UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
AMENDMENT #3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Island Critical Care Corp.
(NAME OF SMALL BUSINESS ISSUER IN OUR CHARTER)
Delaware
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
3699 65-0967706
(PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
85 Watts Drive, Charlottetown, Prince Edward Island
(902) 569-4447
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
J. Paul Hines
205 Worth Avenue, Suite 201
Palm Beach, Florida 33480
(954) 418-4912
(NAME, ADDRESS AND TELEPHONE OF AGENT FOR SERVICE)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of this registration statement.
If any of the Securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended, check the following box: [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act of 1933, please check
the following box and list the Securities Act of 1933 registration number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
Securities Act of 1933 registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act of 1933, check the following box and list the
Securities Act of 1933 registration statement number of the earlier effective
registration statement for the same offering. [ ]
1
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE (1)
Total Registration Fee $ 2,598.00
(1) Estimated solely for the purpose of calculating the registration fee.
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED SEPTEMBER 30, 2000
ISLAND CRITICAL CARE CORP.
7,795,049 shares of Common Stock
The registration statement, of which this prospectus is a part relates
to the offer and sale of 7,795,049 shares of our common stock by the holders of
these securities, referred to as selling security holders throughout this
document.
Our common stock is not listed on any national securities exchange or
the NASDAQ stock market.
The selling security holders may offer their shares at any price. We
will pay all expenses of registering the securities.
These securities involve a high degree of risk and should be
considered only by persons who can afford the loss of their entire investment.
SEE RISK FACTORS BEGINNING ON PAGE 7.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
2
The date of this preliminary prospectus is May 30, 2000
TABLE OF CONTENTS
Part I - Prospectus Information
1. Front Cover Page of Prospectus . . . . . . . . . . . . . . . . 1
2. Inside Front and Outside Back Cover Pages of Prospectus. . . . 2
3. Summary Information. . . . . . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . 5
Because We are a Development Stage Company
with Limited Operations and No Revenues or
Profits We are Subject to Developmental Stage Risks;
If We Fail to develop a Marketing Plan, Sales of Our
Pulse Oximeters Will be Negatively Impacted 5
If We Fail to Develop Assembly
Plans the Quality of Our Products
Will be Negatively Impacted 5
Masimo Has Already Granted Licenses of its Signal
Extraction Technology to Other Companies
Which Puts us at a Competitive Disadvantage 5
Because Our Business is Overly
Dependent Upon Masimo, Any Material Change
in Our Relationship or Agreement with
Masimo will Negatively Impact Our Business 6
We are Subject to Intense
Competition Which May Negatively Impact Our
Ability to Achieve Profitable
Operations 6
If We Fail to Obtain Distribution Agreements,
Sales of Our Pulse
Oximeters Will be Negatively Impacted 6
If We Do Not Use a System of Quality
Assurance in Our Assembly Process,
Our Pulse Oximeters Will Not
Perform to Industry Expectations 7
If Our Completed Pulse Oximeter
Does Not Perform to Industry Standards,
it Will Become Obsolete 7
Cost Saving Measures by Managed Health
Organizations May Negatively Impact
Potential Sales of Our Pulse
Oximeters to these Organizations 7
Because Our Licensing Agreement
with Masimo Requires Us to
Use Masimo's Product Designation on
the Front of Our Pulse Oximeters,
We May be Unable to Develop and Promote
Our Own Brand Name 7
We Are Limited In Our Ability
to Enter Into Agreements or Arrangements
with Other Technology Companies
that Could Offer Technology Superior to Masimo's 7
If We Fail to Diversify Our Product
Line, We will be at a Competitive
and Technological Disadvantage 8
Our Use of Masimo's Signal Extraction
Technology May Subject Us to Possible
Patent Infringement Claims that Could
result in Damage Awards Against
Us and/or Limit our Ability to Use
or Sell Our Pulse Oximeters 8
Our Line of Credit Facility with
Enterprise P.E.I. Imposes Restrictions
that May Limit Our Ability to Manage
and/or Structure Our Debt and Corporate
Expenditures and other Finances 8
4. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . 9
5. Determination of Offering Price. . . . . . . . . . . . . . . . 10
6. Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7. Selling Security Holders . . . . . . . . . . . . . . . . . . . 10
8. Plan of Distribution . . . . . . . . . . . . . . . . . . . . . 13
9. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . 14
10. Directors, Executive Officers, Promoters, and Control Persons. 14
11. Security Ownership of Certain Beneficial Owners and Management 16
12. Description of Securities. . . . . . . . . . . . . . . . . . . 17
13. Interest of Experts and Counsel. . . . . . . . . . . . . . . . 18
14. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities . . . . . . . . . . . . . . . . 18
15. Organization Within Last Five Years. . . . . . . . . . . . . . 19
16. Description of Business. . . . . . . . . . . . . . . . . . . . 19
17. Plan of Operation. . . . . . . . . . . . . . . . . . . . . . . 35
18. Description of Property. . . . . . . . . . . . . . . . . . . . 37
19. Certain Relationships and Related Transactions . . . . . . . . 38
20. Market for Common Equity and Related Stockholder Matters . . . 38
21. Executive Compensation . . . . . . . . . . . . . . . . . . . . 39
22. Financial Statements . . . . . . . . . . . . . . . . . . . . . 41
23. Changes and Disagreements With Accountants on Accounting
and Financial Disclosure . . . . . . . . . . . . . . . . . . . 50
Part II - Information Not Required in Prospectus
24. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . 51
25. Other Expenses of Issuance and Distribution. . . . . . . . . . 51
26. Recent Sales of Unregistered Securities. . . . . . . . . . . . 52
27. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
28. Undertakings . . . . . . . . . . . . . . . . . . . . . . . . . 54
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ITEM 3. SUMMARY INFORMATION AND RISK FACTORS
PROSPECTUS SUMMARY
This prospectus contains statements about our future business operations
that involve risks and uncertainties. OUR ACTUAL RESULTS COULD DIFFER
SIGNIFICANTLY FROM OUR ANTICIPATED FUTURE OPERATIONS, AS A RESULT OF MANY
FACTORS, INCLUDING THOSE IDENTIFIED IN THE "RISK FACTORS" BEGINNING ON PAGE 6.
The prospectus summary is limited to highlighting the most significant aspects
of this offering. You should carefully read all information in the prospectus,
including the financial statements and their explanatory notes, prior to making
an investment decision.
Our company.
We were incorporated in Delaware on December 15, 1999. On December 22,
1999 we merged with Island Critical Care Corp., an inactive Florida corporation.
The purpose of this merger was to effect a change in the domicile of the Florida
corporation to Delaware. Island Critical Care Corp. (a Florida corporation), was
originally incorporated on March 15, 1996 under the name 9974 Holdings Inc., and
subsequently changed its name from 9974 Holdings Inc. to Ontario Midwestern
Railway Co. Inc, and finally the Florida corporation's name was changed to
Midwestern Railway Co. Inc. All three name changes of the Florida corporation
were completed prior to its merger with the Delaware company. In the merger of
the Florida and Delaware corporations, we issued 3,072,504 common shares that
were exchanged for 3,072,504 shares of the Florida corporation on a 1 for 1
basis. Following this transaction, we emerged as the surviving corporation. On
January 13, 2000, we merged with Island Critical Care Corporation, an Ontario
corporation. In the merger of the Ontario corporation into the Delaware
corporation we issued 15,028,496 common shares that were exchanged for
15,028,496 shares of the Ontario corporation on a one for one basis. Following
this transaction we emerged as the surviving corporation. We acquired the
Ontario incorporated Island Critical Care Corporation, because we wanted to
purchase its licensed technology of Masimo's signal extraction technology,
cash, financial incentive agreements and research and development of its pulse
oximeter prototype.
Through our acquisition of the Ontario incorporated Island Critical Care
Corporation we acquired the right to use Masimo Corporation's Signal Extraction
Technology in medical devices that we plan to develop. This Technology
integrates a computer processing board, computer software program, cables, and
other equipment into medical monitoring devices and is designed to measure the
level of oxygen saturation in the blood of human patients.
We seek to become a developer, assembly plant, and worldwide distributor
of medical monitoring devices that use Masimo's Signal Extraction Technology.
Our registered office is located at Suite 201, 205 Worth Avenue, Palm Beach,
Florida, 33480 and our registered agent at that address is J. Paul Hines. Our
principal executive offices are currently located at 85 Watts Avenue,
Charlottetown, Prince Edward Island, Canada. Our telephone number is (902)
569-4447. We are only authorized to issue common stock. Our total authorized
common stock consists of 50,000,000 shares, of which 18,101,000 shares are
issued and outstanding.
4
Our business.
We currently have limited operations comprised of assembling some of our
sub-component parts for the assembly of our pulse oximeter product. We currently
have no revenues or profits. The initial medical monitoring device we have
developed and we will attempt to market is the VitalSAT stand-alone pulse
oximeter using Masimo's Signal Extraction Technology. On or about April 28, 2000
we completed development of our prototype pulse oximeter. From approximately
January 1, 2000 to approximately August 1, 2000, the name of our pulse oximeter
was the ATO2m2000 pulse oximeter. On or about August 21, 2000, we decided to
change the name of our pulse oximeter to the VitalSAT pulse oximeter. We changed
the name of our pulse oximeter because we believed the new name offered greater
name recognition.
Our plans include leasing a building to be constructed in the Town of
Stratford, Prince Edward Island. Prince Edward Island is one of the ten
Provinces which comprise the Confederation of Canada. It is located in the
Atlantic Ocean approximately 13 miles northwest of Nova Scotia. Until
construction of the to be leased building is complete, and we have entered into
an agreement for the use of those premises, we have been given access to office
and manufacturing premises owned by the government of the Province of Prince
Edward Island on a rent free basis. These temporary offices are located in the
West Royalty Industrial Park in Charlottetown, Prince Edward Island and includes
approximately 2800 square feet of office space, storage space, assembly space
and a foyer. In approximately July 2000, we began limited operations in these
temporary facilities. Our limited operations to date have consisted of
assembling three of the five sub-component parts of the VitalSAT pulse oximeter;
however, we have not assembled any pulse oximeters to completion other than our
prototype pulse oximeters. We do plan to assemble pulse oximeters to completion
in these temporary facilities as of approximately November 2000. We expect that
the new Stratford assembly plant will be available for our use by approximately
December, 2000, at which time we will begin assembling and distributing our
VitalSAT Pulse Oximeter. There are no assurances that any of these plans will
occur.
We have developed no assembly, marketing, or distribution plans for our
VitalSAT stand-alone pulse oximeter. We cannot assure that we will ever develop
any other medical device products.
THE OFFERING.
As of June 30, 2000, we had 18,101,000 shares of our common stock
outstanding. This offering is comprised of securities offered by selling
security holders only. We will not receive any proceeds from the sale of the
securities.
FINANCIAL SUMMARY INFORMATION.
You should read carefully all the information in this prospectus,
including the financial statements and their explanatory notes.
(In US Dollars)
Statement of Operations Period from
Inception to
March 31, 2000
------------------------------ -----------------
Net Sales $ 0
Cost of Sales $ 0
Gross profit $ 0
Operating expenses $ 439,843
Income (loss) from operations $ (439,843)
Other expense, net $ 4,015
Net income (loss) $ (435,828)
Net income per common share $ (.03)
5
(In US Dollars)
Balance Sheet Period from
Inception to
March 31, 2000
----------------------------------------- ----------------
Total current assets $ 277,386
Other assets $ 37,780
Total Assets $ 315,166
Current liabilities $ 36,070
Due to stockholder/officer $ 0
Due to related party $ 0
Total liabilities $ 36,070
Stockholders equity (deficiency) $ 279,096
Total liabilities and stockholder equity $ 315,166
RISK FACTORS
An investment in the shares of common stock offered in this prospectus
involves a high degree of risk. We cannot assure that we will ever generate
revenues, develop operations, or make a profit.
Because we are a development stage company with limited operations and no
revenues or profits we are subject to developmental stage risks; your ability to
evaluate our business is limited
We are a development stage company with only limited operations. We have
just begun assembly of the sub-component parts of our pulse oximeters. We have
not generated any revenues and have operated at a loss since our inception. As
such, we have no operating history upon which you can evaluate our business or
our business strategies. You must consider the risks and difficulties frequently
encountered by development stage companies. Such risks include: An evolving
and unpredictable business model . Whether we are able to manage our growth.
Whether we are able to anticipate and adapt to a developing market. Whether the
public will accept our product. Whether we will be able to identify, attract,
and retain qualified
personnel
There can be no assurance that we be will successful in addressing these
risks. Moreover, because we will be required to make significant up-front
expenditures in connection with developing our assembly, marketing and
advertising plans, we anticipate that we may incur losses until such time as
revenues are sufficient, if ever, to cover our operating costs. There are no
assurances that we will ever generate significant revenue or ever achieve
profitable operations.
If we fail to develop a marketing plan, sales of our pulse oximeters will be
Negatively impacted
Although we have generally determined that our marketing plans will
consist of distributor and direct sales, we have not specifically determined how
we will implement those plans. If we fail to develop a marketing plan, sale of
our pulse oximeter product will be negatively impacted. Even if we develop a
marketing plan, there are no assurances that it will be successful in generating
sales of our product.
If we fail to develop assembly plans the quality of our products will be
negatively impacted
Our assembly plant is scheduled to be completed by approximately
December 2000, however, we have not developed specific assembly plans for the
assembly of our pulse oximeter in our to be constructed new assembly plant. If
we fail to develop assembly plans, other aspects of our business will be
negatively impacted, as follows:
_ Our ability to develop a quality assurance program
_ Our ability to efficiently manage costs in the assembly of our pulse
oximeter or other future products
_ Our ability to efficiently and effectively make maximum use of our
employees
Masimo has already granted licenses of its signal extraction technology to other
companies which puts us at a competitive disadvantage
Masimo has always maintained a business strategy of commercializing its
Signal Extraction Technology by granting licenses of this technology to medical
device manufacturers or distributors. For instance, Masimo has granted licenses
to the following established medical monitoring device companies that have
substantially greater assets and financial resources than us:
- Zoll, a company based in the United States
- Protocol, a company based in the United
States
- Drager, a company based in Germany
- GE-Marquette, a company based in the United States
- Data Scope, a company based in the United States
- NEC, a company based in Japan
- GS Electromedizinische Gerate, a company based in Germany
Although none of these companies have added Masimo's Signal Extraction
Technology to a stand-alone portable pulse oximeter like our VitalSAT pulse
oximeter, these companies have added this technology to their existing products.
In doing so, Masimo has made the Signal Extraction Technology readily available
to hospitals, clinicians, and physicians and to other venues servicing medical
patients. Over thirty companies in the United States, Europe, and Japan have
licensing agreements with Masimo. Several of these companies already have
6
long-standing relationships with Masimo and have developed products using
Masimo's Signal Extraction Technology. Moreover, under the terms of our
agreement with Masimo, Masimo may grant these licenses to an unlimited number of
companies that could cause increased competition.
In contrast, we are in the initial stages of our agreement with Masimo,
we have no distribution agreements, and we have just completed the development
of our prototype pulse oximeter. Accordingly, we must successfully implement our
development, marketing, and distribution plans to become competitive.
Because our business is overly dependent upon Masimo, any material change in our
relationship or agreement with Masimo will negatively impact our business
Our continued existence is dependent upon Masimo. Because a crucial
component of our VitalSAT pulse oximeter is Masimo's Signal Extraction
Technology, the development and promotion of our product is dependent upon
Masimo's continued participation. Should a change in our control occur, our
Agreement with Masimo might be negatively affected, including possible breach of
contract claims against us. Should Masimo breach its agreement with us and stop
supplying us with their Signal Extraction Technology computer boards, we will be
unable to assemble any further products. Should Masimo become insolvent and
incapable of producing computer boards used in our pulse oximeter, our business
will cease to exist.
We are subject to intense competition which may impact our ability to achieve
profitable operations
The medical device industry is subject to rapidly evolving technology and
increased competition. Nellcor Puritan Bennett of Orlando, Florida occupies
about 80% of the pulse oximeter market and is a dominant player in the pulse
oximeter market. Ivy Biomedical is one of three manufacturers that have
incorporated Masimo's Signal Extraction Technology in the manufacture of a
stand-alone pulse oximeter. These companies may have the following competitive
advantages regarding their pulse oximeters and other medical monitoring devices:
- More established distribution networks
- More competitively priced products
- Better quality and performance
- More financial and technological resources to devote to research and
development
- Technological and marketing advantages.
In addition, Masimo is currently developing its own stand-alone pulse
oximeter, known as the "Radical."
If we are unable to overcome these competitive advantages, we will
generate few sales of our pulse oximeters and our ability to achieve profitable
operations will be negatively impacted.
If we fail to obtain distribution agreements, sales of our pulse oximeter will
be negatively impacted
We now have only one confidential distribution agreement for our initial
product. We have no agreements for any other possible future products. We may
encounter difficulties in securing other distribution
7
agreements. Although we have generally developed our methods of distribution, we
have not developed a specific plan to implement them. In contrast, our
competitors, such as Nellcor, have a substantial distribution network. If we
fail to adequately develop a distribution network, we will not generate
sufficient sales to become profitable.
If we do not use a system of quality assurance in our assembly process, our
pulse oximeters will not perform to industry expectations
If each step in our assembly process is not compliant with acceptable
standards of quality assurance, the performance of our VitalSAT pulse oximeter
will be compromised. Because Masimo's Signal Extraction Technology will be a
crucial component of our VitalSAT Pulse Oximeter, if we do not use quality
assurance in integrating that technology to our remaining components, our entire
unit will not function properly. Currently, we do not have a specific quality
assurance plan to be implemented in our assembly process. If we fail to develop
or implement a quality assurance plan to our assembly process, our pulse
oximeters will not perform properly and our reputation for providing quality
products will diminish or never be developed.
If our completed pulse oximeter does not perform to industry standards, it will
become obsolete
We have not determined whether the completed prototype product will
perform to industry standards. If our product does not perform to industry
expectations, it will not be accepted into the marketplace as a reliable patient
monitoring device. If our completed product does not exceed the performance of
conventional pulse oximeters, our product will become obsolete. In addition,
should the industry standard increase to a level which our prototype product
does not perform, our product will become obsolete.
Cost saving measures by managed health organizations may negatively impact
potential sales of our pulse oximeters to these organizations
The North American population is increasingly dependent upon managed
care organizations. If managed care organizations continue to grow and/or
consolidate, these organizations may seek cost-saving measures such as
decreasing the use of newly developed patient monitoring devices with new
technology or additional functions, in favor of conventional devices that may
possibly be obtained at less expensive prices. This development would have a
negative impact upon the sales of our pulse oximeters.
Because our licensing agreement with Masimo requires us to use Masimo's product
designation on the front of our pulse oximeters, we may be unable to develop and
promote our own brand name
Our purchasing and licensing agreement with Masimo requires us to affix
the Masimo label to our products. Our distributors may want to affix our company
name on our pulse oximeter; however, they will not be required to do so, in
which case the distributor's name will appear, while our name will not appear.
In other cases, distributors may choose Masimo's name to appear on our products,
to the exclusion of our company name. If distributors choose not to use our
name, it limits our ability to develop recognition of our company name and
reputation.
8
Our agreement with Masimo limits our ability to enter into agreements or
arrangements with other technology companies that could offer us technology
superior to Masimo's technology
Our purchasing and licensing agreement with Masimo requires that our
products exclusively use Masimo's Signal Extraction Technology. In addition, the
agreement requires that after the third year of the agreement our products using
this technology will make up at least 80% of our annual patient monitoring
product shipments. Because of these limiting provisions, if other companies
produce superior technologies to Masimo, we will be unable to use these
technologies in our products which could cause our competitors to have a
competitive advantage over us.
If we fail to diversify our product line, we will be at a competitive and
technological disadvantage
As we become more established in the assembly of our pulse oximeters, we
will be under increased market pressure to develop and/or acquire new products
or develop technological enhancements to our existing products. If we devote too
many financial resources to the development, assembly, and promotion of our
pulse oximeters, at the expense of research and development of new medical
testing devices, our business may be overly concentrated in one product. Other
companies that are partners with Masimo have begun development of other medical
monitoring devices, other than the pulse oximeter, using the Signal Extraction
Technology. These companies will have technological advantages over us in
developing new products.
Our use of Masimo's signal extraction technology may subject us to possible
patent infringement claims that could result in damage awards against us and/or
limit our ability to use or sell our pulse oximeters
Masimo has sued Nellcor for infringement of its Signal Extraction
Technology patent and Nellcor has counterclaimed against Masimo and Ivy
Biomedical for infringement of patents held by Nellcor. If Masimo is found to
have infringed on Nellcor's patent, Masimo may no longer be able to sell their
Signal Extraction Technology computer boards. Should that event occur, we will
be unable to assemble our products. In addition, if we were to be sued for
money damages for any such patent infringement, and we were not successful in
defending such a claim, and we were ordered to pay money damages, our financial
condition would be negatively impacted.
Our line of credit facility with Enterprise P.E.I. Imposes restrictions that may
limit our ability to manage and/or structure our debt and corporate expenditures
and other finances
Our line of credit from Enterprise, P.E.I., a Prince Edward Island
government agency, requires the agency's written consent if we wish to make
certain expenditures. For instance, if we wish to make any loans or advances to
shareholders or affiliated companies or grant corporate loan guarantees, we must
obtain the agency's written consent. Enterprise PEI also requires its written
consent if we wish to make dividend payments to our shareholders or bonuses to
our directors. These conditions limit our ability to structure our corporate
finances and affairs in a manner that may be advantageous to our corporate
affairs and development.
ITEM 4. USE OF PROCEEDS
We will not receive any proceeds from the sale of securities by the
holders of the securities.
9
ITEM 5. DETERMINATION OF OFFERING PRICE
We will not make this determination. The holders of the securities will
be able to determine the price at which they sell their securities.
ITEM 6. DILUTION
Since we are not offering or registering shares at a specific price, we
are unable to calculate dilution.
ITEM 7. SELLING SECURITY HOLDERS
The securities are being sold by the selling security holders named
below. The table assumes that all of the securities will be sold in this
offering. However any or all of the securities listed below may be retained by
any of the selling security holders, and therefore, no accurate forecast can be
made as to the number of securities that will be held by the selling security
holders upon termination of this offering. We believe that the selling security
holders listed in the table have sole voting and investment powers with respect
to the securities indicated. We will not receive any proceeds from the sale of
the securities.
Name Relationship Amount Amount Percentage
With Issuer Beneficially Beneficially Owned
Owned Prior to Owned After
Offering After Offering Offering is
Complete
3006760 Ontario Inc. 20,000 0
503124 Ontario Ltd. 108,715 0
Bob Anderson 834 0
Atlantis Capital 16,687 0
Corp.
Nick Auciello 6,667 0
James Aw 20,000 0
Pamela K. Beer 500 0
Marlon Brand 4,000 0
Ronald B. Brown 834 0
C&T Co, Inc. 80,000 0
Frank Cango 667 0
Steve Chafetz 6,667 0
Bob Chaudhuri 5,000 0
Ken Coe 667 0
Marc Comjean 23,334 0
10
Courtice Investments 150,000 0
Inc.
D. Bond Investments 6,667 0
David Cravit 10,000 0
Amy G. Crosby 150,000 0
Michael Curtis 41,285 0
Kathy Deamics 867 0
Deborah Dublack 12,000 0
Elgin Investments Investor 1,600,000 0 0
Don Fenn 20,000 0
Finlay Investment
Consulting Investment 1,000,000 0 0
Relations Sub-
Contractor
David Fletcher 20,000 0
Tony Flynn 20,000 0
David Frattaroli 10,000 0
Louis Gallo 7,048 0
Jay Gemma 16,667 0
Matthew Glac 3,000 0
Alan Grant 60,000 0
Brenda Hamilton 25,000 0
Lucy Harris 6,667 0
El-Ann Hines 334 0
L.J. Hines 334 0
Lauren Hines 834 0
Mark Hines 334 0
Nadine Hines 834 0
Collin Hong 10,000 0
Alex Johnston 10,000 0
Nicolia Kartsonas 1,000 0
Alex Kennedy 20,000 0
William Kennedy 6,826 0
M.G. Kennedy 10,000 0
Tan Hi Kim 3,816 0
W.E. King 834 0
Martin Laelante 10,000 0
Annie Lee 2,151 0
Ben Leung 1,334 0
Peter Lockey 667 0
11
Liane Lueck 667 0
Norma Marrone 16,667 0
Michael Martin 839 0
Nora Marjorie 342 0
Martin
Teresa Melo 1,667 0
Jesse Moore 334 0
Stewart Murray 2,000 0
Diane Nemis 50,000 0
Mary Ann Neshevica 20,000 0
Don Paradiso 25,000 0
Joseph Perrault 6,667 0
John Pignatelli 4,000 0
Lynn Pignatelli 40,000 0
Paul Pignatelli 36,000 0
Karen Pohl 6,667 0
Ruth Reisman 6,667 0
Gavin Riches 793,098 0
Romz International 200,000 0
Co.
Lissette Rozon 834 0
Irnre Sarvari 10,000 0
Jules Sarvari 2,000 0
Guy Schierau 20,000 0
Ship Island Investor 2,719,811 0 0
Investments
Nikolic Slobodan 80,000 0
Terrence Edwin 475 0
Staples
Peter Stein 60,000 0
Swift Enterprises 72,000 0
Inc.
Harry Tan 5,239 0
The Imerax Group 25,667 0
Frank Ursoleo 667 0
George C. Valeri 5,000 0
Delia Bowman 382 0
Wach
12
Dr. Ed White 1,000 0
Fern White 334 0
David B. Williams 7,000 0
Lily Lau Chui Ying 954 0
Silvano Zacchigna 30,000 0
Jerry Zadyko 2,000 0
Dimitri Zolotoreu 8,000 0
Total 7,795,049 0
ITEM 8. PLAN OF DISTRIBUTION
The securities offered by this prospectus may be sold by the selling
security holders or by those to whom such shares are transferred. We are not
aware of any underwriting arrangements that have been entered into by the
selling security holders. The distribution of the securities by the selling
security holders may be effected in one or more transactions that may take place
in the over-the-counter market, including broker's transactions, privately
negotiated transactions or through sales to one or more dealers acting as
principals in the resale of these securities.
Any of the selling security holders, acting alone or in concert with one
another, may be considered statutory underwriters under the Securities Act of
1933, if they are directly or indirectly conducting an illegal distribution of
the securities on behalf of our corporation. For instance, an illegal
distribution may occur if any of the selling security holders were to provide us
with cash proceeds from their sales of the securities. If any of the selling
shareholders are determined to be underwriters, they may be liable for
securities violations in connection with any material misrepresentations or
omissions made in this prospectus.
In addition, the selling security holders and any brokers and dealers
through whom sales of the securities are made may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, and the commissions or
discounts and other compensation paid to such persons may be regarded as
underwriters' compensation.
The selling security holders may pledge all or a portion of the
securities owned as collateral for margin accounts or in loan transactions, and
the securities may be resold pursuant to the terms of such pledges, accounts or
loan transactions. Upon default by such selling security holders, the pledge in
such loan transaction would have the same rights of sale as the selling security
holders under this prospectus. The selling security holders also may enter into
exchange traded listed option transactions which require the delivery of the
securities listed under this prospectus. The selling security holders may also
transfer securities owned in other ways not involving market makers or
established trading markets, including directly by gift, distribution, or other
13
transfer without consideration, and upon any such transfer the transferee would
have the same rights of sale as such selling security holders under this
prospectus.
In addition to the above, each of the selling security holders and any
other person participating in a distribution will be affected by the applicable
provisions of the Securities Exchange Act of 1934, including, without
limitation, Regulation M, which may limit the timing of purchases and sales of
any of the securities by the selling security holders or any such other person.
There can be no assurances that the selling security holders will sell
any or all of the securities. In order to comply with state securities laws, if
applicable, the securities will be sold in jurisdictions only through registered
or licensed brokers or dealers. In various states, the securities may not be
sold unless these securities have been registered or qualified for sale in such
state or an exemption from registration or qualification is available and is
complied with. Under applicable rules and regulations of the Securities Exchange
Act of 1934, as amended, any person engaged in a distribution of the securities
may not simultaneously engage in market-making activities in these securities
for a period of one or five business days prior to the commencement of such
distribution.
All of the foregoing may affect the marketability of the securities.
Pursuant to the various agreements we have with the selling security holders, we
will pay all the fees and expenses incident to the registration of the
securities, other than the selling security holders' pro rata share of
underwriting discounts and commissions, if any, which is to be paid by the
selling security holders.
Should any substantial change occur regarding the status or other
matters concerning the selling security holders, we will file a Rule 424(b)
Prospectus Supplement disclosing such matters.
ITEM 9. LEGAL PROCEEDINGS
We are not aware of any pending or threatened legal proceedings, in
which we are involved.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
Directions And Executive Officers.
Our Bylaws provide that we may have the minimum number of directors
allowable by law. Delaware Corporate Law provides that a corporation must have
at least 1 director. Vacancies are filled by a majority vote of the remaining
directors then in office. Our directors and executive officers are as follows:
14
Name Age Position
-------------- --- --------------------
Kenneth Legere 53 President & Director
Sean Flanigan 35 Secretary & Director
Wayne Weber 41 Treasurer & Director
Each director will serve until our next annual shareholders' meeting
to be held at an undetermined date or until a successor is elected who accepts
the position. Directors are elected for one-year terms. Our officers will be
elected by the Board of Directors at their first meeting following the annual
shareholder meeting each year.
Kenneth R. Legere, our president, chief executive officer and director,
served seventeen years in the Canadian Armed Forces as a Medic, pharmacist,
x-ray technician, and laboratory technologist from 1969 to 1988. >From 1981 to
1983, Mr. Legere completed biomedical engineering training at the NATO learning
institution, the U.S. Army Medical Equipment and Optical School, and Fitzsimmon
Army Medical Center. From 1988 to 1998, Mr. Legere, acted as the sole Canadian
distributor of Schiller AG's life sciences equipment. Schiller AG is a Swiss
company.
Sean Flanigan, our vice president, chief operating officer and director is
an attorney licensed to practice law in the Province of Ontario. He graduated
from Carleton University (Ottawa) with a Bachelor of Arts degree in June of
1987. After graduation he studied economics at Carleton University and enrolled
in the University of Ottawa Law School from which he graduated in 1991. He was
admitted to the bar of Ontario in February of 1993 and practiced law as a
partner of the firm Tavel & Flanigan from September 1993 through December of
1999. Mr. Flanigan was the incorporator of the Ontario Corporation that we
acquired in January of 2000 and he joined our board of directors and became our
chief operating officer as of the date of the merger.
Wayne Weber, our vice president, chief financial officer and director is a
Chartered Accountant licensed to practice in the Province of Ontario. He
graduated from the University of Ottawa with a Bachelors of Administration in
1981. After graduation he articled with a Grant Thornton International affiliate
and became a Chartered Accountant in 1985 and member of the Public Accountants
Council for the Province of Ontario in 1986. Wayne continued to climb through
the ranks within the public accounting firm and was admitted to partnership in
January 1998 where he continued to work until joining Island Critical Care Corp.
Significant Employees.
Other than those persons mentioned above, we have no significant
employees.
15
Family Relationships.
There are no family relationships among our officers, directors, or
persons nominated for such positions.
Legal Proceedings.
No officer, director, or persons nominated for such positions and no
promoter or significant employee of our Company has been involved in legal
proceedings that would be material to an evaluation of our management.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth the ownership, as of January 18,2000,
of our common stock (a) by each person known by us to be the beneficial owner of
more than 5% of our outstanding common stock, and (b) by each of our directors,
by all executive officers and our directors as a group. To the best of our
knowledge, all persons named have sole voting and investment power with respect
to such shares, except as otherwise noted.
Security Ownership Of Certain Beneficial Owners.
Title of Class Name and Address # of Shares Nature of Ownership Current %
Owned
------------- ------------------ --------- ---------------- -------------
Common Finlay
Investment Consulting 1,000,000 Direct 5.5%
Common Elgin
Investments 1,600,000 Direct 8.83%
Common Ship Island Investments 2,719,811 Direct 15.03%
Common 10,000 Del., Inc. 10,164,398 Direct 56.15%
10,000 Del Inc. is an affiliate corporation, which is controlled by
Kenneth Legere, Wayne Weber and Sean Flanigan. The shares owned indirectly by
Kenneth Legere, Wayne Weber and Sean Flanigan through 10,000 Del Inc. are
indicated below. However, none of the shares owned by 10,000 Del., Inc. are
being registered under this prospectus. In addition it should be noted that the
shares of Finlay Investment Consulting and Elgin Investments are being
registered pursuant to this prospectus.
Security Ownership Of Management.
Title of Class Name and Address # of Shares Nature of Ownership Current %
Owned
------------- --------------- ----------- ------------------- --------------
Common Kenneth Legere 10,164,398 Indirect through
10,000 Del. Inc. 34.08%
Common Sean Flanigan 10,164,398 Indirect through
10,000 Del. Inc. 8.29%
Common Sean Flanigan 1000 Direct 0.01%
Common Wayne Weber 10,164,398 Indirect through
10,000 Del. Inc. 12.15%
-------------- --------------- ----------- ------------------ --------------
Total 10,165,398 54.53%
16
Changes In Control.
There are currently no arrangements, which would result in a change in
our control.
ITEM 12. DESCRIPTION OF SECURITIES
The following description is a summary and is qualified in its
entirety by the provisions of our Articles of Incorporation and Bylaws, copies
of which have been filed as exhibits to the registration statement of which this
prospectus is a part.
Common Stock.
General.
We are authorized to issue 50,000,000 shares of common stock with a
par value of $.001 per share. As of June 30, 2000, there were 18,101,000 common
shares issued and outstanding. All shares of common stock outstanding are
validly issued, fully paid and non-assessable.
Voting Rights.
Each share of common stock entitles the holder to one vote, either in
person or by proxy, at meetings of shareholders. The holders are not permitted
to vote their shares cumulatively. Accordingly, the holders of common stock
holding, in the aggregate, more than fifty percent of the total voting rights
can elect all of our directors and, in such event, the holders of the remaining
minority shares will not be able to elect any of such directors. The vote of the
holders of a majority of the issued and outstanding shares of common stock
entitled to vote thereon is sufficient to authorize, affirm, ratify or consent
to such act or action, except as otherwise provided by law.
Dividend Policy.
All shares of common stock are entitled to participate proportionally
in dividends if our Board of Directors declares them out of the funds legally
available. These dividends may be paid in cash, property or additional shares of
common stock. We have not paid any dividends since our inception and presently
anticipate that all earnings, if any, will be retained for development of our
business. Any future dividends will be at the discretion of our Board of
Directors and will depend upon, among other things, our future earnings,
operating and financial condition, capital requirements, and other factors. In
addition, our agreement with Prince Edward Island forbids our payment of
dividends while any loan amount is outstanding, unless we receive specific
written consent from the Prince Edward Island government. Therefore, there can
be no assurance that any dividends on the common stock will be paid in the
future.
Miscellaneous Rights And Provisions.
Holders of common stock have no preemptive or other subscription
rights, conversion rights, redemption or sinking fund provisions. In the event
of our dissolution, whether voluntary or involuntary, each share of common stock
is entitled to share proportionally in any assets available for distribution to
17
holders of our equity after satisfaction of all liabilities and payment of the
applicable liquidation preference of any outstanding shares of preferred stock.
Shares Eligible For Future Sale.
The 7,795,049 shares of common stock sold in this offering will be freely
tradable without restrictions under the Securities Act of 1933, except for any
shares held by our "affiliates", which will be restricted by the resale
limitations of Rule 144 under the Securities Act of 1933.
In general, under Rule 144 as currently in effect, any of our
affiliates and any person or persons whose sales are aggregated who has
beneficially owned his or her restricted shares for at least one year, may be
entitled to sell in the open market within any three-month period a number of
shares of common stock that does not exceed the greater of (i) 1% of the then
outstanding shares of our common stock, or (ii) the average weekly trading
volume in the common stock during the four calendar weeks preceding such sale.
Sales under Rule 144 are also affected by limitations on manner of sale, notice
requirements, and availability of current public information about us. Non-
affiliates who have held their restricted shares for two years may be entitled
to sell their shares under Rule 144 without regard to any of the above
limitations, provided they have not been affiliates for the three months
preceding such sale.
Further, Rule 144A as currently in effect, in general, permits
unlimited resales of restricted securities of any issuer provided that the
purchaser is an institution that owns and invests on a discretionary basis at
least$100 million in securities or is a registered broker-dealer that owns and
invests $10 million in securities. Rule 144A allows our existing stockholders to
sell their shares of common stock to such institutions and registered
broker-dealers without regard to any volume or other restrictions. Unlike under
Rule 144, restricted securities sold under Rule 144A to non-affiliates do not
lose their status as restricted securities.
As a result of the provisions of Rule 144, all of the restricted
Securities could be available for sale in a public market, if developed,
beginning 90 days after the date of this prospectus. The availability for sale
of substantial amounts of common stock under Rule 144 could adversely affect
prevailing market prices for our securities.
ITEM 13. INTEREST OF EXPERTS AND COUNSEL
Our Financial Statements for the period from inception of our
predecessor to March 31, 2000 and September 30, 2000 have been included in this
prospectus in reliance upon Rotenberg & Co., independent Certified Public
Accountants, as experts in accounting and auditing.
18
ITEM 14. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to our directors, officers and
controlling persons, we have been advised that in the opinion of the SEC, such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities, other than the payment by us of
expenses incurred or paid by our directors, officers or controlling persons in
the successful defense of any action, suit or proceedings, is asserted by such
director, officer, or controlling person in connection with any securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by controlling precedent, submit to court of appropriate jurisdiction
the question whether such indemnification by us is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issues.
ITEM 15. ORGANIZATION WITHIN LAST FIVE YEARS
Our company was established in Delaware on December 15, 1999 and then
merged with two other companies, one from Florida and one from Ontario, Canada.
Prior to the merger, in December 1999, Island Critical Care Corporation, the
Ontario Corporation, sold a total of 2,988,098 shares of common stock to one
investor; Marmaid Development Corporation which was established under the laws
of Ontario, Canada in connection with a Canadian private placement, for cash
consideration totaling $1,113,491 in United States dollars. As part of this
private placement, Island Critical Care Corporation, the Ontario Corporation,
also issued an additional 876,000 shares in exchange for a note receivable in
the amount of $292,015 which is due on November 30, 2000. Subsequently, Marmaid
was dissolved and the assets were distributed to its shareholders; the largest
of which was Elgin Investments. Elgin Investments received 1,600,000 shares of
Island Critical Care Corporation, the Ontario Corporation, of the total
3,864,098 shares of common stock sold to the investors in the Canadian private
placement. Elgin Investments' total investment in the Canadian private placement
was $550,960 in United States dollars of which $258,945 was in cash and $292,015
was by way of a note receivable due November 30, 2000. In connection with that
private offering, Island Critical Care Corporation, the Ontario Corporation,
also issued 1,000,000 shares of its common stock to Finlay Investments, for
services valued at $340,000. The investors in the Canadian private placement
received warrants to purchase an additional 747,025 shares of Island Critical
Care, Ontario Corporation's common stock. As of December 31, 1999, these
warrants remained outstanding. These warrants, if exercised, will result in the
issuance of 747,025 shares of our common stock. The warrants may be exercised
over a two-year period. The warrants are exercisable in the first year at US $
0.68 per share and at US$ 1.02 per share in the second year.
In December 1999 and prior to the merger, 10,000 Delaware, Inc., a
corporation owned by our president, Kenneth Legere, provided Island Critical
Care Corporation, the Ontario Corporation , with $6,145 of legal and
incorporation expenses to affect the incorporation of the Island Critical Care
Corporation, the Ontario corporation. 10,000 Delaware, Inc. received 6,164,398
shares of Island Critical Care Corporation, the Ontario corporation, as
consideration for the payment of these expenses.
ITEM 16. DESCRIPTION OF BUSINESS
Business Development.
We were incorporated in Delaware on December 15, 1999 for the purpose
of developing, assembling, and distributing patient monitoring devices
worldwide. On December 22, 1999, we merged with Island Critical Care Corp.,
19
an inactive Florida corporation. Island Critical Care, Florida, was originally
incorporated on March 15, 1996 under the name 9974 Holding, Inc., but changed
its name from 9974 Holding Co., to Ontario Midwestern Railway Company, Inc., and
then to Midwestern Railway Company, prior to their merger with us. In the merger
transaction, we exchanged our shares with Island Critical Care Florida in a 1
for 1 exchange of common stock. Following that transaction, we emerged as the
surviving entity. On January 13, 2000, we merged with Island Critical Care
Corporation, an Ontario corporation. In this transaction, we exchanged our
shares with the Ontario incorporated Island Critical Care Corporation in a 1 for
1 exchange of common stock. We emerged as the surviving entity. We acquired the
Ontario incorporated Island Critical Care Corporation, because we wanted to
purchase its licensed technology, cash, financial incentive agreements and
research and development of its pulse oximeter prototype.
We have operated as a development stage company since our inception.
We have devoted all our efforts to financial planning, raising capital, research
and development, and development of our assembly plant. We have never been the
subject of any bankruptcy or receivership. We have had no operations to date.
In our merger with the Ontario incorporated Island Critical Care, we
acquired the right to incorporate Masimo's Signal Extraction Technology in
medical devices we plan to develop. We are in the process of developing a
medical device using this technology. We completed the development of our
VitalSAT pulse oximeter on or about the end of October 2000.
Principal Products And Services.
We currently have one prototype product, the VitalSAT pulse oximeter.
We publicly announced this product under the product name ATO2M2000 Pulse
Oximeter on June 26, 2000 at the World Congress of Pediatric Intensive Care in
Montreal, Canada. On August 21, 2000 we changed the name of our product to the
VitalSAT pulse oximeter. We have presently commenced production of the sub-
component parts of this product and anticipate delivery of the first completed
VitalSAT pulse oximeter in approximately December, 2000.
The planned operation and assembly of our product, the VitalSAT pulse
oximeter, which is a medical device for gathering patient information, is as
follows:
We plan to obtain Masimo's computer board and sensors that will
collect and interpret concentration of oxygen in the bloodstream which will then
be delivered to the user through a display panel and alarms. The VitalSAT pulse
oximeter is a delivery device for patient information.
We will directly be involved in providing the following functions to
our pulse oximeter:
- Product Design
- Collecting data on the user opinion of the pulse oximeter and
making necessary modifications to the product and the original design, if
necessary, and incorporating those changes, if necessary, into future
models of the pulse oximeter
- Storage of patient data
- Organization of patient data
- Delivery of patient data
- Display of data in:
- Real time (occurs at the moment of measurement)
- Historical Trending
- Constant patient monitoring that displays
20
blood oxygen levels by plotting real time measurements
against a 48 hour period
- Alarm Results
- Alarm sounds if blood oxygen level reaches a level below normal
- Historical Readings
- providing a memory of real time readings for a single patient for up to
ten days of continuous monitoring.
Our pulse oximeter is a medical measurement and storage device that is
attached to a patient via a cable and sensor applied to a finger, toe, across
the bridge of the nose or an ear lobe. The device measures the concentration of
oxygen in the blood stream as well as the heart rate measured in beats per
minute. The oxygen is measured with an infrared light signal, which the probe
emits and then picks up and transmits to the oximeter unit through the cable. A
numerical read-out of blood oxygen saturation and pulse rate is displayed for
diagnostics purposes. Pulse oximeters are used year round in operating rooms,
intensive care units, emergency room; ambulances, air transportation units,
clinics, respiratory care units, and home care programs.
We have a licensing agreement with Masimo Corporation, the
manufacturer of a Signal Extraction Technology board and pulse oximeter sensors,
providing us with the right to use their patented technology in a stand alone
pulse oximeter for ten years commencing in May of 1998. We need to enter into a
leasing agreement with the owner of the to be constructed assembly plant and
develop our marketing division. We hired a Vice President of Sales and
Marketing, Colin Marr, as of July 24, 2000 and Mr. Marr is presently developing
our marketing division.
Conventional pulse oximetry has been used for years in the patient
monitoring market. Conventional pulse oximeters are susceptible to inaccuracies
in oxygen saturation measurement as a result of interference caused by movement
of the patient or electronic devices in close proximity to the patient.
Conventional pulse oximeters do not use Masimo Signal Extraction Technology or
any similar technology to reduce and/or eliminate inaccuracies and as such
continue to present clinical inaccuracies due to their sensitivity to such
interference and low levels of blood flow. Masimo's Signal Extraction Technology
is designed to reduce and/or eliminate the inaccuracy and interference caused by
patient movement. The results of various clinical tests using pulse oximeters
with Masimo's Signal Extraction Technology have shown this technology to be
effective in reducing the effects of electronic interference.
On June 9, 1999, Masimo received 510(K) clearance from the Food and
Drug Administration to extend the application for use of its Signal Extraction
Technology to include conditions of patient motion and patients with low blood
oxygen levels on all patient populations. Masimo was also cleared for accuracy
specifications under these conditions.
In order to sell its signal extraction technology, or any medical device, Masimo
was required to apply to the United States Food and Drug Administration for
510(k) clearance based upon statutory criteria found in the Federal Food, Drug
and Cosmetic Act. These criteria include the level of risk that the agency
determines is associated with the device to be registered. Devices determined to
pose relatively less risk are placed in either class I or II, which requires the
manufacturer to submit a premarket notification requesting 510(k) clearance,
unless an exemption applies.
Masimo has submitted seven 510(k) notices covering the Masimo signal extraction
technology board and sensors. Masimo received clearance from the agency in
February 1997 for its SET MS-1 pulse oximeter and accessories, in January 1998
for Masimo SET MS-1P pulse oximeter and accessories with claims for accuracy
during patient motion, and in June 1999 for the Masimo SET 2000 pulse oximeter
and accessories with accuracy claims during motion and low perfusion.
Accordingly Masimo is permitted by the United States Food and Drug
Administration to sell its medical technology in the United States for the
stated purpose of gathering patient information in situations where the patient
is moving or has a low degree of oxygen in their blood. Without this approval
the Masimo technology could not legally be sold in the United States.
Distribution.
We will employ three methods of distribution:
- Enter into distribution agreements with other medical device distributors
21
granting exclusive distribution rights to our products within
geographically defined areas.
- Enter into non-exclusive agreements that will require distributors to
assume additional cost for entering into non-exclusive arrangements with
us.
- Marketing our products through our website to end users, such as
hospitals, distributors, and HMOs.
From January 1, 2000 to approximately the middle of July, 2000 we had
no distribution agreements. In July, 2000 we signed one confidential
distribution agreement whereby a distributor has sought exclusive distribution
rights for the VitalSAT pulse oximeter in Iran and the United Arab Emirates. The
completion of sales to Iran is governed by the Office of Foreign Asset Control,
a department of the Department of the Treasury. All sales of goods to Iran must
be approved by that office. We have also received an order from that same
distributor for the purchase of 1200 of our VitalSAT pulse oximeter to be
delivered over a twelve month period commencing in October of 2000. We have
created a website to market our products and provide information about our
company but this website is presently unfinished and it may never be finished.
This web site is hosted by IslandTel on Prince Edward Island, Canada. The
address for the website is www.spo2.com.
Originally we planned to visit several potential distributors during
May and June, 2000 to negotiate possible distribution agreement. However as the
VitalSAT pulse oximeter was not market ready we rescheduled those efforts for
September and October, 2000 to explore and negotiate additional distribution
agreements.
New Products Or Services.
We currently have no new products or services announced to the public.
Although we generally plan to develop other medical monitoring devices using
Masimo's Signal Extraction Technology, we now have no specific proposed products
or plan to develop prototypes for these products.
Competitive Business Conditions.
We face competition from 3 fronts:
Companies that manufacture traditional pulse oximeters without artifact
reduction component
Companies, such as Nellcor, manufacture conventional pulse oximeters used
in the market. Although these pulse oximeters are not equipped with the artifact
reduction technology such as Masimo's Signal Extraction Technology, they are
still used by the full spectrum of medical facilities.
Companies that manufacture high end monitoring systems with artifact reduction
component
Companies such as Atom of Japan and Schiller AG of Switzerland, manufacture
high end monitoring systems composed of large rack mounted systems that use
Masimo's Signal Extraction Technology. These high-end units are used in
operating rooms and intensive care units.
One of the competitive business conditions we face is those competitors who
have licensed the same technology from Masimo and have then incorporated this
technology into their large-scale patient monitoring systems. These systems,
which incorporate many different types of invasive and non-invasive patient
measurements, are used almost exclusively in operating rooms and in intensive
care units. Where these items are used to the exclusion of stand-alone pulse
oximeters they create competitive forces against us. Where these units are too
costly or physically too large for the hospital to accommodate, they do not
create competitive forces for the Company producing the larger scale patient
monitoring devices.
Companies that manufacture stand alone pulse oximeters with artifact reduction
component
Our greatest competition will come from companies that manufacture or
market a stand-alone pulse oximeter using Masimo's signal Extraction technology,
similar to our own proposed product, as follows:
- Masimo has introduced its own stand-alone pulse oximeter using their
Signal Extraction Technology, the Radical.
- Ivy Biomedical and Quartz Corporation manufacture pulse oximeters that
use Masimo Signal Extraction Technology.
- Atom manufactures a stand alone pulse oximeter incorporating Masimo's
Signal Extraction Technology and sells this product in Japan.
22
- Nellcor, the market leader in pulse oximeters, has developed an artifact
reduction technology named Oxismart, which it has incorporated into its
own stand-alone pulse oximeters.
We believe that our product will be competitive to those already on the
market because it will offer:
- greater user functions such as ten day storage of patient data,
- compilation of ten days of continuous trends of patient data,
- more easily viewed numerical displays for use in low light environments,
- greater battery life, shorter battery charge time,
- multilingual menus,
- user friendly designed case and,
- ease of conversion of units from North American to European electrical
currents.
In addition we intend to offer our product for sale to distributors at a
lower price than the competition. There is no assurance that our greater user
functions and our lower prices will make us competitive with our competitors.
To compete effectively we plan to establish relationships with several
companies located in North America, Europe, Australia and Japan. We will attempt
to market our VitalSAT pulse oximeter as a user friendly and cost efficient
pulse oximeter that can be used worldwide. Our Vice President, Marketing and
Sales will screen and select appropriate partners who have proven track records
of sales within their geographic markets with a view to signing distribution
agreements so that they may then sell the VitalSAT pulse oximeter. As we enter
into agreements with distributors who will have to agree to quarterly minimum
orders, we will attempt to achieve our sales and revenue goals. There are no
assurances that any of these plans will occur or succeed.
Sources and availability of raw materials.
As of the date of this prospectus, we have raw materials and suppliers of
components. As of June 15, 2000 we commenced manufacture of sub-components to be
assembled as the final commercial version of the VitalSAT pulse oximeter. We
have purchase orders for our parts for our VitalSAT pulse oximeters from the
companies listed below. We may continue to use these companies as our suppliers
when we begin our assembly of our VitalSAT pulse oximeter; however, there is no
assurance that these companies will enter into supplier agreements with us. The
following is a description of the parts we have purchased from these companies:
Apollo Display Technologies, Inc. - Distributor
- A display screen module manufactured by Optrex.
- A part manufactured by NEC that generates the power required to light the
display screen module's screen.
Arrow/Bell Components - Master Distributor
- A memory chip, manufactured by Micron Technology. This chip is a type of
memory that keeps its information even when power is removed. This memory
is used by the VitalSAT pulse oximeter to store the patient information for
a period of up to ten (10) days.
- A part manufactured by Corcom that acts to protect the VitalSAT pulse
oximeter and its user from electrical discharge. This part is designed to
meet all the required medical specifications in North America and Europe.
23
- A power regulator manufactured by Linear Technology . Its function is to
generate the right amount of power for charging the internal battery.
California Micro Devices - Manufacturer
- A computer chip that lowers that the amount of energy that escapes from
the VitalSAT pulse oximeter during operation of its front panel keypad. It
also protects the VitalSAT pulse oximeter from any electrical
interference.
Cantec Systems Ltd. - Manufacturer
- A battery. We use five (5)of these batteries in the VitalSAT pulse
oximeter that can operate the unit for up to 4 hours.
Coilcraft - Manufacturer
- A miniature coil used within the VitalSAT pulse oximeter that acts as an
internal surge protector.
Component Distributors Inc. - Manufacturer's Representative
- A red numeric display. This is used to display the percentage of oxygen in
a patient's blood.
- A green numeric display. This is used to display the patient's heart rate.
GGI International - Manufacturer
- This supplier provides the front panel keypad of the VitalSAT pulse
24
oximeter. This keypad will be used by the user to program the VitalSAT
pulse oximeter as well as operate it, controlling such items as volume.
Maxim Integrated Products - Manufacturer
- A computer chip used in the VitalSAT pulse oximeter to
allow information to transfer from the oximeter to a computer.
- The computer chip used in the VitalSAT pulse oximeter to generate the
power needed to control contrast on the display screen.
- A computer chip used in the VitalSAT pulse oximeter to power the red and
green displays on its front panel.
Pioneer Standard Canada - Distributor
- A one way circuit used to generate the power needed to control contrast on
the display screen.
- A switch used to filter low-level signals within the VitalSAT pulse
oximeter.
- A computer chip that is a microprocessor. It runs all the sections of the
VitalSAT pulse oximeter.
- A computer chip that is manufactured by Analog Devices and it is used
within the VitalSAT pulse oximeter in converting data to be displayed on
the display panel.
- A computer chip that is manufactured by Fairchild Semiconductor and its
function is to detect which key was pressed by the user.
25
- A computer chip that is manufactured by National Semiconductor and its
function is to measure the temperature inside the VitalSAT pulse oximeter.
- A switch manufactured by Silonex and used as a switch to turn on or off
power in the VitalSAT pulse oximeter during its operations.
- A crystal used for the operation of the control-processing unit.
- A crystal used for the operation of the real time clock.
- A computer chip that is manufactured by National Semiconductor that is
used to increase signals within the VitalSAT pulse oximeter.
- A computer chip that is manufactured by QT Electronics. It is used to
communicate with the patient probe.
- A surge protector manufactured by Siemens.
- A display screen manufactured by Optrex. It is used in the VitalSAT pulse
oximeter to display all additional patient information.
- A memory chip, manufactured by Intel. This chip is a type of memory
that keeps its information even when power is removed. This memory
is
26
used by the pulse oximeter to store the patient functions for a
period of up to 10 days.
- A computer chip used in the VitalSAT pulse oximeter to power the red and
green displays on its front panel.
- A one way circuit used to filter low-level signals within the VitalSAT
pulse oximeter.
- A control processing unit manufactured by Zilog that runs all the sections
of the VitalSAT pulse oximeter.
Protek Devices - Manufacturer
- Surge protectors that can protect the VitalSAT pulse oximeter from
electrical surges of up to 25,000 volts without any damage to the unit.
Customer Base
As of the date of this prospectus, we have one customer; however there
is no assurance that we will be successful in establishing a broader customer
base. We do not plan on being dependent upon one single or just a few customers.
Intellectual Property
At present, we do not have any trademarks, patents, royalty
agreements, or other proprietary interest other than our proprietary interest in
the Masimo Licensing Agreement. We may apply for a patent upon the VitalSAT
pulse oximeter if it is determined that there is any proprietary technology in
the VitalSAT pulse oximeter. At present we do not know if any patents would be
granted for the VitalSAT pulse oximeter.
28
Government Regulation Issues
The VitalSAT pulse oximeter is classified as medical device under the
Federal, Food, Drug, and Cosmetics Act administered by the United States Food
and Drug Administration. This agency regulates the clinical testing,
manufacture, labeling, sale, distribution and promotion of medical devices.
Prior to introduction of our products into the market, as a manufacturer we must
obtain market clearance through pre- notification or application process to the
Food and Drug Administration. In addition, a manufacturer is required by the
Food and Drug Administration to comply with current good manufacturing
practices. If we fail to comply with these regulations, we may be subject to
fines, injunctions, civil penalties, recall or seizure of products, total or
partial suspension of production, and criminal prosecution. We have not yet made
the necessary application to the Food and Drug Administration to pre-register
the VitalSAT pulse oximeter as a medical device. We anticipate receiving FDA
approval in April 2001.
The VitalSAT pulse oximeter is classified as a medical device under the
Therapeutic Products Act administered by Health Canada. This agency regulates
the importation and sale of medical devices in Canada. Prior to introduction of
our products into the market, as a manufacturer, we must obtain market clearance
through pre- notification or application process to the Therapeutic Products
Directorate. In addition, a manufacturer is required by Health Canada to comply
with current good manufacturing practices. If we fail to comply with these
regulations, we may be subject to fines, injunctions, civil penalties, recall or
seizure of products, total or partial suspension of production, and criminal
prosecution. We anticipate that in approximately December 2000, we will be
making the necessary application to the Therapeutic Products Directorate to
license the VitalSAT pulse oximeter as a medical device in Canada.
The sale of products to sanctioned countries is governed by the Office
of Foreign Asset Control, a department of the Department of the Treasury. If we
seek to sell medical devices in countries which are the subject of sanctions by
the government of the United States we must first obtain approval and licenses
from the Office of Foreign Asset Control.
The Atlantic Canada Opportunities Agency is an agency established and
operated by the Federal government of Canada to provide economic incentives to
companies to establish and operate businesses in economically depressed areas of
Canada. Under the terms of the repayable contribution by the Atlantic Canada
Opportunities Agency to us, we have certain reporting requirements. We are
required to submit, at the Agency's request, status reports on the progress and
results of the construction of the proposed leased facilities in Prince Edward
Island. In addition, within 90 days at the end of each fiscal year we are
required to furnish this agency with a copy of our financial statements.
Under the terms of the line of credit we are eligible from the P.E.I.
lending agency we are required to submit financial statements to the manner
prescribed by our agreement with P.E.I.
We will seek the following certifications for our operations and
products:
- Canadian Standards Association testing
- Canadian Electric testing for sale of electrical component products in
Europe
- International Standards Organization 9001 standards, including a
performance audit of our operations.
- Underwriters Laboratory certification
- Food and Drug Administration certification
The International Standard Organization standard series was developed by
the International Standards Organization of Geneva, Switzerland, a worldwide
confederation of 90 countries. The standards were originally conceived to
establish quality criteria for companies wishing to sell their products within
the European Union. The standards promote operating efficiency, productivity,
and cost-effectiveness in business and manufacturing. International Standards
Organization ISO 9001 standards cover an organization's practices in the areas
of product design, development, production, installation, and servicing.
29
Prince Edward Island is a Province within the federal structure of
Canada. The Province of Prince Edward Island is empowered by the Constitution of
Canada to regulate certain activities of businesses that operate within that
Province such as minimum wages, occupational health and safety, employment
standards, excise taxes, and private contractual relations. In addition, the
federal government of Canada has constitutional jurisdiction to regulate
interprovincial trade, income taxation, export and import taxation, excise
taxation all of which will be applicable to the operations of the company, which
are located within Canada.
As a company established under the laws of the State of Delaware we
will also be governed by the U.S. Federal Trading with the Enemy Act that
precludes our company from selling our products to certain embargoed countries.
RESEARCH AND DEVELOPMENT.
During the period from approximately December 15, 1999 until
approximately April 28, 2000, our employees of Island Critical Care Corporation
Ontario and Island Critical Care Corp. spent approximately 400 hours on research
and development of the proposed VitalSAT pulse oximeter product. During the
period from approximately December 1, 1999 to approximately December 31, 1999,
in accordance with agreements between engineering companies and us, we spent
$15,331 on research and development costs. This work consisted of engineering
costs associated with the development of the oximeter prototype. We contracted
on a time and materials basis with the following companies to design and develop
the prototype:
Richard Branker Research, Ltd. $7758
Dabby and Associates, Inc. $7573
In addition, our purchase of the Ontario based company, included their
research and development beginning in mid-1997 until our acquisition of their
company.
The research and development of our pulse oximeter proceeded, as follows:
Step I - Purchasing And Licensing Agreement With Masimo:
- Island Critical Care Corporation Ontario entered into a ten-year agreement
whereby it acquired the licensing rights to use Masimo's patented Signal
Extraction Technology. Upon the merger of the two companies we acquired
the rights of the Ontario Corporation pursuant to its agreement with
Masimo.
- We acquired these licensing rights to:
- Process information pertaining to blood oxygen saturation and patient
heart rate.
- To remove forms of outside interference in blood oxygen saturation
measurements, such as electricity, light, and motion.
Step II Design Phase:
Signal Extraction Technology.
During the period from December 1, 1999 and continuing to the
date of this prospectus, a team of 6 engineers and 1 biomedical technician
employed by Island Critical Care Corporation Ontario evaluated several different
configuration designs for our prototype pulse oximeter. The work commenced by
the Ontario Corporation continued after the merger in the surviving company.
30
Evaluating The Signal Extraction Technology Computer Board.
In December 1999, we constructed a working mini model computer assisted
oximeter. To accomplish this we built our own power supply board, added our
previously built microprocessor board, and generated a computer software program
and completed integration of Masimo's Signal Extraction Technology computer
board. We accomplished these tasks during the period from December 22, 1999 to
January 28, 2000, and then had a fully operational large-scale prototype
oximeter. In the period January 28, 2000 to April 28, 2000 our team of engineers
worked to reduce the size of the original prototype by 50% and to enhance the
overall design of the casing and thereafter to incorporate the component parts
into the smaller design.
Design Of Additional Features.
During the period from January 4, 2000 to March 20, 2000, we refined and
designed the following special additional features we felt were important to end
users of our pulse oximeter:
- Large easy to see red and green LEDs to display oxygen and heart rate
values
- User friendly menus to select various functions
- Trending up to ten days by any amount of time such as hours and days.
Trends are continuous oximeter readings that are stored in the flash
memory chip on the microprocessor board permitting a physician or nurse to
view trend graphs at anytime they wish
- Language settings to permit users to select their preferred language in
English, French, German, Spanish, Japanese, Portuguese or Italian
- Reduction in size of unit, both electronically and mechanically, to make
our pulse oximeter more portable and acceptable to world markets
- Critical alarm settings of oxygen and heart rate values with settings for
both high and low readings
Design Of Mechanical Components
During the period from February 1, 2000 to March 6, 2000, we redesigned
our previously built microprocessor board to add more powerful capabilities, as
follows:
- We coordinated the electrical components to our redesign and the new
schematics we drew. We reconfigured our Central Processing Unit board by
adding a new generation microprocessor and a 16-megabyte flash memory
chip.
- This new design would allow our pulse oximeter to accommodate more
significant features and processes, more efficiently than our previous
design.
- This new process would also allow a significant reduction in size of the
unit because we were able to use subminiature microchip technology.
31
- Our schematics were submitted to the Prism Corporation for production of
our first 15 prototype boards. We received delivery of the boards on March
17, 2000.
- We redesigned the power supply board schematics enabling us to add special
features and reduce the size of the unit. A smart power supply capable of
functioning over various AC/DC voltages.
Design Of Software
The systems software we designed will be programmed in the flash
memory of the Central Processing Unit board. This will allow the oximeter
systems to communicate in real time the readings of the isolated patient
interface into tabular data as well as into a graphic display. The readings will
be displayed on a:
- Electro Luminous Display
- Blood Oxygen Saturation Percentage
- Heart Rate Levels on large light emitting diodes
The software has been written. However, additional features and
functions will be available to be incorporated through our software development
by approximately December, 2000. This software pertains to the following
additional features and functions:
- Blood Oxygen Saturation percentage and heart rate trending for up to 10
days
- Language changes
- Various Alarm Functions
- Nurse Call Function
Although our development of these features and functions will be
completed in approximately December, 2000 we will continually refine this
software during approximately the next two years. These features and functions
will be added to our pulse oximeter in response to the needs and requirements of
companies that may purchase our pulse oximeter. We may make the software
providing for these additional features and functions available by downloading
it from the Internet; however, there is no assurance that this service will be
available or that we will be successful in adding features and functions to our
pulse oximeter in response to the needs and requirements of companies that may
purchase the pulse oximeter.
Design of Mechanical Portion
During the period from approximately January 10, 1999 to approximately
April 24, 2000, we designed the mechanical portion, which is comprised of the
following:
- Composed of 10 major parts:
- 3 custom circuit packs
- 1 custom membrane assembly also known as a front cover plate
- 6 or more miscellaneous custom mechanical pieces to tool, evaluate and
refine the mechanical side of the development
- Our team evaluated several different configurations to meet users needs,
such as flat or tall units, from a visual, physical, user interaction
perspective.
- Definition of internal components progressed alongside the creation of the
overall unit concepts
32
- Detailed design of the plastic housings commenced for the newly formed
design concept.
- Industrial design, graphics design and user interface design worked
together to close open items on function, shape, location, size, and color
of all the external user elements.
- Design verification of the physical/mechanical parts and integration of
the software and hardware into the 15 prototypes being build will allow
full unit experience.
Final Design And Testing
Final design concerning all aspects of the VitalSAT pulse oximeter has
been completed and all components to build the oximeter have been ordered. As of
May 19, 2000 we had 15 finalized prototypes of the VitalSAT pulse oximeter. Some
of these prototypes were be turned over to our evaluation team for testing while
others will be provided to our marketing team who can begin showing our new unit
to potential distributors. Once we have debugged our pulse oximeter we
anticipate full-scale production to commence in December 2000. At or about the
same time we anticipate commercial sale of our pulse oximeter product to the
public. In December, 2000 we will apply for 510(k) approval from the Food and
Drug Administration and we anticipate that we will receive such approval in
April, 2001. There is no assurance that any of these assumptions are correct.
Environmental Law Compliance.
Assembly of components for the completion of our pulse oximeter will
not involve the discharge of environmental pollutants. Therefore, the extent
which environmental compliance may be necessary, we do not anticipate any
significant compliance expense.
Employees.
Kenneth R.Legere, our president, chief executive officers and
director, served seventeen years in the Canadian Armed Forces as a Medic,
pharmacist, x-ray technical, and laboratory technologist from 1969 to 1988. From
1981 to 1983, Mr. Legere completed biomedical engineering training form the NATO
learning institution, the U.S. Army Medical Equipment and Optical School, and
Fitzsimmon Army Medical Center. From 1988 to 1998, Mr. Legere, acted as Schiller
AG of Switzerland's sole Canadian distributor of their life sciences equipment.
Sean Flanigan, our vice president, chief operating officer and director is
an attorney licensed to practice law in the Province of Ontario. He graduated
from Carleton University (Ottawa) with a Bachelor of Arts degree in June of
1987. After graduation he studied economics at Carleton University and enrolled
in the University of Ottawa Law School from which he graduated in 1991. He was
called to the bar of Ontario in February of 1993 and practiced law as a partner
of the firm Tavel & Flanigan from September 1993 through December of 1999. Mr.
Flanigan was the incorporator of the Ontario Corporation that we acquired in
January of 2000 and he joined our board of directors and became our chief
operating officer as of the date of the merger.
33
Wayne Weber, our vice president, chief financial officer and director
is a Chartered Accountant licensed to practice in the Province of Ontario. He
graduated from the University of Ottawa with a Bachelors of Administration in
1981. After graduation he articled with a Grant Thornton International affiliate
and became a Chartered Accountant in 1985 and member of the Public Accountants
Council for the Province of Ontario in 1986. Wayne continued to climb through
the ranks within the public accounting firm and was admitted to partnership in
January 1998 where he continued to work until joining Island Critical Care Corp.
Our full-time employees consist of:
- Kenneth Legere President and Chief Executive Officer
- Sean Flanigan Vice President and Chief Operating Officer
- Wayne Weber Vice President and Chief Financial Officer
- Colin Marr Vice President, Marketing and Sales
- Brian Sharpe Director of Quality Control
- Marilee Livingstone Sales and Marketing Associate
- Robert Jameson Production Technician
- Robert Legere Shipping and Receiving Manager
- Caroline Lyons Receptionist
The following positions are now on a third party contract basis;
however, During the next twelve months we anticipate hiring these individuals as
our full-time employees:
- 1 Electrical Engineer - Dr. Frank Johnson of Richard Brancker Research,
Ltd.
- 1 Electrical Engineer/Project Manager - Mr. Joseph Dabby of Dabby and
Associates, Inc.
- 1 Software Engineer - Mr. Deiter Seilers of Richard Brancker Research,
Ltd.
- 2 Mechanical Engineers - Mr. Michael Brown and Mr. Kevin Bailey of Richard
Brancker Research, Ltd.
As we progress to set up our assembly facility targeted for
December, 2000 we plan to staff the following full time positions:
ADMINSTRATIVE STAFF:
- 2 Executive secretaries
- 1 Financial Assistant
- 1 Project Standards Secretary
- 1 Receptionist
- 1 Cleaner
- 1 Director of Sales and Marketing - U.S.A.
ASSEMBLY FACILITY:
- 1 Engineering Supervisor
- 18 Assemblers
- 2 Shipping and Receiving Clerks
- 3 Sales and Marketing Personnel
If the demand for our VitalSAT pulse oximeter products grows to a
sufficient level we will hire approximately 61 additional personnel, as follows:
34
- 51 Assemblers
- 2 Engineering Supervisors
- 2 Secretaries
- 1 Shipping and Receiving
- 1 Receptionist
- 2 Marketing and Sales
- 2 Biomedical Technologist
There is no assurance that we will hire any of these personnel.
Reports To Security Holders.
After the effective date of this document, we will be a reporting
company under the requirements of the Securities Exchange Act of 1934 and will
file quarterly, annual and other reports with the Securities and Exchange
Commission. Our annual report will contain the required audited financial
statements. We are not required to deliver an annual report to security holders
and will not voluntarily deliver a copy of the annual report to the security
holders. The reports and other information filed by us will be available for
inspection and copying at the public reference facilities of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549.
Copies of such material may be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Information on the operation of the Public Reference
Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the
Commission maintains a World Wide Website on the Internet at http://www.sec.gov
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.
35
ITEM 17. PLAN OF OPERATIONS
The discussion contained in this prospectus contains "forward- looking
statements" that involve risk and uncertainties. These statements may be
identified by the use of terminology such as "believes", "expects", "may",
"will", or "should", or "anticipates", or expressing this terminology negatively
or similar expressions or by discussions of strategy. The cautionary statements
made in this prospectus should be read as being applicable to all related
forward-looking statements wherever they appear in this prospectus. Our actual
results could differ materially from those discussed in this prospectus.
Important factors that could cause or contribute to such differences include
those discussed under the caption entitled "risk factors," as well as those
discussed elsewhere in this prospectus.
We are a development stage company with limited operations and no revenues
or profit. We plan to develop and refine and assemble a stand-alone pulse
oximeter using Masimo's Signal Extraction Technology. We have taken the
following steps towards this purpose.
- As stated previously, one of the reasons for the merger with the
Canadian corporation was to obtain the $ 1,107,744 that it had
previously raised in a private placement. In January, 2000, as a
result of the merger being concluded, our operations were funded.
- With the assistance of the government of Prince Edward Island we
issued a request for proposals to have developers design and build a
mixed-use assembly and office facility to be located in the Town of
Stratford, Prince Edward Island, which we will use as our assembly
plant. We do not currently have any lease agreement for these premises
nor is there any guarantee this building will be built. Under the
terms of our request for proposal we have proposed that we lease this
to be constructed building for a term of ten years after which time we
shall have the option to purchase the building at a discount off fair
market value. There is no guarantee that we will purchase this
building.
- The government of Prince Edward Island has provided us with a verbal
commitment to use a building, rent-free, located at 85 Watts Drive,
Charlottetown, Prince Edward Island, until the construction of the
Stratford facility is completed. On May 1, 2000, we occupied this
building.
- We have secured a line of credit in the amount of US$ 1,020,500
through the Prince Edward Island Lending Agency, the Prince Edward
Island government agency responsible for attracting new business to
Prince Edward Island. We have met all preconditions to funding under
this line of credit and have proceeded to draw down on these funds.
The interest rate on this line of credit is the prime rate plus 3%.
Interest is paid monthly. The line of credit facility is reviewed
annually with the Prince Edward Island Lending Agency in September of
each year.
- We have secured a US$244,900 repayable grant from the Atlantic Canada
Opportunities Agency, an agency of the Canadian government. This
agency is responsible for the development of business opportunities in
Atlantic Canada. The grant is interest free and repayable over a
five-year period. Acceptable expenditures under the grant are capital
asset acquisitions, market development, and standards certification
costs and are reimbursed by the Atlantic Canada Opportunities
Agency once the expenditure has been incurred and paid for by the
Company. We have filed claims with the Atlantic Canada Opportunities
Agency and are presently awaiting payment on those claims.
36
- In April 2000 we applied for funding under the Canada Jobs Program
with Human Resource Development Canada, a Federal government agency
responsible for job development in undeveloped in underdeveloped parts
of Canada. Under such an agreement, the government would fund 50% of
qualified employee salaries for one year. The average salaries for
these type employees are between US$10,200 and US$ 13,600 per
employee. In May 2000, we received verbal approval for US$ 42,900 of
funding from Human Resource Development Canada representing only a
portion of our possible funding. The US $42,900 of funding will be
used for hiring of our assembly personnel and the related capital
costs for these employees. Human Resource Development Canada will
not provide funding to us until we hire the personnel to be so funded.
We have not yet hired any of these personnel and there is no certainty
that we will hire them.
- Once we have established a commercially operational assembly facility
for a period of thirty days we will receive a non-repayable grant of
US$ 136,100 from Enterprise PEI.
- Once we occupy the Stratford facility, we will receive from Enterprise
Prince Edward Island a US $34,000 rental incentive to be
applied as against our rental cost of the Stratford building in the
first year of occupancy. This grant is non-repayable.
Our operations over the next twelve months include the following:
- Finalization of the development of the pulse oximeter for market,
- Obtaining certification under various governmental regulating bodies
including the Food and Drug Administration, Health Canada's
Therapeutic Product Programme, Canadian Standards Association,
Certifications Europe and Underwriters Laboratories;
- Setting up our distribution channels for the sale of the product,
- Setting up the production facility in Prince Edward Island, and;
- Hiring of staff to produce the product.
Current cash reserves, generated from the initial private placement
together with the funding commitments from the Government of Canada and the
Province of Prince Edward Island are sufficient to bring us to the point where
our operations will be funded by the sale of our product.
All of our required parts to manufacture the pulse oximeter have been
secured from suppliers on purchase orders covering 10,000 units to be delivered
over a 14-month period. The cost of these parts have been fixed and a delivery
schedule has been arranged with the suppliers to ensure that the parts are
delivered to us in a timely fashion in order to meet our projected sales
volumes. The inventory purchases are 100% funded by the Province of Prince
Edward Island's US $1,020,500 line of credit facility.
Cost of obtaining the certifications have been minimized by centralizing
this function with one contractor. All of the certifications are done at once,
for a fixed fee. The Atlantic Canada Opportunities Agency finances these costs.
In addition, Atlantic Canada Opportunities Agency finances all costs
associated with establishing distribution channels, marketing materials such as
brochures, attendance at trade shows, travel related to establishing foreign
markets, and capital acquisitions.
We are eligible to receive Federal non-repayable grants from the
Government of Canada for the hiring of certain of our production staff. These
subsidies range from $5,000 to $10,000 per qualified individual hired.
We do not anticipate having to raise additional funds in the next twelve
months to finance our current operating plan for the development and
manufacturing of the current product.
ITEM 18. DESCRIPTION OF PROPERTY
We do not own any property nor do we have any plans to own any
property in the future. Although the building that will house our operations
will be located in the Stratford Business Park in the town of Stratford, Prince
Edward Island, the exact location of property has not been determined. Stratford
Business Park consists of approximately 72 acres of land. Our facility will
occupy approximately 2 acres. We plan to use a newly constructed building by
approximately December 2000 that we will lease back for a ten-year period from
the developer, Fitzgerald and Snow. Our annual rent cost will be approximately
US$ 60,500. The agreement with the developer will provide that the contractor
will agree to build a facility and lease it to us for 10 years with lease
payments of $60,500 per annum and a proposed buy out in year ten for fair market
value, less a 20% discount.
This facility will include administration and executive offices,
boardroom facilities, and shipping and receiving, inventory maintenance, and
storage, assembly area and offices necessary for testing equipment. All parts
necessary for assembling the products will be received and stored in this
facility until they are allocated for assembly to a specific worker. The
assembly area will be approximately 4,000 square feet and will be equipped with
flooring and other environmental conditions that will be conducive to testing
our products.
There is no intention to sub-tenant any of these premises. We will
occupy the entire premises. We will be required to have commercial insurance,
including personal injury coverage of at least US$ 680,000 as well as sufficient
insurance
37
to cover the value of inventory on hand, equipment and furnishings. Insurance
for the building could cost as much as $6,800 U.S. per year.
Enterprise PEI has also provided to us space in a building owned by
the Provincial government to house our offices and assembly facility on a rent
free basis until the Stratford facility is constructed. These facilities, Unit
12, 85 Watts Street, Charlottetown, Prince Edward Island is comprised of
approximately 2800 square feet. We established our headquarters and executive
offices within the temporary assembly facility as of May 2000. In May 2000, we
initiated communication with possible distributors to arrange training and
demonstration of our pulse oximeter to their sales representatives.
Our current employees and the employees we plan on hiring over the
next twelve months will be housed initially in the Watts Street temporary
assembly facility and thereafter in the yet to be completed Stratford building.
These employees will be involved in:
- Shipping, receiving
- Assembly of Product
- Administration and Executive assistance
- Sales
Our registered offices are located in West Palm Beach, Florida.
The sole purpose of these offices is to permit the delivery of mail and
forwarding of same to our principal offices in Prince Edward Island.
ITEM 19. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have not entered into any transactions with our officers,
directors, persons nominated for such positions, beneficial owners of 5% or more
of our common stock, or family members of such persons other than an agreement
with Finlay Investment Consulting whereby Malcolm Finlay will provide investor
relations services for a fee of US$ 2,050 per month. Under this agreement we are
obliged to also pay any reasonable expenses incurred by Malcolm Finlay in
providing these services.
We are not a subsidiary of any other company.
ITEM 20. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Market Information.
Our common stock is not traded on any exchange. We plan to eventually
seek listing on the OTCBB, once our registration statement has cleared comments
of the Securities and Exchange Commission, if ever. We cannot guarantee that we
will obtain a listing. There is no trading activity in our securities, and there
can be no assurance that a regular trading market for our common stock will ever
be developed.
38
Penny Stock Considerations.
Broker-dealer practices in connection with transactions in penny
stocks are regulated by certain penny stock rules adopted by the Securities and
Exchange Commission. Penny stocks generally are equity securities with a price
of less than US$ 5.00. Penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document that provides information about penny
stocks and the risks in the penny stock market. The broker- dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction,
and monthly account statements showing the market value of each penny stock held
in the customer's account. In addition, the penny stock rules generally require
that prior to a transaction in a penny stock, the broker-dealer make a special
written determination that the penny stock is a suitable investment for the
purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the
level of trading activity in the secondary market for a stock that becomes
subject to the penny stock rules. Our shares may someday be subject to such
penny stock rules and our shareholders will, in all likelihood, find it
difficult to sell their securities.
Holders.
As of January 18, 2000, there were approximately 857 holders of record
of our common stock.
Dividends.
We have not declared any cash dividends on our common stock since our
inception and do not anticipate paying such dividends in the foreseeable future.
We plan to retain any future earnings for use in our business. Any decisions as
to future payment of dividends will depend on our earnings and financial
position and such other factors, as the Board of Directors deems relevant.
ITEM 21. EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
Summary Compensation Table
----------------------------
Annual Compensation Long Term Compensation
------------------------------ ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Name and Principle Year Salary Bonus Other Annual Restricted Securities LTIP Other
Position ($) ($) Compensation Stock Award(s) Underlying Payouts ($)
($) ($) Options (#) ($)
------------------ ---- ------- ------ ------------- -------------- ----------- -------- ------
Kenneth Legere 1999 18,500 0 0 0 0 0 0
President
Wayne Weber 1999 14,800 0 0 0 0 0 0
Treasurer
Sean Flanigan 1999 14,800 0 0 0 0 0 0
Secretary
</TABLE>
We have entered into employment agreements with our employees. We have
arrangements under which we are obligated to compensate our officers, directors
or employees in the future. We have no standard arrangements under which we will
compensate our directors for their services provided to us.
39
Our January 1, 2000 employment agreement with Kenneth Legere provides
for an unlimited term of his employment as our president and chief executive
officer, commencing on January 1, 2000. The agreement provides that:
- Mr. Legere will receive US$ 102,050, exclusive of bonuses, benefits, and
other compensation during his first year of employment.
- For each successive year, his annual base salary is to be increased by
eight per cent.
- Mr. Legere will be permitted to participate in any share option plan,
share purchase plan, retirement plan or similar plan offered by us to our
senior executives to the extent that any such plan is authorized by our
board of directors.
- Mr. Legere will be entitled to receive one thousand compensation options
per month that may be exercised by him at fixed price of US$0.17 per
option for a period of three years after vesting.
- Mr. Legere will participate in our executive bonus plan.
Our March 1, 2000 employment agreement with Wayne Weber provides for
an unlimited term of his employment as our vice president and chief financial
officer, commencing on May 1, 2000. The agreement provides that:
- Mr. Weber will receive US$ 81,700, exclusive of bonuses, benefits, and
other compensation during his first year of employment.
- For each successive year, his annual base salary is to be increased by
eight per cent.
- Mr. Weber will be permitted to participate in any share option plan, share
purchase plan, retirement plan or similar plan offered by us to our senior
executives to the extent that any such plan is authorized by our board of
directors.
- Mr. Weber will be entitled to receive an unspecified number compensation
options that may be exercised by him at a fixed price of US$ 0.17 per
option for a period of three years after vesting.
- Mr. Weber will participate in our executive bonus plan.
Our March 1, 2000 employment agreement with Sean Flanigan provides for
an unlimited term of his employment as our vice president and chief operating
officer, commencing on May 1, 2000. The agreement provides that:
- Mr. Flanigan will receive US$ 81,700, exclusive of bonuses, benefits, and
other compensation during his first year of employment.
- For each successive year, his annual base salary is to be increased by
eight per cent.
- Mr. Flanigan will be permitted to participate in any share option plan,
share purchase plan, retirement plan or similar plan offered by us to our
senior executives to the extent that any such plan is authorized by our
board of directors.
- Mr. Flanigan will be entitled to receive an unspecified number
compensation options that may be exercised by him at a fixed price of US$
0.17 per option for a period of three years after vesting.
40
- Mr. Flanigan will participate in our executive bonus plan.
Our auditors, in accordance with the following formula will calculate
our executive bonus plan for each fiscal year, as follows:
- In the event that pre-tax profits for the relevant fiscal year are greater
than US$340,200, the lesser of US$ 10,200 or ten percent of the
Executive's base salary; and
- US$ 6,800 plus 1% of the amount by which such pre-tax profits exceed US$
340,200; and
- in the event that pre-tax profits for the relevant fiscal year are equal
to or less than US$ 340,200, no bonus will be paid.
Our Board of Directors in their sole discretion will determine the amount of the
Executive Bonus payable to Mr. Legere , Mr. Weber, and Mr. Flanigan.
ITEM 22. FINANCIAL STATEMENTS
Statements included in this prospectus that do not relate to present
or historical conditions are "forward-looking statements." We may make future
forward-looking statements, which may be included in documents that we file with
the Commission other than this registration statement. Forward-looking
statements involve risks and uncertainties that may differ materially from
actual results, and may relate to our plans, strategies, objectives,
expectations, intentions and adequacy of resources.
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
-------- -------------------------------------- ------
FINANCIAL REPORTS
AT
MARCH 31, 2000
-------- -------------------------------------- ------
<PAGE>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-------------------------------------------------------------------------------------------------------------------
<S> <C>
Independent Auditors' Report F-1
Balance Sheets at March 31, 2000 and March 31, 1999 F-2
Statements of Changes in Stockholders' Equity for the Period From the Date of
Inception (April 21, 1998) through March 31, 2000. F-3
Statements of Operations and Comprehensive Income for the Year Ended March 31,
2000 and for the Period From the Date of Inception (April 21, 1998)
Through March 31 2000 F-4
Statements of Cash Flows for the Year Ended March 31, 2000 and for the Period
From the Date of Inception (April 21, 1998) Through March 31 2000. F-5
Notes to the Financial Statements F-6-F-11
Interim Unaudited Financial Statements at September 30, 2000 and 1999 F-12
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
and Shareholders
Island Critical Care Corp.
Palm Beach, Florida
We have audited the accompanying balance sheets of Island Critical Care
Corp. (A Development Stage Company) as of March 31, 2000 and 1999 and the
related statements of changes in stockholders' equity, operations and
comprehensive income and cash flows for the year ended March 31, 2000 and for
the periods from inception (April 21, 1998) through March 31, 1999 and March 31
2000. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits provide 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 Island Critical Care Corp.
as of March 31, 2000 and 1999 and the results of its operations and its cash
flows for the year ended March 31, 2000 and for the period from the date of
inception (April 21, 1998) through March 31, 1999 and March 31 2000, in
conformity with generally accepted accounting principles.
As discussed in Note I, the financial statements have been restated to give
effect to changes made in proceeds received from the sale of common stock, the
write-off of goodwill and the related amortization.
/s/ Rotenberg & Company, LLP
Rotenberg & Company, LLP
Rochester, New York
May 30, 2000
(Except Note I, Dated November 11, 2000)
<PAGE>
<TABLE>
<CAPTION>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
BALANCE SHEETS
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
(In U.S. Dollars)
(Restated)
March 31, March 31,
2000 1999
-----------------------------------------------------------------------------------------------------------------------
ASSETS
Current Assets
Cash and Cash Equivalents $ 246,814 $ 100
Accounts Receivable
2,121 --
Commodity Tax Recoverable
7,875 --
Prepaid Expenses
20,576 --
-----------------------------------------------------------------------------------------------------------------------
Total Current Assets 277,386
100
Property and Equipment - Net of Accumulated Depreciation
13,847 --
Other Assets
License Fee - Net of Accumulated Amortization
23,933 --
-----------------------------------------------------------------------------------------------------------------------
Total Assets $ 315,166 $ 100
-----------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 36,070 $ 50,877
-----------------------------------------------------------------------------------------------------------------------
Total Liabilities
36,070 50,877
-----------------------------------------------------------------------------------------------------------------------
Stockholders' Equity
Common Stock - $.001 Par; 50,000,000 Authorized; 18,101,000
Issued and Outstanding
18,101 6,164
Additional Paid - In Capital 701,719
--
Deficit Accumulated During Development Stage (435,828)
(56,941)
Accumulated Other Comprehensive Income
(4,896) --
-----------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 279,096
(50,777)
-----------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 315,166 $ 100
-----------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of this
financial statement.
F- 2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE PERIOD
FROM THE DATE OF INCEPTION (APRIL 21, 1998) THROUGH MARCH 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
(In U.S. Dollars)
Deficit
Common Accumulated Accumulated Total
Stock Additional During Other Stockholders'
Number of $.001 Par Paid-In Development Comprehensive Equity
Shares Value Capital Stage Income (Deficit)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance - April 21, 1998 -- $ -- $ -- $ -- $ -- $ --
Issuance of Shares for Cash
- Original incorporation of
Canadian Company 10,164,398 10,164 (4,000) -- -- 6,164
Net Loss for Period 6,941) -- (56,941)
------------------------------------------------------------------------------------------------------------------------------------
Balances - March 31, 1999 10,164,398 10,164 (4,000) (56,941) -- (50,777)
Canadian Private Placement Offering
of Stock, Net of Offering Costs of
$249,835 2,988,098 2,988 860,668 -- -- 863,656
Stock Subscriptions 876,000 876 291,139 -- -- 292,015
Less: Subscriptions Receivable -- -- (292,015) -- -- (292,015)
Issuance of Shares in Exchange
for Services, Net of Costs of
Related Services of $340,000 1,000,000 1,000 (1,000) -- -- --
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Sub-Total 15,028,496 15,028 854,792 (56,941) -- 812,879
Acquisition of Florida Public
Shell Corporation -- -- (150,000) -- -- (150,000)
Issuance of Shares in Connection
with Merger with
Island Critical Care Corp. Florida 3,072,504 3,073 (3,073) -- -- --
Comprehensive Income:
Net Loss for the Period -- -- -- (378,887) -- (378,887)
Foreign Currency Translation -- -- -- -- (4,896) (4,896)
Total Comprehensive Income - - - (378,887) (4,896) (383,783)
------------------------------------------------------------------------------------------------------------------------------------
Balances - March 31, 2000 -
Restated 18,101,000 $ 18,101 $ 701,719 $ (435,828) $ (4,896) $279,096
------------------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of this
financial statement.
F- 3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
--------------------------------------------------------------------------------------------------------------------------
(In U.S. Dollars)
(Restated)
From Date of (Restated) From Date of
Inception Year Ended Inception
through March 31, through
March 31, 2000 2000 March 31, 1999
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ -- $ -- $ --
--------------------------------------------------------------------------------------------------------------------------
Operating Expenses
Advertising and Promotion
11,635 5,288 6,347
Bank Charges and Interest
447 356 91
Communications
6,135 2,123 4,012
Investor Relations
12,714 12,714 --
Legal and Accounting
8,504 8,504 --
Organization Costs
6,064 -- 6,064
Office Supplies and Stationery
12,419 1,515 10,904
Shipping Charges
404 404 --
Rent and Rentals
5,213 5,213 --
Research and Development Costs 112,278
112,278 --
Salaries and Benefits 212,896
212,896 --
Telephone
616 616 --
Travel
46,284 16,761 29,523
Depreciation
3,167 3,167 --
Amortization
1,067 1,067 --
--------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 382,902
439,843 56,941
--------------------------------------------------------------------------------------------------------------------------
Loss From Operations (382,902)
(439,843) (56,941)
Other Income (Expenses)
Interest Income
4,015 4,015 --
--------------------------------------------------------------------------------------------------------------------------
Net Loss $ (435,828) $ (378,887) $ (56,941)
Other Comprehensive Income, Net of Income Tax:
Foreign Currency Translation (4,896) (4,896) --
--------------------------------------------------------------------------------------------------------------------------
Comprehensive Income (Loss) $ (440,724) $ (383,783) $ (56,941)
--------------------------------------------------------------------------------------------------------------------------
Net Loss per Common Share - Basic and Diluted $ (0.03) $ (0.03) $
(0.00)
--------------------------------------------------------------------------------------------------------------------------
Weighted Average Common Shares Outstanding 15,522,395 10,164,398
15,522,395
--------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of this
financial statement.
F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------------------------------------------------------------
(In U.S. Dollars)
(Restated)
From Date of (Restated) From Date of
Inception Year Ended Inception
through March 31, through
March 31, 2000 2000 March 31, 1999
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Cash Received from Customers $ -- $ -- $ --
Cash Paid to Suppliers and Employees (425,910) (419,846) (6,064)
-------------------------------------------------------------------------------------------------------------------------------
Net Cash Flows from Operating Activities (425,910) (419,846) (6,064)
-------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
Acquisition of Florida Public Shell Corporation (150,000) (150,000) --
Purchase of Property and Equipment (16,776) (16,776)
--
Purchase of License Fee
(25,000) (25,000) --
-------------------------------------------------------------------------------------------------------------------------------
Net Cash Flows from Investing Activities (191,776) (191,776)
--
-------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
Gross Proceeds From Private Placement Offering 1,107,744 1,101,505 6,239
Cost of Private Placement Offering (249,835) (249,835)
--
-------------------------------------------------------------------------------------------------------------------------------
Net Cash Flows from Financing Activities 857,909 851,670 6,239
-------------------------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes on Cash and
Cash Equivalents 6,591 6,666 (75)
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
Net Increase in Cash and Cash Equivalents 246,814 246,714 100
Cash and Cash Equivalents - Beginning of Period -- 100 --
-------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents - End of Period $ 246,814 $ 246,814 $ 100
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
RECONCILIATION OF NET LOSS TO NET CASH FLOWS FROM OPERATING ACTIVITIES
---------------------------------------------------------------------------------------------------------------------------
(In U.S. Dollars)
(Restated)
From Date of (Restated) From Date of
Inception Year Ended Inception
through March 31, through
March 31, 2000 2000 March 31, 1999
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Loss $ (435,828) $ (378,887) $ (56,941)
Adjustments:
Depreciation --
3,167 3,167
Amortization of License Fee --
1,067 1,067
Changes:
Accounts Receivable (2,114) (2,114) --
Commodity Tax Recoverable (7,827) (7,827) --
Prepaid Expenses (20,445) (20,445) --
Accounts Payable 36,070 (14,807) 50,877
---------------------------------------------------------------------------------------------------------------------------
Net Cash Flows from Operating Activities $ (425,910) $ (419,846) $ (6,064)
---------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of this
financial statement.
F- 5
</TABLE>
<PAGE>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
NOTES TO THE FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Note A - The Companies
The Company was incorporated in Delaware on December 15, 1999.
On December 22, 1999 the Company merged with Island Critical Care
Corp., an inactive Florida corporation. The purpose of this merger
was to effect a change in the domicile of the Florida corporation to
Delaware. Island Critical Care Corp. (a Florida corporation), was
originally incorporated on March 15, 1996 under the name 9974
Holdings Inc., and subsequently changed its name from 9974 Holdings
Inc. to Ontario Midwestern Railway Co. Inc., and finally the Florida
corporation's name was changed to Midwestern Railway Co. Inc. All
three name changes of the Florida corporation were completed prior
to its merger with the Delaware company. The company purchased
Midwestern Railway Co., Inc.(A Florida Public Shell Corporation) for
$150,000 in November, 1999. In the merger of the Florida and Delaware
corporations, the Company issued 3,072,504 common shares that were
exchanged for 3,072,504 shares of the Florida corporation on a one
for one basis. Following this transaction, the Company emerged as the
surviving corporation.
On January 13, 2000, the Company merged with Island Critical Care
Corporation, an Ontario, Canada corporation. In the merger of the
Ontario corporation into the Delaware corporation, the Company issued
15,028,496 common shares that were exchanged for 15,028,496 shares of
the Ontario Corporation on a one for one basis. Following this
transaction the Company emerged as the surviving corporation.
In neither of these merger transactions were any shares issued to any
person who was not already known to the Company nor were any shares
issued as any consideration for soliciting the exchange. The Company
acquired the Ontario incorporated Island Critical Care Corporation,
because it wanted to purchase the licensed technology of Masimo's
signal extraction technology, cash, financial incentive agreements
and research and development of its pulse oximeter prototype of the
Ontario corporation.
The business combinations described above have been accounted for as
a recapitalization of the Company. Accordingly, the financial
statements for all periods presented reflect the historical activity
of the Canadian operating company.
The Company's registered office is located in Palm Beach, Florida.
The Company's principal executive office is located in Charlottetown,
Prince Edward Island, Canada.
Scope of Business
At the present time, the Company is in the development stage and does
not provide any product or service. The Company's objective is to be
a leading developer and manufacturer of medical instrumentation for
world export. It is currently developing a state of the art, stand
alone pulse oximeter, which will be commercially manufactured in the
Province of Prince Edward Island, Canada by July 2000. The Company
has future plans to design, develop and manufacture a combined
stand-alone oximeter and blood pressure unit, a stand-alone blood
pressure unit and a vital signs monitor.
Note B - Summary of Significant Accounting Policies
Method of Accounting
The Company maintains its books and prepares its financial statements
on the accrual basis of accounting.
F-6
<PAGE>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Note B - Summary of Significant Accounting Policies - continued
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenue and expense during the reporting period. Actual results can
differ from those estimates.
Concentrations of Credit Risk
Financial instruments that potentially expose the Company to
significant concentrations of credit risk consist principally of bank
deposits. Cash is placed primarily with high quality AAA rated
financial institutions.
Cash and Cash Equivalents
Cash and cash equivalents include time deposits, certificates of
deposit, and all highly liquid debt instruments with original
maturities of three months or less.
Foreign Currency Translation
The Company's foreign operations are measured using the local
currency as the functional currency. Assets and liabilities are
translated at exchange rates as of the balance sheet date. Revenues,
expenses and cash flows are translated at weighted average rates of
exchange in effect during the year. The resulting cumulative
translation adjustments have been recorded as a separate component of
stockholder's equity and comprehensive income. Foreign currency
transaction gains and losses are included in net income.
Development Stage
The Company has operated as a development stage enterprise since its
inception by devoting substantially all of its efforts to financial
planning, raising capital, research and development, and developing
markets for its goods. The Company prepares its financial statements
in accordance with the requirements of Statement of Financial
Accounting Standards No. 7, Accounting and Reporting by Development
Stage Enterprises.
License Fee
The Company entered into a licensing agreement with Masimo
Corporation of Irvine, California that provides the Company with the
rights to use their new technology known as Signal Extraction
Technology (SET(R)) in the production of high-end stand-alone pulse
oximeters. The license fee is amortized over seven years.
- continued -
F-7
<PAGE>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Note B - Summary of Significant Accounting Policies - continued
Income Taxes
Deferred taxes are provided in the financial statements for
significant temporary differences arising from assets and liabilities
whose bases are different for financial reporting and income tax
purposes. The primary differences are attributable to depreciation
methods. Deferred tax assets arising from net operating losses
incurred during the development stage have been fully reserved
against due to the uncertainty as to when or whether the tax benefit
will be realized. At March 31, 2000, the Company has incurred net
operating losses available to offset future income taxes of
approximately $441,000. The net operating losses will begin to expire
in 2014.
Net Income (Loss) Per Common Share
Net income (loss) per common share is computed in accordance with
SFAS No. 128, "Earnings Per Share". Basic earnings per share is
calculated by dividing net income (loss) available to common
stockholders by the weighted average number of common shares
outstanding for each period. Share and per share amounts for all
periods presented have been adjusted to reflect the recapitalization.
The weighted average shares outstanding for the periods ended March
31, 2000 and 1999 reflects the common stock issued as outstanding for
the entire year since there were no significant operations prior to
the stock offering. Diluted earnings per share are identical to basic
earnings per share for the periods presented since the conversion of
the outstanding stock options would have an anti-dilutive effect on
earnings per share.
Stock Options and Warrants
The Company accounts for stock options and warrants in accordance
with the provisions of SFAF No. 123 "Accounting for Stock-Based
Compensation." SFAS No. 123 prescribes the recognition of
compensation based on the fair value of the options on the grant
date. The Company values stock options issued based upon an
option-pricing model and recognizes this value as an expense over the
vesting period.
Note C - Property and Equipment
Property and equipment consists of furniture, fixtures and equipment
located in Prince Edward Island, Canada. Property and equipment are
stated at cost, less accumulated depreciation computed on the
straight-line method over the estimated useful lives as follows:
Equipment 5 Years
Computer 3 Years
Furniture and Fixtures 5 Years
Maintenance and repairs are charged to expense. The cost of property
and equipment retired or otherwise disposed of and the related
accumulated depreciation are removed from the accounts
Note D - Research and Development
Research and development expenses represent contract engineering
costs and are charged against operations as incurred.
F-8
<PAGE>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Note E - Stockholders' Equity
Common Stock
The Company's securities are not registered under the Securities Act
of 1933 and, therefore, no offering may be made which would
constitute a "Public Offering" within the meaning of the United
States Securities Act of 1933, unless the shares are registered
pursuant to an effective registration statement under the Act.
The stockholders may not sell, transfer, pledge or otherwise dispose
of the common shares of the company in the absence of either an
effective registration statement covering said shares under the 1933
Act and relevant state securities laws, or an opinion of counsel that
registration is not required under the Act or under the securities
laws of any such state.
Common Stock Issued
The Company raised capital through a Canadian Private Placement
offering during 1999 with one significant investor. Stock
subscriptions totaling $1,113,491 in U.S. dollars (representing
2,988,098 common shares) were received in cash. An additional 876,000
shares representing $292,015 was subscribed for but was not paid for
as of the balance sheet date, but is due by November 30, 2000.
As a fee for arranging the private placement of shares, Finlay
Investment Consulting earned a fee of 8.5% of the total value of
common shares issued amounting to $87,460 and also 1,000,000 common
shares. The shares and related services were valued at the same value
as the stock issued under the private placement of $0.50 Canadian per
share ($0.34 US per share). The cash commission paid to Finlay
Investment Consulting is considered a cost of raising capital and
accordingly has been included as part of the total offering costs of
$249,835 which have been netted with proceeds from the Canadian
Private Placement in the accompanying financial statements. Other
offering costs consisted of legal($80,768), consulting and accounting
fees ($67,775) as well as travel expenses and related costs($13,832).
Note F - Stock Options and Warrants
Investors
In November 1999, the Company granted 747,025 warrants to investors
in connection with the original issuance of shares. The warrants are
exercisable over a 24 month term at an exercisable price of $1.00 and
$1.50per share in the first and second year respectively ($.68 and
$1.02 in U.S. Dollars). The fair market value of the options was
determined by using a Black Scholes option pricing model. The
calculated fair value at the date of the grant was zero.
Directors
In January 2000, the Company began granting options to certain
directors in increments of 1,000 per month (6,000 outstanding at
March 31, 2000). The stock options are exercisable at $.25 per share
($.17 per share US). All options are fully vested and expire three
years from the date of the grant. The fair market value of the
options was determined using the Black Scholes option pricing model.
The calculated fair value at the date of the grant was zero.
- continued -
F-9
<PAGE>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Note F - Stock Options and Warrants - continued
The assumptions used were as follows:
--------------------------------------------------------------------------------------------- -------------- ----
<S> <C>
Weighted Average Fair Value of Common Stock $ .34
Expected Market Volatility 10.0%
Risk Free Interest Rate 5.50%
Terms 24 Months
--------------------------------------------------------------------------------------------- -------------- ----
----------------------------------------------------------------------------------------------------------------------------
Information with respect to all stock options is as follows:
--------------------------------------------------------------------------------------------- -------------- ----
Outstanding at March 31, 1999 $ --
Granted to Investors 747,025
Granted to Directors 6,000
Granted to Employees --
Exercised --
--------------------------------------------------------------------------------------------- -------------- ----
--------------------------------------------------------------------------------------------- -------------- ----
Outstanding at March 31, 2000 $ 753,025
--------------------------------------------------------------------------------------------- -------------- ----
</TABLE>
The weighted average value of the common stock used was the last
stock offering price since the company has no established market for
its shares.
Note G - Related Party Transactions
The Company entered into an agreement with a shareholder to provide
investor relation services at a monthly fee of $2,050 plus approved
out-of-pocket expenses. The agreement is for a one year term and
expires in November, 2000.
Note H - Other
The Company is eligible for a line of credit in the amount of
$1,500,000 Canadian with Enterprise PEI which is an agency of the
Province of Prince Edward Island. The Company is also eligible for a
repayable grant in the amount of $350,000 Canadian from the Atlantic
Canada Opportunities Agency. Both the line of credit and the grant
become available when the Company can demonstrate that it has a
working prototype of its pulse oximeter.
F-10
<PAGE>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Note I - Restatement
The financial statements have been restated adjust for the accounting
for the price paid to acquire the public shell company. The amount of
$150,000 U.S. initially recorded as goodwill has been reclassified as a
cost of raising capital in the accompanying financial statements.
A summary of the effect of the retroactive restatements on net income
for the years ended March 31, 2000 and 1999 and stockholders' equity
(deficit) at March 31, 2000 are as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C>
Stockholders'
Equity
Net Income (Loss) (Deficit)
2000 1999 March 31, 2000
--------------------------------------------------------- ------------------- ------------------- -------------------
--------------------------------------------------------- ------------------- ------------------- -------------------
As Originally Reported $(384,749) $(56,941) $ 423,234
Effect of Restated Items
Write-Off of Goodwill -- -- (150,000)
Elimination of Amortization of Goodwill 5,862 -- 5,862
--------------------------------------------------------- ------------------- ------------------- -------------------
--------------------------------------------------------- ------------------- ------------------- -------------------
As Restated $(378,887) $(56,941) $ 279,096
--------------------------------------------------------- ------------------- ------------------- -------------------
</TABLE>
F-11
<PAGE>
<TABLE>
<CAPTION>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
TABLE OF CONTENTS
-------------------------------------------------------------------------------------------------------------------
<S> <C>
Independent Accountants' Report F - 13
Balance Sheets at September 30, 2000 (Unaudited) and March 31, 2000 F - 14
Statements of Changes in Stockholders' Equity for the Six Months Ended September
30, 2000 and 1999 and for the Period from Date of Inception
(April 21, 1998) through September 30, 2000 (Unaudited) F - 15 to F - 16
Statements of Operations and Comprehensive Income for the Three Months and Six
Months Ended September 30, 2000 and 1999, and for the Period from
Date of Inception (April 21, 1998) through September 30, 2000 (Unaudited) F - 17 to F - 18
Statements of Cash Flows for the Six Months Ended September 30, 2000 and 1999
and for the Period from Date of Inception (April 21, 1998) through
September 30, 2000 (Unaudited) F - 19 to F - 20
Notes to the Financial Statements F - 21 to F - 24
</TABLE>
F-12
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors
Island Critical Care Corp.
(A Development Stage Company)
(A Delaware Corporation)
Palm Beach, Florida
We have reviewed the accompanying balance sheet of Island Critical Care
Corp. as of September 30, 2000, and the related statements of operations and
comprehensive income for the three months and six months ended September 30,
2000 and 1999 and for the period from date of inception (April 21, 1998) through
September 30, 2000, and the related statements of changes in stockholders'
equity and cash flows for the six months ended September 30, 2000 and 1999 and
for the period from date of inception (April 21, 1998) through September 30,
2000. All information included in these financial statements is the
responsibility of the management of Island Critical Care Corp.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements in order for them to be
in conformity with the generally accepted accounting principles.
/s/ Rotenberg & Company, LLP
Rotenberg & Company, LLP
Rochester, New York
October 18, 2000
F-13
<PAGE>
The accompanying notes are an integral part of this
financial statement.
<TABLE>
<CAPTION>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
BALANCE SHEETS AT SEPTEMBER 30, 2000 (UNAUDITED) AND MARCH 31, 2000
-
------------------------------------------------------------------------------------------------------------------------
(Unaudited) (Restated)
September 30, March 31,
2000 2000
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents $ 35,971 $ 246,814
27,871 2,121
Accounts Receivable
35,516 7,875
Commodity Tax Recoverable
217,660 --
Inventory
Prepaid Expenses 58,013 20,576
------------------------------------------------------------------------------------------------------------------------
Total Current Assets 375,031 277,386
Property and Equipment - Net of Accumulated Depreciation 34,593 13,847
Other Assets
License Fee - Net of Accumulated Amortization 21,420 23,933
------------------------------------------------------------------------------------------------------------------------
Total Assets $ 431,044 $ 315,166
------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
$ 195,010 $ --
Line of Credit
32,483 --
Note Payable - Due Within One Year
Accounts Payable 122,482 36,070
34,066 --
Accrued Expenses
------------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 384,041 36,070
Other Liabilities
19,275
Grants Payable --
137,753 --
Note Payable - Due After One Year
------------------------------------------------------------------------------------------------------------------------
Total Liabilities 541,069 36,070
------------------------------------------------------------------------------------------------------------------------
Stockholders' Equity
Common Stock - $.001 Par; 50,000,000 Authorized;
18,101,000 Issued and Outstanding 18,101 18,101
Additional Paid-In Capital 885,639 701,719
Deficit Accumulated During Development Stage (1,000,292) (435,828)
(13,473) (4,896)
Accumulated Other Comprehensive Income (Loss)
------------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity (Deficit) (110,025) 279,096
------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 431,044 $ 315,166
------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-14
<PAGE>
The accompanying notes are an integral part of this
financial statement.
<TABLE>
<CAPTION>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
STATEMENTS OF CHANGES IN STOCKHOLERS'EQUITY FOR THE PERIOD FROM THE PERIOD FROM THE DATE OF INCEPTION (APRIL 21, 1998) THROUGH MARCH
31, 2000
------------------------------------------------------------------------------------------------------------------------------------
(In U.S. Dollars)
Deficit
Common Accumulated Accumulated Total
Stock Additional During Other Stockholders'
Number of $.001 Par Paid-In Development Comprehensive Equity
Shares Value Capital Stage Income (Deficit)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance - April 21, 1998 -- $ -- $ -- $ -- $ -- $ --
Issuance of Shares for Cash
- Original incorporation of
Canadian Company 10,164,398 10,164 (4,000) -- -- 6,164
Net Loss for Period (56,941) (56,941)
--
------------------------------------------------------------------------------------------------------------------------------------
Balances - March 31, 1999 10,164,398 10,164 (4,000) (56,941) -- (50,777)
Canadian Private Placement Offering of
Stock, Net of Offering Costs of
$249,835 2,988,098 2,988 860,668 -- -- 863,656
Stock Subscriptions 876,000 876 291,139 -- -- 292,015
Less: Subscriptions Receivable -- -- (292,015) -- -- (292,015)
Issuance of Shares in Exchange
for Services, Net of Costs of
Related Services of $340,000 1,000,000 1,000 (1,000) -- -- --
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Sub-Total 15,028,496 15,028 854,792 (56,941) -- 812,879
Acquisition of Florida Public
Shell Corporation -- -- (150,000) -- -- (150,000)
Issuance of Shares in Connection
with Merger with
Island Critical Care Corp. Florida 3,072,504 3,073 (3,073) -- -- --
Comprehensive Income:
Net Loss for the Period - - - (378,887) -- (378,887)
Foreign Currency Translation -- -- -- -- (4,896) (4,896)
Total Comprehensive Income - - - - (4,896) (383,783)
------------------------------------------------------------------------------------------------------------------------------------
Balances - March 31, 2000 18,101,000 $ 18,101 $ 701,719 $ (435,828) $ (4,896) $279,096
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-15
<PAGE>
The accompanying notes are an integral part of this
financial statement.
<TABLE>
<CAPTION>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE SIX MONTHS ENDED SEPTEMBER
30, 2000 AND FOR THE PERIOD FROM THE DATE OF INCEPTION (APRIL 21, 1998) THROUGH
SEPTEMBER 30, 2000 (UNAUDITIED)
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
(In U.S. Dollars)
Deficit
Common Accumulated Accumulated Total
Stock Additional During Other Stockholders'
Number of $.001 Par Paid-In Development Comprehensive Equity
hares Value Capital Stage Income (Deficit)
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balances - March 31, 2000 18,101,000 $ 18,101 $ 701,719 $ (435,828) $ (4,896) $279,096
Contribution of Capital -- -- 183,920 -- -- 183,920
Comprehensive Income:
Net Loss for the Period -- -- -- (564,464) -- (564,464)
Foreign Currency Translation -- -- -- -- (8,577) (8,577)
---- -------
Total Comprehensive Income -- -- -- -- -- (573,041)
-- ---------
Balance - September 30, 2000 18,101,000 $ 18,101 $885,639 $(1,000,292) $(13,473) $(110,025)
-------- -------- ------------ --------- ----------
</TABLE>
F-16
<PAGE>
The accompanying notes are an integral part of this
financial statement.
<TABLE>
<CAPTION>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
-------------------------------------------------------------------------------------------------------------------------------
From Date of Six Months Ended
Inception Through September 30,
--------------------------
September 30,
2000 2000 1999
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ -- $ -- $ --
Revenues
-------------------------------------------------------------------------------------------------------------------------------
Operating Expenses
25,433 13,798 --
Advertising and Promotion
6,048 5,601 --
Bank Charges
11,433 5,298 --
Communications
4,803 4,803 --
Insurance
46,701 33,987 --
Investor Relations
26,719 18,215 --
Legal and Accounting
6,064 -- 978
Organization Costs
23,869 11,450 --
Office Expense
47,407 47,407 --
Relocation Expense
15,349 10,136 --
Rent and Rentals
69 69
Repairs & Maintenance
304,289 192,011 --
Research and Development Costs
420,488 207,592 --
Salaries and Benefits
4,717 4,313 --
Shipping Charges
5,823 5,207 --
Telephone and Utilities
64,696 18,412 --
Travel
11,951 11,951
Web Page Design
6,629 3,462 --
Depreciation
2,815 1,748 --
Amortization
-------------------------------------------------------------------------------------------------------------------------------
1,035,303 595,460 978
Total Operating Expenses
-------------------------------------------------------------------------------------------------------------------------------
(1,035,303) (595,460) (978)
Loss Before Other Income (Expenses)
Other Income (Expenses)
32,001 32,001 --
Government Grants
5,961 1,946 --
Interest Income
(2,951) (2,951) --
Interest Expense
-------------------------------------------------------------------------------------------------------------------------------
(1,000,292) (564,464) (978)
Net Loss for the Period
Other Comprehensive Income (Loss)
(13,473) (8,577) --
Foreign Currency Translation Adjustment
-------------------------------------------------------------------------------------------------------------------------------
$(1,013,765) $(573,041) $(978)
Comprehensive Income (Loss)
-------------------------------------------------------------------------------------------------------------------------------
$(0.060) $(0.031) $(0.00)
Net Loss per Common Share - Basic and Diluted
-------------------------------------------------------------------------------------------------------------------------------
Weighted Average of Common Shares Outstanding 16,663,198 18,101,000 10,164,398
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-17
<PAGE>
The accompanying notes are an integral part of this
financial statement.
<TABLE>
<CAPTION>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - CONTINUED
---------------------------------------------------------------------------------------------------------------
Three Months Ended
September 30,
----------------------------
2000 1999
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
$-- $ --
Revenues
--------------------------------------------------------------------------------------------------------------
Operating Expenses
Advertising and Promotion 4,540 --
Bank Charges and Interest 5,302 --
Communications 3,422 --
Insurance 2,122 --
Investor Relations 11,411 --
Legal and Accounting 13,123 --
Organization Costs -- --
Office Expense 9,031 --
Relocation Expense 16,314 --
Rent and Rentals 6,008 --
Repairs & Maintenance 69 --
Research and Development Costs 36,331 --
Salaries and Benefits 109,626 --
Shipping Charges 3,661 --
Telephone and Utilities 3,358 --
Travel 16,333 --
Web Page Design 11,951 --
Depreciation 2,610 --
Amortization 780 --
--------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 255,992 --
--------------------------------------------------------------------------------------------------------------------------
Loss Before Other Income (Expenses) (255,992) --
Other Income (Expenses)
Government Grants 5,351 --
Interest Income 1,946 --
Interest Expense (2,951) --
--------------------------------------------------------------------------------------------------------------------------
Net Loss for the Period (251,646) --
Other Comprehensive Income (Loss)
Foreign Currency Translation Adjustment (4,391) --
--------------------------------------------------------------------------------------------------------------------------
$(256,037) $ --
Comprehensive Income (Loss)
--------------------------------------------------------------------------------------------------------------------------
$(0.014) $ --
Net Loss per Common Share - Basic and Diluted
--------------------------------------------------------------------------------------------------------------------------
Weighted Average of Common Shares Outstanding 18,101,000 10,164,398
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-18
<PAGE>
The accompanying notes are an integral part of this
financial statement.
<TABLE>
<CAPTION>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
STATEMENTS OF CASH FLOWS (UNAUDITED)
-----------------------------------------------------------------------------------------------------------------------------------
From Date of Six Months Ended
Inception Through September 30,
----------------------------
September 30,
2000 2000 1999
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
$ - $ - $ --
Cash Received from Government
(1,176,106) (750,196) (33)
Cash Paid to Suppliers and Employees
------------------------------------------------------------------------------------------------------------------------------------
(1,176,106) (750,196) (33)
Net Cash Flows from Operating Activities
------------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities
(150,000) -- --
Acquisition of Florida Public Shell Corporation
(42,098) (25,322) --
Purchase of Property and Equipment
(25,000) -- --
Purchase of License Fee
-----------------------------------------------------------------------------------------------------------------------------------
(217,098) (25,322) --
Net Cash Flows from Investing Activities
-----------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities
390,473 390,473 --
Proceeds From Borrowing
1,107,744 -- --
Gross Proceeds From Private Placement Offering
185,383 185,383 --
Capital Contribution
(249,835) -- --
Cost of Private Placement Offering
-----------------------------------------------------------------------------------------------------------------------------------
1,433,765 575,856 --
Net Cash Flows from Financing Activities
-----------------------------------------------------------------------------------------------------------------------------------
Effect of Exchange Rate Changes on Cash and
(4,590) (11,181) --
Cash Equivalents
-----------------------------------------------------------------------------------------------------------------------------------
35,971 (210,843) (33)
Net Increase (Decrease) in Cash and Cash Equivalents
-- 246,814 100
Cash and Cash Equivalents - Beginning of Period
-----------------------------------------------------------------------------------------------------------------------------------
$ 35,971 $ 35,971 $ 67
Cash and Cash Equivalents - End of Period
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-19
<PAGE>
The accompanying notes are an integral part of this
financial statement.
<TABLE>
<CAPTION>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
RECONCILIATION OF NET LOSS TO NET CASH FLOWS FROM OPERATING ACTIVITIES
-------------------------------------------------------------------------------------------------------------------------------
From Date of Six Months Ended
Inception Through September 30,
--------------------------------
September 30,
2000 2000 1999
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ (1,000,292) $ (564,464) $ (978)
Net Loss
Adjustments:
6,629 3,462 --
Depreciation
2,815 1,748 --
Amortization
Changes in Assets and Liabilities:
(28,295) (26,181) --
Accounts Receivable
(35,853) (28,026) --
Commodity Tax Recoverable
(220,380) (220,380) --
Inventory
(59,088) (38,643) --
Prepaid Expenses
144,893 108,823 945
Accounts Payable
13,465 13,465 --
Accrued Expenses
-----------------------------------------------------------------------------------------------------------------------------
$ (1,176,106) $ (750,196) $ (33)
Net Cash Flows from Operating Activities
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
F-20
<PAGE>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
NOTES TO THE FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Note A - Basis of Presentation
The condensed financial statements of Island Critical Care Corp. (the
"Company") included herein have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Securities and
Exchange Commission (the "SEC"). Certain information and footnote
disclosures normally included in financial statements prepared in
conjunction with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the
information presented not misleading. These condensed financial
statements should be read in conjunction with the annual audited
financial statements and the notes thereto included in the Company's
Form 10SB, and other reports filed with the SEC.
The accompanying unaudited interim financial statements reflect all
adjustments of a normal and recurring nature which are, in the
opinion of management, necessary to present fairly the financial
position, results of operations and cash flows of the Company for the
interim periods presented. The results of operations for these
periods are not necessarily comparable to, or indicative of, results
of any other interim period of or for the fiscal year taken as a
whole. Factors that affect the comparability of financial data from
year to year and for comparable interim periods include non-recurring
expenses associated with the company's registration with the
Securities and Exchange Commission and costs incurred to raise
capital and acquisitions of patents and trademarks. Certain financial
information that is not required for interim financial reporting
purposes has been omitted.
F-21
<PAGE>
Note B - Other Matters
Additional Capital Contribution
During the quarter ended September 30, 2000, the Company received an
additional capital contribution in cash of $183,920 from an existing
shareholder to use as working capital.
Grants
The Company is entitled to receive grants from the National Research
Council of Canada. The grants are non-repayable and are based upon
40% of qualified research and development expenditures up to a
maximum of $48,000 (approximately $32,000 US at September 30, 2000).
Grants received are recognized as revenue in the period in which the
related expenses are incurred and are recorded as other income in the
accompanying financial statements. Grant revenue amounted to $32,001
at September 30, 2000. Grants receivable amounted to $5,656 and are
included in accounts receivable at September 30, 2000.
The Company is entitled to receive grants in the form of interest
free loans from the Atlantic Canada Opportunities Agency, an agency
of the Canadian Government. The total amount of the loans available
is approximately $244,900 US and is based upon Qualified Expenditures
for Capital Asset Acquisitions, Market Development and Standard
Certification Costs. The grant is interest free and is repayable over
5 years. At September 30, 2000, amounts receivable under this program
amounted to $19,275 and are included in accounts receivable with a
corresponding amount in loans payable.
Inventory
Inventory consists of parts to be used in the assembly of the pulse
oximeter. Inventory is recorded at the lower of cost determined by
the first in, first out method or market. As of the balance sheet
date there were no sub-assembly components or finished goods in
inventory.
- continued -
F-22
<PAGE>
ISLAND CRITICAL CARE CORP.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Palm Beach, Florida
NOTES TO THE FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Note B - Other Matters - continued
Line of Credit
The Company has available a line of credit with the Prince Edward
Island Lending Agency, an agency of the Province of Prince Edward
Island Government with a maximum amount of $1,020,500 US. The line of
credit became available upon the completion of the prototype for the
Pulse Oximeter. The line of credit bears interest at the prime rate
plus 3% (10.25% at September 30, 2000) annually and is collateralized
by the general assets of the Company. The line of credit is renewable
annually in September. The total amount outstanding was $195,010 US
at September 30, 2000.
Notes Payable
<TABLE>
<CAPTION>
---------------------------------------------------------------------------- -------------------- ---------------
2000 1999
---------------------------------------------------------------------------- -------------------- ---------------
---------------------------------------------------------------------------- -------------------- ---------------
<S> <C> <C>
Note payable, unsecured, repayable in monthly installments of
$2,422, including principal and interest. The note is for a five
year term and bears interest at the rate of 9% per annum. The
note is due in July, 2005. $--
$ 113,566
Note payable, unsecured, repayable in monthly installments of $1,176,
including principal and interest. The note is for a five year term
and bears interest at the rate of 9% per annum. The note
is due in September, 2005. 56,670 --
---------------------------------------------------------------------------- -------------------- ---------------
---------------------------------------------------------------------------- -------------------- ---------------
$ 170,236 $--
Less: Amount due within one year 32,483 --
---------------------------------------------------------------------------- -------------------- ---------------
---------------------------------------------------------------------------- -------------------- ---------------
Amount Due After One Year $137,753 $--
---------------------------------------------------------------------------- -------------------- ---------------
Annual maturities of debt for the five years succeeding, September
30, 2000 are as follows:
2001 2002 2003 2004 2005 Total
------------------- ------------------ ------------------ ------------------- ------------------ ----------------
------------------- ------------------ ------------------ ------------------- ------------------ ----------------
$ 32,483 $ 35,532 $ 35,094 $ 38,385 $ 28,742 $ 170,236
------------------- ------------------ ------------------ ------------------- ------------------ ----------------
</TABLE>
Interest expense for the six months ended September 30, 2000 and 1999
amounted to $2,951 and $-0-, respectively.
Stock Options and Warrants
Investors
In November 1999, the Company granted 747,025 warrants to investors
in connection with the original issuance of shares. The warrants are
exercisable over a 24 month term at an exercisable price of $1.00 and
$1.50 per share in the first and second year respectively ($.68 and
$1.02 in U.S. Dollars). The fair market value of the options was
determined by using a Black Scholes option pricing model. The
calculated fair value at the date of the grant was zero.
- continued -
F-23
<PAGE>
Note B - Other Matters - continued
Directors
In January 2000, the Company began granting options to certain
directors in increments of 1,000 per month (23,000 outstanding at
September 30, 2000). The stock options are exercisable at $.25 per
share ($.17 per share U.S.). All options are fully vested and expire
three years from the date of the grant. The fair market value of the
options was determined using the Black Scholes option pricing model.
The calculated fair value at the date of the grant was zero.
Employee
In July, 2000, the Company granted options to an employee. These
options vest over a three year period and are exercisable at U.S.
$2.00 per share. The options expire three years from the date of the
grant. The fair market value of the options was determined using the
Black Scholes option pricing model. The calculated fair value at the
date of the grant was zero.
<TABLE>
<CAPTION>
The assumptions used were as follows:
----------------------------------------------------------------------------------------- ----------------- -----
<S> <C>
Weighted Average Fair Value of Common Stock $ .34
Expected Market Volatility 10.0%
Risk Free Interest Rate 5.50%
Terms 24 Months
----------------------------------------------------------------------------------------- ----------------- -----
Information with respect to all stock options is as follows:
----------------------------------------------------------------------------------------- ----------------- -----
Outstanding at March 31, 1999 --
Granted to Investors 747,025
Granted to Directors 6,000
Granted to Employee --
Exercised --
----------------------------------------------------------------------------------------- ----------------- -----
Outstanding at March 31, 2000 753,025
Granted to Investors --
Granted to Directors 17,000
Granted to Employee 50,000
----------------------------------------------------------------------------------------- ----------------- -----
----------------------------------------------------------------------------------------- ----------------- -----
Outstanding at September 30, 2000 820,025
----------------------------------------------------------------------------------------- ----------------- -----
</TABLE>
The weighted average value of the common stock used was the last
stock offering price since the company has no established market for
its shares.
F-24
<PAGE>
ITEM 23. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The accounting firm of Rotenberg & Company, LLP, Certified
Public Accountants and Consultants audited our financial statements. Since
inception, we have had no changes in or disagreements with our accountants.
---------
Dealer Prospectus Delivery Obligation
Until ninety days after the effectiveness of the registration
statement of which this prospectus is a part, 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 dealers'
obligation to deliver a prospectus when acting as underwriters and with respect
to their unsold allotments or subscriptions.
50
PART II INFORMATION NOT REQUIRED TO BE INCLUDED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our bylaws provide for indemnification of each person (including
the heirs, executors, administrators, or estate of such person) who is or was
director and officer of the corporation to the fullest extent permitted or
authorized by current or future legislation or judicial or administrative
decision against all fines, liabilities, costs and expenses, including
attorneys' fees, arising out of his or her status as a director, officer, agent,
employee or representative. The foregoing right of indemnification shall not be
exclusive of other rights to which those seeking an indemnification may be
entitled. The corporation may maintain insurance, at its expense, to protect
itself and all officers and directors against fines, liabilities, costs, and
expenses, whether or not the corporation would have the legal power to indemnify
them directly against such liability.
Section 145 of the Delaware General Corporation Law provides
that a corporation may indemnify any persons, including officers and directors,
who were or are, or are threatened to be made, parties to any threatened,
pending or completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer, director,
employee or agent of such corporation or is or was serving at the request of
such corporation as an officer, director, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such person acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, for criminal proceedings, had no reasonable
cause to believe that his conduct was unlawful. A Delaware corporation may
indemnify officers and directors in an action by or in the right of the
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses that such officer or
director actually and reasonably incurred.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling an issuer pursuant to the foregoing provisions, the opinion of the
Commission is that such indemnification is against public policy as expressed in
the Securities Act of 1933 and is therefore unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
51
The following table is an itemization of all expenses, without
consideration to future contingencies, incurred or expected to be incurred by
our Corporation in connection with the issuance and distribution of the
securities being offered by this prospectus. Items marked with an asterisk (*)
represent estimated expenses. We have agreed to pay all the costs and expenses
of this offering. Selling security holders will pay no offering expenses.
ITEM EXPENSE
---- -------
SEC Registration Fee $ 2,598.00
Legal Fees and Expenses* $ 20,000.00
Accounting Fees and Expenses* $ 20,000.00
Miscellaneous* $ 500.00
===============================================
Total* $ 43,098.00
* Estimated Figure
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On December 15, 1999 we issued a total of 3,072,504 shares of
our common stock (at $.001 par value) in connection with a merger with
Midwestern Railway Co. Inc., an inactive Florida corporation. We exchanged our
shares for an equivalent number of shares of the Florida corporation (which
amounted to 100% of the total shares outstanding of the Florida corporation). In
completing this transaction we relied upon Securities Act Section 3(a)(9)
because the shares we issued in our merger were issued exclusively to our
existing security holders and no commission or other remuneration was paid or
given directly or indirectly for soliciting the exchange. In addition, we relied
upon the exemption from Registration provided in Section 4(2) of the Securities
Act because the merger transaction did not involve a public offering. We had a
preexisting relationship with each recipient of the shares since they were our
existing shareholders.
On January 13, 2000, we issued a total of 15,028,496 shares of
our common stock (at $.001 par value) in connection with a merger with Island
Critical Care Corporation, an Ontario corporation. We exchanged our shares
for an equivalent number of shares of the Ontario corporation (which amounted
to 100% of the total shares outstanding of the Ontario corporation). In
completing this transaction we relied upon Securities Act Section 3(a) (9)
because the shares we issued in our merger were issued exclusively to our
existing security holders and no commission or other remuneration was paid or
given directly or indirectly for soliciting the exchange. In addition, we
relied upon the exemption from Registration provided in Section 4(2) of the
Securities Act because the merger transaction did not involve a public offering.
We had a preexisting relationship with each recipient of the shares since they
were our existing shareholders.
Prior to the merger, in November 1999, Island Critical Care
Corporation, the Ontario Corporation, issued a total of 2,988,098 shares of
common stock to Marmaid Development Corportaion in a private transaction for
cash consideration totaling $1,113,491. As part of this private placement,
Island Critical Care Corporation, the Ontario Corporation, also issued an
additional 876,000 shares in exchange for a note receivable in the amount of
$292,015 which is due on November 30, 2000. In connection with that private
offering, Island Critical Care Corporation, the Ontario Corporation, also
issued 1,000,000 shares of its common stock and warrants to purchase an
additional 747,025 shares of its common stock to Finlay Investments for
services valued at $340,000. The securities were issued under the exemption
52
from registration provided by Section 4(2) of the Securities Act, as amended. We
believed this exemption was available because these issuances were transactions
not involving a public offering. There was no general solicitation or
advertising used to offer shares. In addition, each investor had the knowledge
and experience in financial and business matters to evaluate the merits and
risks of this prospective investment and therefore was either accredited or
sufficiently sophisticated to undertake such an investment.
As of December 31, 1999, these warrants remained outstanding.
These warrants, if exercised, will result in the issuance of 747,025 shares of
our common stock. The warrants may be exercised over a two year period. The
warrants are exercisable in the first year at $0.68 per share and at $1.02 per
share in the second year.
<TABLE>
<CAPTION>
ITEM 27. EXHIBITS
Exhibit Number Exhibit Description
-------------- -----------------------------------------------------------------------------
<S> <C>
2 Plan of Merger between Island Critical Care Corp. (a Florida corporation)
and Island Critical Care Corp (a Delaware corporation)*
-------------- -----------------------------------------------------------------------------
2.1 Plan and Agreement of Merger*
-------------- -----------------------------------------------------------------------------
3.1 Certificate of Incorporation - Island Critical Care Corp (a Delaware
corporation)*
-------------- -----------------------------------------------------------------------------
3.2 Bylaws of Island Critical Care Corp - Island Critical Care Corp. (a Delaware
corporation)*
-------------- -----------------------------------------------------------------------------
5 Opinion re: Legality - The Law Offices of Brenda Lee Hamilton, P.A.*
-------------- -----------------------------------------------------------------------------
10.1 Purchasing and Licensing Agreement Between Island Critical Care
Corporation and Masimo Corporation*
-------------- -----------------------------------------------------------------------------
10.2 Prince Edward Island Lending Agency (Prince Edward Island Government,
Canada), Offer of Credit and Acceptance by Borrower, Island Critical Care
Corporation*
-------------- -----------------------------------------------------------------------------
10.3 Prince Edward Island Lending Agency (Prince Edward Island Government,
Canada) Acknowledgement to Island Critical Care Corporation*
-------------- -----------------------------------------------------------------------------
10.4 Atlantic Canada Opportunities Agency's Offer to Make Repayable
Contribution to Island Critical Care Corporation and Island Critical Care
Corporation's Acceptance*
-------------- -----------------------------------------------------------------------------
10.5 Employment Agreement Between Kenneth Legere and Island Critical Care
Corporation*
-------------- -----------------------------------------------------------------------------
10.6 Employment Agreement Between John Wayne Weber and Island Critical
Care Corporation*
-------------- -----------------------------------------------------------------------------
10.7 Employment agreement between Sean Patrick Flanigan and Island Critical
Care Corporation*
-------------- -----------------------------------------------------------------------------
23 Consent of Rotenberg & Company, LLP
-------------- -----------------------------------------------------------------------------
</TABLE>
* Previously Filed
53
ITEM 28. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
1. To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
a. Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
b. Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in
the registration statement;
c. Include any additional or changed material information on the plan
of distribution.
2. That, for determining liability under the Securities Act of 1933, to
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. To file a post-effective amendment to remove from registration any of the
securities that Remain unsold at the end of the offering.
4. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
5. In the event that a claim for indemnification against such liabilities,
other than the payment by the Registrant of expenses incurred and paid by
a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding, is asserted by such
director, officer or controlling person in connection with the securities
being registered hereby, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication
of such issue.
SIGNATURES
54
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
the requirements of filing of Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of
Charlottetown, Province of Prince Edward Island on July 6th , 2000.
------------- ---------------------- ---------
Island Critical Care Corp.
/s/ Kenneth R. Legere
------------------------
By: Kenneth R. Legere
Title: President, Chief Executive Officer, Director
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 date stated.
/s/ Sean Flanigan
-------------------
By: Sean Flanigan
Title: Vice President, Chief Operating Officer, Director
/s/ Wayne Weber
-----------------
By: Wayne Weber
Title: Vice President, Chief Financial and
Accounting Officer And Director
