UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g)
of the Securities Exchange Act of 1934
ENDOVASC LTD., INC.
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(Name of Small Business Issuer in its Charter)
Nevada 76-0512500
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(State of other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
15001 Walden Road, Suite 108, Montgomery, TX 77356
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(Address of principal executive offices) (Zip Code)
Issuer's Telephone number: (409) 448-2222
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Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $0.001 Per Share
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(Title of Class)
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ITEM 1. DESCRIPTION OF BUSINESS
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(a) Business Development
Endovasc Ltd., Inc., (the "Company" or the "Registrant" ) is a Nevada
corporation which was originally incorporated on June 10, 1996 under the name of
Endovasc. The Company was authorized to issue an aggregate of 25,000 shares of
capital stock with a par value of $0.001 per share. The Company filed a
Certificate of Amendment to the Articles of Incorporation on September 5, 1996
increasing the authorized shares to 100,000,000 shares of common stock, par
value $0.001 per share. On May 28, 1997, the Company filed a Certificate of
Amendment of Articles of Incorporation changing the name of the Company to
Endovasc Ltd., Inc. On June 2, 1997, the Company filed a Certificate of
Amendment of Articles of Incorporation increasing the authorized shares to
120,000,000 shares of capital stock, par value $0.001 per share, of which
100,000,000 shares are common shares and 20,000,000 shares are preferred shares.
In December of 1997, the Company offered to sell certain securities
under Regulation D, Rule 504, which it closed on or about July 1, 1998.
Immediately thereafter, the Company offered a second offering under the same
regulation which became fully subscribed on or about August 1, 1999. The
combined funds raised totaled One Million Dollars ($1,000,000), or Five Hundred
Thousand Dollars ($500,000) on each offering.
The Company has not been subject to bankruptcy, receivership or any
similar proceeding.
The Company maintains offices at 15001 Walden Road, Suite 108,
Montgomery, Texas 77356. As of October 13, 1999, 7,296,496 shares of the
Company's authorized shares of common stock were issued and outstanding. No
shares of preferred stock have been issued.
(b) Business of the Registrant
(1) Principal Products and Services
The Company develops biotechnology products for marketing or licensing
in the human health care industry. In this regard, the Company has focused on
developing products related to the treatment of patients who have undergone
angioplasty treatment for vessel blockages.
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Patients who become critically ill due to vessel blockage are treated
with bypass or medical therapy or in many cases are treated with an angioplasty
procedure. The angioplasty procedure uses a small balloon like structure to open
blocked blood vessels. Quite often angioplasty patients develop new blockages
after treatment. The Company has focused on developing products to reduce the
occurrence of new blockages after angioplasty procedures.
The Company has found that a naturally occurring hormone called
prostaglandin E1 may prevent secondary blockages from occurring if it can be
used at the same time that an angioplasty is preformed. Unfortunately,
prostaglandin E1 has a short life in the blood stream, not quite long enough to
produce the effect needed to prevent the reclosure. The Company is developing a
method of delivering prostaglandin over a long period of time thereby increasing
the therapeutic effect of the hormone.
In this regard, the Company is using methods described in two patents
transferred to the Company to create an effective delivery system for
prostaglandin. The Company's technology has been developed around its US Patents
No. 4,820,732, "Method and Compositions for Reducing Dysfunction in Angioplasty
Procedures," and No. 4,955,878, "Kit for Treating Arterial Dysfunction Resulting
from Angioplasty Procedures".
The products created by the Company using the methods described in the
patents consist of putting prostaglandin into tiny "artificial cells" called
liposomes. Liposomes are extremely small cell-like structures composed of a
thin, but durable, membrane that surrounds a hollow compartment containing an
active drug, protecting the drug from the outside environment. The liposome is
capable of regulating the transport of molecules in and out of the enclosed
compartment. The, liposomes may be used to control the passage if drugs through
the membrane and to the intended body site for absorption or action.
The Company's products use liposomes filled with prostaglandin to
penetrate the area of the angioplasty-treated blood vessel wall. Once in place
these liposomes slowly dissolve and continuously release prostaglandin over a
specific period of time. The prostaglandin can thereby treat the effected area
over a longer period of time than it could without the liposomes. The Company's
liposome/prostaglandin products are protected by US Patent 4,820,732, US Patent
4,955,878 and Notice of Allowance to US Ser. No. 07/797,743 received on March 1,
1999, and Trademark Application Ser. No. 75/632,736' (LiprostinTM) and various
patents pending.
The Company's lead product is called Liprostin(TM). The Company intends to
use Liprostin(TM) to coat surgical stents. Such stents are used in vascular
surgical procedures such as angioplasty and in the treatment of critical limb
salvage. Stents are small structures used in vascular surgery to support vessel
healing and instilling agents that promote the healing process. The Company is
in the clinical trial testing procedure necessary to obtain the Federal Drug
Administration's approval for the sale of Liprostin(TM) in the Untied States.
The Company intends to commence Phase I/II testing by January 1, 2000.
(2) Distribution Methods
Once the Company has completed clinical testing of Liprostin(TM) and
obtained FDA approval for the sale of the drug, Liprostin(TM) will be sold alone
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or in a kit containing a delivery catheter and a stent or other components. The
Company intends to promote the product through peer review, seminars, journals
and direct sales. The Company intends to market its Liprostin(TM) coated
surgical stents via marketing partners with experience in the marketing and
distribution of medial products. If no suitable partner is found the Company
likely will use either a public or private offering of its securities, either
equity or debt, to raise funds necessary to create the production, marketing and
distribution infrastructure necessary to bring its products to market.
(3) Status of Publicly Announced New Products or Services
At the time of the filing of this Form 10-SB, the Company's primary
product, Liprostin(TM), has received preclinical approval to file the IND for
Phase I/II of its clinical trials. The Company estimates that both phases of
clinical trial will be complete by approximately December 31, 2000.
(4) Competition
The Company faces well established and well funded competition from
other companies using liposomes for drug delivery. These include Eli Lilly, The
Liposome Company and Schering-Plough. These companies generally use liposome for
the delivery of antitumor drugs. While the Company's stents coated in
Liprostin(TM) can be use in antitumor treatment, the Company primarily intends
to market Liprostin(TM) in connection with angioplasty treatments.
Competition in this area is limited at present as only ReoPro sold by
Censtocor and marketed by Eli Lilly is being used in angioplasty and no product
is available to treat critical limit ischemia (cu), the Company's first
indication for approval.
(5) Raw Materials and Principal Suppliers
At the time of the filing of this Form 10-SB, the Company is still in
the process of test its products in clinical trials. Commercial production of
production of products had not begun.
(6) Dependence on Major Customers
As indicated throughout this Item 1, the Company is in the
organizational stage and is in the process of developing, manufacturing and
distributing its biopharmaceutical products. At this point in time, the Company
has no sales and accordingly, no major customers.
(7) Patents, Trademarks, Licenses, Copyrights, etc.
The Company owns two patents. US Patents No. 4,820,732, "Method and
Compositions for Reducing Dysfunction in Angioplasty Procedures," and No.
4,955,878, "Kit for Treating Arterial Dysfunction Resulting from Angioplasty
Procedures".
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The Company also has applied for trademark protection for the name
Liprostin(TM) under Trademark Application Ser. No. 75/632,736. In May of 1999,
USPTO notified the Company that its pending Patent US Ser. No. 09/309,949 would
be allowed (Notice of Allowance).
(8) Governmental Approval, Effect of Governmental Regulations and Costs and
Effects of Compliance with Environmental Laws
The Company anticipates that governmental regulation will significantly
impact upon the time in which the Company can market its biopharmaceutical
products in the United States. Initially, the Company must comply with FDA
procedures to gain approval for its products. Such approval process involves
clinical testing which occurs in three phases to demonstrate safety and efficacy
of the product. Phase I clinical trials consist of testing for the safety and
tolerance of the product with a small group of subjects and may also yield
preliminary information about the effectiveness and dosage levels of the
product. Phase II clinical trials involve testing for efficacy, determination of
optional dosage and identification of possible side effects in a larger patient
group. Phase III clinical trials consist of additional testing for efficacy and
safety with an expanded patent group. After the product has been approved for
marketing, Phase IV post-marketing surveillance studies may be required to
provide additional data to the FDA for longer term follow-up concerns.
Upon successful completion of Phase III testing, either a New Drug
Application (NDA) or Product License Application (PLS) can be filed, depending
upon whether the product is designated as a drug or a biological, respectively.
Either approval requires a review of detailed data of the results of clinical
studies, the composition of the drug or biological, the labeling that will be
used, information on manufacturing methods, and samples of the products. After
the FDA completes its review of the application, the product is typically
reviewed by a panel of medical experts, and the applicant required to answer
questions on its safety and efficacy. At the recommendation of the panel, an NDA
or PLA may be granted and the product may then be marketed.
The Company anticipates that even after FDA approval, the Company's
products will be subject to FDA regulation.
(9) Research and Development in the Last Two Years
During the last two years, the Company has been primarily involved in
developing its anti-restenosis stent coatings and its liposomes for treating
vascular disease. Both projects are developed and, in the Company's opinion, are
ready for human clinical trials. The Company has collaboration with outside
partners on its stent coatings, but is at present taking its liprostinTM
liposome to market without corporate alliances.
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(10) Employees
As of October, 1999, the Company had five (5) full-time employees.
Three of the officers and directors of the Company also perform services on
behalf of the Company but do so on a non-exclusive basis. None of the Company's
employees or independent contractors is subject to a collective bargaining
agreement and the Company believes its relations with its employees and
independent contractors are good.
(c) Reports to Security Holders
Prior to filing this Form 10-SB, the Company has not been required to
deliver annual reports. To the extent that the Company is required to deliver
annual reports to security holders through its status as a reporting company,
the Company shall deliver annual reports. Also, to the extent the Company is
required to deliver annual reports by the rules or regulations of any exchange
upon which the Company's shares are traded, the Company shall deliver annual
reports. If the Company is not required to deliver annual reports, the Company
will not go the expense of producing and delivering such reports. If the Company
is required to deliver annual reports, they will contain audited financial
statements as required.
Prior to the filing of this Form 10-SB, the Company has not filed
reports with the Securities and Exchange Commission. Once the Company becomes a
reporting company, management anticipates that Forms 3, 4, 5, 10K-SB, 10Q-SB,
8-K and Schedules 13D along with appropriate proxy materials will have to be
filed as they come due. If the Company issues additional shares, the Company may
file additional registration statements for those shares.
The public may read and copy any materials the Company files with the
Securities and Exchange Commission at the Commission's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by call the Commission
at 1-800-SEC-0330. The Commission maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the Commission. The Internet address of
the Commission's site is (http://www.sec.gov).
(d) Year 2000 Disclosure
State of Readiness
The Company does not anticipate any problems in dealing with year 2000
issues. All of the Company's computer systems have been acquired within the last
year and are year 2000 compliant. All such systems have computer processors
capable of properly recognizing dates past 1999. The Company's computer systems
are used primarily for word processing, bookkeeping and Internet communications.
The Company keeps current with all updates and revisions of all software used in
connection with the Company's business. The Company's current word processing
accounting and Internet communications software is year 2000 compliant. From an
internal standpoint, the Company is year 2000 ready.
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The Company's business may be impacted by the year 2000 readiness of
third parties with whom the Company has a material relationship. Such parties
include banks, telephone companies, attorneys, accountants and transfer agents.
The Company has made inquiry of its transfer agent, Nevada Agency and Trust
Company, its attorneys and its accountant regarding their year 2000 readiness.
All of the Company's attorneys, its accountant and its transfer agent are year
2000 compliant. Larger vendors, such as banks and telecommunications companies,
have represented themselves as year 2000 compliant.
Costs of Year 2000 Issues
The Company's costs of remediating any year 2000 issues has been
inconsequential. Such costs total no more than a few thousand dollars. Indeed,
the general need to upgrade and replace computer systems was more of a factor in
recent computer hardware and software acquisitions than the year 2000 was in
connection with the computer systems the Company uses.
Year 2000 Issues, Risks and Contingency Plans
The most reasonable worst case scenario the Company faces as a result
of year 2000 issues is the failure of third party service providers, such as
banks or telecommunications companies, failing as a result of their failure to
properly remediate any year 2000 problem they may have. If that happens, the
Company will deal with service providers who have not failed to remediate their
year 2000 issues. Management does not anticipate that the costs of changing such
third party service providers will be significant.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
OR PLAN OF OPERATION
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PLAN OF OPERATION
From time to time, the Company may publish forward-looking statements
relating to certain matters, including anticipated financial performance,
business prospects, product development and other similar matters. All
statements other than statements of historical fact contained in this 10-SB or
in any other report of the Company are forward- looking statements. The Private
Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. In order to comply with the terms of that safe
harbor, the Company notes that a variety of factors could cause the Company's
actual results and experience to differ materially from the anticipated results
or other expectations expressed in the Company's forward-looking statements. In
addition, the Company disclaims any intent or obligation to update those
forward-looking statements.
As was indicated in the notes to the financial statements, the Company
is primarily a developer and marketer of proprietary biopharmaceutics for the
human healthcare industry. The products are delivered in very small micro
spheres called liposomes which can range in size from 50 mm to 10,000 mm or
more, or in conjugated compounds containing the drug on the surface of various
prosthesis. These products are protected by US Patent 4,820,732, US Patent
4,955,878 and Notice of Allowance to US Ser. No. 07/797,743 received on March 1,
1999, and Trademark Application Ser. No. 75/632,736 (LiprostinTM) and various
patents pending.
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Liquidity and Cash Requirements
For a complete understanding, this Plan of Operations should be read in
conjunction with Part I Item 1. Description of Business and Part F/S - Financial
Statements to this Form 10-SB.
During the period from inception, June 10, 1996 to June 30, 1999, the
Company has not generated any revenue from the sale of products and does not
expect to generate any material revenue from sale of products for at least the
following twelve months.
However, during the next 12 months, management of the Company will
attempt to generate revenue by enhancing its ongoing research and development
services. In July 1999, the Company established one such program with C. R.
Bard, Inc. ("Bard") of Murray Hill, New Jersey. The Company and Bard are
collaborating on the development of new bioactive coatings for vascular stents,
which may inhibit or prevent neoplastic encroachment (restenosis) and premature
closure of Bard's peripheral stent and graft prosthesis. The above agreement
also called for a "standstill" and "quiet period" for six months while Bard
carried out certain due diligence on both the current research and development
and the Company's core technologies. Although there can be no assurances, the
Company is hopeful that this collaboration may result in a license or similar
agreement some time during the next 12 months, which may alleviate the Company's
cash flow needs and its complete reliance on the need to secure funds through
small private placements of its debt and equity securities and its dependency on
personal loans from Dr. Summers.
As discussed above, research and development services are being sought
in order to generate revenues to assist in the cost of operations as opposed to
solely relying on the sale of equity or debt securities. However, these services
and revenues are dependent upon the ability of the Company primarily through its
founder, Dr. David Summers, to continue to be actively involved in the
development of new and novel technologies, which are of interest to potential
outside company collaborators and partner. Should Dr. Summers not be able to
continue to provide such services, the Company would be forced to recruit and
employ personnel capable of performing similar services and there is no
assurance that such persons could be recruited and employed to provide these
services, thus exposing the Company to potential loss of revenues tied to the
services.
In addition, the Company's projected income for the coming 12 months is
dependent on the timely acceptance of the Company's request for Food and Drug
Agency ("FDA") approval of its Phase I and Phase II clinical trials of its main
product Liprostin(TM), for treatment of critical limb salvage. There is no
assurance that the FDA will approve the Company's submission as submitted. It is
possible that undue delays by the FDA will present opportunities for other
treatments to become available from larger companies with greater financial and
logistical resources. It also is possible that the FDA will not approve
Liprostin(TM).
Either of the two events described above could have an adverse impact
on the Company's ability to continue operations. Other than discussed above, the
Company knows of no other trends, events or uncertainties that have or are
reasonably likely to have a material impact on the Company's short-term or
long-term liquidity.
As of June 30, 1999, the Company had an accumulated deficit of
($2,776,737) funded primarily by paid-in capital. During the years ended June
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30, 1999 and 1998, the Company had losses from operations of $796,543) and
($1,032,834), respectively. The Company expects that losses from operations will
continue until such time as product sales or research and development services
generate sufficient revenues to fund its continuing operations, as to which
there can be no assurance.
In December 1998, the Company offered to sell certain securities
under a Regulation D, Rule 504 exemption, which became fully prescribed in
August 1999 for a combined total of $1,000,000. The Company intends to continue
to raise capital as needed via private placement of its securities, will seek
lines of credit and will solicit the sale of licenses and/or sale of its
potential technologies if so required.
Research and Development
The Company will continue to attempt to develop new indications for its
core product LiprostinTM, which may enable it to avoid serious impact from the
uncertainties of (1) continued collaboration with Bard, or (2) the inability to
recruit other partners, collaborations or licensees for its technologies by
developing new uses for its prostaglandin coatings, such as use in hip or bone
prosthesis to promote rapid bone growth, use of prostaglandin and other
therapeutic agents for treatment of cancer, inflammatory disease, liver disease
and other diseases which prostaglandin has demonstrated safety and efficacy.
1. The Company has begun testing its first product, a liposomal
encapsulation of a natural occurring hormone, prostaglandin E-1 ("PGE-1") in
laboratory and animal models and is at present awaiting response from the US
Food and Drug Agency for approval to commence Phase I/II human trials. Although
the submission is planned for during the first quarter of the year 2000 and
should be reviewed and responded to by the FDA within the statutory 45 days,
there can be no assurance that this will be the case. It could be delayed if the
FDA requires additional information or tests which may necessitate resources
and/or financial outlays beyond the Company's capabilities. Consequently, this
may substantially impact the Company to the point that the Company may be
required to (a) cease operations, (b) out-license the product to a third party,
or (c) drop the product entirely.
2. The Company continues to devote the majority of its funds and
revenues on (a) its core product LiprostinTM, and (b) its collaborations and
potential licensing agreements.
3. To date, all of the Company's research and development has been
carried out without the need of additional plant and equipment other than what
the Company purchased during its first year of operation. Although there can be
no assurances that our collaborations or research and development agreements may
required additional plant and equipment, the Company has no plans for such
outlays.
Employees will be added as needed by the size and complexity of the
Company's business.
Going Concern Issue
The report from the Company's independent accountants includes an
explanatory paragraph which describes substantial doubt concerning the ability
of the Company to continue as a going concern, without continuing additional
contributions to capital. The Company may incur losses for the foreseeable
future due to the significant costs associated with research and development
activities and operation expenses which will be necessary for further
development of applications for the Company's products and its research and
development services. See "Financial Statements - Report of Independent
Accountants" and Note 9 - Going Concern Considerations.
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Costs of Filing Periodic Reports
The filing of this Form 10-SB registration statement subjects the
Company to certain requirements of the Exchange Act of 1934. These requirements
include the filing of an annual report on the Company's business, which must
include audited financial statements; quarterly reports, which must include
unaudited interim financial statements; and periodic reports of certain material
events of which investors should be made aware. Legal and accounting expertise
are required to prepare these reports. The annual auditor's services must be
paid for in cash. Should cash not be available to pay for the auditor's
services, the Company will have to borrow the needed funds from sources not yet
identified.
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ITEM 3. DESCRIPTION OF PROPERTY
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(a) Principal Plants and Property and Description of Real Estate and
Operating Data.
The Company owns no real property. It leases office space at its
address in Montgomery, Texas.
(b) Investment Policies
The Company's plan of operations is focused on the sale and promotion
of its biopharmaceutical products as described in Item (1) of this part.
Accordingly, the Company has no particular policy regarding each of the
following types of investments:
(1) Investments in real estate or interests in real estate; (2)
Investments in real estate mortgages; or (3) Securities of or interests
in persons primarily engaged in real
estate activities.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
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(a) Security Ownership of Certain Beneficial Owners:
The following information sets forth certain information as of October
30, 1999 about each person who is known to the Company to be the beneficial
owner of more than five percent (5%) of the Company's Common Stock:
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<TABLE>
<CAPTION>
(2)
(1) Name and Address (3) (4)
Title of Beneficial Amount and Nature of Percent of
of Class Owner Beneficial Ownership Class
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<S> <C> <C> <C>
Common David P. Summers 2,167,7001 29.7%
15001 Walden Rd., Suite 108
Montgomery, TX 77356
Common Gary R. Ball 533,0002 7.3%
19015 Lockridge
Spring, TX 77373
Common Cede & Co. 2,909,919 39.9%
P.O. Box 222
Bowling Green Station
New York, N.Y. 10274
(b) Security Ownership of Management:
(2)
(1) Name and Address (3) (4)
Title of Beneficial Amount and Nature of Percent of
of Class Owner Beneficial Ownership Class
- -------- ---------------- -------------------- -----
Common David P. Summers 2,167,700 29.7%
15001 Walden Rd., Suite 108
Montgomery, TX 77356
Common Gary R. Ball 533,000 07.3%
19015 Lockridge
Spring, TX 77373
Common M. Dwight Cantrell 50,000 Less than 1%
12777 Jones Rd., #102
Houston, TX 77070
Common Claudio R. Roman None 0.0%
Common All Directors and 2,750,700 37.7%
Officers as a Group
(c) Changes in Control:
There is no arrangement which may result in a change in control.
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1 Of this amount, 223,000 shares are owned by Dorothy
Summers, David P. Summers' wife.
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2 Of this amount, 5,000 shares are owned by Sherry R. Ball,
Gary Ball's wife.
</TABLE>
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TEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
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(a) Directors and Executive Officers
As of October, 1999, the directors and executive officers of the
Company, their ages, positions in the Company, the dates of their initial
election or appointment as director or executive officer, and the expiration of
the terms as directors are as follows:
<TABLE>
<CAPTION>
Period Served As
Name Age Position Officer/Director*
- ---- --- -------- -------------------------
<S> <C> <C> <C>
David P. Summers 61 Chief Executive Officer, Inception to Present
Chief Scientific Officer
and a Director
Gary R. Ball 39 Vice President of Inception to Present
Research and
Development, treasurer
and a Director
M. Dwight Cantrell 54 Chief Financial Officer Jan. 1997 to Present
and a Director
Claudio R. Roman 42 Company Counsel Jan. 1997 to Present
and a Director
</TABLE>
*The Company's directors are elected at the annual meeting of stockholders and
hold office until their successors are elected and qualified. The Company's
officers are appointed annually by the Board of Directors and serve at the
pleasure of the Board.
(b) Business Experience:
Dr. David P. Summers, age 61, is the Chief Executive Office and Chief
Scientific Officer of Endovasc and serves as a director as well. Dr. Summers has
worked in this capacity since the Company's inception. Prior to founding
Endovasc, Dr. Summers founded American BioMed, Inc. in 1984 and served as its
President and CEO until June of 1995. Dr. Summers is a Fellow in the American
College of Angioplasty and am engineer/inventor of a number of medical devices
used primarily to treat cardiovascular diseases. He is the author of 18 issued
patents and has 8 patents pending. Prior to Founding American BioMed, he was
employed in marketing and management with C.R. Bard, Inc., a manufacture and
distributor of cardiovascular medical products, Karl Stortz Endoscopy, and
endoscopic instrument company, and Pall Corporation, a manufacture and
distributor of blood filtration products for medical use. Dr. Summers received a
M.B.A. degree from Pepperdine University in 1989 and received a doctorate in
1992 in International Economics and Kennedy-Western University. He holds
membership in the New York Academy of Sciences, American Association of
Advancement of Science, Houston Inventors Association, International Society for
Endovascular Surgery, European Vascular Society and is a Senior Member of the
Society of Plastic Engineers.
Gary R. Ball, age 39, is the Vice President of Research and Development,
treasurer and a Director of the Company. Mr. Ball has degree in electrical and
mechanical engineering has experience in micro processor technology and research
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and development. His is a co-inventor of two U.S. patents, including a spinal
dissector and vascular stent. Mr. Ball has developed these products from
inception into devices for spinal procedures and devices for supporting blood
vessels. He is experienced in designing, researching and developing prototypes,
reliability testing and patent research and filing. Mr. Ball has designed animal
protocols for testing and has been responsible for human clinical studies and
regulatory approvals.
M. Dwight Cantrell, age 54, is the acting Chief Financial Officer and a
Director of the Company. Mr. Cantrell graduated from Southern Ohio University in
1967 and is a public accountant with 31 years of experience. He was formerly CFO
for a $100 million electrical supply company and has been self-employed as a
private consultant to several Houston area banks for over 30 years.
Claudio R. Roman, age 42, is the General Counsel and a Director of the
Company. Mr. Roman is a practicing attorney, who received his law degree from
University of Houston School of Law in 1984.
(c) Directors of Other Reporting Companies:
None of the Company's officers and directors are officers or directors
of any other reporting company.
(d) Employees:
The Company employs five (5) full time employees. The officers and
directors who are identified above are also significant employees of the
Company.
(e) Family Relationships:
Gary R. Ball, Vice President of Research and Development, Treasurer and
a Director of the Company, is the son-in-law of David P. Summers, Chief
Executive Officer, Chief Scientific Officer and a Director of the Company.
(f) Involvement in Certain Legal Proceedings:
Except as noted below, none of the officers, directors, promoters or
control persons of the Company have been involved in the past five (5) years in
any of the following:
(1) Any bankruptcy petition filed by or against any business of
which such person was a general partner or executive officer
either at the time of the bankruptcy or within two years prior
to that time;
(2) Any conviction in a criminal proceedings or being subject to a
pending criminal proceeding (excluding traffic violations and
other minor offenses);
(3) Being subject to any order, judgment or decree, not
subsequently reversed, suspended or vacated, or any Court of
competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in
any type of business, securities or banking activities; or
(4) Being found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities laws
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or commodities law, and the judgment has not been reversed,
suspended, or vacated.
David R. Miller, a former officer of the Company, was charged and
indicted for grand theft from the Company. The matter is pending in the District
Court for the State of Texas. A trial date was set for September 13, 1999, but
Mr. Miller failed to appear forfeiting his bond.
- --------------------------------------------------------------------------------
ITEM 6. EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
The following table sets forth information about compensation paid or
accrued by the Company during the years ended June 30, 1999 and 1998 and 1997 to
the Company's officers and directors. None of the Executive Officers of the
Company earned more than $100,000 during the years ended June 30, 1999, 1998 and
1997.
<TABLE>
Summary Compensation Table
Long Term Compensation
----------------------------------------
Annual Compensation Awards Payouts
------------------- ------ -------
(e) (g)
Other (f) Securities (i)
(a) Annual Restricted Under- (h) Other
Name and (c) (d) Compen- Stock Lying LTIP Compen-
Principal (b) Salary Bonus sation Awards Options/ Payouts sation
<S> <C> <C> <C> <C> <C> <C>
Position Year $ ($) ($) ($) ($) ($) SARs(#)
- -------- ------ ------ ----- ------ ----- -------- ------ -------
David P. Summers
CEO, Chief 1999 $75,000$ None $ None $ None 1,000,000 $0.25 None
Scientific 1998 $60,000$ None $ None $ None None None None
Officer and 1997 $60,000$ None $ None $ None None None None
a Director
Gary R. Ball
Vice President 1999 $60,000$ None $ None $ None 500,000 $0.25 None
Research and 1998 $60,000$ None $ None $ none None None None
Development, 1997 $60,000$ None $ None $ None None None None
Treasurer and
a Director
Dwight Cantrell
______________ 1999 $ None $ None $ None $ None 100,000 $0.25 None
and a Director 1998 $ None $ None $ None $ none None None None
1997 $ None $ None $ None $ None None None None
Claudio R. Roman
______________ 1999 $ None $ None $ None $ None 50,000 $0.25 None
and a Director 1998 $ None $ None $ None $ none None None None
1997 $ None $ None $ None $ None None None None
</TABLE>
Directors of the Company receive no compensation for their services as
directors.
-13-
<PAGE>
- --------------------------------------------------------------------------------
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
During the past two (2) years, the Company has not entered into a
transaction with a value in excess of $60,000 with a director, officer or
beneficial owner of 5% or more of the Company's capital stock, or members of
their immediate families had, or is to have, a direct or indirect material
interest, except as follows:
Effective October 1, 1999, the Company entered into a stock option
agreement with Dr. David P. Summers. Under this agreement, Dr. Summers is
granted an option to purchase up to 1,000,000 shares of the Company's common
stock at a purchase price below the prevailing market price. The option is for a
five year period ending October 31, 2004.
Effective December 9, 1997, the Company entered into a stock option
agreement with Gary R. Ball. Under this agreement, Mr. Ball is granted an option
to purchase up to 600,000 shares of the Company's common stock at a purchase
price below the prevailing market price. The option is for a three year period
expiring December 8, 2000.
During the fiscal year ended June 30, 1998, the Company also entered
into an agreement with M. Dwight Cantrell under the terms of which he was
compensated for past services as a director of the Company. Under the terms of
this agreement, Mr. Cantrell was granted an option to purchase 50,000 shares of
the Company's common stock at a purchase price of $0.75 per share for a term of
three years.
During the fiscal year ended June 30, 1999, the Company entered into an
agreement with Claudio Roman, Esq., under the terms of which he was compensated
for past services as legal counsel for the Company. Under the terms of this
agreement, Mr. Roman was granted an option to purchase 50,000 shares of the
Company's common stock at a purchase price of $0.25 per share for a term of
three years.
During the fiscal year ended June 30, 1998, the Company entered into an
agreement to purchase the rights to patent number 4,820,732 and patent number
955,878 from Francis Pizzulli. The purchase price was $125,000, $50,000 of which
was payable upon execution and $75,000 of which was due by December 31, 1997.
The agreement also called for the issuance of 200,000 shares of the Company's
common stock. The Company made the initial $50,000 payment and issued the
200,000 shares of stock. The stock was issued pursuant to the exemption from
registration under Section 4(2) of the Securities Act of 1933, as amended.
However, the Company did not make the $75,000 payment as scheduled. The
agreement indicated that if the final payment was not made within seven months
from the execution of the agreement that the final payment would be increased to
$150,000 plus the issuance an additional 200,000 shares of stock.
- --------------------------------------------------------------------------------
ITEM 8. LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
Except as follows, the Company is not party to, and none of the
Company's property is subject to, any pending or threatened legal, governmental,
administrative or judicial proceedings that will have a materially adverse
effect upon the Company's financial condition or operation:
14
<PAGE>
- --------------------------------------------------------------------------------
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON
EQUITY AND RELATED SHAREHOLDER MATTERS
- --------------------------------------------------------------------------------
Market Information:
The Company's common stock is quoted for trading on the system of the
National Association of Securities Dealers, Inc. ("NASDAQ"), known as the
Bulletin Board under the symbol "ENDV". On November 15, 1999, the Company's
stock may no longer qualify for such quotation because it will not by that date
be a company that files reports with the Securities and Exchange Commission (the
"Commission"). When this Form 10-SB registration statement becomes effective at
the Commission 60 days after it is filed and after any comments that the staff
of the Commission has with regard to this registration statement have been
satisfied, management anticipates that one or more NASD-member market makers
will apply for a resumption of quotation privileges on the OTC Bulletin Board.
Management of the Company believes that the common stock will be quoted
in the Pink Sheets during the period when it is not eligible for quotation on
the OTC Bulletin Board. The Pink Sheets is a weekly publication of the National
Quotation Bureau, a private business concern that lists the names, telephone
numbers and indications of interest of broker-dealers in buying or selling the
securities listed in the publication. Because the prices quoted are only
indications of interest printed weekly, the trading markets of Pink Sheet
companies tend to be thin, sporadic and volatile.
The following table sets forth the range of high and low bid prices for
the Company's Common Stock for each quarterly period indicated as reported by
the NASDAQ Research department: <TABLE> <CAPTION>
Common Stock
---------------------------------------------------------------------------------
Quarter Ended High Bid Low Bid
---------------------------------------------------------------------------------
<S> <C> <C>
September 30, 1999 $0.4271 $0.2709
June 30, 1999 $0.8750 S0.3750
March 31, 1999 $0.9375 $0.1563
December 31, 1998 $1.4375 $0.3125
September 30, 1998 $5.50 $0.375
June 30, 1998 $N/A $N/A
March 31, 1998 $N/A $N/A
December 31, 1997 $N/A $N/A
September 30, 1997 $N/A $N/A
June 30, 1997 $N/A $N/A
March 31, 1997 $N/A $N/A
December 31, 1996 $N/A $N/A
</TABLE>
Holders:
There were approximately 59 holders of record of the Company's common
stock as of October 13, 1999.
-15-
<PAGE>
Dividends:
The Company has never paid cash dividends on its stock and does not
intend to do so in the foreseeable future. The Company currently intends to
retain its earnings for the operation and expansion of its business. The
Company's continued need to retain earnings for operations and expansion are
likely to limit the Company's ability to pay dividends in the future.
- --------------------------------------------------------------------------------
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
- --------------------------------------------------------------------------------
On or about July 25, 1997, the Company issued at total of 300,000 of
its common stock pursuant to the exemption for registration provided by
Regulation D. The total consideration paid the shares was $300,000, or $1.00 per
share. Such shares were issued to the following individuals in the following
amounts:
Name Shares
---- ------
Ronald & Judy Neddings 15,000
Paul & Helen Jones 30,000
Rafael and Ana Moreno 30,000
Drexal Global Fund 100,000
Ebensfeld Corporation 125,000
On or about September 26, 1997, the Company issued 382,571 shares of
its common stock for a total consideration of $500,000, or $1.30 per share. Such
shares were issued pursuant to the exemption from registration under Section
4(2) of the Securities Act of 1933, as amended. Such shares were issued to the
following individuals in the following amounts:
Name Shares
---- ------
Richard M. Johnson & Assoc. 300,000
James Mundt 3,571
Claudio R. Roman 20,000
M. Dwight Cantrell 25,000
Nick Nichols 10,000
Lester Summers 1,000
Dorothy Summers 1,000
Allan Burns 5,000
Dan Halman 2,000
Eric Gilles 10,000
Charles Siedel 5,000
Susan Cohen, Esq. 2,044
On or about November 13, 1997, the Company issued 200,000 shares to
Geothermica in consideration of certain patent rights. Such shares were valued
at $4.00 per share and were issued pursuant to the exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended.
On or about June 16, 1998, the Company issued 100,000 shares of its
common stock to Alexander H. Walker, Jr. in consideration for legal services
rendered to the Company. Such shares were valued at $1.00 per share and were
issued pursuant to the exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended.
16
<PAGE>
On or about June 16, 1998, the Company issued 300,000 shares of its
common stock to Dorothy Summers in exchange for services. Such shares were
valued at $1.00 per share and were issued pursuant to the exemption from
registration under Section 4(2) of the Securities Act of 1933, as amended.
On or about June 30, 1998, the Company issued 50,000 shares of its
common stock to Danilo D. Lasic in exchange for technical advisement services
rendered to the Company. Such shares were valued at $1.00 per share and were
issued pursuant to the exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended.
On or about September 23, 1998, the Company issued 18,987 shares of its
common stock to Nick A. Nichols, Jr. in exchange for patent counsel and filing
services. Such shares were valued at $1.00 per share and were issued pursuant to
the exemption from registration under Section 4(2) of the Securities Act of
1933, as amended.
On or about September 24, 1998, the Company issued 25,000 shares of its
common stock to M. Dwight Cantrell in exchange for services. Such shares were
valued at $1.00 per share and were issued pursuant to the exemption from
registration under Section 4(2) of the Securities Act of 1933, as amended.
On or about September 28, 1998, the Company issued 1,416 shares of its
common stock to Janet S. Clark in exchange for services. Such shares were valued
at $1.00 per share and were issued pursuant to the exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended.
On or about September 28, 1998, the Company issued 1,190 shares of its
common stock to James Mundt in exchange for dividends. Such shares were valued
-17-
<PAGE>
at $1.00 per share and were issued pursuant to the exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended.
On or about October 19, 1998, the Company issued 2,083 shares of its
common stock to Alenka Lasic in exchange for services rendered in connection
with designing the Company's brochures and designing the Company's website. Such
shares were valued at $1.00 per share and were issued pursuant to the exemption
from registration under Section 4(2) of the Securities Act of 1933, as amended.
On or about November 19, 1998, the Company issued 14,380 shares of its
common stock to Susan Cohen in consideration for legal services rendered to the
Company. Such shares were valued at $1.00 per share and were issued pursuant to
the exemption from registration under Section 4(2) of the Securities Act of
1933, as amended.
On or about November 30, 1998, the Company issued 50,000 shares of its
common stock to James D. Regan in exchange for technical advisement services
rendered to the Company. Such shares were valued at $1.00 per share and were
issued pursuant to the exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended.
On or about November 30, 1998, the Company issued 10,416 shares of its
common stock to Alenka Lasic in exchange for services rendered in connection
with designing Company brochures and designing the Company's website. Such
shares were valued at $1.00 per share and were issued pursuant to the exemption
from registration under Section 4(2) of the Securities Act of 1933, as amended.
On or about December 29, 1998, the Company issued 650,000 shares of its
common stock to Edward H. Burnbaum in exchange for escrow. Such shares were
valued at $1.00 per share and were issued pursuant to the exemption from
registration under Rule 504 of Regulation D.
On or about January 8, 1999, the Company issued 35,556 shares of its
common stock to Amram Rothman in exchange for purchase. Such shares were valued
at $1.00 per share and were issued pursuant to the exemption from registration
under Rule 504 of Regulation D.
On or about January 14, 1999, the Company issued 20,000 shares of its
common stock to Phoenix Investment Group in exchange for services. Such shares
were valued at $1.00 per share and were issued pursuant to the exemption from
registration under Section 4(2) of the Securities Act of 1933, as amended.
On or about January 14, 1999, the Company issued 5,200 shares of its
common stock to James Regan in exchange for technical advisement services
rendered to the Company. Such shares were valued at $1.00 per share and were
issued pursuant to the exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended.
On or about January 22, 1999, the Company issued 10,116 shares of its
common stock to Alenka Lasic in exchange for services rendered in connection
with designing Company brochures and designing the Company's website. Such
shares were valued at $1.00 per share and were issued pursuant to the exemption
from registration under Section 4(2) of the Securities Act of 1933, as amended.
On or about January 28, 1999, the Company issued 80,000 shares of its
common stock to Amram Rothman in exchange for purchase. Such shares were valued
at $1.00 per share and were issued pursuant to the exemption from registration
under Rule 504 of Regulation D.
On or about February 3, 1999, the Company issued 2,000 shares of its
common stock to John G. Charles in exchange for services. Such shares were
valued at $1.00 per share and were issued pursuant to the exemption from
registration under Section 4(2) of the Securities Act of 1933, as amended.
On or about February 3, 1999, the Company issued 5,200 shares of its
common stock to James D. Regan in exchange for technical advisement services
rendered to the Company. Such shares were valued at $1.00 per share and were
issued pursuant to the exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended.
-18-
<PAGE>
On or about February 18, 1999, the Company issued 106,667 shares of its
common stock to Amram Rothman in exchange for purchase. Such shares were valued
at $1.00 per share and were issued pursuant to the exemption from registration
under Rule 504 of Regulation D.
On or about February 23, 1999, the Company issued 100,000 shares of its
common stock to Patrick M. Rost in exchange for services. Such shares were
valued at $1.00 per share and were issued pursuant to the exemption from
registration under Rule 504 of Regulation D.
On or about February 23, 1999, the Company issued 5,000 shares of its
common stock to Shawn F. Hackman in exchange for services. Such shares were
valued at $1.00 per share and were issued pursuant to the exemption from
registration under Rule 504 of Regulation D. Mr. Hackman returned these shares
to the Company on or about September 1, 1999.
On or about March 9, 1999, the Company issued 248,889 shares of its
common stock to Amram Rothman in exchange for purchase. Such shares were valued
at $1.00 per share and were issued pursuant to the exemption from registration
under Rule 504 of Regulation D.
On or about March 23, 1999, the Company issued 13,201 shares of its
common stock to Hiroko Yoshida in exchange for technical advisement services
rendered to the Company. Such shares were valued at $1.00 per share and were
issued pursuant to the exemption from registration under Section 4(2) of the
Securities Act of 1933, as amended.
On or about April 6, 1999, the Company issued 127,348 shares of its
common stock to Amram Rothman in exchange for services. Such shares were valued
at $1.00 per share and were issued pursuant to the exemption from registration
under Rule 504 of Regulation D.
On or about April 13, 1999, the Company issued 5,166 shares of its
common stock to Alenka Lasic in exchange for services rendered in connection
with designing Company brochures and designing the Company's website. Such
shares were valued at $1.00 per share and were issued pursuant to the exemption
from registration under Section 4(2) of the Securities Act of 1933, as amended.
On or about April 19, 1999, the Company issued 187,324 shares of its
common stock to Mr. Amram Rothman in debt conversion. Such shares were valued at
$0.3203 and were issued pursuant to the exemption from registration under Rule
504 of Regulation D.
On or about April 29, 1999, the Company issued 139,132 shares of its
common stock to Mr. Amram Rothman in debt conversion. Such shares were valued at
$0.35937 per share and were issued pursuant to the exemption from registration
under Rule 504 of Regulation D.
On or about May 20, 1999 the Company issued 65,308 shares of its common
stock to Amram Rothman in exchange for purchase. Such shares were valued at
$1.00 per share and were issued pursuant to the exemption from registration
under Rule 504 of Regulation D.
On or about May 27, 1999, the Company issued 1,000 shares of its common
stock to Janet S. Clark in exchange for services. Such shares were valued at
-19-
<PAGE>
0.3828 per share and were issued pursuant to the exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended.
On or about June 8, 1999, the Company issued 16,487 shares of its
common stock to Hiroko Yoshida in exchange for services. Such shares were valued
at $1.00 per share and were issued pursuant to the exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended.
On or about June 24, 1999, the Company issued 124,444 shares of its
common stock to Amram Rothman in exchange for purchase. Such shares were valued
at $0.28125 per share and were issued pursuant to the exemption from
registration under Section 4(2) of the Securities Act of 1933, as amended.
On or about July 8, 1999, the Company issued 10,000 shares of its
common stock to John G. Charles in exchange for services. Such shares were
valued at $1.00 per share and were issued pursuant to the exemption from
registration under Section 4(2) of the Securities Act of 1933, as amended.
On or about July 27, 1999, the Company issued 5,000 shares of its
common stock to Sherry R. Ball in exchange for corporate video design and
development services. Such shares were valued at $1.00 per share and were issued
pursuant to the exemption from registration under Section 4(2) of the Securities
Act of 1933, as amended.
On or about July 26, 1999 the Company issued 98,467 shares of its
common stock to Amram Rothman in exchange for purchase. Such shares were valued
at $0.30467 per share and were issued pursuant to the exemption from
registration under Rule 504 of Regulation D.
On or about July 29, 1999, the Company issued 18,577 shares of its
common stock to Hiroko Yoshida in exchange for scientific and product
development services rendered to the Company. Such shares were valued at $1.00
per share and were issued pursuant to the exemption from registration under
Section 4(2) of the Securities Act of 1933, as amended.
On or about August 6, 1999, the Company issued 9,883 shares of its
common stock to Hiroko Yoshida in exchange for scientific and product
development services rendered to the Company. Such shares were valued at $1.00
per share and were issued pursuant to the exemption from registration under
Section 4(2) of the Securities Act of 1933, as amended.
On or about August 6, 1999, the Company issued 50,000 shares of its
common stock to Danilo Lasic in exchange for scientific, laboratory, and
technical advice rendered to the Company. Such shares were valued at $1.00 per
share and were issued pursuant to the exemption from registration under Section
4(2) of the Securities Act of 1933, as amended.
On or about September 27, 1999, the Company issued 200,000 shares of
its common stock to Francis Pizzuli in connection with a settlement reach in
litigation. Such shares were issued pursuant to the exemption from registration
under Section 4(2) of the Securities Act of 1933, as amended.
On or about September 27, 1999, the Company issued 237,079 shares of
its common stock to Amram Rothman in connection with the conversion of
convertible debentures owned by Mr. Rothman. Such shares were issued pursuant to
the exemption from registration under Rule 504 of Regulation D.
-20-
<PAGE>
On or about October 4, 1999, the Company issued 4,000 shares of its
common stock to John G. Charles in exchange for sales and marketing services.
Such shares were valued at $1.00 per share and were issued pursuant to the
exemption from registration under Section 4(2) of the Securities Act of 1933, as
amended.
On or about October 13, 1999 the Company issued 384,000 shares of its
common stock to Amram Rothman in in debt conversion. Such shares were valued at
$0.09375 per share and were issued pursuant to the exemption from registration
under Rule 504 of Regulation D.
On or about October 19, 1999 the Company issued 100,000 shares of its
common stock to Amram Rothman in debt conversion. Such shares were valued at
$0.075 per share and were issued pursuant to the exemption from registration
under Rule 504 or Regulation D.
- --------------------------------------------------------------------------------
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
- --------------------------------------------------------------------------------
The Company is registering all of its issued and outstanding shares of
its capital stock with a par value of One Mill ($0.001) per share. As of October
13, 1999, there were 7,296,496 shares of stock issued and outstanding. The
Company also is registereing all of its 8% Series A Senior Subbordinated
Convertible Redeemable Debentures and 8% Series B Senior Subbordinated
Convertible Redeemable Debentures and the shares of common stock into which the
debentures are redeemable. As of September 30, 1999, the Company had issued one
8% Series A Senior Subbordinated Convertible Redeemable Debenture in the amount
of $500,000 and one 8% Series B Senior Subbordinated Convertible Redeemable
Debenture in the amount of $500,000.
Capital Stock
Each of the holders of record of stock is entitled to one (1) vote per
share thereof at all shareholder meetings for all purposes, including the
election of the Company's directors and all other matters submitted to such
holders for a vote of stockholders; to share ratably in all dividends, when, as,
and if declared by the Company's Board of Directors from funds legally available
therefor; and to share ratably in all assets available for distribution to
holders of record of capital stock upon liquidation or dissolution after the
payment of ll debts and other liabilities. Shares of common stock are not
redeemable and the holders have no conversion rights, pre-emptive or other
rights to subscribe to or purchase additional shares in the event of a
subsequent offering. The common stock does not carry cumulative voting rights.
All issued and outstanding shares of common stock are fully-paid and
non-assessable.
There are no limitations or restrictions upon the rights of the Board
of Directors to declare dividends out of any funds legally available therefor.
The Company has not paid dividends to date and it is not anticipated that any
dividends will be paid in the foreseeable future. The Board of Directors
initially may follow a policy of retaining earnings, if any, to finance the
future growth of the Company. Accordingly, future dividends, if any, will depend
upon, among other considerations, the Company's need for working capital and its
financial condition at the time.
"Anti-Takeover" Provisions. Although the Board of Directors is not
presently aware of any takeover attempts, the Company's Certificate of
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<PAGE>
Incorporation and By-laws contain certain provisions which may be deemed to be
"anti-takeover" in nature in that such provisions may deter, discourage, or make
more difficult the assumption of control of the Company by another corporation
or person through a tender offer, merger, proxy contest or similar transaction
or series of transactions. These provisions were adopted unanimously by the
Board of Directors and approved by the stockholders of the Company.
Authorized but Unissued Shares. The Company has authorized 100,000,000
shares of Common Stock, par value $0.001 per share. These shares were authorized
for the purpose of providing the Board of Directors of the Company with as much
flexibility as possible to issue additional shares for proper corporate purposes
including equity financing, acquisitions, mergers, stock dividends, stock
splits, stock options and other purposes. The Company has no agreements,
commitments or plans at this time for the sale or use of its shares of common
stock except as described herein. Through October 13, 1999, the Company had
issued 7,296,496 shares of stock.
No Cumulative Voting. The Company's Certificate of Incorporation and
By-laws do not contain any provisions for cumulative voting. Cumulative voting
entitles stockholders to as many votes as equal the number of shares owned by
such holder multiplied by the number of directors to be elected. A stockholder
may cast all these votes for one candidate or distribute them among any two or
more candidates. Thus, cumulative voting for the election of directors allows a
stockholder or group of stockholders who hold less than fifty percent (50%) of
the outstanding shares voting to elect one or more members of a Board of
Directors. Without cumulative voting for the election of directors, the vote of
holders of a plurality of the shares voting is required to elect any member of a
Board of Directors and would be sufficient to elect all the members of the Board
of Directors being elected.
General Effect of Anti-Takeover Provisions. The overall effect of these
provisions may be to deter a future tender offer or other takeover attempt that
some stockholders might view to be in their best interest as the offer might
include a premium over the market price of the Company's capital stock at that
time. In addition, these provisions may have the effect of assisting the
Company's current management in retaining its position and place it in a better
position to resist changes which some stockholders may want to make if
dissatisfied with the conduct of the Company's business.
Voting Rights. Except as set forth below, every holder of shares
present in person or by proxy or by representative, attorney or proxy appointed
under the Company's By-laws at a meeting of shareholders has one vote on a vote
taken by a show of hands, and on a poll every holder of shares who is present in
person or by proxy or representative has one vote for every fully paid share
held by him, registered in each shareholder's name on the Company's stockholder
list. Unless a poll is demanded, every question submitted to a meeting of
holders of shares shall be decided by a show of hands of the shareholders
present and entitled to vote. In the case of an equality of votes, in either a
poll or a show of hands, the chairman shall have a second or casting vote.
Notwithstanding the above, restrictions are imposed on voting rights in the
following circumstances: (a) if two or more persons are registered as the holder
of the share, the only one of the holders entitled to vote is the senior who
tenders a vote, seniority being determined by the order of names in the
company's list of stockholders; (b) if the terms upon which the shares was
issued restrict the voting rights attaching to that share, the holder is
entitled to vote only in accordance with the terms upon which that share was
issued (neither any shares currently outstanding nor the common shares have
restricted voting rights).
Article II Section 5 of the Company's By-laws allows that the holders
of a majority of the issued and outstanding shares of the common stock of the
Company entitled to vote thereat, present in person or represented by proxy,
22
<PAGE>
shall constitute a quorum for the transaction of business at all meetings of the
stockholders. All resolutions (e.g. resolutions for the election of directors,
the approval of increase in authorized capital, approval of financial
statements, amending the Articles of Incorporation and By-laws; authorizing
liquidation or a going private transaction) require the affirmative vote of the
holders of a majority of the issued and outstanding shares of the common stock
of the Company entitled to vote.
Not less than ten days' notice of any general shareholders meeting,
specifying the place, day and hour of the meeting, specifying the general nature
of the business, shall be given to the shareholders.
Article III Section 4 of the Company's By-laws allows that any director
or the entire Board of Directors may be removed, at any time, with or without
cause, by the holders of a majority of the shares then entitled to vote with or
without a stockholders meeting.
Certain Voting Requirements. The affirmative vote of the holders of a
majority of the shares present at a shareholders meeting and entitled to vote
generally constitutes shareholder approval or authorization of matters for which
such approval or authorization is required. A sale or transfer of substantially
all of the Company's assets, liquidation, merger, consolidation, reorganization
or similar extraordinary corporate action generally requires the affirmative
vote of a majority of the shares outstanding and entitled to vote thereon.
Restricted Shares. Restricted shares may not be sold unless they are
registered or are sold pursuant to an applicable exemption from registration,
including pursuant to Rule 144.
Reports to Shareholders. The Company intends to furnish its
shareholders with annual reports containing financial statements for each fiscal
year containing unaudited summary financial information and such other periodic
reports as it may deem appropriate or as required by law.
Debentures
8% Series A Senior Subordinated Convertible Redeemable Debenture:
As part of an offering made pursuant to Rule 504 under Regulation D
which ran from December 1, 1997 through June 1, 1999, the Company entered into a
Securities Subscription Agreement with Amran Rothman. Pursuant to the Securities
Subscription Agreement, the Company issued an 8% Series A Senior Subordinated
Convertible Redeemable Debenture. The Series A Debenture had a face amount of
$500,000. Amram Rothman paid the Company a consideration of $500,000 for the
issuance of the Debenture.
Under the terms of the Series A. Debenture, the Company agreed to pay
Amram Rothman or his authorized successors or assigns, the aggregate principal
face sum of the Debenture in July 2001 together with interest on the principal
sum outstanding at the rate of 8% per annum commencing in August of 1999.
The Debenture provides that multiple debentures in denominations of
$10,000 may be issued up to the face value of the Debenture. The Debenture
provides that such debentures may be transferred or exchanged only in compliance
with the Securities Act of 1933, as amended, and applicable state securities
laws.
The holders of the debentures are entitled, at their option, at any
time immediately following the execution of the subscription agreement and
-23-
<PAGE>
delivery of the debenture, to convert all or any amount over $10,000 of the
principal face amount of the debenture then outstanding into freely tradeable
common stock of the Company. Pursuant to the terms of the Debenture, the
conversion price for each share of common stock is equal to 75% of the average
closing bid price of the common stock as reported on the National Association of
Securities Dealers electronic Bulletin Board (OTC Bulletin Board) for the three
(3) consecutive trading days immediately preceding the date of receipt by the
Company of a Notice of Conversion from the debenture holder. If the number of
converted shares would as a matter of law or pursuant to regulatory authority
require the Company to seek shareholder approval of such issuance, the Company
is required to take necessary steps to seek such approval.
At the time of conversion, interest is calculated on the debenture
amount converted into shares and interest is paid on such amount at the annual
rate of 8%. The dollar amount of interest payable is calculated based upon the
total amount of payments actually made by the holder of the debenture in
connection with the purchase of the debenture at the time any interest payment
is due.
All the Company's common stock issued in connection with the Debentures
is issued pursuant to Rule 504 of Regulation D in accordance with the terms of
the Subscription Agreement.
Pursuant to the terms of the Debenture, at any time after ninety (90)
days of the issuance of the debenture, the Company has the option to pay the
holder of the debenture 125% of the principal amount of the debenture, in the
event no conversion of the debenture has occurred.
8% Series B Senior Subordinate Convertible Redeemable Debenture:
As part of an offering made pursuant to Rule 504 under Regulation D
which ran from July 1, 1999 through the present, the Company entered into a
Securities Subscription Agreement with BSD Holdings, LLC. Pursuant to the
Securities Subscription Agreement, the Company issued an 8% Series B Senior
Subordinated Convertible Redeemable Debenture. The Series B Debenture had a face
amount of $500,000. BSD Holdings, LLC paid the Company a consideration of
$500,000 for the issuance of the Debenture.
Under the terms of the Series A. Debenture, the Company agreed to pay
DSB Holdings, LLC or its authorized successors or assigns, the aggregate
principal face sum of the Debenture in July 2001 together with interest on the
principal sum outstanding at the rate of 8% per annum commencing in August of
1999.
The Debenture provides that multiple debentures in denominations of
$10,000 may be issued up to the face value of the Debenture. The Debenture
provides that such debentures may be transferred or exchanged only in compliance
with the Securities Act of 1933, as amended, and applicable state securities
laws.
The holders of the debentures are entitled, at their option, at any
time immediately following the execution of the subscription agreement and
delivery of the debenture, to convert all or any amount over $10,000 of the
principal face amount of the debenture then outstanding into freely tradeable
common stock of the Company. Pursuant to the terms of the Debenture, the
conversion price for each share of common stock is equal to 75% of the average
closing bid price of the common stock as reported on the National Association of
Securities Dealers electronic Bulletin Board (OTC Bulletin Board) for the three
(3) consecutive trading days immediately preceding the date of receipt by the
Company of a Notice of Conversion from the debenture holder. If the number of
-24-
<PAGE>
converted shares would as a matter of law or pursuant to regulatory authority
require the Company to seek shareholder approval of such issuance, the Company
is required to take necessary steps to seek such approval.
At the time of conversion, interest is calculated on the debenture
amount converted into shares and interest is paid on such amount at the annual
rate of 8%. The dollar amount of interest payable is calculated based upon the
total amount of payments actually made by the holder of the debenture in
connection with the purchase of the debenture at the time any interest payment
is due.
All the Company's common stock issued in connection with the Debentures
is issued pursuant to Rule 504 of Regulation D in accordance with the terms of
the Subscription Agreement.
Pursuant to the terms of the Debenture, at any time after ninety (90)
days of the issuance of the debenture, the Company has the option to pay the
holder of the debenture 125% of the principal amount of the debenture, in the
event no conversion of the debenture has occurred.
- --------------------------------------------------------------------------------
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
Section 78.751 of the Nevada General Corporation Law allows the Company
to indemnify any person who was or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding by reason of the
fact that he or she is or was a director, officer, employee or agent of the
Company or is or was serving at the request of the Company as a director,
officer, employee or agent of any corporation, partnership, joint venture, trust
or other enterprise. The Company may advance expenses in connection with
defending any such proceeding, provided the indemnitee undertakes to pay any
such amounts if it is later determined that such person was not entitled to be
indemnified by the Company.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company 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.
- --------------------------------------------------------------------------------
ITEM 13. Financial Statements
- --------------------------------------------------------------------------------
The following financial statements, audited for the fiscal year ended
1998 and unaudited for the months of 1999 ended September 30, 1999, are filed
with this Form 10- SB:
1998 FINANCIAL TO BE INSERTED
-25-
<PAGE>
ENDOVASC LTD., INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
----------
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT ACCOUNTANTS
as of September 30, 1999 and June 30, 1999,
and for the period from inception, June 10, 1996,
to September 30, 1999
<PAGE>
<TABLE>
ENDOVASC LTD., INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
TABLE OF CONTENTS
----------
<CAPTION>
Page(s)
-------
<S> <C>
Report of Independent Accountants F-2
Financial Statements:
Balance Sheet as of September 30, 1999 and
June 30, 1999 F-4
Statement of Operations for the three months ended September 30, 1999 and
1998, and for the period from inception, June 10, 1996, to
September 30, 1999 F-5
Statement of Stockholders' Deficit for the three months ended September 30,
1999 and 1998, and for the period from inception,
June 10, 1996, to September 30, 1999 F-6
Statement of Cash Flows for the three months ended September 30, 1999 and
1998, and for the period from inception, June 10, 1996,
to September 30, 1999 F-8
Notes to Financial Statements F-9
</TABLE>
F-1
<PAGE>
Report of Independent Accountants
---------------------------------
To the Stockholders of
Endovasc Ltd., Inc.
We have audited the accompanying balance sheet of Endovasc Ltd., Inc. (a
development stage enterprise) as of June 30, 1999, and the related statements of
operations, stockholders' deficit and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based upon
our audit. We also audited the adjustments described in Note 2 that were applied
to restate the financial statements for the year ended June 30, 1998 and for the
period from inception, June 10, 1996. The financial statements of the Company as
of and for the year ended June 30, 1998 and for the period from inception, June
10, 1996 before restatement were audited by other auditors whose report dated
December 10, 1998 expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing 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 Endovasc Ltd., Inc. as of June
30, 1999, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
Continued
<PAGE>
Endovasc Ltd., Inc.
Page 2
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements
and discussed in Note 9, the Company has incurred significant recurring losses
from operations since inception, is in a negative working capital and
stockholders' deficit position at June 30, 1999, and is dependent on outside
sources of financing for continuation of its operations. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans with regard to this matter are also discussed in Note 13.
These financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
/s/ Ham, Langston & Brezina. L.L.P.
- -----------------------------------
Ham, Langston & Brezina, L.L.P.
Houston, Texas
September 2, 1999
F-2
<PAGE>
ENDOVASC LTD., INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
BALANCE SHEET
June 30, 1999 and 1998
----------
ASSETS
------
Current assets:
Cash and cash equivalents $ 120,058
Prepaid expenses 5,014
-----------
Total current assets 125,072
Property and equipment, net 9,483
Deposits 2,900
-----------
Total assets $ 137,455
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
- -------------------------------------
Current liabilities:
Current maturities of long-term debt $ 53,482
Note payable to shareholder 85,248
Accounts payable 85,666
Accrued liabilities 361,956
-----------
Total current liabilities 586,352
Long-term debt, net of current maturities 30,918
Convertible debentures 180,000
-----------
Total liabilities 797,270
-----------
Commitment and contingencies
Stockholders' deficit:
Common stock, $.001 par value, 100,000,000
shares, authorized, 8,374,490 shares
issued and 5,639,490 shares outstanding 8,374
Additional paid-in capital 2,125,459
Losses accumulated during the development
stage (2,776,737)
Treasury stock (16,911)
-----------
Total stockholders' deficit (659,815)
-----------
Total liabilities and stockholders'
deficit $ 137,455
===========
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
<TABLE>
ENDOVASC LTD., INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENT OF OPERATIONS
for the years ended June 30, 1999 and 1998
and for the period from inception, June 10, 1996,
to June 30, 1999
----------
<CAPTION>
Year Ended
June 30,
Year Ended 1998 Inception
June 30, As Restated to June 30,
1999 (See Note 2) 1999
---------- ------------ -----------
<S> <C> <C> <C>
Income:
Sales $ 5,000 $ - $ 5,000
Interest income - - 653
Other income - - 3,618
---------- ----------- -----------
Total income 5,000 - 9,271
---------- ----------- -----------
Costs and expenses:
Operating, general and adminis-
trative expenses 396,454 418,056 1,384,203
Research and development costs 211,278 607,384 1,199,332
Interest expense 193,811 7,394 202,473
---------- ----------- -----------
Total costs and expenses 801,543 1,032,834 2,786,008
---------- ----------- -----------
Net loss $ (796,543) $(1,032,834) $(2,776,737)
========== =========== ===========
Weighted average shares outstanding 7,217,096 6,757,534
========== ===========
Basic and diluted net loss per
common share $ (0.11) $ (0.15)
========== ===========
</TABLE>
The accompanying notes are an integralpart of these financial statements.
F-4
<PAGE>
<TABLE>
F-5
ENDOVASC LTD., INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENT OF STOCKHOLDERS' DEFICIT
for the years ended June 30, 1999 and
1998, and for the period from inception, June 10,
1996 to June 30, 1999
----------
<CAPTION>
Losses
Accumulated
Additional During the
Common Stock Paid-In Treasury Development
Amount Shares Capital Stock Stage Total
------ ------ ------- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Balance at inception, June 10, 1996 $ - - $ - $ - $ - $ -
Stock issued for equity securities
in 1996 2,332 2,332,000 300,000 - - 302,332
Stock issued for purchase of patent
rights in 1996 2,188 2,188,000 282,252 - - 284,440
Stock issued for services in 1997 1,702 1,702,000 354,198 - - 355,900
Stock issued for cash in June 1997 305 304,571 205,196 - - 205,501
Losses accumulated during the
period from inception, June 10,
1996, to June 30, 1997 - - - - (947,360) (947,360)
------ --------- ---------- ---------- ------------ ----------
Balance at June 30, 1997 6,527 6,526,571 1,141,646 - (947,360) 200,813
Stock issued for purchase of patent
rights in September 1997 200 200,000 199,800 - - 200,000
Stock issued for services in 1998 77 77,380 55,516 - - 55,593
Stock subject to rescission - - - (16,911) - (16,911)
Net loss accumulated in 1998 - - - - (1,032,834) (1,032,834)
------ --------- ---------- ---------- ----------- ----------
Balance at June 30, 1998 6,804 6,803,951 1,396,962 (16,911) (1,980,194) (593,339)
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
Continued
<TABLE>
ENDOVASC LTD., INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENT OF STOCKHOLDERS' DEFICIT, Continued
for the years ended June 30, 1999 and 1998, and
for the period from inception, June 10, 1996 to June 30, 1999
----------
<CAPTION>
Losses
Accumulated
Additional During the
Common Stock Paid-In Treasury Development
Amount Shares Capital Stock Stage Total
------ ------ ------- ----- ----- -----
<S> <C> <C> <C> <C>
Conversion of debentures to
common stock 1,208 1,208,077 443,792 - - 445,000
Stock issued for services 362 362,462 284,705 - - 285,067
Net loss accumulated in 1999 - - - - (796,543) (796,543)
------ --------- ---------- ---------- ----------- ----------
Balance at June 30 ,1999 $8,374 8,374,490 $2,125,459 $ (16,911) $(2,776,737) $ (659,815)
====== ========= ========== ========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
<TABLE>
ENDOVASC LTD., INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENT OF CASH FLOWS
for the years ended June 30, 1999 and
1998, and for the period from inception, June
10, 1996, to June 30, 1999
----------
<CAPTION>
Year Ended Year Ended Inception
June 30, June 30, to June 30,
1999 1998 1999
---------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (796,543) $(1,032,834) $(2,776,737)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Common stock and stock options
issued as compensation for services 285,067 55,593 896,560
Write down of long-lived assets to
fair value - 200,000 284,440
Depreciation expense 3,242 3,150 9,512
Deferred income tax expense - - 7,994
Amortization of discount on con-
vertible debentures 125,000 - 125,000
Changes in operating assets and
liabilities:
(Increase) decrease in prepaid
expenses and deposits 22,336 76,403 (7,914)
Increase (decrease) in accounts
payable and accrued liabilities (16,474) 448,330 439,628
---------- ----------- -----------
Net cash used in operating
activities (377,372) (249,358) (1,021,517)
---------- ----------- -----------
Cash flows from investing activities:
Capital expenditures (3,198) - (18,995)
Proceeds received from repayment of
loan to stockholder - 71,854 -
---------- ----------- -----------
Net cash used in investing
activities (3,198) 71,854 (18,995)
Cash flows from financing activities:
Proceeds from sale of equity securities - - 302,332
Proceeds from sale of common stock - - 205,501
Proceeds from sale of convertible
debenture and related conversion
feature 500,000 - 500,000
Issuance (repayment) of notes payable (12,390) 72,474 84,400
Proceeds from advances from
stockholders 10,100 75,148 85,248
Purchase of treasury stock - (16,911) (16,911)
---------- ----------- -----------
Net cash provided by financing
activities 497,710 130,711 1,160,570
---------- ----------- -----------
Net increase in cash and cash equivalents 117,140 (46,793) 120,058
Cash and cash equivalents at beginning
of period 2,918 49,711 -
---------- ----------- -----------
Cash and cash equivalents at end of
period $ 120,058 $ 2,918 $ 120,058
========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for interest expense $ 63,105 $ 7,394 $ 71,767
========== =========== ===========
Cash paid for income taxes $ - $ - $ -
=========== =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
ENDOVASC LTD., INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
----------
1. Organization and Summary of Significant Accounting Policies
-----------------------------------------------------------
Endovasc, Ltd., Inc. (the "Company") was incorporated under the laws of
the State of Nevada on June 10, 1996. The Company's principal business is
the production of various drugs that can be administered using the
liposomal drug delivery system. The Company believes that its drug
delivery system will ultimately be widely used by cardiologists,
interventional radiologists and vascular surgeons. The Company is
considered a development stage enterprise because it has not yet
generated significant revenue from sale of its products and has devoted
substantially all of its efforts in raising capital.
Significant 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 dates of the
financial statements and the reported amounts of revenues and expenses
during the periods. Actual results could differ from estimates making it
reasonably possible that a change in the estimates could occur in the
near term.
Cash and Cash Equivalents
-------------------------
The Company considers all highly liquid short-term investments with an
original maturity of three months or less when purchased to be cash
equivalents.
Property and Equipment
----------------------
Property and equipment are recorded at cost. Depreciation is provided on
the straight-line method over the estimated useful lives of the assets,
which range from five to seven years. Expenditures for major renewals and
betterments that extend the original estimated economic useful lives of
the applicable assets are capitalized. Expenditures for normal repairs
and maintenance are charged to expense as incurred. The cost and related
accumulated depreciation of assets sold or otherwise disposed of are
removed from the accounts, and any gain or loss is included in
operations.
F-8
<PAGE>
Continued
ENDOVASC LTD., INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS, Continued
----------
1. Organization and Summary of Significant Accounting Policies,
------------------------------------------------------------
continued
---------
Issuance Costs
--------------
Debt issuance costs are deferred and recognized, using the interest
method, over the term of the related debt.
Income Taxes
------------
The Company uses the liability method of accounting for income taxes.
Under this method, deferred income taxes are recorded to reflect the tax
consequences on future years of temporary differences between the tax
basis of assets and liabilities and their financial amounts at year-end.
The Company provides a valuation allowance to reduce deferred tax assets
to their net realizable value.
Research and Development Expenses
---------------------------------
Research and development costs are expensed as incurred. These costs
consist of direct and indirect costs associated with specific projects.
Stock-Based Compensation
------------------------
Stock-based compensation is accounted for using the intrinsic value
method prescribed in Accounting Principles Board Opinion ("APB") No. 25,
"Accounting for Stock Issued to Employees", rather than applying the fair
value method prescribed in SFAS No. 123, "Accounting for Stock-Based
Compensation".
Loss Per Share
--------------
Basic and diluted loss per share is computed on the basis of the weighted
average number of shares of common stock outstanding during each period.
Common equivalent shares from common stock options and warrants are
excluded from the computation as their effect would dilute the loss per
share for all periods presented.
F-9
<PAGE>
Continued
ENDOVASC LTD., INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS, Continued
----------
Fair Value of Financial Instruments
-----------------------------------
The Company includes fair value information in the notes to financial
statements when the fair value of its financial instruments is different
from the book value. When the book value approximates fair value, no
additional disclosure is made.
1. Organization and Summary of Significant Accounting Policies,
------------------------------------------------------------
continued
---------
Comprehensive Income
--------------------
The Company has adopted Statement of Financial Accounting Standards
("SFAS") No. 130, Reporting Comprehensive Income, which requires a
company to display an amount representing comprehensive income as part of
the Company's basic financial statements. Comprehensive income includes
such items as unrealized gains or losses on certain investment securities
and certain foreign currency translation adjustments. The Company's
financial statements include none of the additional elements that affect
comprehensive income. Accordingly, comprehensive income and net income
are identical.
2. Prior Period Adjustments
------------------------
During the period from inception, June 10, 1996, to June 30, 1997, and
during the year ended June 30, 1998, the Company issued common stock to
compensate key employees, consultants and certain vendors and to purchase
the rights to use specific patents. The issuance of such stock was not
afforded consistent accounting treatment but was generally recorded at
par value or some other nominal value in the Company's financial
statements. Generally accepted accounting principles require that common
stock issuances be recorded at the estimated fair value of the stock
issued or at the fair value of consideration received or services
provided if such value is more readily determinable.
During the year ended June 30, 1998 the Company entered into an agreement
to purchase the rights to a specific patent. The purchase price was
$125,000 (payable at $50,000 upon execution of the agreement and $75,000
by December 31, 1997) and 200,000 shares of the Company's common stock.
The Company issued the stock and made the $50,000 payment. However, the
Company has yet to make the final $75,000 payment. Per the agreement, if
the final payment is not made within seven months of the execution of the
agreement, the final payment is increased to $150,000 plus the issuance
of an additional 200,000 shares of the Company's common stock. Although
this matter is currently being disputed, generally accepted accounting
principles
F-10
<PAGE>
requires these additional amounts to be accrued in the period they became
due. Accordingly, these amounts have been accrued in the financial
statements for the year ended June 30, 1998.
Continued
ENDOVASC LTD., INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS, Continued
----------
2. Prior Period Adjustments, continued
-----------------------------------
The Company also capitalized the costs of purchasing and protecting
patent rights during the year ended June 30, 1998. Generally accepted
accounting principles require all long-lived assets to be reviewed for
impairment and written down to their estimated fair value based on
expected future cash flows generated by the asset. Since it is unknown
whether this patent will ever generate cash flow for the Company, all
costs associated with the patent have been recorded as research and
development expense during the year ended June 30, 1998.
The effect of correcting these errors in application of generally
accepted accounting principles on the Company's financial statements at
June 30, 1998 and 1997 is as follows:
June 30, June 30,
1998 1997
---------- ----------
Decrease in total assets $ (321,815) $ -
========== ==========
Increase in total liabilities $ (209,000) $ -
========== ==========
Increase in additional paid-in
capital $ 36,317 $ 488,569
========== ==========
Increase in accumulated deficit $ (567,132) $ (488,569)
========== ==========
Increase in net loss for the
year ended June 30, 1998 $ (567,132)
==========
Increase in net loss per common
share for the year ended
June 30, 1998 $ (0.08)
==========
F-11
<PAGE>
Continued
ENDOVASC LTD., INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS, Continued
----------
<TABLE>
<CAPTION>
3. Property and Equipment
----------------------
<S> <C>
Property and equipment at June 30, 1999 consists of the following:
Office furniture, fixtures and
equipment $ 18,995
Less accumulated depreciation (9,512)
------------
$ 9,483
============
Depreciation expense during the year ended June 30, 1999 was $3,242.
4. Notes Payable and Convertible Debentures
----------------------------------------
Notes payable at June 30, 1999 consist of the following:
Notes payable to a bank, bearing interest of prime (8.25% at June 30,
1999) plus 1% per year and due in monthly installments of up to $1,238,
including interest, through November 2002. These notes are
uncollateralized but are guaranteed by two stockholders
of the Company. $ 65,689
Notes payable to a company, bearing
interest of 6%, with principal and
interest due on demand. These notes
are uncollateralized. 18,711
Notes payable to stockholders, bearing
interest of 10% per year and due on
demand. These notes are uncollater-
alized. 85,248
----------
Total notes payable 169,648
Less current maturities (138,730)
----------
$ 30,918
==========
</TABLE>
F-12
<PAGE>
Continued
ENDOVASC LTD., INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS, Continued
----------
4. Notes Payable and Convertible Debentures, continued
---------------------------------------------------
At June 30, 1999, the Company owed amounts under convertible debentures
totaling $180,000. The debentures bear interest at a stated rate of 8%
per year, payable at maturity in common stock of the Company. These
debentures mature in July 2001 and are convertible to shares of the
Company's common stock at a conversion price per share equal to 75% of
the average closing bid price of the common stock for the three days
immediately preceding the date of conversion. During the fiscal year
ended June 30, 1999 $320,000 of the original $500,000 debenture was
converted to common stock.
Future annual maturities of notes payable and convertible debentures at
June 30, 1999 are as follows:
Year Ended
June 30, Amount
-------- ------
2000 $ 138,730
2001 12,578
2002 193,758
2003 4,582
----------
$ 349,648
==========
5. Income Tax
----------
The composition of deferred tax assets and the related tax effects at
June 30, 1999 are as follows:
Benefit from carryforward of net
operating losses $ 406,769
Less valuation allowance (406,769)
Net deferred tax asset $ -
==========
F-13
<PAGE>
Continued
ENDOVASC LTD., INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS, Continued
----------
5. Income Tax, continued
---------------------
The difference between the income tax benefit in the accompanying
statement of operations and the amount that would result if the U.S.
Federal statutory rate of 34% were applied to pre-tax loss is as follows:
<TABLE>
<CAPTION>
1999 1998
-------------------------- ---------------------------
Percentage Percentage
of Pre-Tax of Pre-Tax
Amount Loss Amount Loss
------ ---- ------ ----
<S> <C> <C> <C> <C>
Benefit for income tax at
federal statutory rate $ 270,825 34.0% $ 351,164 34.0%
Non-deductible expenses (17,096) (2.1) (198,124) (19.2)
Increase in valuation
allowance (253,729) (31.9) (153,040) (14.8)
---------- ----- ---------- -----
Total $ - - % $ - - %
========== ===== ========== =====
</TABLE>
The non-deductible expenses shown above related primarily to the issuance
of common stock for services using different valuation methods for
financial and tax reporting purposes.
At June 30, 1999, for federal income tax and alternative minimum tax
reporting purposes, the Company has approximately $1,200,000 of unused
net operating losses available for carryforward to future years. The
benefit from carryforward of such net operating losses will expire in
various years between 2016 and 2019 and could be subject to severe
limitations if significant ownership changes occur in the Company.
F-14
<PAGE>
Continued
ENDOVASC LTD., INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS, Continued
----------
6. Stock Options
-------------
Effective December 9, 1997, the Company entered into a stock option
agreement with an employee that granted the employee an option to
purchase up to 600,000 shares of the Company's restricted common stock at
a below market purchase price. The option is for a three year period
expiring December 8, 2000. According to the agreement the employee vests
in these options as follows:
Date Vested Amount
December 9, 1998 $ 200,000
December 9, 1999 200,000
December 9, 2000 200,000
----------
$ 600,000
==========
6. Stock Options, continued
------------------------
The Company recognized compensation expense with respect to these stock
options in the amount of $50,000.
During the year ended June 30, 1998, the Company also executed an
agreement with a former director of the Company under which the Company
compensated the former director for past services by grant of options to
acquire 50,000 shares of the Company's restricted common stock at $0.75
per share, which approximates market value, for a term of three years.
During the year ended June 30, 1999, the Company also granted stock
options to acquire up to 250,000 shares of the Company's restricted
common stock. These stock options have a three year term and an exercise
price of $0.40 - $0.75 per share, which approximated market value at date
of grant.
The Company periodically issues incentive stock options to key employees,
officers, directors and outside consultants to provide additional
incentives to promote the success of the Company's business and to
enhance the ability to attract and retain the services of qualified
persons. The issuance of such options are approved by the Board of
Directors. The exercise price of an option granted is determined by the
fair market value of the stock on the date of grant.
The Company has issued stock options to employees and non-employee
consultants as follows:
F-15
<PAGE>
Continued
ENDOVASC LTD., INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS, Continued
----------
<TABLE>
<CAPTION>
Number of Shares
Employee Non-employee Total Exercisable Exercise Price
-------- ------------ ----- ----------- --------------
<S> <C> <C> <C> <C> <C>
Options outstand-
ing at June 30,
1997 - - - -
Options granted 600,000 50,000 650,000 50,000 $0.10-$0.75
------- ------- ------- -------
Options outstand-
ing at June 30,
1998 600,000 50,000 650,000 50,000 $0.10-$0.75
Options granted - 250,000 250,000 100,000 $0.40-$0.75
------- ------- ------- -------
Options outstand-
ing at June 30,
1999 600,000 300,000 900,000 350,000 $0.10-$0.75
======= ======= ======= =======
</TABLE>
6. Stock Options, continued
------------------------
Following is a summary of outstanding options at June 30, 1999:
<TABLE>
<CAPTION>
Number of Shares Vested Expiration Date Exercise Price
---------------- ------ --------------- --------------
<S> <C> <C> <C> <C>
600,000 200,000 December, 2000 $0.10
50,000 50,000 May, 2001 0.75
100,000 100,000 June, 2001 0.40
150,000 - October, 2001 0.75
------- -------
900,000 350,000
======= =======
</TABLE>
The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations in accounting for its employee stock options because, as
discussed below, the alternative fair value accounting provided for under
FASB Statement No. 123, "Accounting for Stock- Based Compensation",
requires use of option valuation models that were not developed for use
in valuing employee stock options.
Proforma information regarding net income and earnings per share is
required by Statement 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of
that Statement. The fair value for these options was estimated at the
date of grant using a Black-Scholes option pricing model with the
following weighted-average assumptions for 1999 and 1998: risk-free
interest rate of 6%; no dividend yield; weighted average volatility
factor of the expected market price of the Company's common stock of
0.70; and a weighted-average expected life of the options of 3 years.
F-16
<PAGE>
Continued
ENDOVASC LTD., INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS, Continued
----------
The Black-Scholes option valuation model was developed for use in
estimating fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option valuation
models require the input of highly subjective assumptions including the
expected stock price volatility. Because the Company's employee stock
options have characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of
the fair value of its employee stock options.
6. Stock Options, continued
------------------------
For purposes of proforma disclosures, the estimated fair value of the
options is included in expense at the date of issuance because the
options may be fully exercised at that date. The Company's proforma
information follows:
1999 1998
---------- -----------
Net loss available to common
stockholders $ (796,543) $(1,032,834)
Proforma net loss available to
common stockholders $ (886,943) $(1,048,334)
Proforma basic and dilutive
loss per share $ (0.12) $ (0.16)
7. Commitments and Contingencies
-----------------------------
Lease Commitments
-----------------
The Company has entered into a one-year lease agreement for office space
which is accounted for as an operating lease. Rent expense for the years
ended June 30, 1999 and 1998 was $15,606 and $11,981, respectively.
Impact of Year 2000
-------------------
The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of
the Company's computer programs that have time sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000.
This could result in a system failure or miscalculation causing a
disruption of business activities.
F-17
<PAGE>
Continued
ENDOVASC LTD., INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS, Continued
----------
The Company has performed a complete assessment of the Year 2000 issue
and believes that no significant modifications to its existing computer
software will be required and that its existing computer systems will
function properly with respect to dates in the year 2000 and thereafter.
The Company also believes that costs related to the Year 2000 issue will
not be significant because the Company's systems have been designed to be
Year 2000 compliant.
Based on the Company's assessment of its relationships with significant
suppliers and major customers to understand the extent to which the
Company is vulnerable to any failure by third parties to remedy their own
Year 2000 issues, management believes that the Company does not have
significant exposure with respect to third parties.
9. Going Concern Considerations
----------------------------
Since its inception, as a development stage enterprise, the Company has
not generated significant revenue and has been dependent on debt and
equity raised from individual investors to sustain its operations. The
Company has conserved cash by issuing its common stock to satisfy
obligations, to compensate individuals and vendors and to settle disputes
that have arisen. However, during the years ended June 30, 1999 and 1998,
the Company incurred net losses of ($796,543) and ($1,032,834),
respectively, and negative cash flows from operations of ($377,372) and
($272,761), respectively. These factors along with a ($461,280) negative
working capital position at June 30, 1999 raise substantial doubt about
the Company's ability to continue as a going concern.
Management plans to take specific steps to address its difficult
financial situation as follows:
o In the near term the Company plans additional private sales of debt
and common stock to qualified investors to fund its current operations.
o In the intermediate term, the Company plans a public registration of
its common stock under the Securities and Exchange Act of 1933 to provide
a means of expanding the market for its common stock and to provide a
means of obtaining the funds necessary to bring its products to the
commercial market.
o In the long-term, the Company believes that cash flows from
commercialization of its products will provide the resources for
continued operations.
F-18
<PAGE>
Continued
ENDOVASC LTD., INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS, Continued
----------
There can be no assurance that the Company's planned private sales of debt and
equity securities or its planned public registration of common stock will be
successful or that the Company will have the ability to commercialize its
products and ultimately attain profitability. The Company's long-term viability
as a going concern is dependent upon three key factors, as follows:
o The Company's ability to obtain adequate sources of debt or equity
funding to meet current commitments and fund the commercialization of its
products.
o The ability of the Company to obtain positive test results of its
products in clinical trials.
o The ability of the Company to ultimately achieve adequate
profitability and cash flows to sustain its operations.
10. Non-Cash Investing and Financing Activities
-------------------------------------------
During the years ended June 30, 1999, 1998 and 1997, the Company engaged
in certain non-cash investing and financing activities as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Common stock issued in exchange
for equity securities $ - $ - $302,332
======== ======== ========
Common stock issued upon conver-
sion of debentures $320,000 $ - $ -
======== ======== ========
Common stock issued for purchase
of patent rights $ - $200,000 $284,440
======== ======== ========
</TABLE>
F-19
<PAGE>
ENDOVASC LTD., INC.
(A DEVELOPMENT STAGE CORPORATION)
FINANCIAL STATEMENTS
September 30, 1999
UNAUDITED
-------------------
-26-
<PAGE>
<TABLE>
ENDOVASC LTD., INC.
(A DEVELOPMENT STAGE CORPORATION)
BALANCE SHEET
September 30 , 1999
<CAPTION>
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash $ 18,519
Debenture Proceeds Receivable 369,500
Prepaid Expenses 2,094
------------------------
TOTAL CURRENT ASSETS $309,113
FIXED ASSETS
Equipment and Furniture $20,297
Less Accumulated Depreciation 10,387 9,911
OTHER ASSETS
Deposits
2,900
------------------------
TOTAL ASSETS $402,924
========================
</TABLE>
UNAUDITED - FOR MANAGEMENT PURPOSES ONLY
----------------------------------------
-27-
<PAGE>
<TABLE>
ENDOVASC LTD., INC.
(A DEVELOPMENT STAGE CORPORATION)
BALANCE SHEET
September 30,1999
<CAPTION>
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
<S> <C> <C>
Accounts Payable $161,543
Accrued Expenses 330,652
Deferred Income Tax 7,994
Payroll Taxes Payable 8,881
Current Portion of Long Term Debt ------------------------
158,055
TOTAL CURRENT LIABILITIES $667,125
LONG-TERM DEBT
Notes Payable $166,455
Convertible Debenture 500,000
666,455
Less Current Portion 158,055 508,400
------------------------
STOCKHOLDERS EQUITY
Common Stock, $0.001 Par Value
100,000,000 Shares Authorized
8,789,604 Issued and Outstanding 8,789
Preferred Stock, $0.001 Par Value
20,000,000 Shares Authorized
0 Shares Issued and Outstanding 0
Treasury Stock (16,911)
Paid in Capital 2,385,503
Deficit Accumulation During Development Stage (3,149,983) (772,601)
------------------------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $402,924
========================
UNAUDITED - FOR MANAGEMENT PURPOSES ONLY
----------------------------------------
</TABLE>
-28-
<PAGE>
ENDOVASC LTD., INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF OPERATIONS
For the Three Months Ended on September 30, 1999
REVENUE $ 14,283
OPERATING EXPENSES
Research and Development Cost $ 229,912
Professional Fees 39,036
Salaries 45,652
Other Selling & G&A 56,782
-----------
Total Operating Expenses 371,382
OTHER INCOME (EXPENSE)
Depreciation (875)
Interest Expense (989)
-----------
(1,864)
Net Income (Loss) (373,246)
Retained Earnings 07/01/99 (2,776,737)
-----------
Retained Earnings 09/30/99 (3,149,982)
-----------
UNAUDITED - FOR MANAGEMENT PURPOSES ONLY
----------------------------------------
-29-
<PAGE>
<TABLE>
ENDOVASC LTD., INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF OPERATIONS
For the Three Months Ended on September 30, 1999
<CAPTION>
OPERATING ACTIVITIES
<S> <C>
Net Loss ($373,246)
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 875
(Increase) decrease in:
Prepaid expenses 2,920
Debenture receivable (369,500)
Increase (decrease) in:
Accounts Payable 75,877
Accrued Expenses 355
Short-term Debt 11,593
Net Cash Provided by operating activities --
(680,659)
-----------
FINANCING ACTIVITIES
Issue of Convertible Debt-Net 320,000
Common Stock Issued 415
Additional paid in Capital 260,044
Fixed Asset Additions (1,302)
Net Cash Provided by Financing Activities 579,557
INCREASE (DECREASE) IN CASH (101,539)
CASH AND EQUIVALENTS
Beginning of period --
120,058
---------
End of period $ 18,519
=========
</TABLE>
UNAUDITED - FOR MANAGEMENT PURPOSES ONLY
----------------------------------------
-30-
<PAGE>
<TABLE>
ENDOVASC LTD., INC.
(A DEVELOPMENT STAGE CORPORATION)
STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY For the Three
Months Ended on September 30, 1999
<CAPTION>
CAPITAL STOCK
Number of Dollar Paid in Accumulated
Shares Amount Capital Deficit
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at June 30, 1999 8,374,160 $8,374 $2,125,459 $2,776,737
Issue of common stock for services
in this period 79,898 79 71,590 0
Issue of common stock for cash
in this period 335,546 336 179,664 0
Net (loss) for the period ending
June 30, 1999 (373,246)
Balance at September 30, 1999 8,789,604 $8,789 $2,385,503 ($3,149,983)
============ ====== ========== ============
</TABLE>
UNAUDITED - FOR MANAGEMENT PURPOSES ONLY
----------------------------------------
-31-
<PAGE>
ENDOVASC LTD., INC.
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND NATURE OF BUSINESS:
The Company was organized under the laws of the State of Nevada on June
10, 1996. The principal business of the Company is to utilize its patents
in the production of various drugs using a technology referred to as
liposomal drug delivery for use by cardiologists, interventional
radiologists and vascular surgeons.
ORGANIZATIONAL and PATENT COST:
The Company charges off certain cost incurred in connection with the
development of its product and the formation of the corporation during
the period in which they occur.
FURNITURE AND EQUIPMENT:
Furniture and equipment are stated at cost. Depreciation is computed
using the straight-time method over a period of five to seven years.
<TABLE>
<CAPTION>
NOTE 2 - NOTES PAYABLE
<S> <C>
A note payable to Bio-sphere Technology, Inc., dated May 10,
1996 payable on demand with interest at 6% per annum $7,500
A note payable to Bio-sphere Technology, Inc., dated June 24,
1996 payable on demand with interest at 6% per annum $4,182
A note payable to Bio-sphere Technology, Inc., dated July 8,
1996 payable on demand with interest at 6% per annum $7,029
A note payable to a bank in monthly installments with a
variable interest rate and guaranteed by a stockholder $23,272
A note payable to a bank due on demand with interest payable
monthly at a variable rate and guaranteed by
a stockholder $42,417
</TABLE>
ENDOVASC LTD., INC.
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1999
Note 2-Continued
<TABLE>
<CAPTION>
A short term note payable to shareholders representing funds
advance to the company, payable on demand. The note is interest
free.
<S> <C>
$82,055
---------
Total $166,455
========
</TABLE>
-32-
<PAGE>
NOTE 3 - INCOME TAX:
The Company accounts for the effects of income taxes under the
deferred methods. Under this method deferred income taxes are
recognized for income and expense items that are reported in
different years for financial reporting purposes and income tax
purposes using the tax rate applicable to the year of the
calculation.
NOTE 4 - CONTINGENCIES
STOCK OPTIONS: As of June 10, 1997 the Company adopted a stock
option plan for the purchase of shares of the Company's common
stock. Options have been granted to three employees and officers
of the corporation the right to purchase up to 1,700,000 shares
of the Company's stock at $0.10 per share. The options will be
vested as follows:
First year of service 33% vesting
Second year of service 66% vesting
Third year of service 100% vesting
CONVERTIBLE DEBENTURES:
In July, 1999 the company entered into an agreement to issue
$500,000 of convertible debentures at an exchange rate of 75% of
the average price of a common share price of the prior 3 day
period. The full amount has been subscribed and $130,500 has
been advanced under this agreement. At September 30, 1999 no
conversion to common shares has occurred.
-33-
<PAGE>
ENDOVASC LTD., INC.
(A DEVELOPMENT STAGE CORPORATION)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 1999
NOTE 4 - CONTINUED
PENDING LITIGATION: A former employee and director of the
Company fraudulently received money from the Company under the
guise of purchasing materials for research. The district
attorney has filed criminal charges and the Company plans to
file civil proceedings to recover these funds. Certain stock
options and capital stock subscriptions due this employee were
canceled by the Board of Directors. The individual has filed
notice of a cross complaint. The Company plans to pursue this
matter vinously.
-34-
<PAGE>
- --------------------------------------------------------------------------------
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
- --------------------------------------------------------------------------------
On July 29, 1999, the Company engaged Ham, Langston & Brezina,
L.L.P. ("HL&B") as its independent accountant and terminated the services of Ken
Beverly & Associates, P.C. The decision to engaged HL&B as the Company's
independent accountant was recommended and approved by the Company's Chief
Executive Officer.
The Company's change of accountants was not the result of any
disagreement with the Company's previous accountant. During the past two years,
the principal accountant's report on the financial statements for the Company
have not contained an adverse opinion or disclaimer of opinion, or was modified
as to uncertainty, audit scope, or accounting principles.
- --------------------------------------------------------------------------------
ITEM 15. Financial Statements and Exhibits
- --------------------------------------------------------------------------------
The following exhibits are filed with this Form 10-SB:
Assigned Number Description
- --------------- -----------
(2) Plan of acquisition, reorganization, arrangement, liquidation, or
succession. None.
(3)(ii) By-laws of the Company: Included
(4) Instruments defining the rights of holders including indentures:
Form 8% Series A Senior Subbordinated Convertible
Redeemable Debenture
Form 8% Series B Senior Subbordinated Convertible
Redeemable Debenture
(9) Voting Trust Agreement: None
(10) Material Contracts: None
(11) Statement regarding computation of per share earnings: Computations
can be determined from financial statements.
-35-
<PAGE>
(16) Letter on change in certifying accountant: None
(21) Subsidiaries of the registrant: None
(24) Power of Attorney: None
(27) Financial Data Schedule: Included
(99) Additional Exhibits: None
- --------------------------------------------------------------------------------
SIGNATURES
- --------------------------------------------------------------------------------
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: November 18, 1999.
ENDOVASC LTD, INC.
By: /S/ David P. Summers
---------------------
David P. Summers
Chairman and Chief Executive Officer
-36-
Exhibit (3)(ii)
BY-LAWS FOR THE REGULATION
EXCEPT AS OTHERWISE PROVIDED BY STATUTE
OR ITS ARTICLES OF INCORPORATION OF
ENDOVASC
* * * * * * *
ARTICLE I.
Offices
Section 1. PRINCIPAL OFFICE. The
principal office for the transaction of the business of the corporation is
hereby fixed and located at 50 West Liberty Street, Suite 880, Reno, Nevada
89501, being the offices of Nevada Agency and Trust Company. The Board of
Directors is hereby granted full power and authority to change said principal
office from one location to another in the State of Nevada.
Section 2. OTHER OFFICES. Branch or
subordinate offices may at any time be established by the Board of Directors at
any place or places where the corporation is qualified to do business.
ARTICLE II.
Meetings of Shareholders
Section 1. MEETING PLACE. All
annual meetings of shareholders and all other meetings of shareholders shall be
held either at the principal office or at any other place within or without the
State of Nevada which may be designated either by the Board of Directors,
-37-
<PAGE>
pursuant to authority hereinafter granted to said Board, or by the written
consent of all shareholders entitled to vote thereat, given either before or
after the meeting and filed with the Secretary of the corporation.
Section 2. ANNUAL MEETINGS. The
annual meetings of shareholders shall be held on the fourth Wednesday of May
each year, at the hour of 2:00 o'clock p.m. of said day, commencing with the
year 1997, provided, however, that should said day fall upon a legal holiday,
then any such annual meeting of shareholders shall be held at the same time and
place on the next day thereafter ensuing which is not a legal holiday.
Written notice of each annual meeting signed by the President or
a Vice President, or the Secretary, or an Assistant Secretary, or by such other
person or persons as the directors shall designate, shall be given to each
shareholder entitled to vote thereat, either personally or by mail or other
means of written communication, charges prepaid, addressed to such shareholder
at his address appearing on the books of the corporation or given by him to the
corporation for the purpose of notice. If a shareholder gives no address, notice
shall be deemed to have been given to him, if sent by mail or other means of
written communication addressed to the place where the principal office of the
corporation is situated, or if published at least once in some newspaper of
general circulation in the county in which said office is located. All such
notices shall be sent to each shareholder entitled thereto not less than ten
(10) nor more than sixty (60) days before each annual meeting, and
-38-
<PAGE>
shall specify the place, the day and the hour of such meeting, and shall also
state the purpose or purposes for which the meeting is called.
Section 3. SPECIAL MEETINGS.
Special meetings of the shareholders, for any purpose or purposes whatsoever,
may be called at any time by the President or by the Board of Directors, or by
one or more shareholders holding not less than 10% of the voting power of the
corporation. Except in special cases where other express provision is made by
statute, notice of such special meetings shall be given in the same manner as
for annual meetings of shareholders. Notices of any special meeting shall
specify in addition to the place, day and hour of such meeting, the purpose or
purposes for which the meeting is called.
Section 4. ADJOURNED MEETINGS AND
NOTICE THEREOF. Any shareholders' meeting, annual or special, whether or not a
quorum is present, may be adjourned from time to time by the vote of a majority
of the shares, the holders of which are either present in person or represented
by proxy thereat, but in the absence of a quorum, no other business may be
transacted at any such meeting.
When any shareholders' meeting, either annual
or special, is adjourned for thirty (30) days or more, notice of the adjourned
meeting shall be given as in the case of an original meeting. Save as aforesaid,
it shall not be necessary to give any notice of an adjournment or of the
business to be transacted at an adjourned meeting, other than by announcement at
the meeting at which such adjournment is taken.
-39-
<PAGE>
Section 5. ENTRY OF NOTICE.
Whenever any shareholder entitled to vote has been absent from any meeting of
shareholders, whether annual or special, an entry in the minutes to the effect
that notice has been duly given shall be conclusive and incontrovertible
evidence that due notice of such meeting was given to such shareholders, as
required by law and the By-laws of the corporation.
Section 6. VOTING. At all annual
and special meetings of stockholders entitled to vote thereat, every holder of
stock issued to a bona fide purchaser of the same, represented by the holders
thereof, either in person or by proxy in writing, shall have one (1) vote for
each share of stock so held and represented at such meetings, unless the
Articles of Incorporation of the corporation shall otherwise provide, in which
event the voting rights, powers and privileges prescribed in the said Articles
of Incorporation shall prevail. Voting for directors and, upon demand of any
stockholder, upon any question at any meeting shall be by ballot.
Section 7. QUORUM. The presence in
person or by proxy of the holders of a majority of the shares entitled to vote
at any meeting shall constitute a quorum for the transaction of business. The
shareholders present at a duly called or held meeting at which a quorum is
present may continue to do business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum.
Section 8. CONSENT OF ABSENTEES.
-40-
<PAGE>
The transactions of any meeting of shareholders, either annual or special,
however called and noticed, shall be as valid as though a meeting had been duly
held after regular call and notice, if a quorum be present, either in person or
by proxy, and if, either before or after the meeting, each of the shareholders
entitled to vote, not present in person or by proxy, sign a written Waiver of
Notice, or a consent to the holding of such meeting, or an approval of the
minutes thereof. All such waivers, consents or approvals shall be filed with the
corporate records or made a part of the minutes of this meeting.
Section 9. PROXIES. Every person
entitled to vote or execute consents shall have the right to do so either in
person or by an agent or agents authorized by a written proxy executed by such
person or his duly authorized agent and filed with the Secretary of the
corporation; provided that no such proxy shall be valid after the expiration of
eleven (11) months from the date of its execution, unless the shareholder
executing it specifies therein the length of time for which such proxy is to
continue in force, which in no case shall exceed seven (7) years from the date
of its execution.
ARTICLE III.
Directors and Directors' Meetings
Section 1. POWERS. Subject to the
limitations of the Articles of Incorporation or the By-laws, and the provisions
of the Nevada Revised Statutes as to action to be authorized or approved by the
shareholders, and subject to the duties of directors as prescribed by the
-41-
<PAGE>
By-laws, all corporate powers shall be exercised by or under the authority of,
and the business and affairs of the corporation shall be controlled by the Board
of Directors. Without prejudice to such general powers, but subject to the same
limitations, it is hereby expressly declared that the Directors shall have the
following powers, to wit:
First - To select and remove all the other
officers, agents and employees of the corporation, prescribe
such powers and duties for them as may not be inconsistent with
law, with the Articles of Incorporation or the By-laws, fix
their compensation and require from them security for faithful
service.
Second - To conduct, manage and control the
affairs and business of the corporation, and to make such rules
and regulations therefor not inconsistent with law, with the
Articles of Incorporation or the Bylaws, as they may deem best.
Third - To change the principal office for
the transaction of the business of the corporation from one
location to another within the same county as provided in
Article I, Section 1 hereof; to fix and locate from time to time
one or more subsidiary offices of the corporation within or
without the State of Nevada, as provided in Article I, Section 2
hereof; to designate any place within or without the State of
Nevada for the holding of any shareholders' meeting or meetings;
-42-
<PAGE>
and to adopt, make and use a corporate seal and to prescribe the
forms of certificates of stock, and to alter the form of such
seal and of such certificates from time to time, as in their
judgment they may deem best, provided such seal and such
certificates shall at all times comply with the
provisions of law.
Fourth - To authorize the issuance of
shares of stock of the corporation from time to time, upon such
terms as may be lawful, in consideration of money paid, labor
done or services actually rendered, debts or securities
canceled, or tangible or intangible property actually received,
or in the case of shares issued as a dividend, against amounts
transferred from surplus to stated capital.
Fifth - To borrow money and incur
indebtedness for the purposes of the corporation, and to cause
to be executed and delivered therefor, in the corporate name,
promissory notes, bonds, debentures, deeds of trust, mortgages,
pledges, hypothecations or other evidences of debt and
securities therefor.
Sixth - To appoint an executive committee
and other committees and to delegate to the executive committee
any of the powers and authority of the Board in management of
the business and affairs of the corporation, except the power to
declare dividends and to adopt, amend or repeal By-laws. The
executive committee shall be composed of one or more Directors.
Section 2. NUMBER AND QUALIFICATION
-43-
<PAGE>
OF DIRECTORS.The authorized number of directors of the corporation shall be not
less than Three (3).
----------------
Section 3. ELECTION AND TERM OF
OFFICE. The Directors shall be elected at each annual meeting of shareholders,
but if any such annual meeting is not held or the Directors are not elected
thereat, the Directors may be elected at any special meeting of shareholders.
All Directors shall hold office until their respective successors are elected.
Section 4. VACANCIES. Vacancies in
the Board of Directors may be filled by a majority of the remaining Directors,
though less than a quorum, or by a sole remaining Director, and each Director so
elected shall hold office until his successor is elected at an annual or a
special meeting of the shareholders.
A vacancy or vacancies in the Board of Directors
shall be deemed to exist in case of the death, resignation or removal of any
Director, or if the authorized number of Directors be increased, or if the
shareholders fail at any annual or special meeting of shareholders, at which any
Director of Directors are elected, to elect the full authorized number of
Directors to be voted for at that meeting.
The shareholders may elect a Director or
Directors at any time to fill any vacancy or vacancies not filled by the
Directors. If the Board of Directors accepts the resignation of a Director
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tendered to take effect at a future time, the Board, or the shareholders, shall
have the power to elect a successor to take office when the resignation is to
become effective.
No reduction of the authorized number of
Directors shall have the effect of removing any Director prior to the expiration
of his term of office.
Section 5. PLACE OF MEETING.
Regular meetings of the Board of Directors shall be held at any place within or
without the state which has been designated from time to time by resolution of
the Board or by written consent of all members of the Board. In the absence of
such designation, regular meetings shall be held at the principal office of the
corporation. Special meetings of the Board may be held either at a place so
designated, or at the principal office.
Section 6. ORGANIZATIONAL MEETING.
Immediately following each annual meeting of shareholders, the Board of
Directors shall hold a regular meeting for the purpose of organization, election
of officers and the transaction of other business. Notice of such meeting is
hereby dispensed with.
Section 7. OTHER REGULAR MEETINGS.
Other regular meetings of the Board of Directors shall be held without call on
the fourth Wednesday of each month at the hour of 3:00 o'clock p.m. of said day;
provided, however, should said day fall upon a legal holiday, then said meeting
shall be held at the same time on the next day thereafter ensuing which is not a
legal holiday. Notice of all such regular meetings of the Board of Directors is
hereby dispensed with.
Section 8. SPECIAL MEETINGS.
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Special meetings of the Board of Directors for any purpose or purposes shall be
called at any time by the President, or, if absent or unable or refuses to act,
by any Vice President or by any two (2) Directors.
Written notice of the time and place of special
meetings shall be delivered personally to the Directors or sent to each Director
by mail, or other form of written communication, charges prepaid, addressed to
him at his address as it is shown upon the records of the corporation, or if it
is not shown on such records or is not readily ascertainable, at the place in
which meetings of the Directors are regularly held. In case such notice is
mailed or telegraphed, it shall be deposited in the United States mail or other
appropriate mail or facsimile facility, or delivered to the telegraph company in
the place in which the principal office of the corporation is located at least
forty-eight (48) hours prior to the time of the holding of the meeting. In case
such notice is delivered as above provided, it shall be so delivered at least
twenty-four (24) hours prior to the time of the holding of the meeting. Such
mailing, faxing, telegraphing or delivery as above provided shall be due, legal
and personal notice to such Director.
Section 9. NOTICE OF ADJOURNMENT.
Notice of the time and place of holding an adjourned meeting need not be given
to absent Directors, if the time and place be fixed at the meeting adjourned.
Section 10. ENTRY OF NOTICE.
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the Board of Directors, an entry in the minutes to the effect that notice has
been duly given shall be conclusive and incontrovertible evidence that due
notice of such special meeting was given to such Director, as required by law
and the By-laws of the corporation.
Section 11. WAIVER OF NOTICE. The
transactions of any meeting of the Board of Directors, however called and
noticed or wherever held, shall be as valid as though a meeting had been duly
held after regular call and notice, if a quorum be present, and if, either
before or after the meeting, each of the Directors not present sign a written
Waiver of Notice or a Consent to holding such meeting, or an approval of the
minutes thereof. All such waivers, consents or approvals shall be filed with the
corporate records or made a part of the minutes of the meeting.
Section 12. QUORUM. A majority of
the authorized number of Directors shall be necessary to constitute a quorum for
the transaction of business, except to adjourn as hereinafter provided. Every
act or decision done or made by a majority of the Directors present at a meeting
duly held at which a quorum is present, shall be regarded as the act of the
Board of Directors, unless a greater number be required by law or by the
Articles of Incorporation.
Section 13. ADJOURNMENT. A quorum of
the Directors may adjourn any Directors' meeting to meet again at a stated day
and hour; provided, however, that in the absence of a quorum, a majority of the
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Directors present at any Directors' meeting, either regular or special, may
adjourn from time to time until the time fixed for the next regular meeting of
the Board.
Section 14. FEES AND COMPENSATION.
Directors shall not receive any stated salary for their services as Directors,
but by resolution of the Board, a fixed fee, with or without expenses of
attendance, may be allowed for attendance at each meeting. Nothing herein
contained shall be construed to preclude any Director from serving the
corporation in any other capacity as an officer, agent, employee or otherwise,
and receiving compensation therefor.
ARTICLE IV
Officers
Section 1. OFFICERS. The officers
of the corporation shall be a President, a Vice-President, a Secretary and a
Treasurer. The corporation may also have, at the discretion of the Board of
Directors, a Chairman of the Board, one or more Vice Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other officers
as may be appointed in accordance with the provisions of Section 3 of this
Article. Officers, other than President and Chairman of the Board, need not be
Directors. Any person may hold two (2) or more offices.
Section 2. ELECTION. The officers
of the corporation, except such officers as may be appointed in accordance with
the provisions of Section 3 or Section 5 of this Article, shall be chosen
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annually by the Board of Directors, and each shall hold his office until he
shall resign or shall be removed or otherwise disqualified to serve, or his
successor shall be qualified and elected.
Section 3. SUBORDINATE
OFFICERS, ETC. The Board of Directors may appoint such other officers as the
business of the corporation may require, each of whom shall hold office for such
period, have such authority and perform such duties as are provided in the
By-laws or as the Board of Directors may from time to time determine.
Section 4. REMOVAL AND RESIGNATION.
Any officer may be removed, either with or without cause, by a majority of the
Directors at the time in office, at any regular or special meeting of the Board.
Any officer may resign at any time by giving
written notice to the Board of Directors or to the President, or to the
Secretary of the corporation. Any such resignation shall take effect at the date
of the receipt of such notice or at any later time specified therein; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 5. VACANCIES. A vacancy in
any office because of death, resignation, removal, disqualification or any other
cause shall be filled in the manner prescribed in the By-laws for regular
appointments to such office.
Section 6. CHAIRMAN OF THE BOARD.
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The Chairman of the Board, if there shall be such an officer, shall, if present,
preside at all meetings of the Board of Directors, and exercise and perform such
other powers and duties as may be from time to time assigned to him by the Board
of Directors or prescribed by the By-laws.
Section 7. PRESIDENT. Subject to
such supervisory powers, if any, as may be given by the Board of Directors to
the Chairman of the Board, the President shall be the Chief Executive Officer of
the corporation and shall, subject to the control of the Board of Directors,
have general supervision, direction and control of the business and officers of
the corporation. He shall preside at all meetings of the shareholders and in the
absence of the Chairman of the Board, at all meetings of the Board of Directors.
He shall be ex-officio a member of all the standing committees, including the
executive committee, if any, and shall have the general powers and duties of
management usually vested in the office of President of a corporation, and shall
have such other powers and duties as may be prescribed by the Board of Directors
or the By-laws.
Section 8. VICE PRESIDENT. In the
absence or disability of the President, the Vice Presidents, in order of their
rank as fixed by the Board of Directors, or if not ranked, the Vice President
designated by the Board of Directors, shall perform all the duties of the
President and when so acting shall have all the powers of, and be subject to,
all the restrictions upon the President. The Vice Presidents shall have such
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other powers and perform such other duties as from time to time may be
prescribed for them respectively by the Board of Directors or the By-laws.
Section 9. SECRETARY. The Secretary
shall keep, or cause to be kept, a book of minutes at the principal office or
such other place as the Board of Directors may order, of all meetings of
Directors and shareholders, with the time and place of holding, whether regular
or special, and if special, how authorized, the notice thereof given, the names
of those present at Directors' meetings, the number of shares present or
represented at shareholders' meetings and the proceedings thereof.
The Secretary shall keep or cause to be kept, at
the principal office, a share register, or a duplicate share register, showing
the names of the shareholders and their addresses; the number and classes of
shares held by each; the number and date of certificates issued for the same,
and the number and date of cancellation of every certificate surrendered for
cancellation.
The Secretary shall give, or cause to be given,
notice of all the meetings of the shareholders and of the Board of Directors
required by the By-laws or by law to be given, and shall keep the seal of the
corporation in safe custody, and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors or the By-laws.
Section 10. TREASURER. The Treasurer
shall keep and maintain, or cause to be kept and maintained, adequate and
correct accounts of the properties and business transactions of the corporation,
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including accounts of its assets, liabilities, receipts, disbursements, gains,
losses, capital, surplus and shares. Any surplus, including earned surplus,
paid-in surplus and surplus arising from a reduction of stated capital, shall be
classified according to source and shown in a separate account. The books of
account shall at all times be open to inspection by any Director.
The Treasurer shall deposit all monies and other
valuables in the name and to the credit of the corporation with such
depositaries as may be designated by the Board of Directors. He shall disburse
the funds of the corporation as may be ordered by the Board of Directors, shall
render to the President and Directors, whenever they request it, an account of
all transactions as Treasurer and of the financial condition of the corporation,
and shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors or the By-laws.
ARTICLE V.
Miscellaneous
Section 1. RECORD DATE AND CLOSING
OF STOCK BOOKS. The Board of Directors may fix a time, in the future, not
exceeding fifteen (15) days preceding the date of any meeting of shareholders,
and not exceeding thirty (30) days preceding the date fixed for the payment of
any dividend or distribution, or for the allotment of rights, or when any change
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or conversion or exchange of shares shall go into effect, as a record date for
the determination of the shareholders entitled to notice of and to vote at any
such meeting, or entitled to receive any such dividend or distribution, or any
such allotment of rights, or to exercise the rights in respect to any such
change, conversion or exchange of shares, and in such case, only shareholders of
record on the date so fixed shall be entitled to notice of and to vote at such
meetings, or to receive such dividend, distribution or allotment of rights, or
to exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after any record date fixed as aforesaid.
The Board of Directors may close the books of the corporation against transfers
of shares during the whole, or any part of any such period.
Section 2. INSPECTION OF CORPORATE
RECORDS. The share register or duplicate share register, the books of account
and minutes of proceedings of the shareholders and Directors shall be open to
inspection upon the written demand of any shareholder or the holder of a voting
trust certificate, at any reasonable time, and for the purpose reasonably
related to his interests as a shareholder, or as the holder of a voting trust
certificate, and shall be exhibited at any time when required by the demand of
ten percent (10%) of the shares represented at any shareholders' meeting. Such
inspection may be made in person or by an agent or attorney, and shall include
the right to make extracts. Demand of inspection other than at a shareholders'
meeting shall be made in writing upon the President, Secretary or Assistant
Secretary of the corporation.
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Section 3. CHECKS, DRAFTS, ETC. All
checks, drafts or other orders for payment of money, notes or other evidences of
indebtedness, issued in the name of or payable to the corporation, shall be
signed or endorsed by such person or persons and in such manner as, from time to
time, shall be determined by resolution of the Board of Directors.
Section 4. ANNUAL REPORT. The Board
of Directors of the corporation shall cause to be sent to the shareholders not
later than one hundred twenty (120) days after the close of the fiscal or
calendar year an annual report.
Section 5. CONTRACTS, ETC., HOW
EXECUTED. The Board of Directors, except as in the By-laws otherwise provided,
may authorize any officer or officers, agent or agents, to enter into any
contract, deed or lease or execute any instrument in the name of and on behalf
of the corporation, and such authority may be general or confined to specific
instances; and unless so authorized by the Board of Directors, no officer, agent
or employee shall have any power or authority to bind the corporation by any
contract or engagement or to pledge its credit to render it liable for any
purpose or to any amount.
Section 6. CERTIFICATES OF STOCK. A
certificate or certificates for shares of the capital stock of the corporation
shall be issued to each shareholder when any such shares are fully paid up. All
such certificates shall be signed by the President or a Vice President and the
Secretary or an Assistant Secretary, or be authenticated by facsimiles of the
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signature of the President and Secretary or by a facsimile of the signature of
the President and the written signature of the Secretary or an Assistant
Secretary. Every certificate authenticated by a facsimile of a signature must be
countersigned by a transfer agent or transfer clerk.
Certificates for shares may be issued prior to
full payment under such restrictions and for such purposes as the Board of
Directors or the By-laws may provide; provided, however, that any such
certificate so issued prior to full payment shall state the amount remaining
unpaid and the terms of payment thereof.
Section 7. REPRESENTATIONS OF SHARES
OF OTHER CORPORATIONS. The President or any Vice President and the Secretary or
Assistant Secretary of this corporation are authorized to vote, represent and
exercise on behalf of this corporation all rights incident to any and all shares
of any other corporation or corporations standing in the name of this
corporation. The authority herein granted to said officers to vote or represent
on behalf of this corporation or corporations may be exercised either by such
officers in person or by any person authorized so to do by proxy or power of
attorney duly executed by said officers.
Section 8. INSPECTION OF BY-LAWS.
The corporation shall keep in its principal office for the transaction of
business the original or a copy of the By-laws, as amended or otherwise altered
to date, certified by the Secretary, which shall be open to inspection by the
shareholders at all reasonable times during office hours.
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ARTICLE VI.
Amendments
Section 1. POWER OF SHAREHOLDERS.
New By-laws may be adopted or these By-laws may be amended or repealed by the
vote of shareholders entitled to exercise a majority of the voting power of the
corporation or by the written assent of such shareholders.
Section 2. POWER OF DIRECTORS.
Subject to the right of the shareholders as provided in Section 1 of this
Article VI to adopt, amend or repeal By-laws, By-laws other than a By-law or
amendment thereof changing the authorized number of Directors may be adopted,
amended or repealed by the Board of Directors.
Section 3. ACTION BY DIRECTORS
THROUGH CONSENT IN LIEU OF MEETING. Any action required or permitted to be taken
at a meeting of the Board of Directors or of any committee thereof, may be taken
without a meeting, if a written consent thereto is signed by all the members of
the Board or of such committee. Such written consent shall be filed with the
minutes of proceedings of the Board or committee.
-------------------------------------
Secretary
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Exhibit (4)
DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
AND WILL NOT BE REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION PROVIDED BY SECTION
3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED,
AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER (THE "1933 ACT"), AND RULE 504 OF
REGULATION D PROMULGATED THEREUNDER.
A-001 US $500,000
ENDOVASC LTD., INC.
-------------------
8% SERIES A SENIOR SUBORDINATED CONVERTIBLE REDEEMABLE DEBENTURE
DUE JULY 12, 2001
THIS DEBENTURE of Endovasc Ltd., Inc., a
corporation duly organized and existing under the laws of Nevada ("Company"),
designated as its 8% Series A Senior Subordinated Convertible Redeemable
Debentures Due July 12, 2001, in an aggregate principal face amount not
exceeding Five Hundred Thousand Dollars (U.S. $500,000), which Debentures are
being purchased at 100% of the face amount of such Debentures.
FOR VALUE RECEIVED, the Company promises to pay
to Amran Rothman the registered holder hereof and his authorized successors and
permitted assigns ("Holder"), the aggregate principal face sum not to exceed
Five Hundred Thousand Dollars (U.S. $500,000) on July 12, 2001 ("Maturity
Date"), and to pay interest on the principal sum outstanding, at the rate of 8%
per annum commencing August 12, 1999 and due in full at the Maturity Date
pursuant to paragraph 4(b) herein. Accrual of outstanding principal sum has been
made or duly provided for. The interest so payable will be paid to the person in
whose name this Debenture is registered on the records of the Company regarding
registration and transfers of the Debentures ("Debenture Register"); provided,
however, that the Company's obligation to a transferee of this Debenture arises
only if such transfer, sale or other disposition is made in accordance with the
terms and conditions of the Securities Subscription Agreement dated as of July
12, 1999 between the Company and BSD Holdings, L.L.C. ("Subscription
Agreement"). The principal of, and interest on, this Debenture are payable at
the address last appearing on the Debenture Register of the Company as
designated in writing by the Holder hereof from time to time. The Company will
pay the outstanding principal due upon this Debenture before or on the Maturity
Date, less any amounts required by law to be deducted
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or withheld, to the Holder of this Debenture by check if paid more than 10 days
prior to the Maturity Date or by wire transfer and addressed to such Holder at
the last address appearing on the Debenture Register. The forwarding of such
check or wire transfer shall constitute a payment of outstanding principal
hereunder and shall satisfy and discharge the liability for principal on this
Debenture to the extent of the sum represented by such check or wire transfer.
Interest shall be payable in Common Stock (as defined below) pursuant to
paragraph 4(b) herein.
This Debenture is subject to the following
additional provisions:
1. The Debentures are issuable in
denominations of Ten Thousand Dollars (US$10,000) and integral multiples
thereof. The Debentures are exchangeable for an equal aggregate principal amount
of Debentures of different authorized denominations, as requested by the Holders
surrendering the same, but not less than U.S. $10,000. No service charge will be
made for such registration or transfer or exchange, except that Holder shall pay
any tax or other governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold
from all payments any amounts required to be withheld under the applicable laws.
3. This Debenture may be transferred or
exchanged only in compliance with the Securities Act of 1933, as amended ("Act")
and applicable state securities laws. Prior to due presentment for transfer of
this Debenture, the Company and any agent of the Company may treat the person in
whose name this Debenture is duly registered on the Company's Debenture Register
as the owner hereof for all other purposes, whether or not this Debenture be
overdue, and neither the Company nor any such agent shall be affected or bound
by notice to the contrary. Any Holder of this Debenture, electing to exercise
the right of conversion set forth in Section 4(a) hereof, in addition to the
requirements set forth in Section 4(a), and any prospective transferee of this
Debenture, are also required to give the Company written confirmation that the
Debenture is being converted ("Notice of Conversion") in the form annexed hereto
as Exhibit I.
4.(a) The Holder of this Debenture is entitled,
at its option, at any time immediately following execution of this Agreement and
delivery of the Debenture hereof, to convert all or any amount over $10,000 of
the principal face amount of this Debenture then outstanding into freely
tradeable shares of Common Stock, $0.001 par value per share, of the Company
issued without restrictive legend of any kind ("Common Stock"), at a conversion
price ("Conversion Price") for each share of Common Stock equal to 75% of the
average closing bid price of the Common Stock of the Common Stock as reported on
the National Association of Securities Dealers Electronic Bulletin Board ("OTC
Bulletin Board") for the 3 consecutive day immediately preceding the date of
receipt by the Company of a Notice of Conversion ("Conversion Shares"). If the
number of resultant Conversion Shares would as a matter of law or pursuant to
regulatory authority require the Company to seek shareholder approval of such
issuance, the Company shall, as soon as practicable, take the necessary steps to
seek such approval. Such conversion shall be effectuated, as provided in a
certain Escrow Agreement executed simultaneously with this Debenture, by the
Company delivering the Conversion Shares to the Holder within 5 business days of
receipt by the Company of the Notice of Conversion. Once the Holder has received
such Conversion Shares, the Escrow Agent shall surrender the Debentures to be
converted to the Company, executed by the Holder of this Debenture evidencing
such Holder's intention to convert this Debenture or a specified portion hereof,
and accompanied by proper assignment hereof in blank. Accrued but unpaid
interest shall be subject to conversion. No fractional shares or scrip
representing fractions of shares will be issued on conversion, but the number of
shares issuable shall be rounded to the nearest whole share.
(b) Interest at the rate of 8% per annum
shall be paid by issuing Common Stock of the Company as follows: Based on the
closing bid price of the Common Stock as reported
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on the OTC Bulletin Board for the 3 consecutive trading days immediately
preceding the date of the monthly interest payment due ("Market Price"), the
Company shall issue to the Holder freely tradeable shares of Common Stock
without restrictive legend of any kind in an amount equal to the total monthly
interest accrued and due divided by 75% of the Market Price ("Interest Shares").
The dollar amount of interest payable pursuant to this paragraph 4(b) shall be
calculated based upon the total amount of payments actually made by the Holder
in connection with the purchase of the Debentures at the time any interest
payment is due. If such payment is made by check, interest shall accrue
beginning 10 days from the date the check is received by the Company. If such
payment is made by wire transfer directly into the Company's account, interest
shall accrue beginning on the date the wire transfer is received by the Company.
Common Stock issued pursuant hereto shall be issued pursuant to Rule 504 of
Regulation D in accordance with the terms of the Subscription Agreement.
(c) At any time after 90 days the Company
shall have the option to pay to the Holder 125% of the principal amount of the
Debenture, in full, to the extent conversion has not occurred pursuant to
paragraph 4(a) herein, or pay upon maturity if the Debenture is not converted.
The Company shall give the Holder 5 days written notice and the Holder during
such 5 days shall have the option to convert the Debenture or any part thereof
into shares of Common Stock at the Conversion Price set forth in paragraph 4(a)
of this Debenture.
5. No provision of this Debenture shall
alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of, and interest on, this Debenture at the
time, place, and rate, and in the form, herein prescribed.
6. The Company hereby expressly waives
demand and presentment for payment, notice of non-payment, protest, notice of
protest, notice of dishonor, notice of acceleration or intent to accelerate, and
diligence in taking any action to collect amounts called for hereunder and shall
be directly and primarily liable for the payment of all sums owing and to be
owing hereto.
7. The Company agrees to pay all costs and
expenses, including reasonable attorneys' fees, which may be incurred by the
Holder in collecting any amount due under this Debenture.
8. If one or more of the following described
"Events of Default" shall occur and continue for 30 days, unless a different
time frame is noted below:
(a) The Company shall default in the
payment of principal or interest on this
Debenture; or
(b) Any of the representations or warranties
made by the Company herein, in the
Subscription Agreement, or in any
certificate or financial or other written
statements heretofore or hereafter
furnished by or on behalf of the Company
in connection with the execution and
delivery of this Debenture or the
Subscription Agreement shall be false or
misleading in any material respect at the
time made or the Company shall violate
any covenants in the Subscription
Agreement including but not limited to
Section 5(b) or 10; or
(c) The Company shall fail to perform or
observe, in any material respect, any
other covenant, term, provision,
condition, agreement or obligation of the
Company under this Debenture, the
Subscription Agreement or the Escrow
Agreement and such failure shall continue
uncured for a period of thirty (30) days
after notice from the Holder of such
failure; or
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(d) The Company shall (1) become insolvent;
(2) admit in writing its inability to pay
its debts generally as they mature; (3)
make an assignment for the benefit of
creditors or commence proceedings for its
dissolution; (4) apply for or consent to
the appointment of a trustee, liquidator
or receiver for its or for a substantial
part of its property or business; (5) file
a petition for bankruptcy relief, consent
to the filing of such petition or have
filed against it an involuntary petition
for bankruptcy relief, all under federal
or state laws as applicable; or
(e) A trustee, liquidator or receiver shall be
appointed for the Company or for a
substantial part of its property or
business without its consent and shall not
be discharged within thirty (30) days
after such appointment; or
(f) Any governmental agency or any court of
competent jurisdiction at the instance of
any governmental agency shall assume
custody or control of the whole or any
substantial portion of the properties or
assets of the Company; or
(g) Any money judgment, writ or warrant of
attachment, or similar process, in excess
of One Hundred Thousand ($100,000) Dollars
in the aggregate shall be entered or filed
against the Company or any of its
properties or other assets and shall
remain unpaid, unvacated, unbonded or
unstayed for a period of fifteen (15) days
or in any event later than five (5) days
prior to the date of any proposed sale
thereunder; or
(h) Bankruptcy, reorganization, insolvency or
liquidation proceedings, or other
proceedings for relief under any
bankruptcy law or any law for the relief
of debtors shall be instituted voluntarily
by or involuntarily against the Company;
or
(i) The Company shall have its Common Stock
delisted from the over-the-counter market
or other market or exchange on which the
Common Stock is or becomes listed or
trading in the Common Stock shall be
suspended for more than 10 consecutive
days; or
(j) The Company shall not deliver to the Buyer
the Common Stock pursuant to paragraph 4
herein without restrictive legend within 5
business days.
Then, or at any time thereafter, unless cured, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law.
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9. This Debenture represents a prioritized
obligation of the Company. However, no recourse shall be had for the payment of
the principal of, or the interest on, this Debenture, or for any claim based
hereon, or otherwise in respect hereof, against any incorporator, shareholder,
officer or director, as such, past, present or future, of the Company or any
successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.
10. In case any provision of this Debenture is
held by a court of competent jurisdiction to be excessive in scope or otherwise
invalid or unenforceable, such provision shall be adjusted rather than voided,
if possible, so that it is enforceable to the maximum extent possible, and the
validity and enforceability of the remaining provisions of this Debenture will
not in any way be affected or impaired thereby.
11. This Debenture and the agreements referred
to in this Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof. Neither
this Debenture nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the Company and the
Holder.
12. This Debenture shall be governed by and
construed in accordance with the laws of Texas applicable to contracts made and
wholly to be performed within the State of Texas and shall be binding upon the
successors and assigns of each party hereto. The Holder and the Company hereby
mutually waive trial by jury and consent to exclusive jurisdiction and venue in
the courts of the State of Texas. At Holder's election, any dispute between the
parties may be arbitrated rather than litigated in the courts, before the
American Arbitration Association in Dallas and pursuant to its rules. Upon
demand made by the Holder to the Company, the Company agrees to submit to and
participate in such arbitration. This Agreement may be executed in counterparts,
and the facsimile transmission of an executed counterpart to this Agreement
shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused
this instrument to be duly executed by an officer thereunto duly authorized.
Dated: July 12, 1999
ENDOVASC LTD., INC.
By: /S/David Summers
----------------
David Summers
President
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A SERIES EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to
convert $___________ of the above Debenture No. _______ into Shares of Common
Stock of Endovasc Ltd., Inc. according to the conditions set forth in such
Debenture, as of the date written below.
If Shares are to be issued in the name of a
person other than the undersigned, the undersigned will pay all transfer and
other taxes and charges payable with respect thereto.
Date of Conversion________________________________________________
Applicable Conversion Price________________________________________
Signature__________________________________________________________
[Print Name of Holder and Title of Signer]
Address:___________________________________________________________
-------------------------------------------------------------
SSN or EIN:
Shares are to be registered in the following name:
Name:____________________________________
Address:_________________________________
Tel:_____________________________________
Fax:_______________
SSN or EIN:________
Shares are to be sent or delivered to the following account:
Account Name:_______________________________________________
Address:____________________________________________________
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<PAGE>
DEBENTURE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
AND WILL NOT BE REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION PROVIDED BY SECTION
3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED,
AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER (THE "1933 ACT"), AND RULE 504 OF
REGULATION D PROMULGATED THEREUNDER.
B-001 US $500,000
ENDOVASC LTD., INC.
-------------------
8% SERIES B SENIOR SUBORDINATED CONVERTIBLE REDEEMABLE DEBENTURE
DUE JULY 12, 2001
THIS DEBENTURE of Endovasc Ltd., Inc., a
corporation duly organized and existing under the laws of Nevada ("Company"),
designated as its 8% Series B Senior Subordinated Convertible Redeemable
Debentures Due July 12, 2001, in an aggregate principal face amount not
exceeding Five Hundred Thousand Dollars (U.S. $500,000), which Debentures are
being purchased at 100% of the face amount of such Debentures.
FOR VALUE RECEIVED, the Company promises to pay
to BSD Holdings, L.L.C. the registered holder hereof and his authorized
successors and permitted assigns ("Holder"), the aggregate principal face sum
not to exceed Five Hundred Thousand Dollars (U.S. $500,000) on July 12, 2001
("Maturity Date"), and to pay interest on the principal sum outstanding, at the
rate of 8% per annum commencing August 12, 1999 and due in full at the Maturity
Date pursuant to paragraph 4(b) herein. Accrual of outstanding principal sum has
been made or duly provided for. The interest so payable will be paid to the
person in whose name this Debenture is registered on the records of the Company
regarding registration and transfers of the Debentures ("Debenture Register");
provided, however, that the Company's obligation to a transferee of this
Debenture arises only if such transfer, sale or other disposition is made in
accordance with the terms and conditions of the Securities Subscription
Agreement dated as of July 12, 1999 between the Company and BSD Holdings, L.L.C.
("Subscription Agreement"). The principal of, and interest on, this Debenture
are payable at the address last appearing on the Debenture Register of the
Company as designated in writing by the Holder hereof from time to time. The
Company will pay the outstanding principal due upon this Debenture before or on
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<PAGE>
the Maturity Date, less any amounts required by law to be deducted or withheld,
to the Holder of this Debenture by check if paid more than 10 days prior to the
Maturity Date or by wire transfer and addressed to such Holder at the last
address appearing on the Debenture Register. The forwarding of such check or
wire transfer shall constitute a payment of outstanding principal hereunder and
shall satisfy and discharge the liability for principal on this Debenture to the
extent of the sum represented by such check or wire transfer. Interest shall be
payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.
This Debenture is subject to the following
additional provisions:
1. The Debentures are issuable in
denominations of Ten Thousand Dollars (US$10,000) and integral multiples
thereof. The Debentures are exchangeable for an equal aggregate principal amount
of Debentures of different authorized denominations, as requested by the Holders
surrendering the same, but not less than U.S. $10,000. No service charge will be
made for such registration or transfer or exchange, except that Holder shall pay
any tax or other governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold
from all payments any amounts required to be withheld under the applicable laws.
3. This Debenture may be transferred or
exchanged only in compliance with the Securities Act of 1933, as amended ("Act")
and applicable state securities laws. Prior to due presentment for transfer of
this Debenture, the Company and any agent of the Company may treat the person in
whose name this Debenture is duly registered on the Company's Debenture Register
as the owner hereof for all other purposes, whether or not this Debenture be
overdue, and neither the Company nor any such agent shall be affected or bound
by notice to the contrary. Any Holder of this Debenture, electing to exercise
the right of conversion set forth in Section 4(a) hereof, in addition to the
requirements set forth in Section 4(a), and any prospective transferee of this
Debenture, are also required to give the Company written confirmation that the
Debenture is being converted ("Notice of Conversion") in the form annexed hereto
as Exhibit I.
4.(a) The Holder of this Debenture is entitled,
at its option, at any time immediately following execution of this Agreement and
delivery of the Debenture hereof, to convert all or any amount over $10,000 of
the principal face amount of this Debenture then outstanding into freely
tradeable shares of Common Stock, $0.001 par value per share, of the Company
issued without restrictive legend of any kind ("Common Stock"), at a conversion
price ("Conversion Price") for each share of Common Stock equal to 75% of the
average closing bid price of the Common Stock of the Common Stock as reported on
the National Association of Securities Dealers Electronic Bulletin Board ("OTC
Bulletin Board") for the 3 consecutive day immediately preceding the date of
receipt by the Company of a Notice of Conversion ("Conversion Shares"). If the
number of resultant Conversion Shares would as a matter of law or pursuant to
regulatory authority require the Company to seek shareholder approval of such
issuance, the Company shall, as soon as practicable, take the necessary steps to
seek such approval. Such conversion shall be effectuated, as provided in a
certain Escrow Agreement executed simultaneously with this Debenture, by the
Company delivering the Conversion Shares to the Holder within 5 business days of
receipt by the Company of the Notice of Conversion. Once the Holder has received
such Conversion Shares, the Escrow Agent shall surrender the Debentures to be
converted to the Company, executed by the Holder of this Debenture evidencing
such Holder's intention to convert this Debenture or a specified portion hereof,
and accompanied by proper assignment hereof in blank. Accrued but unpaid
interest shall be subject to conversion. No fractional shares or scrip
representing fractions of shares will be issued on conversion, but the number of
shares issuable shall be rounded to the nearest whole share.
(b) Interest at the rate of 8% per annum shall
be paid by issuing Common Stock of the Company as follows: Based on the closing
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<PAGE>
bid price of the Common Stock as reported on the OTC Bulletin Board for the 3
consecutive trading days immediately preceding the date of the monthly interest
payment due ("Market Price"), the Company shall issue to the Holder freely
tradeable shares of Common Stock without restrictive legend of any kind in an
amount equal to the total monthly interest accrued and due divided by 75% of the
Market Price ("Interest Shares"). The dollar amount of interest payable pursuant
to this paragraph 4(b) shall be calculated based upon the total amount of
payments actually made by the Holder in connection with the purchase of the
Debentures at the time any interest payment is due. If such payment is made by
check, interest shall accrue beginning 10 days from the date the check is
received by the Company. If such payment is made by wire transfer directly into
the Company's account, interest shall accrue beginning on the date the wire
transfer is received by the Company. Common Stock issued pursuant hereto shall
be issued pursuant to Rule 504 of Regulation D in accordance with the terms of
the Subscription Agreement.
(c) At any time after 90 days the Company
shall have the option to pay to the Holder 125% of the principal amount of the
Debenture, in full, to the extent conversion has not occurred pursuant to
paragraph 4(a) herein, or pay upon maturity if the Debenture is not converted.
The Company shall give the Holder 5 days written notice and the Holder during
such 5 days shall have the option to convert the Debenture or any part thereof
into shares of Common Stock at the Conversion Price set forth in paragraph 4(a)
of this Debenture.
5. No provision of this Debenture shall alter
or impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of, and interest on, this Debenture at the time, place, and
rate, and in the form, herein prescribed.
6. The Company hereby expressly waives demand
and presentment for payment, notice of non-payment, protest, notice of protest,
notice of dishonor, notice of acceleration or intent to accelerate, and
diligence in taking any action to collect amounts called for hereunder and shall
be directly and primarily liable for the payment of all sums owing and to be
owing hereto.
7. The Company agrees to pay all costs and
expenses, including reasonable attorneys' fees, which may be incurred by the
Holder in collecting any amount due under this Debenture.
8. If one or more of the following described
"Events of Default" shall occur and continue for 30 days, unless a different
time frame is noted below:
(a) The Company shall default in the payment
of principal or interest on this
Debenture; or
(b) Any of the representations or warranties
made by the Company herein, in the
Subscription Agreement, or in any
certificate or financial or other written
statements heretofore or hereafter
furnished by or on behalf of the Company
in connection with the execution and
delivery of this Debenture or the
Subscription Agreement shall be false or
misleading in any material respect at the
time made or the Company shall violate any
covenants in the Subscription Agreement
including but not limited to Section 5(b)
or 10; or
(c) The Company shall fail to perform or
observe, in any material respect, any
other covenant, term, provision,
condition, agreement or obligation of the
Company under this Debenture, the
Subscription Agreement or the Escrow
Agreement and such failure shall continue
uncured for a period of thirty (30) days
after notice from the Holder of such
failure; or
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<PAGE>
(d) The Company shall (1) become insolvent;
(2) admit in writing its inability to pay
its debts generally as they mature; (3)
make an assignment for the benefit of
creditors or commence proceedings for its
dissolution; (4) apply for or consent to
the appointment of a trustee, liquidator
or receiver for its or for a substantial
part of its property or business; (5) file
a petition for bankruptcy relief, consent
to the filing of such petition or have
filed against it an involuntary petition
for bankruptcy relief, all under federal
or state laws as applicable; or
(e) A trustee, liquidator or receiver shall be
appointed for the Company or for a
substantial part of its property or
business without its consent and shall not
be discharged within thirty (30) days
after such appointment; or
(f) Any governmental agency or any court of
competent jurisdiction at the instance of
any governmental agency shall assume
custody or control of the whole or any
substantial portion of the properties or
assets of the Company; or
(g) Any money judgment, writ or warrant of
attachment, or similar process, in excess
of One Hundred Thousand ($100,000) Dollars
in the aggregate shall be entered or filed
against the Company or any of its
properties or other assets and shall
remain unpaid, unvacated, unbonded or
unstayed for a period of fifteen (15) days
or in any event later than five (5) days
prior to the date of any proposed sale
thereunder; or
(h) Bankruptcy, reorganization, insolvency or
liquidation proceedings, or other
proceedings for relief under any
bankruptcy law or any law for the relief
of debtors shall be instituted voluntarily
by or involuntarily against the Company;
or
(i) The Company shall have its Common Stock
delisted from the over-the-counter market
or other market or exchange on which the
Common Stock is or becomes listed or
trading in the Common Stock shall be
suspended for more than 10 consecutive
days; or
(j) The Company shall not deliver to the Buyer
the Common Stock pursuant to paragraph 4
herein without restrictive legend within 5
business days.
Then, or at any time thereafter, unless cured, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein or any other
rights or remedies afforded by law.
9. This Debenture represents a prioritized
obligation of the Company. However, no recourse shall be had for the payment of
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<PAGE>
the principal of, or the interest on, this Debenture, or for any claim based
hereon, or otherwise in respect hereof, against any incorporator, shareholder,
officer or director, as such, past, present or future, of the Company or any
successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.
10. In case any provision of this Debenture is
held by a court of competent jurisdiction to be excessive in scope or otherwise
invalid or unenforceable, such provision shall be adjusted rather than voided,
if possible, so that it is enforceable to the maximum extent possible, and the
validity and enforceability of the remaining provisions of this Debenture will
not in any way be affected or impaired thereby.
11. This Debenture and the agreements referred
to in this Debenture constitute the full and entire understanding and agreement
between the Company and the Holder with respect to the subject hereof. Neither
this Debenture nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the Company and the
Holder.
12. This Debenture shall be governed by and
construed in accordance with the laws of Texas applicable to contracts made and
wholly to be performed within the State of Texas and shall be binding upon the
successors and assigns of each party hereto. The Holder and the Company hereby
mutually waive trial by jury and consent to exclusive jurisdiction and venue in
the courts of the State of Texas. At Holder's election, any dispute between the
parties may be arbitrated rather than litigated in the courts, before the
American Arbitration Association in Dallas and pursuant to its rules. Upon
demand made by the Holder to the Company, the Company agrees to submit to and
participate in such arbitration. This Agreement may be executed in counterparts,
and the facsimile transmission of an executed counterpart to this Agreement
shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused
this instrument to be duly executed by an officer thereunto duly authorized.
Dated: July 12, 1999
ENDOVASC LTD., INC.
By:/s/David Summers
------------------
David Summers
President
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<PAGE>
B SERIES EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects
to convert $___________ of the above Debenture No. _______ into Shares of Common
Stock of Endovasc Ltd., Inc. according to the conditions set forth in such
Debenture, as of the date written below.
If Shares are to be issued in the name of
a person other than the undersigned, the undersigned will pay all transfer and
other taxes and charges payable with respect thereto.
Date of Conversion________________________________________________
Applicable Conversion Price________________________________________
Signature__________________________________________________________
[Print Name of Holder and Title of Signer]
Address:___________________________________________________________
----------------------------------------------------------
SSN or EIN:
Shares are to be registered in the following name:
Name:__________________________________________________
Address:_______________________________________________
Tel:___________________________________
Fax:___________________________________
SSN or EIN:____________________________
Shares are to be sent or delivered to the following account:
Account Name:______________________________________
Address:_____________________________________________________
-69-
