1.19 $200,000 2/15/2006 168,000
Management Group
525 E. 72nd St., Apt. 37H
New York, NY 10021
--------------------------------- ------------ ------------------ ----------------- ----------------
H. Thomas Monroe $1.19 $249,900 2/6/2006 210,000
2623 Merlin Dr.
Lewisville, TX 75056
--------------------------------- ------------ ------------------ ----------------- ----------------
Theon Enderle $1.19 $249,900 2/14/2006 210,000
7594 Lockhart Way
Boynton Beach, FL 33437
--------------------------------- ------------ ------------------ ----------------- ----------------
Maurice Bennett $1.19 $1,250,000 4/4/2006 1,050,420
164 S. Washington
Denver, CO 80209
--------------------------------- ------------ ------------------ ----------------- ----------------
The sales were made in reliance on the exemption under Section 4(6) of the
Securities Act of 1933.
49
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibit
No.
3.1 Articles of Incorporation*
3.2 Articles of Amendment*
3.3 Bylaws*
3.4 Certificate of Amendment*
3.5 Certificate of Amendment*
5.1 Opinion and Consent of Michael A. Littman, Attorney at Law (to be filed by
Amendment)
4.1 Warrant "A"
4.2 Warrant "B"
23.1 Consent of Michael A. Littman, Attorney at Law (included in Exhibit 5.1 to
be filed by Amendment)
23.2 Consent of Michael Johnson & Co., LLC
23.3 Consent of Jaspers + Hall, PC
* Previously filed and incorporated herein by this reference.
ITEM 28. UNDERTAKINGS. The undersigned registrant hereby undertakes to:
(1) File, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933, as amended (the "Securities Act");
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
the securities offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with
the Commission pursuant to Rule 424(b) under the Securities Act if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement, and
(iii)Include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(4) For purposes of determining any liability under the Securities Act, treat
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 as part of this registration statement as of the time
it was declared effective.
(5) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
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, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
50
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe it meets all of
the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned in the City of North
Olmsted, State of Ohio on June 29, 2006.
IMPLANTABLE VISION, INC.
By: /s/Dr. George Rozakis
--------------------------------
Dr. George Rozakis
President and
Chief Executive Officer
By: /s/William Rozakis
--------------------------------
William Rozakis, Secretary
By: /s/William Rozakis
--------------------------------
William Rozakis
Chief Financial Officer and
Principal Accounting Officer
In accordance with the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons on behalf of our
Company in the capacities and on the dates indicated.
Signature Title Date
/s/Dr. George Rozakis Director June 29, 2006
----------------------------
Dr. George Rozakis
/s/Igor Valyunin Director June 29, 2006
----------------------------
Igor Valyunin
/s/Jerry Kaeni Director June 29, 2006
----------------------------
Jerry Kaeni
51
Dates Referenced Herein and Documents Incorporated by Reference
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