SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Amendment No. 3
FORM SB-2REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
LVPS MicroFacility, Inc.
- -------------------------------------------------------------------------------
(Name Of Small Business Issuer In Its Charter)
Delaware 3841
- -------------------------------------------------------------------------------
(State or Other Jurisdiction (Primary Standard
of Incorporation Industrial Classification
or Organization) Code Number)
33-0845992
- -------------------------------------------------------------------------------
(I.R.S. Employer Identification No.)
7755 Center Avenue, 11th Floor, Huntington Beach, CA 92647
(714) 372-2251
- -------------------------------------------------------------------------------
(Address and Telephone Number of Principal Executive Offices)
7755 Center Avenue, 11th Floor, Huntington Beach, CA 92647
- -------------------------------------------------------------------------------
(Address of Principal Place of Business or Intended Principal Place of Business)
Richard O. Weed
4695 MacArthur Court, Suite 530, Newport Beach, CA 92660
(949) 475-9086
- -------------------------------------------------------------------------------
(Name, Address, and Telephone Number of Agent for Service)
Approximate Date of Commencement of Proposed Sale to the Public:
as soon as possible after this registration statement becomes effective
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. o
- -------------------------------------------------------------------------------
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. o
- -------------------------------------------------------------------------------
1
<PAGE>
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. o
- -------------------------------------------------------------------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. o
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------
Title Of Each Proposed Proposed
Class Of Maximum Maximum
Securities Amount Offering Aggregate Amount Of
To Be To Be Price Offering Registration
Registered Registered Per Unit Price Fee
- ------------------------- ----------------------- ----------------------- ---------------------- -----------------------
<S> <C> <C> <C> <C>
Common Stock 625,000 $8.00 $5,000,000 $1,390
- ------------------------- ----------------------- ----------------------- ---------------------- -----------------------
</TABLE>
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
2
<PAGE>
PART I
INFORMATION REQUIRED IN PROSPECTUS
Item 1. Front of Registration Statement and Outside Front Cover of Prospectus.
The Registrant may amend this registration statement. A registration statement
relating to these securities has been filed with the Securities and Exchange
Commission. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not soliciting an offer to
buy these securities in any state where the offer or sale is not permitted.
PROSPECTUS
LVPS MicroFacility, Inc., a Delaware corporation
625,000 shares of common stock of LVPS MicroFacility, Inc. at a price of $8.00
per share. The offering is for $5,000,000.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The offering will terminate nine months after the effective date of this
registration statement.
You should carefully consider the Risk Factors beginning on page 7 of this
prospectus before purchasing any of the common stock offered by this prospectus.
This is a self-underwritten offering.
====================== ===================== ============================
Shares Sold (3) Price (1) Proceeds to LVPS (2)
====================== ===================== ============================
Per Share $8.00 $8.00
====================== --------------------- ============================
Minimum Shares
287,500 $2,300,000 $2,300,000
====================== ===================== ============================
Maximum Shares
625,000 $5,000,000 $5,000,000
====================== ===================== ============================
(1) The price of the shares has been determined by LVPS and not as the
result of arm's-length negotiations. (2) Before deducting expenses of
the offering. (3) In the event the 287,500 shares have not been sold
within nine months after the effective date of this registration
statement, this offering will terminate. This offer may be extended for
an additional sixty days.
Until the minimum shares are sold, all funds and shares will be held in
escrow by Richard O. Weed pursuant to an Escrow Agreement with LVPS.
There is presently no market for these securities.
Until _________, 2000, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealer's obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
The date of this prospectus is April 25, 2000.
3
<PAGE>
Item 2. Inside Front and Outside Back Cover Pages of Prospectus.
Table of Contents
Item 3. Summary Information ..............................................5
Risk Factors. ....................................................6
Item 4. Use of Proceeds...................................................9
Item 5. Determination of Offering Price...................................13
Item 6. Dilution..........................................................13
Item 7. Selling Security Holders..........................................14
Item 8. Plan of Distribution..............................................14
Item 9. Legal Proceedings.................................................16
Item 10. Directors, Executive Officers, Promoters and Control Persons......16
Item 11. Security Ownership of Certain Beneficial Owners and Management....23
Item 12. Description of Securities. .......................................24
Item 13. Interest of Named Experts and Counsel.............................25
Item 14. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities ......................................25
Item 15. Organization Within Last Five Years...............................25
Item 16. Description of Business. .........................................26
Item 17. Management's Discussion and Analysis or Plan of Operation.........32
Item 18. Description of Property. .........................................33
Item 19. Certain Relationships and Related Transactions. ..................33
Item 20. Market for Common Equity and Related Stockholder Matters..........33
Item 21. Executive Compensation............................................33
Item 22. Financial Statements..............................................35
Item 23. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure ........................................47
4
<PAGE>
SUMMARY
LVPS MicroFacility, Inc.
LVPS MicroFacility, Inc. was incorporated in the State of Delaware on December
16, 1998. LVPS was formed to manufacture facilities for the production of large
volume parenteral solutions. The LVPS MicroFacility is a state-of-the-art
modular micro-manufacturing facility that will produce intravenous solutions
from local water sources. The LVPS MicroFacility plants will be commissioned to
US FDA and host country standards.
LVPS was recently formed and has no ongoing operations. There is no market for
its securities.
LVPS's executive office is at 7755 Center Avenue, 11th Floor, Huntington Beach,
CA 92647. The telephone number is (714) 372-2251.
OFFERING
Offering Size ..........................Maximum: 625,000 shares of common stock
at $5,000,000
Minimum: 287,500 shares of common stock
at $2,300,000
Description of Shares...................Shares of common stock, $.001 par value
Offering Price..........................$8.00 per share
Common Stock
Currently Outstanding...................625,000 shares
Common Stock
Outstanding After Offering..............Minimum Maximum
------- ---------
912,500 1,250,000
Risk Factors............................Investment in the shares involves a high
degree of risk.
Use of Proceeds.........................LVPS will use the net proceeds from this
sale of shares to commence operations.
Subscription Procedure..................To subscribe to the shares, prospective
investors are to deliver (1) a completed
and duly executed copy of the
subscription agreement and (2)
immediately available funds in the
amount of $8.00 per share.
5
<PAGE>
RISK FACTORS
An investment in the shares offered hereby involves a high degree of risk.
Prospective investors should carefully consider the following factors concerning
the business of LVPS and the offering, and should consult independent advisors
as to the technical, tax, business and legal considerations regarding an
investment in the shares.
LVPS Is A Start-Up Stage Company With No Operating History And Is Subject To All
Of The Risks Inherent To A Business In The Start-Up Phase
LVPS was established in December 1998 and has no operating history and no
revenues and is subject to all of the risks inherent in a business in the
start-up phase. LVPS has financed its activities to date through a private
placement of its equity securities and LVPS is dependent on the proceeds from
this offering and the sale of its prototype to fund its operations. If LVPS
sells the minimum amount of securities in this offering it will only be able to
support its operations for six months, if LVPS sells the maximum amount of its
securities, it will only be able to support its operations for twelve months.
Further, there can be no guarantee that LVPS will be able to secure adequate
financing or additional funds from the sale of its prototype to continue to
operate as a going concern for an additional twelve months if the minimum
offering is sold or for an additional six months if the maximum offering is
sold.
The LVPS MicroFacility Is Subject To Extensive Government Regulation Which May
Delay Or Impede LVPS's Operations
LVPS's industry is subject to extensive and frequently revised federal, state,
local and applicable foreign laws and regulations. The successful manufacture of
the LVPS MicroFacility will require applicable government permits,
authorizations and approvals, the nature of which may vary from jurisdiction to
jurisdiction. The permits, authorizations and approvals required for the
MicroFacility could be difficult and time-consuming to obtain and, if and when
issued, may be subject to conditions or restrictions which may limit LVPS's
ability to operate efficiently or at all in the applicable jurisdiction.
Further, any modification, suspension or revocation of the permits,
authorizations and approvals could have a material adverse effect on LVPS's
business, financial condition and results of operations.
LVPS's Growth May Require Substantial Expenditures Which LVPS May Not Be Able To
Fund
Any additional equity financing may be dilutive to LVPS's existing stockholders,
and any debt financing, if available, may involve restrictive covenants which
limit LVPS's operations. LVPS's failure to raise capital if and when needed
could delay or suspend LVPS's strategy and result in a material modification of
LVPS's business strategy. LVPS's inability to fund its capital requirements
could have a material adverse effect on LVPS's business, financial condition and
results of operations.
6
<PAGE>
LVPS's Primary Source Of Revenue And Business Will Come From The Sale Of The
MicroFacility, Which May Not Support LVPS Growth And Therefore, LVPS's Continued
Operation
LVPS will derive its business and revenues from the sale of its MicroFacility.
To achieve market acceptance and penetration, LVPS must continually enhance and
improve its products and services, as well as increase its marketing and sales
efforts to effectively compete and increase customers' awareness of LVPS's
products and services. Failure of LVPS to achieve market success with its
MicroFacility could limit or suspend LVPS's business, financial condition, and
results of operations. Although LVPS is aggressively continuing research and
development for expanded products, there can be no assurance that LVPS's
expanded marketing and sales efforts and increased expenditures will result in
successful commercialization and increased market penetration of LVPS's products
and services.
Technological Factors May Impede LVPS's Ability To Produce A Quality
MicroFacility And Related Products, Which May Result In A Delay In The
MicroFacility's Commercial Acceptance And Therefore, Adversely Effect LVPS's
Financial Condition
LVPS has drafted plans for assembling the MicroFacility, which includes
architectural, mechanical and electrical planning and design and establishment
of protocol for regulatory affairs, but, at this time, does not have a working
prototype of the MicroFacility and is dependant on the proceeds of this offering
to construct the prototype. There can be no guarantee that such plans will
translate into an operating prototype and investors may lose most or all of
their investment. Further, LVPS remains subject to all of the risks inherent in
new product development, including unanticipated technical or other development
problems, which could result in material delays in product commercialization or
significantly increased costs. It is common for manufacturing facilities as
complex and sophisticated as that incorporated in the LVPS MicroFacility to
experience problems during and subsequent to commercial introduction.
As A Result Of Rapid Expansion, LVPS May Not Have The Ability To Manage Growth
Which May Strain LVPS's Resources And Therefore, Detrimentally Affect LVPS's
Future Operations
LVPS will expand its operations rapidly, which may create significant demands on
LVPS's administrative, operational, developmental and financial personnel and
other resources. Additional expansion by LVPS may further strain LVPS's
management, financial personnel and other resources. If LVPS's management is
unable to manage growth effectively, its business, financial condition and
results of operations could be materially adversely affected. There can be no
guarantee that LVPS's systems, procedures, controls and existing space will be
adequate to support expansion of LVPS's operations. LVPS's future operating
results will depend, among other things, on its ability to manage changing
business conditions and to continue to improve its operational, financial
control and reporting systems.
7
<PAGE>
Due To The Cost Of The LVPS MicroFacility, LVPS's Customer Base May Be Limited
The estimated cost for the standard three module LVPS MicroFacility is
$5,500,000. The larger volume six module LVPS MicroFacility is $9,400,000.
Revenues attributable to a relatively small number of customers are likely in
the foreseeable future to represent a significant percentage, in any given
period, of its total revenues. The loss of one or more major customers could
have a materially adverse effect on LVPS's business, financial condition and
results of operations. There can be no guarantee that any future customers will
maintain business relationships with LVPS.
The Success Of LVPS's MicroFacility Is Dependant On Its Ability To Protect Its
Proprietary Rights, Inability To Protect Such Rights Could Lead To Delay Or
Suspension In Production Of The MicroFacility And Costly Litigation
LVPS currently has exclusive licenses from DenexCorp(TM)/LVPS MicroFacility for
the design and specifications of its MicroFacility. LVPS's strategy is to
protect its technology and other proprietary rights through patents, copyrights,
trademarks, nondisclosure agreements, license agreements, and other forms of
protection. There can be no guarantee that any pending or future patent
application of LVPS or its licensors will result in issuance of a patent, that
the scope of protection of any patent of LVPS or its licensors will be held
valid if subsequently challenged, or that third parties will not claim rights in
or ownership of the products and other proprietary rights held by LVPS or its
licensors. In addition, the laws of certain foreign countries do not protect
LVPS's intellectual property rights to the same extent as the laws of the United
States.
Litigation or regulatory proceedings which could result in substantial cost and
uncertainty to LVPS may also be necessary to enforce patent or other proprietary
rights of LVPS or to determine the scope and validity of a third party's
proprietary rights. Although LVPS believes that its technology has been
independently developed and that its products do not infringe patents known to
be valid or violate other proprietary rights of third parties, it is possible
that such infringement of existing or future patents or violation of proprietary
rights may occur. LVPS's failure to successfully enforce its proprietary rights
or defend against infringement claims brought by third parties could have a
material adverse effect upon LVPS. In addition, there can be no assurance that
LVPS will have the resources necessary to successfully defend an infringement
claim brought by a third party.
There Is No Public Market For The Shares, Therefore, It Is Unlikely That LVPS
Shareholders Will Be Able To Sell Their Shares At the Public Market At A
Premium, If At All
It is unlikely that any market will develop prior to the second anniversary of
LVPS's operations following this offering, if then. The offering price for the
shares was determined by management and not as the result of arms-length
negotiations.
8
<PAGE>
Item 4. Use of Proceeds.
USE OF PROCEEDS
<TABLE>
<CAPTION>
The following table sets forth the use of the proceeds from this offering:
If Minimum Sold If Maximum Sold
--------------- ---------------
Amount % Amount %
---------- ---- ---------- ----
<S> <C> <C> <C> <C>
Total Proceeds $2,300,000 100% $5,000,000 100%
Less: offering expenses $0 $0
Legal & Accounting $23,000 1% $50,000 1%
Copying & Printing $4,000 .17% $8,000 .16%
Net Proceeds from Offering $2,273,000 98.83% $4,942,000 98.84%
Use of Net Proceeds $2,273,000 100% $4,942,000 100%
Equipment $1,412,257 62.13% $2,384,667 48.25%
Services $498,175 21.92% $1,248,175 25.26%
Operating Expenses & $362,568 15.95% $1,309,158 26.49%
Working Capital
</TABLE>
9
<PAGE>
The use of the operating expenses and working capital is as follows:
<TABLE>
<CAPTION>
LVPS MicroFacility, Inc.
Operating Expenses &
Working Capital
Minimum Offering Shares Sold
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Total
------- ------- ------- ------- -------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Salaries 12,500 12,500 12,500 12,500 12,500 12,500 75,000
Taxes/FICA (1) 1,375 1,375 1,375 1,375 1,375 1,375 8,250
Office Rent (2) 0 0 0 0 0 0 0
Telephone 450 450 450 450 450 450 2,700
Copy/printing/supply 300 300 300 300 300 300 1,800
Marketing 400 400 400 400 400 400 2,400
Operating Reserve 500 500 500 500 500 500 3,000
Travel & Expenses 1,046 1,046 1,046 1,046 1,046 1,046 6,276
Insurance/Liability 1,000 1,000 1,000 1,000 1,000 1,000 6,000
Operating Reserve 4,642 4,500 4,500 4,500 4,500 4,500 27,142
- ----------------- ----- ----- ----- ----- ----- ----- ------
Total 22,213 22,071 22,071 22,071 22,071 22,071 132,568
</TABLE>
(1) Tax burden 11%
(2) Rent paid by DenexCorp
10
<PAGE>
<TABLE>
<CAPTION>
LVPS MicroFacility
Working Capital &
Operating Expense
Maximum Amount of Shares Sold
Month 1 1 Month 2 Month 3 Month 4 Month 5 Month 6
--------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Salaries (1) 25,000 25,000 25,000 25,000 25,000 25,000
Taxes/FICA (2) 3,250 3,250 3,250 3,250 3,250 3,250
Office Rent 500 500 500 500 500 500
Telephone 450 450 450 550 550 550
Copying & Printing 300 300 300 300 425 425
Marketing (3) 2,000 2,000 2,000 2,000 2,500 2,500
Operations Director (4) 0 0 0 0 0 0
Marketing Director (5) 5,500
Taxes/FICA (6) 0 0 0 0 0 715
Insurance/Liability 1,000 1,000 1,000 1,000 1,000 1,000
Travel/Expenses 1,000 1,500 1,500 2,000 2,000 2,500
Postage/Courier 200 200 200 275 275 325
Supplies 400 400 350 350 350 350
Consultants (7) 500 500 500 500 2,500 2,500
Dues/Subscriptions 200 200 200 200 200 200
Computer Equipment 4,500 500 500 500 500 1,500
Office Furniture/Equip 4,500 0 0 0 0 1,500
Operating Reserve 19,951 19,951 19,951 19,951 19,951 19,951
- ---------------- ------- -------- -------- -------- -------- --------
Total 63,751 55,751 55,701 56,376 59,001 68,266
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Total
------- ------- ------- -------- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Salaries (1) 25,000 25,000 25,000 25,000 25,000 25,000 300,000
Taxes/FICA (2) 3,250 3,250 3,250 3,250 3,250 3,250 39,000
Office Rent 1,500 1,500 1,500 1,500 1,500 1,500 12,000
Telephone 625 625 625 625 625 625 6,750
Copying & Printing 425 425 425 425 425 425 4,600
Marketing (3) 2,750 2,750 2,750 2,750 2,750 2,750 29,500
Operations Director (4) 6,000 6,000 6,000 6,000 6,000 6,000 36,000
Marketing Director (5) 5,500 5,500 5,500 5,500 5,500 5,500 38,500
Taxes/FICA (6) 1,430 1,430 1,430 1,430 1,430 1,430 9,295
Insurance/Liability 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Travel/Expenses 3,000 3,000 3,000 3,000 3,000 3,000 28,500
Postage/Courier 325 325 325 375 375 375 3,575
Supplies 400 425 425 425 425 425 4,725
Consultants (7) 3,750 3,750 3,750 3,750 3,750 3,750 29,500
Dues/Subscriptions 200 200 300 300 300 300 2,800
Computer Equipment 1,500 500 500 500 500 500 12,000
Office Furniture/Equip 2,000 0 0 0 0 8,000
Operating Reserve 19,951 19,951 19,951 19,951 19,951 12,952 232,413
- ------------------ --------- ------- ------- -------- -------- ------- ---------
Total 78,606 75,631 75,731 75,781 75,781 68,782 809,158
</TABLE>
(1) Salaries of principal officers
(2) Tax/FICA burden 13%
(3) Including materials
(4) New hire at Month 7
(5) New hire at Month 6
(6) Tax/FICA burden 13%
(7) Independent, no benefits
The amounts allocated to equipment and services will be used to develop a
working prototype of the LVPS MicroFacility. If the amount of securities sold
are between the minimum and the maximum, the purchase of equipment and services
will have priority over operating expenses, executive salaries and working
capital. If the offering is not fully sold, then executive salaries and overhead
expenses will be proportionately reduced.
12
<PAGE>
Item 5. Determination of Offering Price.
The offering price of the shares has been determined by LVPS and not as the
result of arm's-length negotiations. There is no established public market for
the shares. LVPS set the price of the shares to value LVPS before financing at
$5,000,000 and after full financing through this offering at $10,000,000.
Item 6. Dilution.
LVPS's existing officers, directors, promoters, and affiliated persons obtained
their 612,500 shares for cash consideration of $612 or $.001 per share. As a
comparison, investors in this offering will pay $8.00 per share. Therefore,
investors will suffer an immediate dilution of $4.00 per share. The net tangible
book value per share before this distribution is $0.00. After this distribution,
net tangible book value will be $4.00 per share. As such, there will be a $4.00
per share increase in net tangible book value per share attributable to the cash
payments made by purchasers of the shares being offered. The purchasers will
absorb an immediate dilution of $4.00 per share in net tangible book value from
the public offering price. The following table illustrates this per share
dilution.
Offering price to new investors ........................................$8.00
Average price paid by existing stockholders ............................$.001
Net tangible book value before the offering..............$0.00
Increase in tangible book attributable to this offering..$4.00
Pro forma net tangible book value after the offering ......................$4.00
Dilution of net tangible book value to new investors ......................$4.00
Dilution to new investors if the minimum number of shares are sold ........$5.48
Dilution to new investors if the maximum number of shares are sold ........$4.00
13
<PAGE>
The following table reflects the number of shares of common stock, the
percentage of common stock purchased, the total consideration paid, and the
percentage of the total consideration paid by existing stockholders and new
investors and the average price paid for LVPS shares. LVPS is authorized to
issue 20,000,000 shares of its common stock.
<TABLE>
<CAPTION>
- ----------------------- ------------ ------------------ ------------------------- ----------------------- ------------
<S> <C> <C> <C> <C>
Percentage of
Number of common stock Percentage of total Average
shares purchased Consideration paid consideration price paid
- ----------------------- ------------ ------------------ ------------------------- ----------------------- ------------
Current stockholders 625,000 $6,862.00 Less than 1% $.01
- ----------------------- ------------ ------------------ ------------------------- ----------------------- ------------
Offered to new
investors
At minimum 287,500 32% 2,300,000 99.97% $8.00
At maximum 625,000 50% 5,000,000 99.98% $8.00
- ----------------------- ------------ ------------------ ------------------------- ----------------------- ------------
Total
At minimum 912,500 2,306,862 $2.53
At maximum 1,250,000 5,006,862 $4.01
- ----------------------- ------------ ------------------ ------------------------- ----------------------- ------------
</TABLE>
If the minimum number of shares is sold in this offering, then the new investors
will have contributed 99.97% of the financing in exchange for 32% of the
outstanding common stock. Similarly, if the maximum number of shares is sold in
this offering, then the new investors will have contributed 99.98% of the
financing in exchange for 50% of the outstanding common stock.
Item 7. Selling Security Holders.
None.
Item 8. Plan of Distribution.
LVPS is offering a minimum of 287,500 and a maximum of 625,000 shares at the
purchase price of $8.00 per share on an all or none basis as to the first
287,500 shares. This is a self underwritten offering. If the minimum number of
shares are not sold during the offering period, the proceeds received will be
promptly returned to the investors without any fees or interest. However,
because this is a self underwritten offering, investors will not have access to
their funds held in escrow or the ability to accrue interest on such funds
during the offering period. LVPS may allocate among or reject any offers to
purchase in whole or in part.
Moreover, LVPS's directors, officers, and principals of LVPS's counsel may
purchase shares on the same terms and conditions as all other investors;
provided, however, that any such shares so purchased (a) will not be included in
calculating the minimum number of shares to be sold and (b) will be acquired for
investment and not with an intention to resell such shares shortly thereafter.
This offering will terminate nine months after the effective date of this
registration statement and may be extended by LVPS for an additional sixty days.
14
<PAGE>
LVPS reserves the right to use selling agents with the appropriate modification
to the registration statement, as necessary. If LVPS make arrangements to use
selling agents after effectiveness of this registration statement, then LVPS
will need to file a post-effective amendment to the registration statement
identifying the broker-dealer, providing the required information on the plan of
distribution and use of proceeds, revising the disclosures in the registration
statement, and filing the agreement as an exhibit to the registration statement.
Further, prior to any involvement of any broker-dealer in the offering, such
broker-dealer must seek and obtain clearance of the underwriting compensation
and arrangements from the NASD Corporate Finance Department.
LVPS's officers and directors will be conducting the offering. Under Section 15
of the Securities Exchange Act of 1934, LVPS's officers and directors are exempt
from registration as broker-dealers under the Act because they are not, and have
not in the past been, engaged in the business of effecting transactions in
securities for the account of others or engaged in the regular business of
buying or selling securities for their own account.
Upon the effectiveness of the registration statement, the Chief Executive
Officer, Ron Patterson, and the President, Ross Boling intend to solicit their
existing business relationships and the investing public for the minimum
offering. The offer to sell and any sales will be made only by this prospectus.
Once the minimum has been raised other alternatives might be explored with the
appropriate modification to the registration statement, as necessary.
None of the persons associated with LVPS:
(1) are subject to a statutory disqualification, as that term is defined
in section 3(a)(39) of the Securities Act of 1933, as amended;
(2) will be compensated in connection with their participation in this
offering by the payment of commissions or other remuneration based
either directly or indirectly on transactions in these securities; or
(3) are associated persons of a broker or dealer.
Furthermore, the persons associated with LVPS that participate in this offering
meet all of the following requirements:
(1) each primarily performs, or is intended to primarily perform at the
end of the offering, substantial duties for or on behalf of LVPS
otherwise than in connection with transactions in securities;
(2) none were a broker or dealer, or an associated person of a broker or
dealer, within the preceding 12 months; and
(3) none participate in selling an offering of securities for any issuer
more than once every 12 months.
The shares will be held in escrow by Richard O. Weed. Subscribers are to deliver
to Richard O. Weed (1) a completed and duly executed copy of the subscription
agreement and (2) immediately available funds in the amount of $8.00 per share.
15
<PAGE>
Once Richard O. Weed receives $2,300,000 in subscriber funds for the purchase of
at least 287,500 shares and subscription agreements are accepted by LVPS,
Richard O. Weed shall release the escrow funds to LVPS and shall release the
shares to the subscribers. Richard O. Weed shall deposit all funds received
under this arrangement in Richard O. Weed's escrow account at City National
Bank, Newport Beach, California or any other nationally recognized financial
institution that has an office in Newport Beach, California. In the event that
Richard O. Weed does not receive at least $2,300,000 in subscriber funds for the
purchase of 287,500 shares and/or LVPS does not accept at least 287,500
subscription agreements within nine months from the effective date of this
registration statement, unless extended for an additional sixty days, Richard O.
Weed shall return the funds held in escrow to the subscribers without fees or
interest. Richard O. Weed is also LVPS's counsel with respect to this
registration statement.
Item 9. Legal Proceedings.
LVPS is not involved in any legal proceedings.
Item 10. Directors, Executive Officers, Promoters and Control Persons.
<TABLE>
<CAPTION>
Identification of Directors and Executive Officers
Name Age Position held with the Term of office as a director Dates of service
Registrant
- --------------------------- ------- ---------------------------- ----------------------------- ----------------------------
<S> <C> <C> <C> <C>
Ronald Patterson 55 Chairman, CEO, Director One year December 16, 1998 to present
Ross Boling 53 President, Secretary, One year December 16, 1998 to present
Principal Financial
Officer, Principal
Accounting Officer,
Director
</TABLE>
At present there are two full-time employees of LVPS, Ron Patterson and Ross
Boling. Messrs Patterson and Boling will not receive salaries from LVPS until
the securities offering is completed. Further, their salaries will be
proportionately reduced if less than the maximum offering is achieved.
Business experience:
Ronald R. Patterson. CEO & Chairman LVPS MicroFacility, Inc.
December 1998 to present. Founder of LVPS, Mr. Patterson has senior level
experience in start-up manufacturing technologies, research and development,
patent application, and infrastructure distribution in marketing/sales in the
international medical industry. Extensive experience in biomedical and medical
device manufacturing and new product development. Strong knowledge of the FDA
regulatory environment. Inventor of several patents that are currently pending.
16
President & Chief Executive Officer DenexCorp(TM)/LVPS MicroFacility.
January 1994 to present. Ron Patterson founded DenexCorp to bring new and
innovative state-of-the-art medical products to the international community with
a totally integrated, complete, manufacturing plant that produces I V solutions
for basic medical requirements. Based on his 25 years in the medical industry,
Ron realized that the medical industry was in drastic and dramatic change.
DenexCorp is structured to lead this change by offering new technology to the
domestic and international community with special emphasis on new and emerging
medical market nations.
Additional business experience:
Patterson Publishing 1990 to 1994, Author. Author of business books for
self-employed people, medical business and research marketing. Author of
"Success and Wealth for the Entrepreneur" published in 1992.
Medexco 1982 to 1987, Founder. Founded an import/export company specializing in
manufacturing and packaging sterile surgical gloves and non-sterile examination
gloves. Services included procurement and distribution of medical equipment to
primary markets in Mexico and Central and South America.
General Clinical Plastics Corporation 1977 to 1982, Founding Partner/Chief
Operating Officer. A start-up medical injection molding facility with
demonstrated strong marketing and development strategy, General Clinical
Plastics Corporation swiftly became a major medical injection molding facility
on the West Coast. Sold the company to Premium Plastics, one of the largest
medical plastics manufacturers in the U.S.
Medical Manufacturers Marketing Company 1973 to 1989, Principal. Following a
major restructuring at Cenco, became a principal in an established independent
representatives group with a major distribution network extending throughout
western U.S. and Hawaii.
Cenco Medical Health Supply Corporation 1968 to 1973, Division Manager, Western
Divisions. The youngest Division Manager in the history of Cenco, responsible
for hospital planning, engineering, distribution, labor arbitration,
implementation of corporate procedures, sales forecasting, product marketing,
national and regional group contracting, data processing systems, and employee
relations.
Education: Bachelor of Science, Business Administration Public Health-University
of Southern California
Military: United States Army Green Beret-Honorable Discharge Special Forces
Medic-Fort Bragg, North Carolina/Republic of Vietnam Awards: Bronze Star, Purple
Heart, and Combat Medical Badge
17
<PAGE>
Ross T. Boling. President, Secretary & Director LVPS MicroFacility, Inc.
December 1998 to present. Co-founder of LVPS, Mr. Boling has extensive
international infrastructure development and financing experience in several
industries. His background in sales, marketing, and finance gives further
leadership in LVPS's goal of worldwide development of MicroFacility plants.
Additionally, Mr. Boling supervises the LVPS worldwide network of authorized
independent sales representatives.
Chief Operating Officer DenexCorp(TM)/LVPS MicroFacility
January 1994 to present. Co-founder of DenexCorp, management responsibility for
Operations, Sales, and Marketing. Created the sales and marketing strategies for
global development of LVPS MicroFacility plants. Involved in all phases of
research and development of the MicroFacility plant.
Additional business experience:
The Boling Group 1990 to 1994, Owner/Principal. An international marketing
consulting firm specializing in hospitality, health, telecommunications, and
transportation industries. Advisory services to major investment groups
concerning proposed take-over of a long distance telecommunications company;
developed marketing/advertising strategies for Greyhound Bus Lines Rural
Connection transportation service; awarded $700,000 contract to implement the
State of Michigan's Rural Transit service marketing program.
Pool/Sarraille Advertising, Inc. 1988 to 1990, Vice President/Chief Operating
Officer. Managed Dallas, Texas branch of Los Angeles-based firm generating
billing in excess of $4 million. Launched international expansion of Brock
Residence Inn Hotel system creating marketing/advertising plan, franchise
fullfillment brochures, investment film. Managed agency account team, led new
business activities, coordinated Franchise Collateral Fullfillment program.
Responsibility for the overall advertising and public relations for Lincoln
Hotels, Division of Lincoln Property Company. Regional marketing for Grand
Kampenski Hotels, division of Luftansa Airlines.
Hawthorn Suites Hotel Group 1986 to 1988, Vice President/Director of Sales and
Marketing. Administered all system sales, marketing, public relations, and
market research. Participated in franchise sales activities and development;
created national brand identification of new all-suite hotel chain exceeding
sales target of $3 million the first year; trained and motivated sales force for
over 25 hotel properties.
Education: BA Communications-University of Texas
Recipient, American Hotel Sales & Marketing Gold Medal for Best
Marketing/Advertising Campaign.
United States Department of Transportation Outstanding Public/Private Sector
Award
Identification of Significant Employees- The individuals named below are at
present consultants to both LVPS and DenexCorp on an ongoing basis. Our
intention is to employ either these individuals or individuals with similar
professional backgrounds and expertise as full-time employees or consultants to
LVPS once the securities offering is completed. Their backgrounds and experience
illustrate the type of professional employees required to oversee manufacture
and regulatory issues involved with the MicroFacility plant.
18
<PAGE>
Name Age
- --------------------------- -------
Jon Gow 50
Douglas Platt 51
Steven Smith 43
Todd Marrs 50
Bill Hatton 45
Damon Jones 34
Previous business experience:
Jon W. Gow. President & Owner Pacific Environmental Technologies, Inc. (PETI).
October 1989 to present. PETI is an international cleanroom design build and
manufacturing company. With over 20 years in the critical environment industry,
Mr. Gow has gained extensive experience in most aspects of cleanroom's facility
design and construction including air-conditioning HVAC systems, facility
layout, process layout, and commissioning with an emphasis on turnkey projects
and project management. Other areas of his expertise are controls design for
temperature and humidity; start up and balancing of HVAC systems; and innovative
design solutions that offer cost benefit results to the client. PETI provides:
clean room facility design, engineering, consulting, project management,
installation and construction services and commissioning/certification services
for a broad spectrum of industries. These include: aerospace, electronics, bio
medical device manufacturing, pharmaceutical, optical storage and others. Within
LVPS, Mr. Gow is actively involved in the engineering and design of the LVPS
MicroFacility under contract.
Previous to PETI, Mr. Gow has been involved in process systems and critical
manufacturing environments for over 20 years. His initial exposure to critical
environment processes and cleanrooms came in the micro electronics industry as a
process engineer where his chemistry background provided the basic knowledge and
analytical skills required in the semiconductor wafer processing industry. It
was during this period that he gained valuable knowledge and experience in
project management and engineering support for a new wafer fab facility. After
leaving the microelectronics industry, Mr. Gow joined a Southern California
cleanroom manufacturing and contracting company, B.A.C. For the next 10 years,
Mr. Gow provided technical experience in HVAC design, clean room design, project
management, sales and marketing in the international and domestic markets for
critical manufacturing environments that utilize cleanrooms. Mr. Gow worked
extensively in all aspects of the projects including project management,
estimating, design and commissioning of projects which include domestic projects
in the U.S. as well as overseas projects in Taiwan, S. Korea and the Middle
East.
Education: Bachelors of Science in Chemistry from the California University at
Pomona, California Polytechnics University.
19
<PAGE>
Douglas B. Platt. President, East-West Technical Services
1988 to present. Mr. Platt has extensive experience in process development
through validation and license of pharmaceutical and biotechnology operations.
Regulatory matters like biocontainment, sterile processing with emphasis on
aseptic manufacturing, filtration, sterilization, cGMP compliance, validation
and the use of isolation and mobile technologies in aseptic processing. Other
areas of his expertise are facility design and planning, process flow,
WFI/Ultrapure water systems and equipment selection, evaluation and
qualifications. Mr. Platt is actively involved with the Parenteral Drug
Association, Filtration Society, Society of Pharmaceutical Engineers, the
Institute of Environmental Sciences, and the Water Quality Association.
Additional experience:
Alpha Therapeutics Senior Project Management Supervisor. Supervision and project
management responsibilities throughout LVP/S P manufacturing facility in
Southern California. Some of his duties were development with engineering and
quality assurance of the design, construction, and validation for a new $6
million sterile filling and filtration facility, which resulted in increased
productivity by approximately $20 million and doubled the capacity of the
filling operation on a daily basis. Designed and developed the first formal
certified and GMP compliant custodial program plant wide for Alpha Therapeutics.
Biomedical Department of Scientific Air Systems Chino, California Senior
Manager. Provided management and leadership for turnkey design/build
capabilities in the pharmaceutical and biotech industries. His duties included
sales engineering providing international clients with conceptual design
engineering, equipment selection, costing, and contract negotiations.
Gelman Sciences Project Manager/Sales Engineer. Mr. Platt provided product
management and sales engineering expertise, writing, implementing and directing
the field efforts of a validation in plant program affecting over $30 million in
filtration products. He also, through his own initiative, was successful in
negotiating Gelman as one of the two providers of filtration products to a $500
million global ophthalmic manufacturing company with facilities in 5 countries
resulting in annual sales over $1 million.
Education: Bachelors of Science in Psychology in a Pre Medical program in
Tennessee.
Certificate of Pharmacy, Fort Sam Houston, Texas Medical School
Certificate of Biocontainment Technology at John Hopkins University, Maryland.
Steven L. Smith. Senior Manufacturing Manager, McGaw, Inc.
1991 to present. Mr. Smith has over 15 years of management experience in the
pharmaceutical industry. He has expertise in medical products, process
development, capital and expense planning, market research, plastic materials
and processing, all methods of sterilization, processing equipment, and
automation. Currently overseeing cost effective drug delivery and IV container
systems. He has worked closely with other departments to revamp McGaw's entire
process and product development program. He has interfaced with world-renowned
pharmaceutical and biotech companies in the exploration and development of
mutual beneficial joint development projects. His achievements include the
development and successful introduction of the patented Excel(TM)IV system and
the development of the Duplex(TM) advanced drug delivery system. He was the
originator and the product champion behind both of these projects. He is
actively a member of ISPE, ASHP, and PDA.
20
<PAGE>
American Hospital Supply Corporate Technical Consultant, Pacific International
Division. Provided technical and manufacturing support. He increased the output,
efficiency, and quality of medical products produced and developed at various
locations. He developed new product technologies specifically designed to
address the needs of each market. This included a B/F/S irrigation and IV
container system and the use of RO to produce WFI.
Todd P. Mairs. Consultant Long Term Manufacturing Maintenance Systems 1993 to
present. Mr. Mairs has over twelve years of experience in consulting to
commercial nuclear plant owners, the Electric Power Research Institute, URI and
the Department of Energy in the application of risk management methodology and
reliability engineering to improve facility capacity, production throughput and
maintenance cost structure. He is actively involved in the design of maintenance
cost/performance strategies and the development of life-cycle maintenance cost
management process. Currently implementing life-cycle maintenance cost
management at Calvert Cliffs Nuclear Power Plant, Cooper Nuclear Station, and
Boston Edison fossil generating stations to integrate risk, reliability,
maintenance, and cost engineering techniques into an asset and resource
management strategy.
Developed a risk and performance-based process for reducing operating costs by
reengineering the development, planning, scheduling, and conduct of maintenance
activities and inventory management for industrial facilities. The goal of the
lifecycle maintenance cost management process, LCM2, is to achieve significant
and sustained O&M cost reduction and capacity improvement throughout the
operating cycle of a plant without sacrificing safety. This cost-benefit
decision methodology for conducting maintenance activities during all modes of
operation, i.e. generation, production or manufacturing, requires explicit
consideration of financial, operational, and safety risks.
Currently implementing the LCM2 strategy at Calvert Cliffs Nuclear Power Plant
and Cooper Nuclear Station. Additionally, consulted with ComEd, Southern
California Edison, Niagara Mohawk Power Corporation, PSE&G, and Duquesne Light
in developing maintenance policy, process, and procedures that assure safe plant
operation and equipment reliability, and achieve greater efficiencies in cost
performance. In addition, this methodology is being applied at other facilities,
including polyester and pharmaceutical manufacturing facilities, and a uranium
enrichment chemical processing plant.
Mr. Mairs continues to consult with EPRI on similar projects involving the
application of risk management strategies for optimizing the maintenance
business function.
21
<PAGE>
William Hatton. Consultant
1989 to present. Mr. Hatton has over 20 years combined experience working in
manufacturing, quality research and development, and regulatory affairs. Mr.
Hatton is responsible for the coordination of the commissioning and validation
efforts. He has supervised qualifications and validation for several
multi-million dollar construction projects. He also has hands on experience
working within Manufacturing, Metrology, Quality Control, Quality Assurance, R &
D and Regulatory Affairs groups. He is a member of the Regulatory Affairs
Professional Society.
R.J.M. Laboratories Chemist. Chemist performing bench top to pilot plant scale
up-custom synthesis in stereospecific organometallic hydride reduction.
Richard's Surgical Manufacturing Company Quality Engineer Responsible for
monitoring plant GMP compliance and in-house training programs. He performed
vendor audits, wrote inspection procedures, reviewed drawings prior to release,
reviewed rejects for defect analysis, made scrap or rework decision and wrote
engineering change requests.
Westech Gear, Senior Quality Assurance Analyst Performed pre-award surveys for
multi-million dollar contracts (Air Force Nuclear Vault, Navy submarine
elastomeric coupling). He evaluated calibration systems to Mil-STD-45662A, and
audited vendor's quality systems (MIL-45208A and Mil-Q-9858AO).
International Medication Systems, Ltd. Metrology Supervisor and Validation
Project Leader. Implemented a cost effective calibration program reviewed by the
FDA and generated standard cost estimates for departmental budgets and supported
installation qualification for a facility upgrade. He also initiated a gamm
sterilization dosimetric release program and executed protocols for steam
sterilization of parenteral solutions and dry heat depyrogenation of equipment
and components.
Skyland Scientific Services, Technical Manager. Assisted in the development of
validation master plans of new pharmaceutical manufacturing facilities. Wrote
protocols, made cost estimates and supervised the on-site execution of the
validation effort.
Education: University of California, Los Angeles, B.S. Psychobiology.
Damon P. Jones. Manager, Product Development, Medtronic
1994 to present. Mr. Jones has over 13 years experience in the medical device
manufacturing industry as a manager/supervisor. He is also a Certified Quality
Engineer. He received the U.S. Patent application and Medtronic recognition
award for Automated System and Process for Sterilizing and Preserving a Product
in an Aseptic Environment in April of 1994. Currently Manager of Product
Development Projects for Medtronic Heart Valve, Inc. He is responsible for
coordination and implementation of quality assurance systems, quality assurance
laboratories in microbiology and chemistry, and control and improvement of
surface modification processes. Mr. Jones has introduced and sustained
compliance programs for international and domestic regulations such as FDA, MDD,
ISO, CEN. He is currently a member of the American Society for Quality Control
and Chairman of the United States technical advisory group ISO sub-TAG to ISO TC
19 81WG 10 and Delegate to ISOTC 198.
22
<PAGE>
For over 4 years, Mr. Jones was a Senior Microbiologist for Medtronic, Inc.,
Heart Valve Division. He conducted sterilization validations for liquid
chemical, ethylene oxide, steam and irradiation sterilization's. He also planned
and coordinated environmental monitoring programs, bioburden monitoring
programs, water system monitoring and maintenance programs. He was responsible
for all microbiology quality assurance activities.
He also supervised the Heart Valve Division at Medtronic. His responsibilities
included supervision of all validation, inspection, test, and regulatory
activities related to Microbiology and Chemistry. He also managed the laboratory
personnel and coordinated biocompatibility, sterilization and microbiological
quality control for new product development activities.
Presently manages and coordinates the development of implantable cardiovascular
devices. Activities include identifying, organizing and leading individuals for
cross functional project teams. His product development project scope includes
identifying and cultivating product concepts, developing concepts into viable
product offerings, and obtaining United States and international market
approvals and release.
Education: B.S. Microbiology
Item 11. Security Ownership of Certain Beneficial Owners and Management.
LVPS, at present, is 98% owned by DenexCorp(TM)/LVPS, a Nevada corporation. As
such, DenexCorp is an affiliate of LVPS. Upon completion of this offering,
DenexCorp will own 49% of LVPS. Ron Patterson and Ross Boling, who are officers
and directors of LVPS, are also the officers and directors of DenexCorp and
together control 100% of the common stock of DenexCorp. Ron Patterson owns 71%
of DenexCorp and Ross Boling owns 29% of DenexCorp. Following completion of this
offering, LVPS's current executive officers, directors and entities affiliated
with them will beneficially own, in the aggregate, approximately 49% of LVPS's
outstanding common stock. Ron Patterson, as the majority stockholder of
DenexCorp has sole investment power and sole voting power on the shares of LVPS
owned by DenexCorp.
23
<PAGE>
<TABLE>
<CAPTION>
The following table sets out the beneficial ownership of LVPS.
- ------------------------- ------------------------------------ ------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Title of Class Name and Address of Beneficial Amount and Nature Percent of Percent of
Owner of Beneficial Class Prior to Class Upon
Owner Offering Completion of
Offering
- ------------------------- ------------------------------------ ------------------- ----------------- -----------------
common stock, $.001 par DenexCorp 612,500 98% 49%
value 7755 Center Avenue, 11th Floor
Huntington Beach, CA 92647
Ron Patterson 612,500 indirect 98% 49%
7755 Center Avenue, 11th Floor
Huntington Beach, CA 92647
Ross Boling 177,625 indirect 28% 14%
7755 Center Avenue, 11th Floor
Huntington Beach, CA 92647
Officers and Directors 612,500 98% 49%
- ------------------------- ------------------------------------ ------------------- ----------------- -----------------
</TABLE>
Item 12. Description of Securities.
LVPS is authorized to issue twenty million shares of $.001 par value common
stock and one million shares of $.001 par value preferred stock. Prior to this
offering there are 625,000 shares of common stock issued and outstanding. There
are no shares of preferred stock outstanding at the present time.
LVPS's board of directors has the power by resolution only and without further
action or approval, to cause LVPS to issue one or more classes or one or more
series of preferred stock within any class thereof and which classes or series
may have such voting powers, full or limited, or no voting powers, and such
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, as shall be
stated and expressed in the resolution or resolutions adopted by the board of
directors, and to fix the number of shares constituting any classes or series
and to increase or decrease the number of shares of any such class or series.
Each stockholder is entitled to one vote in person or by proxy for each share of
the capital stock. Dividends upon the capital stock of LVPS, subject to the
provisions of the certificate of incorporation, if any, may be declared by the
board of directors at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property, or in shares of capital stock, subject to the
provisions of the Certificate of Incorporation. There are no preemptive rights.
24
<PAGE>
Item 13. Interest of Named Experts and Counsel.
Certain legal matters, including the validity of the securities being issued,
will be passed upon by Richard O. Weed, counsel to LVPS, who at present owns 2%
of LVPS, and upon completion of this offering, will own 1% of LVPS. In addition,
Mr. Weed will receive 1% contingent compensation from the proceeds of the
offering.
Item 14. Disclosure of Commission Position on Indemnification for Securities Act
Liabilities.
Under Delaware law, a corporation may indemnify its officers, directors,
employees, and agents under certain circumstances, including indemnification of
such persons against liability under the Securities Act of 1933.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
small business issuer pursuant to the foregoing provisions, or otherwise, the
small business issuer has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other
than the payment by the small business issuer of expenses incurred or paid by a
director, officer or controlling person of the small business issuer in the
successful defense of any action, suit or proceeding, is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
LVPS's Certificate of Incorporation provides that a director of the corporation
shall not be personally liable to the corporation or its stockholders for
monetary damages for breach or fiduciary duty as a director except for liability
(i) for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
knowing misconduct or an intentional violation of the law, (iii) under section
174 of the Delaware General Corporation Law, or (iv) for any transaction from
which the director derived any personal benefit.
Item 15. Organization Within Last Five Years.
Transactions with promoters
LVPS, at present, is 98% owned by DenexCorp(TM)/LVPS MicroFacility, a Nevada
corporation. As such, DenexCorp is an affiliate of LVPS. Upon completion of this
offering, DenexCorp will own 49% of LVPS. DenexCorp has taken steps to protect
the design of the MicroFacility, under the United States of America and
25
<PAGE>
International Patent laws, as "Patent Pending," titled "Modular Pharmaceutical
Solution Manufacturing," preliminary class 604. All rights to the patent,
including any modifications, and the trademark LVPS/(TM) belong to DenexCorp.
LVPS has been granted the exclusive use of the patent and trademark subject to
the terms of a Licensing Agreement entered into on December 30, 1998 between
DenexCorp and LVPS. The licensing agreement provides for a royalty of two
percent (2%) of the gross selling price on each MicroFacility sold by LVPS
during the ten-year term of the license. The license agreement was not the
subject of an arms length negotiation. As such, a portion of the revenue from
the sale of each MicroFacility will be paid to DenexCorp.
Item 16. Description of Business.
LVPS MicroFacility, Inc. was incorporated in Delaware on December 16, 1998. LVPS
was formed to be the manufacturer, under license from DenexCorp/LVPS
MicroFacility, of a self contained modular enclosure IV solution manufacturing
facility marketed to "third world" or emerging market nations. LVPS does not
sell finished IV solution product. The client is responsible for selling the
final I V solution product. LVPS will build the plant to produce the solutions.
The MicroFacility plant is a complete manufacturing facility that produces IV
solutions from local water sources; blows, fills, and seals the plastic IV
solution container; and sterilizes the finished product for quality assurance
testing, quarantined storage, required by the US FDA, and distribution to
wholesalers, hospitals, and clinics. No LVPS MicroFacility plant as described
above has been built to date. However, the MicroFacility plant is designed and
will be built to comply with all US FDA regulations for pharmaceutical
manufacturing plants and Host Country regulatory requirements. All
pre-manufacture activities are now complete, including finished renderings and
engineering drawings, FDA regulatory protocols, materials vendor identification,
all major components specifications to LVPS requirements, and preliminary
purchase price negotiation. Once the offering is completed, LVPS is ready to
begin manufacture of the first MicroFacility plant. Raw materials for the
production of the IV solutions are readily available in most countries.
Additionally, raw materials like plastic resins, used in the IV solution
container, are available for shipment at acceptable pricing levels from
multi-national companies like BASF and chemicals from Hoechst, Gelman Sciences,
AMOCO Chemicals and Union Carbide.
LVPS has obtained rights to the pending United States patents and trademarks
pursuant to a license agreement with DenexCorp. In return, LVPS will pay
DenexCorp a royalty of two percent of the gross selling price on each
MicroFacility during the ten-year term of the license. Payments under this
agreement are to be made no later than the tenth day of each quarter beginning
June 30, 1999, assuming that a MicroFacility has been sold. Interest shall
accrue on all past due payments from their respective due dates until paid at a
rate of 1% per month, or if such rate exceeds the maximum rate allowed by law,
at the maximum rate allowed by law, and shall be payable upon demand.
The MicroFacility plant will be built in accordance with current governmental
regulations that require IV solutions to be manufactured of United States
Pharmacopoeia quality, meeting United States Food and Drug Administration
current Good Manufacturing Practices in compliance with US FDA Regulations 21
CFR part 211, and USP 23/NF 18 of the National Formulary for pharmaceuticals.
LVPS will also comply with the host country health ministry requirements as they
pertain to IV solution manufacturing. LVPS will adhere to all applicable United
States occupational and export laws as they pertain to the MicroFacility plant
manufacture and delivery to the client.
26
<PAGE>
Existing governmental regulations will have a significant effect on LVPS's
business plan. LVPS will need to devote managerial resources toward
understanding and complying with applicable government regulations. Management
of LVPS and certain consultants identified by management possess the requisite
skill, training and experience to address the constraints of existing government
regulations. LVPS has two full-time employees that serve without compensation.
LVPS will finance the start-up activities and construction of a prototype
MicroFacility plant through this offering. Once the prototype MicroFacility
plant is completed, it will be sold and LVPS will begin production of other
MicroFacility plants. LVPS has a purchaser for the prototype MicroFacility plant
under contract. The purchase agreement entered into on December 18, 1996 between
AO "GIRIYEY," a Russian corporation and DenexCorp/LVPS MicroFacility, an
affiliate of LVPS, provides for a LVPS MicroFacility to be sold to AO "GIRIYEY"
for $5,500,000 United States dollars. $550,000 was delivered upon execution of
the agreement and the remainder of the balance is to be paid over ten years in
one hundred and twenty monthly installments, after reception of the goods. The
parties also entered into a ten-year technical assistance agreement that
commences with delivery of the MicroFacility plant to the client's location. The
terms of this agreement provide that DenexCorp/LVPS MicroFacility will provide
advisory and technical assistance to the purchasers of the MicroFacility, as
sold under the purchase agreement, in exchange for the greater of $100,000 a
year or $0.116 for each unit of solution made by a factory each year. As
authorized under the agreements with AO "GIRIYEY," DenexCorp/LVPS MicroFacility
assigned its rights under the purchase agreement to LVPS on August 30, 1999.
Sale of the prototypical plant and future plant orders currently in negotiation
are expected to provide acceptable cash flow for future expansion and
operations.
Under the current business model, our MicroFacility, which is constructed in a
modular enclosure, will be fabricated, assembled, validated, tested, and
certified to meet US FDA standards before the main components are disassembled
and shipped to the customer for reassembly and recertification. The LVPS
MicroFacility incorporates a class 100 cleanroom and single-operation blow-fill
machine to produce economically competitive IV solutions for regional
distribution in countries like Russia, Ukraine, the Baltic States, India, China,
Czech Republic, Central Europe, Indonesia, Japan, Israel, Saudi Arabia, and
Sweden. LVPS's 4,000,000 unit/year LVPS MicroFacility sells for $5.5 million and
the 8,000,000 unit/year LVPS MicroFacility is priced at $9.4 million.
27
<PAGE>
Conceptual Drawing of LVPS MicroFacility No. 1.
LVPS MicroFacility Plant Overview
The Product
The LVPS MicroFacility was created to provide medically developing countries
with the indigenous capacity to produce the basic components for their own
quality medical care as well as high-value pharmaceutical products for export.
Using time and field-tested technology from several global industries, the LVPS
MicroFacility can produce virtually any intravenous solution product in
aseptically-filled and terminally-sterilized medical grade plastic containers.
Considering the current changes in health care and emphasis on cost savings
worldwide, the introduction of regional/local production of intravenous
solutions through the LVPS MicroFacility will revolutionize solutions
manufacturing and distribution for the estimated $18 billion world market.
Realizing that the experience of many countries has been that the arrival of
equipment alone does not produce a quality product, LVPS has committed itself to
provide all customers with four critical ingredients for successful and
profitable manufacturing operation:
1. Precise documentation and procedures of manufacturing methodology.
2. Known and reliable equipment, life cycle system maintenance planning and
performance strategy including comprehensive system monitoring and
tracking.
3. Properly trained personnel and continuous quality assurance validation.
4. Quality raw materials for manufacture.
In 1996, DenexCorp, the parent company of LVPS, entered a Joint Venture and
Strategic Alliance Agreement with Pacific Environmental Technologies, Inc.
("PETI"). PETI is a fabrication manufacturer with experience in fabricating and
installing modular medical related facilities. The agreement between PETI and
DenexCorp was never implemented and the planned the joint venture was not
formed. Because DenexCorp and PETI have prior business experience with each
other, LVPS intends to seek an agreement with PETI upon completion of this
offering. There is no agreement at the present time and no assurance that PETI
will be available to provide these services to LVPS. The financial terms of any
future agreement are uncertain, but the scope of any agreement would require
PETI to assist with the architectural, planning and design, manufacturing,
fabrication, and US FDA/cGMP compliance and production and validation of the
LVPS MicroFacility. Jon W. Gow, the President of PETI, is identified elsewhere
in this prospectus as a potential significant employee of LVPS upon completion
of this offering. As such, Mr. Gow will have a material interest in any
agreement between LVPS and PETI.
The LVPS MicroFacility is designed so that all manufacturing and intraveneous
solution end product are of United States Pharmacopoeia (USP)/NF (National
Formulation) quality, and current Good Manufacturing Practices in compliance
with US FDA regulations 21 CFR Part 211 and USP No. XXIII. The LVPS
MicroFacility, as designed will be operated according to ISO 9002 certification
plan and European Union (EU) CE Mark quality standards.
28
<PAGE>
Sales and Marketing Activities
LVPS's marketing and sales efforts are presently targeted to the following
countries: Russia, Ukraine, the Baltic States, India, China, Czech Republic,
Central Europe, Indonesia, Israel, Japan, Jordan, Saudi Arabia and Sweden. The
challenge in the majority of these countries is obtaining acceptable financing
for LVPS's MicroFacility. LVPS has from the outset been actively involved in
securing project financing for its potential customers. Most of LVPS's clients
are seeking United States lending institution financing. The approval process
from start to finish with the US Export Import Bank can range from six months to
one year for final approval and funding. Loans for five LVPS plants are in
process with the following clients and financial institutions:
Client Financial Institution
- ---------------------------------- ---------------------------------------
RTV-Axis, Czech Republic Sanwa Bank, International
Sri-Krishna Pharmaceuticals, India Bank of America, International Trade Bank
Kavos Medical Corp, Czech Republic Zurich Insurance
Ipex Group, China. Bank of China/U.S. Ex-Im Bank
Durlacher Co., Romania European Bank for Reconstruction and
Development
There is currently one firm order for the LVPS MicroFacility plant by AO
"GIRIYEY," a Russian company, for $5,500,000 United States dollars. This
purchase agreement was entered into between AO "GIRIYEY" and Denex Corp/LVPS
MicroFacility, an affiliate of LVPS, on December 18, 1996 in Moscow, Russia and
was subsequently assigned, as authorized pursuant to the terms of the purchase
agreement, to LVPS on August 30, 1999.
The LVPS MicroFacility will be available in two production sizes: a
three-module, 4 million unit/year facility and a six-module, 8 million unit/year
facility. The selling price of the LVPS MicroFacility is US$5.5 million for the
4M/year plant and US$9.4 million for the 8M/year plant. The 8M/year LVPS
MicroFacility has the added advantage of incorporating completely independent
systems, providing total production redundancy and virtually eliminating
downtime due to testing, maintenance/repairs, or product line changes. LVPS's
sales and marketing activities are implemented worldwide by independent,
commissioned legal authorized agents responsible for generating sales inquires,
providing support services such as translation, and facilitating the client
through the sales process. In most cases, personnel of our representative firms
live in the client country or by heritage is fluent in the language and customs
of the country. Performance is periodically reviewed and the sales
representative's contract renewed predicated upon their productivity and
reliability within their specified territory. No LVPS sales representative will
represent competing products or services to the MicroFacility plant. Currently,
LVPS has 22 personnel in its sales representative organization.
29
<PAGE>
Competitive Analysis:
LVPS may not encounter direct competition in terms of price and delivery of a
comparable intravenous solution manufacturing facility for several years.
Although the major IV solution manufacturers know the technology behind the
MicroFacility plant, there has been no financial incentive to expand their
manufacturing operations. Under their analysis, the research and development and
retooling costs required to change production modes are prohibitive. Although
unit product pricing has generally been held to the rate of inflation over the
last few years, the introduction of the LVPS MicroFacility plant with its
anticipated, but unproven, reduction in production cost will change the
complexion of the marketplace, thus fueling possible widespread changes in the
traditional production and distribution methods.
The LVPS MicroFacility brings to the marketplace an innovative, expandable, and
leading edge intravenous solution technology for pharmaceutical manufacturing of
dosage-form medications. The competitive set consists of two primary intravenous
solution plant configurations:
1. The Large Volume Rotary Filling Plant, operated by companies such as B/Braun
McGaw and Abbott Laboratories, represents the traditional way of producing
intravenous solutions and bears some similarities to a Coca-Cola type bottling
plant. These United States based intravenous solution plants require a capital
investment exceeding 100+ millions of dollars and as much as 500,000 to one
million square feet or more of space. The plant must produce several hundred
million units of product annually to make the plant economically viable.
Considering the plant costs and volume of solutions that must be sold, this
manufacturing method is probably not feasible for the third world market. While
these plants can compete effectively with LVPS in product pricing, because water
is the primary ingredient in all intravenous solutions, the cost of
transportation becomes significant. Freight costs to import solution product
from another country along with applicable import/excise duties may
substantially increase the selling price of the solution product. In contrast, a
MicroFacility investment of US$5.5 million to US$9.4 million only requires
approximately 18,000 to 25,000 square feet of production and warehousing space.
2. Packagers and/or distributors of various major pieces of pharmaceutical
equipment that attempt to mesh together to manufacture basic intravenous
solutions not in a modular enclosure design and do not use a blow-fill-self seal
machine IV solution filling technology. These plants may be priced lower than
the LVPS MicroFacility, but cannot be validated and certified to US FDA
standards and regulations.
In at least one verifiable instance, this type of plant was built and
unable to meet the host country start-up standards. For the last two years the
plant has stood idle. According to the Health Ministry of the country in
question none of the criteria for pharmaceutical manufacturing will be approved.
This type of outcome reinforces LVPS's insistence that all of the LVPS
MicroFacilities will be US FDA and host country validated and commissioned to
meet or exceed all pharmaceutical manufacturing criteria.
Market Viability: A full 20% of all pharmaceutical costs are accounted for by
intravenous solutions. According to a Market Intelligence Research Corporation
study, this portion amounted to a total worldwide expenditure of $2.7 billion in
1990. But the study also estimated that by 1997, total IV solution expenditures
will have increased to $18.6 billion.
30
<PAGE>
Domestic Markets: IV solutions are used at the rate of 4 units per inpatient day
in the typical U.S. hospital. The number of inpatient days served annually in a
given hospital is calculated by multiplying the licensed bed count by the
occupancy rate by 365 days. Annual intravenous solution consumption can then be
calculated as in the following example:
1,000 beds x 80% occupancy rate x 365 days x 4 units/day= 1,168,000 units/yr
Alternatively, annual consumption can be calculated at the rate of 3.33 units
for each person in the total U.S. population. Best estimates put total U.S.
consumption at over 1 billion units per year.
The MIRC estimates the U.S. hospital intravenous market at $1.2 billion with an
annual growth rate of around 6% expected throughout the decade. But as more and
more care is being diverted or transitioned to home health care and alternate
health care treatment settings, larger and faster-growing markets have emerged
in these fields. In another study, Biomedical Business International projected
that home infusion revenues would increase almost 26% annually.
Market Comparison Chart.
World Markets: Although the U.S. market, currently almost 70% of the total world
market, presents a tremendous opportunity for the LVPS MicroFacility concept,
markets in third world and emerging nations are actually growing even faster.
This faster growth is due to the building of better and higher-quality health
care institutions and other health care infrastructures in areas once deemed to
be dormant.
World market growth is driven by population increase and constant up-scaling and
sophistication of health care delivery. As part of this up-scaling, intravenous
infusion therapy is becoming increasingly important in overall health care
treatment regimens as new developments in antibiotics and other medicants used
in areas such as chemotherapy, burn centers, and renal/peritoneal dialysis
centers favor intravenous use and application.
Cost Containment Trends: Finally, new pressures are being applied worldwide and
especially in the U.S. to curtail spiraling health care costs. The introduction
of new cost effective/high quality methods of production and delivery of health
care products and services are being universally hailed as much for their PR
value as for their actual impact on the industry.
Global Revenue Forecast Chart.
Risk capital is needed to build LVPS MicroFacility No. 1. There is currently no
prototype in existence.
LVPS will voluntarily send an annual report, including audited financial
statements, to its security holders.
31
<PAGE>
LVPS will file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (SEC). The public may
read and copy any materials we file with the SEC at the SEC'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 calling the SEC at
1-800-SEC-0330. The SEC maintains an internet site that contains reports, proxy
and information statements, and other information regarding issuers that file
electronically with the SEC. The address of that web site is http://www.sec.gov.
Item 17. Management's Discussion and Analysis or Plan of Operation.
LVPS was formed on December 16, 1998, at which time LVPS entered into a license
agreement with DenexCorp. for the rights to further develop, and ultimately
manufacture and market the MicroFacility. Expenditures made by DenexCorp to
develop the MicroFacility prior to December 16, 1998 were expensed as research
and development as incurred. The MicroFacility has no revenues. Management
believes that the license does not constitute a trade or business as defined
under Rules and Regulation of Securities and Exchange Commission. Accordingly,
the accompanying financial statements include the accounts of LVPS MicroFacility
since inception; such financial statements do not include any of the accounts of
DenexCorp related to the MicroFacility.
During the period from inception through June 30, 1999, LVPS has been
substantially inactive. In accordance with the Rules and Regulations of the
Securities and Exchange Commission, LVPS is required to reflect in the financial
statements the value of services and costs incurred by DenexCorp on behalf of
LVPS. In management's opinion, such costs are not material.
In connection with the value ascribed to the license agreement obtained through
the issuance of 612,500 shares of common stock, management recorded the
transaction based on the carry-over basis of accounting of DenexCorp. Since
DenexCorp expenses research and development costs as incurred, LVPS recorded the
value of such license agreement at a nominal value. In connection with the
12,500 shares of common stock issued for legal services, LVPS valued such shares
based on the services rendered, since the value of such services were more
readily determinable. The value of such services was $6,250 and was charged to
operations.
The accompanying financial statements have been prepared assuming that LVPS will
continue as a going concern. In the course of its development, LVPS will
continue to incur additional losses during its development of a production
prototype of the MicroFacility. As a result, LVPS will require approximately
$4.1 million to complete the development of its production prototype; the
prototype completion is expected within 12 months from the completion of its
offering. The operational activities and sales efforts of LVPS will be funded
from proceeds of this offering. LVPS can satisfy its financial requirements for
six months if the minimum offering amounts are met and can satisfy its financial
requirements for twelve months if the maximum offering amounts are met. There is
no assurance that additional funds will be available on acceptable terms or
available at all. These factors raise substantial doubt about the LVPS's ability
to continue as a going concern. The accompanying financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
32
<PAGE>
Item 18. Description of Property.
At present, LVPS utilizes office space without cost in Huntington Beach,
California leased to DenexCorp(TM)/LVPS MicroFacility, the major stockholder in
LVPS MicroFacility, Inc. The offices, engineering, administration, and
conference facilities are adequate for LVPS at this stage of operation.
Manufacturing and warehouse space will be provided by our prime third-party
vendors as part of their assembly fees to LVPS once this offering is completed.
Property and business insurance is carried by the prime third-party vendors.
There currently is no business insurance in force in favor of LVPS
MicroFacility, Inc.
Item 19. Certain Relationships and Related Transactions.
See Items 15 and 16. Jon W. Gow, the President of PETI, is identified elsewhere
in this prospectus as a potential significant employee of LVPS upon completion
of this offering. As such, Mr. Gow will have a material interest in any
agreement between LVPS and PETI.
Item 20. Market for Common Equity and Related Stockholder Matters.
LVPS is authorized to issue twenty million shares of $.001 par value common
stock and one million shares of $.001 par value preferred stock. Prior to this
offering there are 625,000 shares of common stock issued and outstanding. There
are no shares of preferred stock outstanding at the present time.
There is currently no public trading market for LVPS's common stock. There are
no amounts of common stock (i) that are subject to outstanding options or
warrants to purchase, or securities convertible into, common stock of LVPS; or
(ii) that could be sold pursuant to Rule 144 under the Securities Act or that
LVPS has agreed to register under the Securities Act for sale by security
holders. A minimum of 287,500 and a maximum of 625,000 shares of LVPS's common
stock are being offered to the public. These shares could have a material effect
on the market price of LVPS's common stock if and when a public trading market
develops. There are 2 holders of record. LVPS has never paid any cash dividends
on its common stock and does not anticipate paying cash dividends within the
next two years.
Item 21. Executive Compensation.
If the offering is fully sold, then Mr. Patterson will receive a salary of
$180,000 per year. If only the minimum amount of shares are sold, then Mr.
Patterson's annual compensation will be proportionately reduced. If the offering
is fully sold, then Mr. Boling will receive a salary of $120,000 per year. If
only the minimum amount of shares are sold, then Mr. Boling's annual
compensation will be proportionately reduced. The following table sets forth all
compensation awarded to, earned by or paid by LVPS to the named executive
officers of LVPS for their services.
33
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Name Salary Bonus Long-Term Compensation
- ---------------------------- ------ ----- ----------------------
<S> <C> <C> <C>
Ron Patterson, Chairman, CEO
1998
1999 $0 None None
$0 None None
Ross Boling, President,
Secretary, Principal
Accounting Officer, Principal
Financial Officer
1998 $0 None None
1999 $0 None None
</TABLE>
Since LVPS's inception the directors have served without compensation and are
expected to serve without compensation for the next 12 months. As such, there is
no standard arrangement for the compensation of directors, including any
additional amounts for committee participation or special assignments.
There have been no stock options granted to any person since LVPS's inception.
34
<PAGE>
Item 22. Financial Statements.
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report ..............................................36
Financial Statements:
Balance Sheets as of June 30, 1999, and November 30, 1999
(unaudited) .........................................................37
Statements of Operations for the period from inception
(December 16, 1998) to June 30, 1999, and the five months
ended November 30, 1999 (unaudited) .................................38
Statements of Stockholders' Deficit for the period from
inception (December 16, 1998), to June 30, 1999, and the
five months ended November 30, 1999 (unaudited) .....................39
Statements of Cash Flows for the period from inception
(December 16, 1998) to June 30, 1999, and the five months
ended November 30, 1999 (unaudited) .................................40
Notes to Financial Statements ........................................41
35
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
LVPS MicroFacility, Inc.
We have audited the accompanying balance sheet of LVPS MicroFacility, Inc. (the
"Company") as of June 30, 1999, and the related statements of operations,
stockholders' deficit and cash flows for the period from inception (December 16,
1998) through June 30, 1999. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with 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 LVPS MicroFacility, Inc. as of
June 30, 1999, and the results of its operations and its cash flows for the
period from inception (December 16, 1998) through June 30, 1999, are in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As further discussed in Note 2 to the
financial statements, the Company is in the development stage, has no revenues
from operations and is seeking significant capital to develop a prototype of its
MicroFacility. These conditions, among others, raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regards
to these matters are also described in Note 2. The accompanying financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
McKennon, Wilson & Morgan LLP
Irvine, California
September 9, 1999
36
<PAGE>
<TABLE>
<CAPTION>
LVPS MICROFACILITY, INC.
(A Development-Stage Company)
BALANCE SHEETS
June 30, 1999 November 30, 1999
--------------- -----------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets - Cash $ 2,000 $ 3,950
----------------- -----------------
Total assets $ 2,000 $ 3,950
================= =================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities-
Accounts payable $ 5,000 $ 2,130
----------------- -----------------
Note payable to DenexCorp 3,125 8,125
----------------- -----------------
Total current liabilities 8,125 10,255
----------------- -----------------
Stockholders' deficit:
Preferred stock, par value $.001;
1,000,000 shares authorized,
none issued and outstanding - -
Common stock, par value $.001;
20,000,000 shares authorized,
625,000 shares issued and outstanding 625 625
Additional paid-in capital 6,237 131,237
Deficit accumulated during the development-stage (12,987) (138,167)
------------------ -----------------
Total stockholders' deficit (6,125) (6,305)
----------------- ------------------
Total liabilities and stockholders' deficit $ 2,000 $ 3,950
================= =================
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
LVPS MICROFACILITY, INC.
(A Development-Stage Company)
STATEMENTS OF OPERATIONS
Period From Five Months
December 16, 1998 Ended
(Inception) to November 30,
June 30, 1999 1999
--------------- ---------------
(unaudited)
<S> <C> <C>
Revenues $ - $ -
--------------- ---------------
General and administrative expenses 12,987 125,180
--------------- ---------------
Loss from operations (12,987) (125,180)
--------------- ---------------
Provision for taxes - -
--------------- ---------------
Net loss $ (12,987) $ (125,180)
--------------- ---------------
Basic and dilutive net loss per common share $ (0.02) $ (0.20)
--------------- ---------------
Weighted average number of shares outstanding 625,000 625,000
=============== ===============
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
LVPS MICROFACILITY, INC.
(A Development-Stage Company)
STATEMENT OF STOCKHOLDERS' DEFICIT
For the Period from Inception (December 16, 1998)
Through June 30, 1999 and the Five Months
Ended November 30, 1999 (unaudited)
Deficit
Preferred Common Accumulated
Stock Stock Additional During the
--------------------------- --------------------------- Paid-in Development Stockholders'
Shares Amount Shares Amount Capital Stage Deficit
------------- ------------- ------------- ------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Inception, December 16, 1998 - $ - - $ - $ - $ - $ -
Common stock issued for license
rights - - 612,500 612 - - 612
Common stock issued for
services rendered - - 12,500 13 6,237 - 6,250
Net loss - - - - - (12,987) (12,987)
------ ------- -------- -------- --------- ----------- ---------
Balances, June 30, 1999 - - 625,000 625 6,237 (12,987) (6,125)
Net Loss - - - - - (125,180) (125,180)
Value of Services Provided by
Officers - - - - 125,000 - 125,000
Balances, November 30, 1999 - $ - 625,000 $ 625 $ 131,237 $ (138,167) $ (6,305)
====== ======== ======= ======== ========= ============ =========
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
LVPS MICROFACILITY, INC.
(A Development-Stage Company)
STATEMENTS OF CASH FLOWS
Period From
December 16, 1998 Five Months
(Inception) to Ended
June 30, 1999 November 30, 1999
------------- -----------------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (12,987) $ (125,180)
Adjustments to reconcile net loss to net cash
used in operating activities:
Value of services provided by officers - 125,000
Issuance of common stock for License Agreement and
legal services 6,862 -
Changes in operating assets and liabilities-
Accounts payable 5,000 (2,870)
---------- ------------
Net cash used in operating activities (1,125) (3,050)
----------- ------------
Cash flows from investing activities -
Issuance of note payable to DenexCorp 3,125 5,000
---------- ------------
Net change in cash 2,000 1,950
Cash at beginning of period - 2,000
---------- ------------
Cash at end of period $ 2,000 $ 3,950
=========== =============
Supplemental disclosures of cash flow information-
No income tax or interest was paid in 1999
</TABLE>
Supplemental non-cash financing and investing activities:
During the fiscal 1999, the Company issued 612,500 shares of its common stock to
acquire the License Agreement valued at $612 and issued 12,500 shares of its
common stock valued at $6,250 for legal services.
40
<PAGE>
NOTE 1 - ORGANIZATION AND HISTORY
Organization and Nature of Operations
LVPS MicroFacility, Inc. (the "Company") was incorporated in the state of
Delaware on December 16, 1998 (date of inception). The Company was formed to be
a manufacturer of clean room facilities for the production of large volume
parenteral solutions. The Company's primary product is the MicroFacility, a
modular micro-manufacturing facility that will produce intravenous solutions
from local water sources; blows, fills, and seals the plastic container; and
autoclaves the finished product for quality assurance testing, quarantined
storage, and distribution. The MicroFacility plants are commissioned to United
States Food and Drug Administration and host country standards. The Company is
in the development stage with no operating revenues since its inception.
DenexCorpTM/LVPS MicroFacility ("DenexCorp"), a Nevada Corporation, owns 98% of
the Company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Basis of Presentation
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. In the course of its development, the
Company will continue to incur additional losses during its development of a
production prototype of the MicroFacility. As a result, the Company will require
approximately $4.1 million to complete the development of its production
prototype; the prototype is expected to be completed within 12 months from the
completion of its offering. The Company will require additional funds for its
operational activities and sales efforts. Management is seeking private or
public equity financings and future collaborative arrangements with third
parties to meet its cash needs. There is no assurance that such additional funds
will be available on acceptable terms or available at all. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
The accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Interim Financial Reporting
The accompanying unaudited financial statements for the five months ended
November 30, 1999, have been prepared in accordance with Rules and Regulations
of the Securities and Exchange Commission for interim financial information.
Accordingly, they do not include all of the information and disclosures required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments consisting of normal recurring
accruals, considered necessary for a fair presentation have been included. The
results of operations and cash flows for the five months ended November 30, 1999
are not necessarily indicative of the operating results expected by management
for the year ending June 30, 2000.
Fiscal Year End
The Company has elected a June 30 year end for financial and income tax
reporting purposes.
Risks, Uncertainties and Concentrations
The Company's industry is subject to federal, state, local and applicable
foreign laws and regulations. The successful manufacturing of the Company's
MicroFacility will require that certain permits be obtained. There is no
assurance that the Company will obtain these permits. The Company is also
subject to compliance inspections from certain regulatory agencies, which may
revoke or suspend the permits for any non-compliance to stated regulations.
41
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES, (Continued)
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Significant estimates that will be made in the future by management include,
among others, provisions for losses on accounts and contracts receivable,
provisions for slow moving and obsolete inventories and warranty obligations, as
well as valuations of the Company's common stock. Actual results could
materially differ from those that will be estimated.
Fair Value of Financial Instruments
At June 30, 1999, the Company has few assets and only limited liabilities
constituting accounts payable that would be considered financial instruments.
The carrying amounts of cash and accounts payable are representative of fair
value. In the future, the Company could have financial instruments whereby the
fair value of the financial instruments is different than that recorded on a
historical basis.
Property and Equipment
Property and equipment will be recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the related assets.
Maintenance and repairs will be charged to expense as incurred. Significant
renewals and betterments will be capitalized. At the time of retirement or other
disposition of property and equipment, the cost and accumulated depreciation
will be removed from the accounts and any resulting gain or loss will be
reflected in operations. At June 30, 1999, the Company had no property and
equipment.
The Company will assess the recoverability of property and equipment by
determining whether the depreciation and amortization of these assets over their
remaining life can be recovered through projected undiscounted future cash
flows. The amount of property and equipment impairment, if any, will be measured
based on fair value and is charged to operations in the period in which such
impairment is determined by management.
Deferred Offering Costs
The Company will defer costs incurred in connection with its offering of common
stock. In the event the offering of its common stock is unsuccessful, the
Company will charge such costs to operations.
Revenue Recognition
The Company intends to enter into contracts to construct its MicroFacilities.
Revenues will be recognized on a percentage of completion basis, using actual
labor hours or labor costs incurred to the total estimated labor hours or costs.
In the event a contract results in a loss, the loss will be recorded at the time
the loss is known. The Company will record revenues related to its technical and
support services over the period the services are provided.
Research and Development Expenses
Research and development costs will be expensed as incurred.
42
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES, (Continued)
Allocation of Common Expenses
Since inception, the Company has had no operations. DenexCorp provides
management expertise and office space; however, these expenses are immaterial
due to minimal use of such resources since inception. No allocations have been
made through the date of these financial statements.
Loss Per Share
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share" ("EPS"). SFAS No. 128 requires dual presentation of basic EPS and diluted
EPS on the face of all income statements issued after December 15, 1997 for all
entities with complex capital structures. Basic EPS is computed as net income
divided by the weighted average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur from common
shares issuable through stock options, warrants and other convertible
securities. Common stock equivalents, which relate to shares issuable upon the
exercise of common stock purchase warrants and options, are not included in the
per share calculation for the period as their effect are anti-dilutive. During
the period, no common stock equivalents were outstanding.
Income Taxes
The Company accounts for income taxes under SFAS No. 109, "Accounting for Income
Taxes." Under SFAS 109, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. A valuation
allowance is provided for significant deferred tax assets when it is more likely
than not that such assets will not be recovered through future operations.
Stock-based Compensation
During 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation," which defines a fair value based method of accounting for
stock-based compensation. However, SFAS No. 123 allows an entity to continue to
measure compensation cost related to stock and stock options issued to employees
using the intrinsic method of accounting prescribed by Accounting Principles
Board Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to Employees."
Entities electing to remain with the accounting method of APB 25 must make pro
forma disclosures of net income and earnings per share, as if the fair value
method of accounting defined in SFAS No. 123 had been applied. The Company
issued no warrants or options during the period.
Comprehensive Income
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income."
This statement establishes standards for reporting the components of
comprehensive income and requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
included in a financial statement that is displayed with the same prominence as
other financial statements. Comprehensive income includes net income, as well as
certain non-shareholder items that are reported directly within a separate
component of stockholders' equity and bypass net income. The Company has adopted
the provisions of this statement during the period, with no impact on the
accompanying financial statements.
43
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES, (Continued)
Disclosures about Segments of an Enterprise and Related Information
The Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information" in fiscal year 1999. SFAS No. 131 establishes standards
for reporting information about operating segments and related disclosures about
products, geographic information and major customers. The Company currently has
no operations which constitute a segment.
NOTE 3 - STOCKHOLDERS' DEFICIENCY
During the period, the Company issued 612,500 shares of common stock to
DenexCorp for the rights to develop and market the MicroFacility. Under
generally accepted accounting principles, transfers of assets between companies
under common control must be reflected at their historical costs in a manner
similar to a pooling of interests. The value assigned to these rights was $612
based on the legal par value of the common stock. As discussed in Note 2,
research and development costs are expensed as incurred, and accordingly, no
asset for such license is reflected in the accompanying balance sheet.
During the period, the Company issued 12,500 shares of common stock valued by
the Board of Directors based on the value of the legal services received, or
$0.50 per share.
NOTE 4 - INCOME TAXES
The Company's net deferred tax asset of approximately $5,000 at June 30, 1999
consists of federal net operating loss carryforwards amounting to approximately
$12,600. At June 30, 1999, the Company provided a valuation allowance for these
net operating loss carryforwards totaling approximately $5,000. The difference
between the tax benefit of approximately $4,300 using the lower federal income
tax rate of 34% is the result of a full valuation allowance of the Company's
deferred tax asset.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
License Agreement
During the period, the Company entered into a license agreement (the "License
Agreement") with DenexCorp for the rights to develop the MicroFacility product.
Pursuant to the License Agreement, the Company will pay a 2% royalty fee for
each MicroFacilty sold within the term of the License Agreement. The royalty fee
will be based on the gross sales price of each MicroFacility sold by the Company
during the term of the License Agreement. No royalties were paid during the
period. The License Agreement expires on December 16, 2008.
Employment Agreements
On June 30, 1999, the Company entered into three-year employment contracts with
each of its two officers. The agreements require salaries to by paid, beginning
the date the Company completes an initial public offering ("IPO"), the aggregate
amount totaling $300,000 annually through June 30, 2002. No amounts will be
earned prior to the completion of an IPO. The Company has reflected the value of
such services amounting to $125,000 during the five months ended November 30,
1999. No amounts were reflected during the period from inception to June 30,
1999, since no material participation by the officers was experienced during
this period.
44
<PAGE>
NOTE 6 - RELATED PARTY TRANSACTIONS
DenexCorp has taken steps to protect the design of the MicroFacility, under the
United States of America and International Patent laws, as "Patent Pending,"
titled "Modular Pharmaceutical Solution Manufacturing," preliminary class 604.
All rights to the patent, including any modifications, and the trademark
LVPS/MicroFacilityTM belong to DenexCorp. The Company has been granted the
exclusive use of the patent and trademark subject to the terms of a License
Agreement between DenexCorp and the Company (Note 5).
On June 30, 1999, the Company issued a note payable totaling $3,125 to
DenexCorp., interest at 10% per annum, due on demand. Subsequent to June 30,
1999, DenexCorp. advanced an additional $5,000 for operating expenses of the
Company.
See Note 5 for discussion of employment contracts.
Item 23. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
None.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Under Delaware law, a corporation may indemnify its officers, directors,
employees, and agents under certain circumstances, including indemnification of
such persons against liability under the Securities Act of 1933. A true and
correct copy of Section 145 of the Delaware General Corporation Law which
addresses indemnification of officers, directors, employees and agents is
attached hereto as Exhibit 99.1
In addition, Section 102(b)(7) of the Delaware General Corporation Law and
LVPS's Certificate of Incorporation provide that a director of this corporation
shall not be personally liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director except for liability
(i) for any breach of the director's duty of loyalty to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) for paying a
dividend or approving a stock repurchase in violation of Section 174 of the
Delaware General Corporation Law; or (iv) for any transaction from which the
director derived an improper personal benefit.
LVPS's Certificate of Incorporation and Bylaws contain provisions that no
director of LVPS shall be liable to LVPS for monetary damages for breach of
fiduciary duty as a director involving any act or omission of such director
other than (i) for breach of director's duty of loyalty to LVPS or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) in respect of
certain unlawful dividend payments or stock redemptions or repurchases, or (iv)
for any transaction from which the director derived an improper personal
benefit.
45
<PAGE>
The effect of these provisions may be to eliminate the rights of LVPS and its
stockholders, through stockholders' derivative suits on behalf of LVPS, to
recover monetary damages against a director for breach of fiduciary duty as a
director, including breaches resulting from negligent or grossly negligent
behavior, except in the situations described in clauses (i) - (iv) of the
preceding sentence.
Item 25. Other Expenses of Issuance and Distribution.
The following sets forth the expenses in connection with the issuance and
distribution of the Securities being registered, other than underwriting
discounts and commissions. We shall bear all such expenses. All amounts set
forth below are estimates, other than the SEC registration fee.
SEC Registration Fee $1,390.00
Accounting Fees and Expenses $15,000.00
Miscellaneous $10,000.00
----------
TOTAL $26,390.00
Item 26. Recent Sales of Unregistered Securities.
In December 1998, LVPS issued 612,500 shares to DenexCorp/LVPS MicroFacility for
the rights to develop and market the LVPS MicroFacility at an assigned value of
$612. Further, in December 1998, LVPS issued 12,500 shares to its legal counsel,
Richard O. Weed, for services rendered valued at $6,250 or $.50 per share. Both
transactions were exempt from registration under Section 4(2) the Securities Act
of 1933, as amended. In both transactions, there was no public offering, no
advertising, no general solicitation and no other offerees.
Item 27. Exhibits.
The following is a list of exhibits required by Item 601 of Regulation S-B that
are filed or incorporated by reference. The exhibits that are incorporated by
reference from LVPS's prior SEC filings are noted on the exhibit index. The
other exhibits are attached hereto and being filed with the SEC as part of this
registration statement.
Exhibit
Number Description of Exhibits
- -------------------------------------------------------------------------------
3.1 Articles of Incorporation of LVPS MicroFacility, Inc.*
3.2 By-laws of LVPS MicroFacility, Inc.*
4.1 Form of Common Stock Certificate*
5.1 Opinion re: legality
10.1 License Agreement*
10.2 Employment Agreement with Ron Patterson*
46
<PAGE>
10.3 Employment Agreement with Ross Boling*
10.4 Escrow Agreement between LVPS and Richard O. Weed*
10.5 Micro-Manufacturing Facility Purchase Agreement between DenexCorp(TM)/
LVPS MicroFacility and AO "GIRIYEY"*
10.6 Agreement on Technical Assistance between DenexCorp(TM)/
LVPS MicroFacility and AO "GIRIYEY"*
10.7 Assignment Agreement between DenexCorp(TM)/LVPS MicroFacility and LVPS
MicroFacility, Inc.*
10.8 Subscription Agreement*
23.1 Consent of Independent Auditors
23.2 Consent of counsel
27 Financial data schedule*
99 Additional Exhibits [8 Del. Code Ann.ss.145 Indemnification of
officers, directors, employees and agents].*
* previously filed
Item 28. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
small business issuer pursuant to the foregoing provisions, or otherwise, the
small business issuer has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other
than the payment by the small business issuer of expenses incurred or paid by a
director, officer or controlling person of the small business issuer in the
successful defense of any action, suit or proceeding, is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
47
<PAGE>
LVPS hereby undertakes to:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the registration
statement; and
(iii) Include any additional or changed material information on the plan of
distribution.
(2) For determining any liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the city of
Huntington Beach, State of California, on April 25, 2000.
LVPS MicroFacility, Inc.
By: /s/ Ron Patterson
----------------------------------
Name: Ron Patterson
Title: Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
/s/ Ron Patterson Director, Chief Executive April 25, 2000
- ------------------------ Officer, Chairman
Ron Patterson
/s/ Ross Boling Director, President, Secretary, April 25, 2000
- ------------------------ Principal Financial Officer,
Ross Boling Principal Accounting Officer
48
<PAGE>
EXHIBIT INDEX
5.1 Opinion re: legality
23.1 Consent of Independent Auditors
23.2 Consent of counsel
49
5.1 Opinion re: legality
WEED & Co. L.P.
4695 MacArthur Court, Suite 530
Newport Beach, California 92660
Telephone (949) 475-9086
Facsimile (949) 475-9087
April 25, 2000
Board of Directors
LVPS MicroFacility, Inc.
7755 Center Avenue, 11th Floor
Huntington Beach, California 92647
RE: Opinion of Counsel
Greetings:
I have acted as counsel to LVPS MicroFacility, Inc. (the "Company") in
connection with the registration under the Securities Act of 1933, as amended
(the "Act"), of an aggregate of 625,000 shares (the "Shares") of the Company's
common stock, par value $.001 per share (the "Common Stock"), to be sold by the
Company upon the terms and subject to the conditions set forth in the Company's
registration statement on Form SB-2 (the "Registration Statement").
In connection therewith, I have examined copies of the Company's Certificate of
Incorporation, Bylaws, the corporate proceedings with respect to the offering of
shares, and such other documents and instruments as I have deemed necessary or
appropriate for the expression of the opinions contacted herein. In such
examination, I have assumed the genuineness of all signatures, the authenticity
and completeness of all documents submitted to us as originals, the conformity
to the original documents of all documents submitted to us as copies and the
correctness of all statements of fact contained in such documents.
Based on the foregoing, and having regard for such legal considerations as I
have deemed relevant, I am of the opinion that the Shares to be sold by the
Company by means of the Registration Statement, when sold in accordance with the
terms and conditions set forth in the Registration Statement, will be duly and
validly issued, fully paid and non-assessable.
Very truly yours,
/s/ Richard O. Weed
- ------------------------
Richard O. Weed
Exhibit 23.1 Consent of Independent Auditors
Consent of Independent Accountants
We hereby consent to the use in this Amendment No. 3 to Registration Statement
No. 333-87839, on Form SB-2 and the Prospectus contained therein of our report
dated September 9, 1999, relating to the financial statements of LVPS
Microfacility, Inc. which appears in such Prospectus.
/s/ McKennon, Wilson & Morgan LLP
---------------------------------------
McKennon, Wilson & Morgan LLP
Irvine, California
April 19, 2000
23.2 Consent of counsel
WEED & Co. L.P.
4695 MacArthur Court, Suite 530
Newport Beach, California 92660
Telephone (949) 475-9086
Facsimile (949) 475-9087
April 25, 2000
Board of Directors
LVPS MicroFacility, Inc.
7755 Center Avenue, 11th Floor
Huntington Beach, California 92647
RE: Consent
Greetings:
I hereby consent to the use of my opinion in connection with the registration
under the Securities Act of 1933, as amended (the "Act"), of an aggregate of
625,000 shares (the "Shares") of the Company's common stock, par value $.001 per
share (the "Common Stock"), to be sold by the Company upon the terms and subject
to the conditions set forth in the Company's registration statement on Form
SB-2, (the "Registration Statement"), as an exhibit to the Registration
Statement and to the use of my name under the caption "Experts" in the
Prospectus included as part of the Registration Statement.
Very truly yours,
/s/ Richard O. Weed
- ------------------------
Richard O. Weed
