As filed with the Securities and Exchange Commission on November 3, 2000
Registration Number 333-43658
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM SB-2/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(Amendment No. 2)
VISUALMED CLINICAL SYSTEMS CORP.
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(Name of small business issuer in its charter)
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Nevada 7373 Applied For
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(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) No.)
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391 Laurier Street West, Montreal, Quebec H2V 2K3, (514) 274-1115
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(Address and telephone number of principal executive offices and principal
place of business)
Eric P. Littman, Esquire
7695 S.W. 104th Street, Suite 210, Miami, FL 33156
Tel: (305) 663-3333; Fax: (305) 668-0003
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(Name, address and telephone number of agent for service)
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As soon as practicable after the effective date of
Approximate date of proposed sale to the public: this Registration Statement
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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 (the "Securities Act"), check the following box: [X]
CALCULATION OF REGISTRATION FEE
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Title of Class of Securities Amount of Securities to be Maximum Amount to be Registration Fee (2)
to be Registered Registered (1) Registered (In U.S. $)
(In U.S. $)
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Common Stock, 19,002,785 66,510,000 20,000
$0.001 par value
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(1) This registration statement covers 19,002,785 shares, which may be
offered from time to time by selling stockholders.
(2) Based on the average of the high and low sales prices of the
Registrant's common stock as quoted by the National Quotation Bureau
Pink Sheets on August 3, 2000 as estimated solely for the purpose of
calculating the registration fee in accordance with Rule 457 under the
Securities Act.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PROSPECTUS COVER
VISUALMED CLINICAL SYSTEMS CORP.
Up to 19,002,785 Shares of Common Stock
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The selling security holders of our Company listed on page 35 under the
caption "Selling Security Holders" may offer and resell up to an aggregate of
19,002,785 shares of our common stock under this prospectus.
The selling security holders may sell the shares of common stock at any
time at any price. We will not receive any proceeds from the resale of these
securities. We have agreed to pay the expenses of this offering.
See "Risk Factors" beginning on page 4 of this prospectus for a
discussion of certain factors that you should consider before investing.
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.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
This prospectus is dated November ____ 2000.
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TABLE OF CONTENTS
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Item Page
FORWARD LOOKING STATEMENTS........................................................................................1
SUMMARY INFORMATION...............................................................................................2
FINANCIAL SUMMARY INFORMATION.....................................................................................3
RISK FACTORS......................................................................................................4
USE OF PROCEEDS...................................................................................................5
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS..........................................................5
DESCRIPTION OF BUSINESS...........................................................................................6
MANAGEMENT'S DISCUSSION AND ANALYSIS.............................................................................19
DESCRIPTION OF PROPERTY..........................................................................................24
LEGAL PROCEEDINGS................................................................................................24
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.....................................................25
EXECUTIVE COMPENSATION...........................................................................................29
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...................................................31
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................................................................35
SELLING SECURITY HOLDERS.........................................................................................35
DESCRIPTION OF SECURITIES........................................................................................39
PLAN OF DISTRIBUTION.............................................................................................41
FINANCIAL STATEMENTS....................................................................................43 (F1-F21)
LEGAL MATTERS....................................................................................................44
REPORTS TO SECURITY HOLDERS......................................................................................44
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PART I
FORWARD LOOKING STATEMENTS
This registration statement contains forward-looking statements, which
involve risks and uncertainties. Our actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors. These factors are described in the section "Risk Factors" and elsewhere
in this prospectus. The following information is selective and qualified in its
entirety by the detailed information (including financial information and notes)
appearing elsewhere in this prospectus. This summary of certain provisions of
the prospectus is intended only for convenient reference and does not purport to
be complete. The entire prospectus should be read and carefully considered by
prospective investors before making a decision to purchase common stock.
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SUMMARY INFORMATION
References in this document to "We" or the "Company" refer to VisualMED
Clinical Systems Corp. and/or VisualMED Clinical System Inc.
The Company:
We were formerly known as Cherry Tree Capital Corp. We were
incorporated in the State of Florida on October 4, 1996. Effective January 29,
1999, we were reincorporated in the state of Nevada. We were basically inactive
until May 9, 2000 when we entered into an Exchange Agreement (the "Agreement")
with VisualMED Clinical Systems Inc., a private Canadian corporation ("VisualMED
Canada") and its shareholders. Pursuant to that agreement, we agreed to issue to
the shareholders of VisualMED Canada 19,002,785 common shares (the "Shares") in
exchange for all of the issued and outstanding shares of VisualMED Canada. As a
result, VisualMED Canada became our wholly owned subsidiary and thereafter we
changed our name to VisualMED Clinical Systems Corp. ("VisualMED U.S."). Our
shares are currently listed for trading on the National Quotation Bureau Pink
Sheets under the trading symbol "VSMD". Our principal executive offices are
located at 391 Laurier Street West, Montreal, Quebec H2V 2K3 and our telephone
number is (514) 274-1115. We are authorized to issue 50,000,000 shares of common
stock, $0.001 par value (the "Common Shares"). At June 30, 2000 there were
13,330,000 common shares issued and outstanding.
The Offering:
|X| Shares Outstanding Prior to Offering: 13,330,000
|X| Shares Outstanding After the Offering: 22,332,785
As of June 30, 2000 we had 13,330,000 shares of common stock issued and
outstanding. This offering is comprised of the 19,002,785 shares, which are to
be issued pursuant to the Agreement. Upon the issuance of the 19,002,785 shares,
the 10,000,000 common shares in the voting trust, referred to in page 31 will be
cancelled.
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FINANCIAL SUMMARY INFORMATION
The information set forth below has been derived from the financial
statements of VisualMED Canada. It should be read in conjunction with and is
qualified in its entirety by reference to these financial statements and notes
included elsewhere in this registration statement. This summary financial
information has been prepared in accordance with accounting principles generally
accepted in the United States, and is expressed in Canadian dollars, which is
both the functional and reporting currency of VisualMED Canada.
Operating Data:
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Nine Month Period Year Ended Cumulative Period
Ended June 30, 2000 September 30, 1999 from December 1, 1997
($) ($) (Date of Inception)
to June 30, 2000
($)
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Revenues - - -
Research and Development Expenses 1,798,193 579,902 2,378,095
Net Loss (4,730,992) (938,959) (5,669,951)
Loss Per Share (0.35) (0.02)
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RISK FACTORS
An investment involves a high degree of risk and should be made only by
investors who can afford the loss of their entire investment. Prospective
investors, prior to making an investment in the securities, should consider
carefully the following risk factors and the other information included in this
prospectus.
History of Operating Losses:
Since our inception, we have accumulated net losses of approximately
$5.7 million. Since we do not have current revenues and expect to incur
substantial costs for research and development, and business development, we
expect losses to continue for the foreseeable future. These losses may be
significant. There is no assurance that we will ever be profitable.
Need for Additional Capital:
Since we expect to incur substantial costs for research and
development, and to implement our business plan, we intend to seek additional
financing during the next 12 months to meet these needs. Additional financings
may come in the form of contractual arrangements with corporate partners,
financing through convertible debentures and lines of credit. The Company must
obtain additional financing to fund our operations, until commercial sales
generate sufficient cash flows.
The Company's cash requirements may vary materially depending on our
rate of development, research and development results, competitive and
technological advances and other factors. If adequate funds are not available,
we may be required to significantly curtail operations or obtain funds by
entering into collaboration agreements, which may contain unfavorable terms. Our
inability to raise capital would have a material adverse effect on our business,
financial condition, and operations.
To the extent that additional capital is raised through the sale of
equity and/or convertible debt securities, the issuance of such securities could
result in dilution to the shareholder value of our common stock. Such equity
securities may have rights, preferences, and privileges senior to those of our
common stock holders. There can be no assurance that additional capital will be
available on terms favorable to our company or its shareholders.
The Company has no credit facility or other committed sources of
capital. There can be no assurance that any additional financing will be
available or, if available, will be on favorable terms. If we are unable to
obtain additional financing, it may have an adverse material effect on our
ability to survive.
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USE OF PROCEEDS
We will not receive any proceeds from the sale of the Securities by the
Selling Security Holders pursuant to this prospectus.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information:
The Company's common stock is currently listed for trading on the
National Quotation Bureau Pink Sheets under the symbol VSMD and began trading
April 25, 2000. The following table shows the quarterly low and high bid
information for our common stock from that date through October 26, 2000.
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2000 Low Bid High Bid
($) ($)
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Second Quarter 5.00 10.00
Third Quarter 3.50 7.00
Fourth Quarter 2.75 3.75
Market quotations reflect inter dealer prices, without retail markups,
markdown or commissions and may not necessarily reflect actual transactions.
Holders:
As of August 1, 2000, there were approximately 50 holders of record of
the common shares of the Company.
Dividend Policy:
Since its incorporation, the Company has not paid any dividends to the
holders of its common shares. There are no restrictions limiting the ability of
the Company to pay dividends on its common shares. However, the Company does not
expect to declare or pay dividends in the foreseeable future.
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DESCRIPTION OF BUSINESS
General:
The Company's strategy is to develop effective and affordable clinical
software solutions. The Company creates informatics tools, which it believes
will revolutionize the practice of hospital and office-based medicine. The
Company's state-of-the-art expert clinical system is called the "VisualMED
System". The VisualMED system is affordable because it is a Personal Computer
based system on a server network. Competitors' products are generally mainframe
computer systems, which are more expensive and harder to customize to the
individual hospital. The VisualMED System can communicate with existing hospital
systems and provide integrated data on patients.
Until recently, modern information and data storage systems have
largely ignored the clinical needs of North American hospitals. Though
management information systems have been developed for use in connection with
the administrative side of healthcare, clinical information systems to assist
doctors and nurses in patient-care delivery are largely nonexistent. In
particular, the information systems that currently exist in the hospital
environment are not clinical tools but rather are focused upon the reporting of
numerical data or images and the maintenance of demographic records. The
VisualMED System is designed to fill this void in the market.
The Development of the VisualMED System:
Dr. Arthur Gelston, the current President and Chief Science Officer of
the Company developed the prototype system in 1994. The prototype system is a
Physician Order Entry System known as "POES". Dr. Gelston conceived the
prototype system as the result of more than twenty years of clinical experience.
Dr. Gelston has studied and practiced at some of North America's most
prestigious medical centers, such as the New York Hospital and the North Shore
University Hospital in Long Island, both teaching hospitals affiliated with
Cornell University.
The prototype system has been in continuous operation at McGill
University's Royal Victoria Hospital in Montreal for the past six years. Dr
Gelston designed the prototype system as a clinical tool to support effective
decision-making through the integration of available nursing, pharmaceutical,
demographic and laboratory data. The prototype system provided physicians with
empirical data and cost information at the time of decision-making. This allowed
them to practice evidence-based medicine and raise the standard of care. Rapidly
accepted by physicians, nurses and paramedics, the prototype system was shown to
reduce medication errors and costs, while increasing personnel efficiency. As a
result of user satisfaction, its use was extended to three medical wards at the
Royal Victoria Hospital.
Dr. Gelston founded VisualMED Canada in December 1997. In 1998, building
upon the prototype system previously developed by Dr. Gelston, the Company began
to develop the VisualMED System. Unlike the prototype, the VisualMED System runs
on a Windows platform. This innovation became possible with the introduction of
more flexible software platforms and more robust networking solutions. The
Company has developed a system that, in its view, is unparalleled at present by
any existing clinical software in terms of flexibility and ease of use. The
VisualMED System provides physicians with an intuitive, user-friendly and
ergonomic expert support system.
At present, the VisualMED System is in the Beta testing phase at the
Montreal Heart Institute. Similar tests are expected to begin in the spring of
2001 at the Sainte Justine Children's Hospital in Montreal. Both of these
institutions are internationally renowned tertiary care teaching hospitals
affiliated with the University of Montreal. The quality of these sites will have
a bearing on market acceptance.
Once commercialized, the Company believes that its suite of software
will usher in a new era of clinical informatics, based upon the application of
previously unavailable technologies. The Company's suite of software will
conform to the speed and reliability criteria of the healthcare informatics
environment, which previously have not been adequately addressed. The use of
higher level programming languages, such as Delphi 5, among others reduces
development time and costs to the client institution.
To the best knowledge of the Company, the VisualMED System is the only
one of its kind to include an expert physician order entry function that has
been proven in a PC environment.
The VisualMED System:
The VisualMED System is a suite of software that allows physicians and
other medical professionals to make informed decisions more rapidly and
effectively in the areas of diagnosis and therapy. This is accomplished by
presenting decision support in real time in the context of the order entry
process. The VisualMED System suite is an expert system that integrates
information, such as laboratory, demographic and clinical data as well as
prescription information from the pharmacy. Data accessed using the VisualMED
System is presented to the physician in the clinical context of a particular
case. Only those portions of the data relevant to the current situation are
displayed on screen. The key features of the VisualMED System are:
Data collection feature
The VisualMED System replaces paper-based recording as well as clinical
data entry.
Management, administration and scheduling features
Through the integration of laboratory, demographic and nursing data
downloaded from existing systems or direct data entry by healthcare
professionals, the VisualMED System facilitates information management within
the hospital. Information is readily accessible to all administrative staff and
medical professionals. This enhances the efficient flow of information
throughout the hospital. From an administrative perspective, this allows the
system administrator to perform quality control audits in real time. Rather than
waiting months for clinical data to become available, as is the case with
existing systems, administrators can review clinical practice, costs and
performance almost instantaneously. Changes in policies and practices may thus
be instituted in a timely manner. Scheduling and booking of appointments for
patients within the hospital are facilitated by the integration of all pertinent
data into a centralized scheduling system. From a medical perspective, the
VisualMED System provides medical professionals with easy access to vital
information, which might otherwise be overlooked despite its clinical
significance, such as serious drug interactions, dosage errors or critical
abnormal results.
Expert content feature
The VisualMED System provides physicians with important suggestions to
the most viable methods of treatment in a given situation. Equipped with
state-of-the-art pharmaceutical and clinical guides, the system provides real
clinical support to medical professionals. The VisualMED System contains the
full repertory of prescription drugs and costs, allowing physicians to make
cost-efficient judgments. The VisualMED System provides physicians with the
preferred diagnostic and therapeutic alternatives to treat patients. However, it
allows the physician to make the final decision in drug prescription.
The VisualMED System consists of specialized modules that are designed
to respond to the clinical needs of the individual medical and surgical
specialties. A hospital will use all or some of the modules depending on its
mission. The hospital can customize and adapt the system to its own needs and to
the needs of certain particular wards. The VisualMED System is suitable for use
in teaching hospitals, general hospitals or community hospitals.
The VisualMED System software is installed on database and application
servers that communicate with Windows NT workstations connected to the
hospital's local area network (LAN). It is possible to send test requests to the
hospital's laboratory systems, receive laboratory and image results, and link to
an existing pharmacy inventory system.
The VisualMED System Modules:
The following are modules in the VisualMED System software suite:
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Product Status of Product Expected Date Estimated Costs to Date when Revenues
Available for Commercial Sales are First Anticipated
Commercial Sale (After July 1, 2000)
In Canadian $
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VisualMD 85% complete (1) First Quarter 2001 500,000 First Quarter 2001
VisualSURGEON 75% complete February 2001 150,000 March 2001
VisualNURSE 50% complete First Quarter 2001 300,000 First Quarter 2001
VisualONCOLOGY 50% complete January 2002 300,000 March 2002
VisualER 50% complete June 2001 300,000 September 2001
VisualADMIN 45% complete February 2001 300,000 March 2001
VisualPHARMACY 40% complete June 2002 300,000 September 2002
VisualCHART 30% complete June 2002 300,000 September 2002
VisualBOOK 0% complete January 2002 90,000 March 2002
VisualPROF 0% complete January 2003 600,000 March 2003
VisualOR 0% complete January 2003 600,000 March 2003
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(1) VisualMD is the core module of the VisualMED system.
VisualMD
VisualMD is the core module of the VisualMED System. It is an
electronic order entry system for doctors. It eliminates all handwritten paper
orders. The VisualMED System tracks patient records and clinical activities in
real time. Up to date laboratory results, X rays, nursing inputs, and
prescriptions are available to the medical staff. Diagnosis-based physician
orders can be prescribed with just one keystroke. Prescriptions are legible and
dosages are calculated on the basis of individual patient parameters. VisualMD
reviews all prescriptions and suggests alternative courses of therapy based on
local practice standards. Physician prescriptions are transmitted directly to
the Kardex, care plan and hospital pharmacy. Clinical signs, diabetic flow
sheets, and input and output data contribute information to the system.
Physicians are alerted by the system before critical situations develop.
Continuity of care is assured from patient admission through discharge and
beyond because the information required to care for the patient is always at the
fingertips of the healthcare team.
VisualNURSE
VisualNURSE eliminates duplicate charting and verification of formerly
paper based data entry. Data recording by physicians and nurses is seamlessly
integrated. Nurses know the information they record is not lost in a paper
chart, but immediately feeds back on the physician's medical prescription.
VisualNURSE can be used to equitably distribute the nursing workload because it
is possible to determine the amount of work involved in caring for patients with
specific diagnoses. Nurses use VisualNURSE to maintain the nursing hospital
record, which is available for discharge planning and medical and paramedical
consultation. A unique user interface allows individual nursing units to
schedule and determine nursing duties in a flexible manner specific to the
medical specialty of each particular ward.
VisualSURGEON
VisualSURGEON is an expert electronic surgical order entry system
designed for use on multiple surgical wards and departments of a hospital.
VisualSURGEON functions similarly to VisualMD except that it is adapted to
surgical practice.
VisualONCOLOGY
VisualONCOLOGY is an expert electronic physician order entry system
designed for use on the oncology ward of a hospital already using the VisualMED
System. VisualONCOLOGY functions similarly to VisualMD except that it is
tailored to the practice of oncology. VisualONCOLOGY maintains the various
chemotherapeutic protocols in an easy-to-use graphic format. Automatic safety
overrides prevent inadvertent dosing errors. VisualONCOLOGY stores
custom-selected information to file, facilitating the work of the Protocol Data
Manager. The Protocol Data Manager is responsible for collating thousands of
data results for patients enrolled in chemotherapy trials. VisualONCOLOGY allows
the Protocol Data Manager to survey the course of therapy and look for
unforeseen side effects and results of treatment.
VisualER
VisualER is an expert electronic physician order entry system designed
for use in the Emergency department of a hospital. VisualER functions similarly
to VisualMD. However VisualER is tailored to the Emergency department's medical
and surgical practice. It contains emergency protocols to facilitate rapid order
entry in a busy department. VisualER contains screens showing the diagnostic and
therapeutic progress of a patient through his or her stay. The physician is able
to rapidly judge if a patient needs a more in-depth assessment. The physician
can review the overall needs and situation of the Emergency department at any
given time. This is especially important during periods when the Emergency
department is very busy.
VisualCHART
VisualCHART is an electronic patient record that contains all
information pertinent to a patient's hospitalization. VisualCHART replaces the
paper patient record and is accessible to all members of the ward team,
including doctors, nurses, consultants, clerks, dieticians, physiotherapists,
social workers and students.
VisualOR
VisualOR is a scheduling and order-entry system for use in the
operating and recovery departments, linked with VisualMD and VisualSURGEON on
the hospital wards. Linked to one central system, all the departments share the
identical electronic patient record. Seamless continuity of care is assured as
the patient is physically moved from one area of the hospital to another. The
VisualOR scheduling feature allows for the effective booking of the operating
room theater, taking into account personnel needs and medical supplies.
VisualPHARMACY
VisualPHARMACY is an electronic pharmacy inventory system.
VisualPHARMACY is linked to an adverse drug reactions database and a
pharmaceutical clinical guide. It shares data with the other modules of the
VisualMED System and has a unique user interface allowing for the development of
local prescription algorithms for use in the clinical pharmacy. VisualPHARMACY
verifies medication dose, frequency, and administration route according to
demographic, laboratory, and diagnostic criteria. This is an important factor in
the enhanced safety profile provided by the VisualMED System. Each prescription
is validated by the pharmacy service.
VisualBOOK
VisualBOOK is an electronic scheduling system for patient examination
and imaging visits in the hospital. VisualBOOK assures maximum flexibility in
physician and patient scheduling. Booking among multiple clinics, wards,
laboratories and the emergency department is possible. VisualBOOK automatically
notifies the physician of periodic preventive care activities such as flu shots,
immunizations or mammographies.
VisualPROF
VisualPROF is a teaching tool containing virtual patients and data for
use by trainees and students in a teaching hospital setting.
VisualADMIN
VisualADMIN is an electronic record that integrates the VisualMED
System's medical, laboratory, imaging, and administrative and demographic data.
VisualADMIN regroups all clinical data emanating from within the same
institution and makes this data available to clinical users throughout the
facility. Relevant data is also accessible in any module of the VisualMED System
in such a manner that only the information that is relevant to a particular
application is displayed at the time of use.
Benefits of the VisualMED System:
The Company believes implementation of the VisualMED System has the
following benefits:
Enhanced patient safety
The VisualMED System improves prescription management. This should lead
to a reduction in dosage errors and potential drug conflicts. The risk of human
filing and transcription errors should be reduced through the standardization of
data entry. The VisualMED System will notify physicians of abnormal critical
results.
Reduction of costs
The VisualMED System presents the least expensive prescription
alternatives to physicians in any given case. It always displays prescription
costs to the prescriber at the time of order entry. The prototype system
installed at the Royal Victoria Hospital has been documented to result in a 29%
savings in prescription costs. The VisualMED System discourages unnecessary test
repeats by prompting the user about tests previously performed. The system is
designed to reduce administrative workload and reduce cost by more efficient use
of resources.
Increased efficiency
The VisualMED System saves physicians, nurses and other medical
professionals time by significantly reducing their paperwork. It also provides
all medical personnel with easy access to patient information. It facilitates
communication among the medical personnel. It allows medical staff to spend more
time with their patients. The implementation of the system may be done rapidly
and with little disruption because the VisualMED System is easy to learn.
Enhanced quality control and administration
Personnel activity, medical data, and cost efficiency can be monitored
in real time. Problems are detected and resolved more rapidly. The modules of
the VisualMED System conform to industry standards, permitting links to be
established with existing software.
Training
The training module of the system enhances the students' learning
process by increasing their exposure to clinical materials.
Research and Development Activities:
During the fiscal year ended September 30, 1999, VisualMED Canada spent
$580,000 for research and development activities. During the nine-month period
ended June 30, 2000, VisualMED Canada spent $1,800,000 on research and
development activities.
Intellectual Property:
VisualMED Canada has made an application for a patent registration in
connection with the VisualMED System. VisualMED Canada has also made an
application in both Canada and the United States for the registration of its
trademark "THE WIRELESS HOSPITAL" for use in connection with the VisualMED
System.
Principal Suppliers:
The Company is not dependent upon any one particular supplier for the
supply of materials and equipment relating to the manufacture of the VisualMED
System software.
Industry Profile:
The introduction of software solutions in clinical medicine has been
slow. Institutional software was initially developed for use in the areas of
hospital administration, personnel scheduling and pharmacy inventory. Clinical
medicine is complex. Until recently, only mainframe systems, which are expensive
to develop and maintain, could generate screens rapidly enough for convenient
access by the user. Moreover, the mainframe systems are not flexible because
users cannot customize the screens. The evolution of local area networks (LAN)
and of the personal computers (PC) they support has changed this. The
introduction of the acceptably stable Windows platforms has set the foundation
for a revolution in clinical informatics. Therefore, it is going to be much
easier to expand the use of electronic charting in critical care hospitals.
Currently, leading suppliers of hospital informatics solutions have focused on
the development of laboratory tools and have not fully focused on the demands of
physicians.
The Market for the Company's Product:
There are over 10,000 hospitals and long-term care centers in the
United States, Canada, South America and Western Europe. To the Company's
knowledge, only a few North American institutions have experimented with
electronic order entry. The Company feels that the use of electronic order entry
and electronic charting will become more prevalent in the healthcare industry in
the upcoming years as institutions begin to demand more clinically oriented
software. Hospitals are under pressure to increase efficiency and prevent deaths
from clinical errors. Hospitals need a tool to monitor quality control. To
accomplish this, they need the audit trails provided by systems such as the
VisualMED System. There is a need to practice evidence-based medicine using the
latest available information. The Company feels it has developed a product that
effectively addresses all these needs.
Competition
In the view of the Company, the healthcare information systems market
is competitive, rapidly evolving and subject to rapid technological change.
However, to the best knowledge of the Company, there are very few companies
which offer software that competes directly with the VisualMED System. The
Company believes that its competitive advantage is that the VisualMED System is
Personal Computer based. Principal competitors offer mainframe-based information
systems. The VisualMED System is more flexible, user-friendly and comprehensive.
The VisualMED System enjoys a price advantage over competing mainframe-based
systems.
The Company's Design and Marketing Program
The Company has assembled an experienced design team. The Company has
access to a host of experienced consultants in the medical, nursing, paramedical
and informatics fields, with whom the principals of the Company have worked for
a number of years. The Company's marketing staff, currently under the direction
of the Vice President of Sales and Marketing will consist of 7 persons
responsible for the marketing of the VisualMED System in Canada and the United
States. At present, the Company is in the advanced stages of discussions with
several potential clients in North and South America, but has not yet concluded
any sales. The commercialization of the system outside of North America will be
handled by current marketing staff or through joint venture and marketing
agreements with third parties. The Company is in the advanced stages of
negotiations relating to the establishment of joint ventures in both Brazil and
Panama.
Employees:
As of June 30, 2000, VisualMED Canada and its affiliates had 34
full-time employees.
Risk Factors Related to the Company's Business:
General Economic Conditions
The Company is subject to risks generally inherent in the operation of
a business. These include, for example, inflation and increases or decreases in
interest rates, which may impact upon the profitable operation of the Company.
The Company is also subject to specific risks such as decrease in computer
equipment prices, increases and decreases in salaries of software development
personnel, increases and decreases of hospital care costs, and increases and
decreases in drug prices.
Changes in the Healthcare Industry
The Company operates in the healthcare industry, which is highly
regulated and is subject to changing political, economic, and other regulatory
influences including the U.S. Food and Drug Administration "FDA".
Competition and Technology
The Company has developed what it believes to be unique software.
However, there is no assurance that another company with more financing and
which is better established in the industry will not develop software, which
will compete with the Company's software. In addition, as technology is rapidly
changing, there is no assurance that such competing company will not develop
software, which renders the Company's software obsolete.
Competition
The Company is entering into the market for healthcare information
systems, which is competitive, rapidly evolving and subject to rapid
technological change. The Company believes that the principal competitive
factors in this market include technology, functionality, reliability, ease of
use, and depth, breadth of the system. Certain competitors of the Company have
greater financial, technical, product development, marketing and other resources
than VisualMED. Some of its competitors offer products that it does not offer.
The Company's principal existing competitors include Cerner Corporation, Shared
Medical Systems Corporation, IDX Systems Corporation, McKesson HBOC Inc.,
Eclipsys Corporation, and others. Certain competitive actions or possible
product developments by competitors may have a material adverse effect upon the
operations of the company.
Uncertainty of Commercialization
The VisualMED System is still in development stage and has yet to
achieve substantial commercial acceptance in order to maintain itself on
internal cash flow. This version of the VisualMED System is new. The system has
yet to prove itself in a practical work environment and has yet to obtain wide
spread professional acceptance, although the Company's prototype system has
proven itself at the Royal Victoria Hospital in Montreal.
Limited Marketing Capabilities
VisualMED's operating results will depend to a large extent on its
ability to successfully market the VisualMED System. The Company currently has
limited marketing capability. It intends to hire additional sales and marketing
personnel and enter into distribution and marketing joint ventures and other
agreements to market the VisualMED System.
Long Lead Time in Implementing Contracts
The process of identifying a potential customer, entering into a
contract, obtaining and installing hardware and implementing the VisualMED
software is lengthy. The process is expected to take at least several months and
perhaps longer. Implementation of the VisualMED System requires specialized
personnel and special training. VisualMED currently has limited staff and
outside consultants' availability for implementation. As demand for
implementation increases, the Company will have to hire additional staff and
train these people or consultants, which may cause delays in completion of
certain sales.
Proprietary Technology May Be Subjected to Infringement Claims or May Be
Infringed Upon
The Company relies upon a combination of trade secrets, copyright and
trademark laws, license agreements, confidentiality procedures, employee
non-disclosure agreements and technical measures to maintain the trade secrecy
of its proprietary information. The Company has filed patent applications or
copyrights covering its software technology. Nonetheless patent protection in
software is not totally reliable. As a result, the Company may not be able to
protect against misappropriation of its intellectual property. In addition, the
Company could be subject to intellectual property infringement claims as the
number of competitors grows and the functionality of its products overlaps with
competitive offerings. These claims, even if without merit, could be expensive
to defend. If the Company becomes liable to third parties for infringing their
intellectual property rights, it could be required to pay a substantial damage
award and to develop non-infringing technology, obtain a license or cease
selling the products that contain the infringing intellectual property.
Key Personnel
As with all knowledge-based companies, certain personnel are important.
Departure of certain key employees may have an adverse effect upon the company.
The Company maintains key-man life insurance in the amount of $1 million
Canadian on the following key employees, Gerard Dab, Arthur Gelston and Richard
Le Hir.
Product Related Liabilities
The Company's products provide critical information for providing
healthcare to patients. Although no such claims have been brought against the
Company to date regarding injuries related to the use of its products, such
claims might occur in the future. Although the Company employs numerous
safeguards and backups, there can be no guarantee that extreme unforeseen
circumstances may arise that can cause product failure and result in damages.
Although the Company maintains product liability insurance coverage in an amount
that it believes is sufficient for its business, there can be no assurance that
such coverage will prove to be adequate or that such coverage will continue to
remain available on acceptable terms, if at all. A successful claim brought
against the Company, which is uninsured or under-insured could materially harm
its business, results of operations or financial condition.
System Errors and Warranties
The Company's systems are very complex and employ state of the art
technology, which may be new to the healthcare industry. As with new and complex
systems, they may contain errors, especially when first introduced. Although the
Company conducts extensive testing, it may still discover software errors in its
products after their introduction. Failure of a client's system to meet these
certain performance criteria could constitute a material breach resulting in
contract cancellation, which could require the Company to take corrective action
or result in damages in possible lawsuits. The Company's contract will generally
limit the Company's liability arising from such claims but such limits may not
be enforceable in certain jurisdictions.
Limited Public Market Exists for the Company's Common Stock
At the present time, there is a limited public market for our common
stock. We intend to apply for listing of the securities on the Over the Counter
Bulletin Board ("OTCBB"). However, we cannot assure that we will be able to
obtain such a listing. The Over the Counter market ("OTC") differs substantially
from national and regional stock exchanges. The OTC market operates through the
communication of bids, offers and confirmations between broker-dealers, rather
than one centralized market or exchange. The securities admitted to quotation
are offered by one or more broker-dealers rather than "specialists" which
operate in stock exchanges. To qualify for listing on the OTCBB, an equity
security must have at least one registered broker-dealer, which acts as the
market maker listing bids or ask quotations and which sponsors an issuer
listing. A market maker sponsoring a company's securities is required to obtain
listing of securities on any of the public trading markets, including the OTCBB.
The Company does not have a market maker for its securities. If we are able to
obtain a market maker for its securities, it may obtain a listing on the OTCBB
or develop a trading market for our common stock. However, we may be unable to
locate a market maker that will agree to sponsor its securities. Even if we do
locate a market maker, there is no assurance that its securities will be able to
meet the OTCBB requirements or that the securities will be accepted for OTCBB
listing.
Stock Price May Be Volatile
The trading price of our common stock may be volatile. The market for
our common stock may experience significant price and volume fluctuations in
response to a number of factors including this being a new stock listing which
has yet to develop an established following, variations in operating results,
changes in expectations of future financial performance, changes in estimates of
securities analysts, governmental regulatory action, healthcare reform measures,
client relationship developments and other factors, many of which are beyond our
control. As well, these factors may influence the trading price, the time in the
development of the Company's product, the ability to debug problems efficiently,
market acceptance, sales, favorable and unfavorable publicity and acceptance by
healthcare professionals.
In recent months, the stock market in general, and the market for
software, healthcare and high technology companies in particular, has
experienced extreme volatility that often has been unrelated to the operating
performance or potential of particular companies. These broad market and
industry fluctuations may adversely affect the trading price of our common
stock, regardless of actual operating performance or potential.
If Future Shares Are Issued, Present Investors' Per Share Value May Be Diluted
Our Articles of Incorporation authorize the issuance of a maximum of
50,000,000 shares of common stock, $0.001 par value. At the conclusion of this
Offering there will be 22,332,785 shares of common stock issued and outstanding
after cancellation of the 10,000,000 common shares in the voting trust. The
authority of our Board of Directors to issue additional stock without
shareholder consent may have a depressive effect on the market value of our
stock.
The Company Has Never Paid Dividends
As a new business, we have never paid dividends and we do not
anticipate declaring or paying any dividends in the foreseeable future. We
intend to retain earnings, if any, to finance the development and expansion of
its business. Future dividend policy will be subject to the discretion of the
Board of Directors and will be contingent upon future earnings, our financial
condition, capital requirements, general business conditions and other factors.
Future dividends may also be subject to covenants contained in loan or other
financing documents we may execute. Accordingly, there can be no assurance that
cash dividends of any kind will ever be declared or paid.
Exchange Rate Data:
Unless otherwise specified or the context otherwise requires, all
dollar amounts in this prospectus are in Canadian dollars. The following table
sets forth certain exchange rates to convert from Canadian into U.S. dollars
calculated daily at 4:00 pm in London, based on the spot closing rates as
provided by Reuters.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------
High for the Low for the Average for the
period period End of period period
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
Nine-Month Period ended June 30, 2000 0.6974 0.6634 0.6749 0.6809
Year ended September 30, 1999 0.6883 0.6425 0.6805 0.6655
Year ended September 30, 1998 0.7293 0.6327 0.6552 0.6903
Year ended September 30, 1997 0.7514 0.7150 0.7232 0.7301
Year ended September 30, 1996 0.7523 0.7218 0.7341 0.7327
Year ended September 30, 1995 0.7479 0.7016 0.7424 0.7272
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
This discussion and analysis should be read in conjunction with
VisualMED Canada financial statements and accompanying notes included. Operating
results for the year ended September 30, 1999 and the nine months ended June
30,2000 are not necessarily indicative of results that may occur in future
periods. All figures are in Canadian dollars.
Except for the historical information contained herein, this discussion
contains forward-looking statements that involve risks and uncertainties. When
used, the words "believe", "anticipate", "expect", "estimate" and similar
expressions are intended to identify such statements. There can be no assurance
that these statements will prove to be correct. VisualMED Canada's actual
results could differ materially from those discussed here. Factors that could
cause or contribute to such differences include, but are not limited to, those
discussed in this section. VisualMED Canada undertakes no obligation to update
any of the forward-looking statements contained herein to reflect any future
events or development.
Background and Basis of Presentation:
On May 9, 2000, Cherry Tree Capital Corp., a non-operating company with
immaterial net assets acquired 100% of the outstanding common shares of
VisualMED Clinical Systems Inc. ("VisualMED Canada"). Effective May 10, 2000,
Cherry Tree Capital Corp. was renamed VisualMED Clinical Systems Corp.
("VisualMED U.S."). The acquisition resulted in the owners and management of
VisualMED Canada having effective operating control of the combined entity. The
exchange ratio is approximately 0.3 common share of VisualMED U.S. for 1 common
share of VisualMED Canada. Pursuant to this agreement, 19,002,785 shares are to
be issued and to be qualified by this registration statement.
The acquisition has been accounted for as a capital transaction in
substance, rather than a business combination. The acquisition is equivalent to
the issuance of stock by VisualMED Canada for the net monetary assets of
VisualMED U.S., accompanied by a recapitalization, and is accounted for as a
change in capital structure. Accordingly, the accounting for the acquisition is
identical to that resulting from a reverse acquisition, except that no goodwill
is recorded. Under reverse acquisition accounting, the post reverse-acquisition
comparative historical financial statements of the "legal acquirer" (VisualMED
U.S.), are those of the "legal acquiree" (VisualMED Canada).
Results Of Operations:
Revenue
As of June 30, 2000, the Company is still in the development stage and
does not have any revenues from sales.
Research and Development
Research and development expenses were $1,800,000 for the nine months
ended June 30, 2000 compared to $265,000 in the similar period last year, and
$580,000 for the year ended September 30, 1999. This increase is the result of
hiring more software development professionals.
General and Administrative
General and administrative expenses for the nine months ended June 30,
2000 were $3,396,000 compared to $198,000 in the similar period last year, and
$516,000 for the year ended September 30, 1999. The major components of General
and Administrative expenses were salaries, marketing, professional fees, and
general office. The increase for the nine-month period was related to the
development of business infrastructure and corporate finance advice.
Interest on Loans
Interest on loans was $44,000 for the nine months ended June 30, 2000
compared to $12,000 in the similar period for last year and $20,000 for the year
ended September 30, 2000. Both increases were due to loan increases.
Depreciation
Depreciation expense was $101,000 for the nine months ended June 30,
2000 compared to $23,000 for the similar period last year and $34,000 for the
year ended September 30, 1999. This reflects increases in computer equipment.
Net Loss
Net loss for the nine months ended June 30, 2000 was $4,730,000
compared to a net loss of $401,000 for the similar period last year, and
$939,000 for the year ended September 30, 1999. The increased net losses reflect
the acceleration in research and development activities, marketing, business
development, and corporate finance advice.
Liquidity and Capital Resources:
During the year ended September 30, 1999, VisualMED Canada obtained
$1,200,000 in loans; $1,000,000 was used in operating expenses and $200,000 was
used in purchase of capital assets which comprise mainly of computer equipment.
During the nine months ended June 30, 2000 VisualMED Canada raised
$6,360,000 through sale of share capital, convertible securities and notes
payable, of which $1,652,000 represented deposits towards subscription for
shares in VisualMED U.S. With the proceeds from share issuance, VisualMED Canada
repaid $1,129,000 in loans from the previous year, purchased capital assets
comprising mainly of computer equipment for $480,000 and incurred $4,750,000 in
expenditures, to develop the VisualMED software and building business
infrastructure, leaving a cash balance of $1,000 on June 30, 2000. Subsequent to
June 30,2000, an additional $1,400,000 will be received from tax credits and the
Quebec Government.
As of October 2000, to meet its cash needs, the Company obtained bridge
financing and $1,000,000 in advances from shareholders. By September 30,2000, we
estimated there will be $1,500,000 in income tax credits receivables. Loans
secured by income tax credits are available. As of October 2000, we borrowed
$375,000 secured by tax credits.
The Company has received an indication of interest from Canadian
venture capital firms to raise between $4,000,000 and $10,000,000 by the end of
this year. The Company has not entered into any formal written agreement with
the venture capital firms and will not do so until this offering is complete.
There is no assurance, however, that we will be able to reach an agreement with
the venture capital firms or that additional monies will be raised for the
Company.
Innovatech Grand Montreal, a public corporation in Montreal created by
the Quebec Government to finance high tech startups, and a large shareholder of
the Company has advanced the company $750,000 and has indicated interest to
invest an additional $1,500,000 in the Company. However, there is no assurance
that Innovatech will make the investment in the Company.
We anticipate receiving $500,000 for the Lakeshore General Hospital
sale by year-end. We anticipate having contract signings on the sale of three
VisualMED systems by January 2001. There are two other hospital systems sales
that are in advanced stages of negotiations. Upon contract signing, one third of
the sale is due and the balance of the contract is available for bank financing.
With our ability to borrow against tax credits which we currently have
and will receive over the next six months, and a receivable from the Quebec
Government of approximately $750,000 which we estimate will be paid in December
2000, and other commitments, the Company believes it will have sufficient cash
flows to operate for an additional six months. In order to survive beyond that
time, the Company will need to raise additional funds and/or capital until it
has achieved a level of sales adequate to support the Company's cost structure.
The Company is engaged in ongoing discussions and negotiations with various
potential investors to obtain the necessary financing to execute its business
plan. Additional financings may come in the form of contractual arrangements
with corporate partners, financing through convertible debentures and lines of
credit. The Company must obtain additional financing to fund its operations
until commercial sales can generate sufficient cash flows. We are confident that
we will be able to obtain the necessary financing. However, there can be no
absolute assurance that additional financing will be available on favorable
terms.
Revenues from budgeted sales of $15 million for 2001, is expected to
start in early 2001. The Company generally requires an upfront payment of
one-third to one-half of the software sale and the balance due upon acceptance
by customer, subject to a ten percent holdback. Short-term bank loans are also
available to finance installation of software, if required. If the Company is
able to obtain the two financings mentioned above and can achieve its sales
budget, by 2002, the Company expects to have positive cash flows and sufficient
operating capital to continue as a going concern without the need for additional
financing in 2002.
Plan of Operations:
As of June 30, 2000, the Company was still in the development phase and
expects to move to the commercial phase, first quarter 2001, subject to any
unforeseen events or delays. Since July 2000, the VisualMD core module has been
running in Beta test mode in an adult care environment at the Montreal Heart
Institute. We expect to complete this phase of Beta testing at the Montreal
Heart Institute during first quarter of 2001.
In February 2001, the Sainte Justine's Children's Hospital will be a
Beta test site for pediatric specialty care. This will validate the VisualMED
System for use in a children care environment.
We will continue with ongoing development of the VisualMED System and
expect to spend net $600,000 per month on development, administration and
marketing. By Spring 2001, the core module, VisualMD and a key module
VisualNURSE will be completed.
We expect to be able to start commercial shipment of the VisualMED
System in the first quarter of 2001. It will offer basic order entry and
decision support functions. There are other non-essential modules of the
VisualMED System, which are optional and address the needs of specific medical
departments. These will be developed over the next three years, at an average of
four modules per year. Additional functions may be added to the VisualMED
modules over time.
The Company is planning to launch a comprehensive marketing campaign in
both the United States and Canada. We expect to start selling VisualMED systems
at prices ranging from $2,000,000 to $5,000,000 U.S. depending on the complexity
and size of specific client sites, starting the first quarter of 2001. To date,
one commercial sale that is contingent upon the customer obtaining a Canadian
government grant has been signed. This sale to the Lakeshore General Hospital in
Montreal is for $2 million. The Company has budgeted $15 million in sales for
2001 and expects to start receiving cash from sales starting in March 2001.
Impact of the Prototype System:
The Company is in the process of developing an advanced expert
physician order entry system for hospitals. This system is developed using many
of the ideas and feedback from the prototype system developed at McGill
University's Royal Victoria Hospital.
The VisualMED System software currently being developed is a new
system, which is more advanced and sophisticated than the prototype system,
Physician Order Entry System known as "POES", at the Royal Victoria Hospital.
The VisualMED System features a new computer platform, a new language and
different codes and ultimately constitutes a new work, which is different from
the Physician Order Entry System at the Royal Victoria Hospital. In a signed
document dated December 23, 1999, McGill University and the Royal Victoria
Hospital have acknowledged that they hold no rights over the VisualMED System.
In the unlikely event they were to hold rights, they have undertaken to assign
such rights to the Company.
Recent Developments:
In September 2000, VisualMED Clinical Systems Corp. entered into a
strategic alliance with Ericsson Canada Inc., Agilent Technologies Canada Inc.,
Locus Dialogue and the Montreal Heart Institute for the development of a
wireless hospital registic solution. Hospital registic solution refers to the
collective information technologies used for processing, communicating, updating
and conserving clinical data. VisualMED's clinical software, combined with
Ericsson's telecommunication technologies, Agilent's medical device technologies
and Locus Dialogue's speech recognition technologies will allow the development
of a new integrated hospital registic solution. This new, innovative, mobile and
wireless product is both speech activated and self-training. In addition, the
device is a data processing system to which a wide range of medical hardware and
software can be attached.
On October 2, 2000, Gerard Dab, Chairman of the Board of VisualMED Clinical
Systems Corp. announced the appointment of two new members to the Company's
Board of Directors, Paul McNelis and Louis J. Lombardo. Paul McNelis is an
Economics Professor at Georgetown University in Washington, D.C. Louis J.
Lombardo was Executive Vice President, Client Service Delivery for American
Express Travel Related Services Company. He is currently President of Lombardo
Consulting, L.P., and is working as a management and operational consultant for
American Express in New York.
On October 19, 2000, VisualMED Clinical Systems Corp. announced that it
signed a memorandum of understanding to create a new entity that will market and
distribute its products in Spanish speaking America and the Caribbean. VisualMED
International S.A., or VMISA will be based in Panama. VMISA will be 51% owned by
VisualMED and 49% owned by Conar Business International S.A. or CBI, a
Panamanian venture capital firm formed to incorporate and operate the new
entity. CBI's initial investment will be a minimum of $3 million U.S., upon
beginning of the operation, which is expected to be no later than January 1,
2001.
VMISA will be the exclusive distributor of all VisualMED products for
Mexico, Central America, all of South America except Brazil, and the Caribbean
(including Puerto Rico but excluding the French territories). VMISA will also
have the exclusive right to license VisualMED products in these areas with prior
written approval.
DESCRIPTION OF PROPERTY
As of March 31, 2000, the Company leased the following premises:
<TABLE>
<CAPTION>
Location Area Purpose Expiry Date
----------------------------------- ----------------------------------- -------------------------- -------------------
----------------------------------- ----------------------------------- -------------------------- -------------------
<S> <C> <C> <C>
391 and 397 Laurier West 2,700 square feet Office space March 2003
Montreal, Quebec (Approximately)
393 Laurier West 1,300 square feet Office space March 2003
Montreal, Quebec
395 Laurier West 1,600 square feet Office space March 2003
Montreal, Quebec
</TABLE>
LEGAL PROCEEDINGS
To the best of our knowledge, we are not a party to any pending legal
proceeding. We are not aware of any contemplated legal proceeding by a
governmental authority involving us.
<PAGE>
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Directors and Executive Officers:
Our Articles of Incorporation provide that we shall have a minimum of
one (1) director on the board at any one time. Any vacancies are filled by a
majority vote of the remaining directors then in office. Each of the directors
listed below will hold office until the next annual meeting of our shareholders
or until the election of his successor, unless he resigns or his office becomes
vacant by removal, death or other cause.
Our directors and executive officers are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
----------------------------- ------- --------------------------------------------------------------------------------
Name Age Positions
----------------------------- ------- --------------------------------------------------------------------------------
----------------------------- ------- --------------------------------------------------------------------------------
Dr. Arthur Gelston 51 President, Chief Science Officer, Director
Gerard Dab 53 Chairman, Director
Richard Le Hir 53 Senior Vice-President and Chief Executive Officer, Director
Joseph Mah 48 Vice President Finance and Chief Financial Officer
Barry Scharf 55 Vice President Client Services
Robert Cohen 42 Vice President Sales and Marketing
Dr. Linda McHarg 55 Director
Dr. Linda Snell 49 Director
Richard Borenstein 34 Director
Caroline Singleton 47 Director
Paul D. McNelis 53 Director
Louis J. Lombardo 56 Director
</TABLE>
Mr. Gerard Dab served as the Company's President and Secretary in 1998. He
has served as the Company's Chairman of the Board since 1999. Mr. Dab founded
Dab Communications Inc. in 1992 and served as its President until 1997. Mr. Dab
is a business executive with more than twenty year's experience in international
marketing and has supervised marketing communications for several information
management companies. He has developed and continues to maintain an extensive
network of contacts in the field of healthcare communications throughout the
world.
Dr. Arthur Gelston has served as the Company's President, Chief Science
Officer, and Director since 1999. Prior to assuming this position, since 1990,
Dr. Gelston was a Senior Physician at Royal Victoria Hospital in Montreal. From
1988 to 1999, Dr. Gelston also served as the Director of Medical Clinics of the
Department of Medicine at Royal Victoria Hospital.
Mr. Richard Le Hir has served as the Company's Chief Executive Officer and
Director since December 1999. Mr. Le Hir is an attorney and business executive
with 25 years of senior management and strategic planning experience in some of
Canada's largest corporations and trade associations. Between 1995 and 1999, Mr.
Le Hir served as Senior Advisor, Value Management and Business Strategies at
Miri-Valorex in Montreal. He was a member of the Quebec Government's National
Assembly from 1994 to 1998. Between 1991 and 1994, Mr. Le Hir was the President
and General Manager of the Quebec Manufacturers' Association. Between 1989 and
1994 he was the Vice President and General Manager of the Quebec Division of the
Canadian Manufacturers' Association.
Mr. Joseph Mah, C.A. has served as the Company's Vice President of Finance
and Chief Financial Officer since January 2000. He is a senior financial
executive with over twenty five years' experience in finance, financial
management, and strategic planning. Between 1993 and 1999, Mr. Mah was Chief
Financial Officer of Desmarais Capital Corporation and Hubstar Inc. in Montreal.
He was the Director of Finance at Canada Steamship Lines Inc. in Montreal from
1991 to 1992. Mr. Mah has also worked at Deloitte and Touche for four years and
Abbott Laboratories (Canada) for seven years.
Mr. Robert Cohen has served as the Company's Vice President of Sales and
Marketing since October 1999. He is a healthcare information sales and marketing
executive with more than ten years' experience in the field. He was the Director
of Sales at a4 Health Systems in Cary, North Carolina, from February 1998 to
September 1999. From June 1997 to February 1998, Mr. Cohen was the Region Sales
and Operations Manager at Fisher Scientific in Raleigh. Mr. Cohen was the
Eastern Region Sales Manager for Park Medical Systems in Philadelphia from
February 1995 to March 1997. Between November 1993 and February 1995, Mr. Cohen
served as Product Manager, Central Atlantic Region at General Electric Medical
Systems in Pittsburgh.
Mr. Barry Scharf has served as the Company's Vice President of Client
Services since February 2000. He is an executive with more than twenty-five
years experience in informatics and medical informatics. He was Chief Operating
Officer from 1998 to January 2000 at Integraware, a division of Phoenix
International Life Sciences Inc. in Montreal. He was responsible for developing
and marketing software solutions to accelerate drug development. Mr. Scharf was
President and Co-Founder of Novasygma Consulting Group Inc. in Montreal in 1998.
Between 1996 and 1997 he was General Manager and Services Manager at Lanvista in
Montreal. Mr. Scharf was Vice President Professional Services and Application
Sales of Computertime Network in Montreal between 1986 and 1996.
Dr. Linda McHarg has served as a Director of the Company since May 1999.
Since 1990 to present, Dr. McHarg has been a Senior Nursing Educator at Vanier
College in Montreal. Dr. McHarg has a diverse background in nursing, teaching
and psychology with more than thirty years' experience in the field of nursing.
Dr. Linda Sara Snell has served as a Director of the Company since May
1999. Since 1998 to present, she has served as the Director of the Division of
General Internal Medicine at the McGill University Health Center in Montreal.
Since 1990 to present, she has been a Senior Physician at the Royal Victoria
Hospital in Montreal. Since 1989 to present, Dr. Snell has been an Associate
Professor at the Department of Medicine at McGill University in Montreal.
Mr. Richard Borenstein has served as a Director of the Company since
January 2000. He is a business executive with ten years experience in the field
of informatics, telecommunications and international manufacturing. Since 1999
to present, he has served as Senior Vice President of Worldwide Sales at Onesoft
Corporation in McLean, Virginia. From 1997 to 1999, Mr. Borenstein was Vice
President Corporate Sales, North America for Mpact Immedia/Bell Emergis in
Montreal. From 1996 to 1997, he was Director Corporate Sales, North America for
the same company. Between 1993 and 1996, Mr. Borenstein was Partner and Vice
President Sales at Michael Phillips in Montreal.
Ms. Caroline Singleton has served as a Director of the Company since May
2000. Ms. Singleton is also a Director of TouchTunes Music Corporation, Nova
Expertises Solutions, Math Engine Canada and "Centre de Promotion de Logiciels
Quebecois". During her twenty-year career in the field of informatics, she has
developed and managed systems for astrophysics, electrical energy,
telecommunications, and medical and banking technologies. Since 1997 to present
she has served as Vice President Information Technologies and
Telecommunications, at Innovatech Grand Montreal, a public corporation in
Montreal created by the Quebec Government to finance high tech startups. During
the period from 1995 to 1997, Ms. Singleton was President and Senior Consultant
of Tordion Consulting, in Montreal.
Professor Paul D. McNelis has served as a Director of the Company since
October 2000. From 1990 to present, he has been a Professor of Economics at
Georgetown University in Washington D.C. Professor McNelis holds extensive
experience as an advisor on monetary policy to central banks and other
policy-making bodies in the United States as well as many other countries around
the world. He has focused in particular on the macroeconomic aspects of risk in
financial markets and has a broad understanding of ethical issues.
Mr. Louis J. Lombardo has served as a Director of the Company since October
2000. From 1985 to 1998, Mr. Lombardo was Executive Vice President, Client
Service Delivery for American Express Travel Related Services Company in New
York. Since 1998 to present, he has served as President of Lombardo Consulting,
L.P., and is working as a management and operational consultant for American
Express in New York. During his 35 years at American Express, Mr. Lombardo's
responsibilities included international risk management, global fraud, customer
service and cross-selling programs in the U.S.
Significant Employees:
Robert Chafetz, age 44, has served as the Company's Director of Systems
Development since 1998. Mr. Chafetz worked at Metagent Inc. in Laval, Quebec
between September 1996 and 1998. While at Metagent Inc., Mr. Chafetz was the
Informatics Project Leader and Lead Programmer for several projects. Between
September 1993 and August 1996, Mr. Chafetz worked at the Center for Information
Technologies Innovation, Industry Canada in Laval, Quebec as a Researcher in
Performance Support Systems.
Family Relationships:
Gerard Dab is married to Dr. Linda McHarg.
Involvement in Certain Legal Proceedings:
To the best knowledge of the Company, no officer, director, promoter or
control person of our Company has been involved in any legal proceeding that
would be material to an evaluation of the ability or integrity of such person in
this capacity.
<PAGE>
EXECUTIVE COMPENSATION
The following table depicts all-plan and non-plan compensation awarded to,
earned by or paid to the named executive officer of the Company for the period
indicated:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Annual Compensation Long Term Total
Compensation (in Canadian $)
Name and Principal Year Ended Salary Bonus Other Annual Restricted
Position September (in Canadian $) (in Canadian Compensation Stock Award
30, 1999 $) (in Canadian $) (in Canadian $)
(1)
---------------------- ------------ ---------------- --------------- ---------------- ---------------- ---------------
---------------------- ------------ ---------------- --------------- ---------------- ---------------- ---------------
Richard Le Hir 1999 N/A (2) N/A N/A N/A N/A
Director, Senior
Vice President and
Chief Executive
Officer
Gerard Dab 1999 0 0 119,165 0 119,165
Chairman
Arthur Gelston 1999 75,000 0 37,000 0 112,000
Director, President
and Chief Science
Officer
Joseph Mah 1999 N/A (2) N/A N/A N/A N/A
Vice President of
Finance and Chief
Financial Officer
Barry Scharf 1999 N/A (2) N/A N/A N/A N/A
Vice President
Client Services
Robert Cohen 1999 N/A (2) N/A N/A N/A N/A
Vice President Sales
and Marketing
Chafye Nemri Chief 1999 11,667 0 0 0 11,667
Executive Officer (3)
</TABLE>
(1) There were no operations prior to the year ended September 30, 1999.
(2) Richard Le Hir, Joseph Mah, Barry Scharf, and Robert Cohen were hired
subsequent to September 30, 1999.
(3) Chafye Nemri was Chief Executive Officer from August 30, 1999 to
December 7, 1999. He was paid a salary of $29,167 and a severance
salary of $30,000 after September 30, 1999.
Option Grants in Last Fiscal Year:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Name & Principal Year
Position Ended Number of Percentage of Exercise Price Expiration Date
September 30 VisualMED Canada Total Options (Canadian$/Share)
Options Granted Granted to
(1) Employees in
Fiscal Year
-------------------- ------------------ ------------------ ------------------ ---------------------- -----------------
-------------------- ------------------ ------------------ ------------------ ---------------------- -----------------
Gerard Dab 1999 528,000 42.3% 0.50 Feb. 15, 2009
Chairman
Arthur Gelston 1999 528,000 42.3% 0.50 Feb. 15, 2009
President and
Chief Science
Officer
</TABLE>
(1) The options in VisualMED Canada are convertible into options in VisualMED
U.S. The exchange ratio is 0.3 option of VisualMED U.S. for 1 option of
VisualMED Canada.
Employment Agreements:
VisualMED Canada has Employment Agreements with Mr. Gerard Dab, Dr.
Arthur Gelston and Mr. Richard Le Hir. The Executives' Employment Agreements
have a fixed term of seven years, ending March 13, 2007. The Employment
Agreements will be renewed if the parties accept. The annual salary of the
Executives is $180,000, subject to reevaluation twice per year. The Executives
are entitled to bonuses and options conditional to the Company's reaching
certain sales criteria. If the Agreement is terminated by VisualMED Canada prior
to the end of the term, VisualMED Canada shall pay an amount representing the
base salary for the remaining period of the contract, taking into account the
twice per year evaluations.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners Prior to Offering:
As of June 30, 2000 we had 13,330,000 common shares issued and
outstanding. The following table lists the person(s) who, to our knowledge
beneficially owned more than five percent (5%) of our common shares as of June
30, 2000.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
---------------------------- --------------------------------------- ------------------- --------------------
Title of Class Name and Address of Beneficial Owner Amount and Nature Percent of Class
of Beneficial
Owner
---------------------------- --------------------------------------- ------------------- --------------------
---------------------------- --------------------------------------- ------------------- --------------------
Common shares, par value Mr. Richard Le Hir 10,000,000 shares 75.02%
$0.001 8360 Pelletier held under a
Brossard Quebec J4X 1N9 voting trust (1)
Canada
Common shares, par value Mile High Group 1,750,000 13.13%
$0.001 711 Forest Park Drive
Deland, Florida 32720
</TABLE>
(1) The voting trust was established pursuant to a letter agreement (the
"Letter Agreement") between Richard Le Hir and VisualMED Canada, dated
May 9, 2000, whereby Richard Le Hir was appointed as the voting trustee
in respect of these shares. Pursuant to the Letter Agreement, Richard
Le Hir shall hold said shares of the Company for the benefit of all of
the shareholders of VisualMED Canada for the purpose of maintaining
control of the Company until (i) the registration of the Securities
pursuant hereto in favor of the shareholders of VisualMED Canada; and
(ii) the issuance to such shareholders of a number of common shares of
the Company that represents a majority of all of the issued and
outstanding shares of the Company, at which time the shares will be
redeemed by the Company for $100.
<PAGE>
Security Ownership of Certain Beneficial Owners After Offering:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
---------------------------- --------------------------------------- ------------------- --------------------
Title of Class Name and Address of Beneficial Owner Amount and Nature Percent of Class
of Beneficial
Owner
---------------------------- --------------------------------------- ------------------- --------------------
---------------------------- --------------------------------------- ------------------- --------------------
Common shares, par value Mile High Group 1,750,000 7.84%
$0.001 711 Forest Park Drive
Deland, Florida 32720
Common shares, par value Innovatech Grand Montreal 2,511,946 11.25%
$0.001 2020 University
Suite 1527
Montreal Quebec H3A 2A5
Canada
Common shares, par value Mr. Philippe Panzini 1,080,215 4.84%
$0.001 32 rue des Archives
75004 Paris
France
</TABLE>
Security Ownership of Management After Offering:
The following table sets out the number of common shares and vested
options to purchase our common shares which will be beneficially owned by our
directors and executive officers at the conclusion of this offering and after
the redemption of the 10,000,000 common shares currently held by Richard Le Hir.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
---------------------------- --------------------------------------- ------------------- --------------------
Title of Class Name and Address of Beneficial Owner Amount and Nature Percent of Class
of Beneficial
Owner
---------------------------- --------------------------------------- ------------------- --------------------
---------------------------- --------------------------------------- ------------------- --------------------
Common shares, par value Mr. Gerard Dab 6,566,990 (1) 29.41%
$0.001 267 Metcalfe
Westmount Quebec
H3Z 2H6
Canada
Common shares, par value Dr. Arthur Gelston 6,041,640 (2) 27.05%
$0.001 790 Rockland
Outremont Quebec H2V 2Z6
Canada
Common shares, par value Mr. Richard Le Hir 617,572 (3) 2.76%
$0.001 8360 Pelletier
Brossard Quebec J4X 1N9
Canada
Common shares, par value Mr. Joseph Mah 92,357 (4) 0.41%
$0.001 349 Masse
LaSalle Quebec H8P 3P9
Canada
Common shares, par value Mr. Robert Cohen 7,500 (5) 0.03%
$0.001 21567 Coronado Avenue
Boca Raton Florida 33433
Common shares, par value Mr. Barry Scharf 35,357 (6) 0.16%
$0.001 10 Malta
Dollard des Ormeaux Quebec H9B 2J6
Canada
Common shares, par value Dr. Linda McHarg 356,572 1.60%
$0.001 267 Metcalfe
Westmount Quebec
H3Z 2H6
Canada
Common shares, par value Dr. Linda Snell 3,000 0.01%
$0.001 12 Trafalgar Place
Montreal QC H3H 1A9
Canada
Common shares, par value Richard Borenstein 401,406 1.80%
$0.001 240 East 86th Street #11G
New York NY 10028
Common shares, par value Robert Chafetz 153,929 (7) 0.69%
$0.001 1218 Lajoie
Outremont Quebec H2V 1P1
Canada
</TABLE>
(1) Mr. Dab has previously been granted fixed options for 575,000 common
shares of which 359,375 are vested and exercisable. None of the options
have been exercised. Mr. Dab has conditional options that could lead
to ownership of another 125,000 common shares of the Company if certain
conditions are met.
(2) Dr. Gelston has previously been granted fixed options for 575,000
common shares of which 359,375 are vested and exercisable. None of the
options have been exercised. Dr. Gelston has conditional options that
could lead to ownership of another 125,000 common shares of the Company
if certain conditions are met.
(3) Mr. Le Hir has previously been granted fixed options for 420,000 common
shares of which 210,000 are vested and exercisable. Mr. Le Hir has
previously been granted fixed options for 125,000 common shares, all of
which are vested and exercisable upon completion of this registration
statement. None of the options have been exercised. Mr. Le Hir has
conditional options that could lead to ownership of another 249,000
common shares of the Company if certain conditions are met.
(4) Mr. Mah has previously been granted fixed options for 125,000 common
shares, all of which are vested and exercisable upon completion of this
registration statement. None of the options have been exercised.
(5) Mr. Cohen has previously been granted conditional options that could
lead to ownership of 60,000 common shares of the Company if certain
conditions are met.
(6) Mr. Scharf has previously been granted fixed options for 125,000
common shares, all of which are vested and exercisable upon completion
of this registration statement. None of the options have been exercised.
(7) Mr. Robert Chafetz has previously been granted fixed options for
396,000 common shares, all of which are vested and exercisable. None
of the options have been exercised.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than the sale of stock to the Company's founders and officers and
directors, there have been no other related transactions.
SELLING SECURITY HOLDERS
The Securities are being sold by the Selling Security Holders named
below. The table indicates that all the Securities will be available for resale
after the effective date of this Registration Statement. However, any or all of
the Securities listed below may be retained by any of the Selling Security
Holders; therefore, no accurate forecast can be made regarding the number of
Securities that will be held by the Selling Security Holders after the effective
date. The following table sets forth the number of Shares being held of record
or beneficially (to the extent known by the Company) by such Selling Security
Holders, all of which is based upon information currently available to the
Company. The Company will not receive any proceeds from the sale of the
Securities.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
Name Position or Material Amount of Amount of Percentage of
Relationship Common Shares Common Shares Class Owned After
Owned Before Owned After Offering If More
Offering Offering Than 1%
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
Gerard Dab Chairman 6,566,990 6,566,990 29.41%
Arthur Gelston President 6,041,640 6,041,640 27.05%
Robert Cohen VP Sales & Marketing 7,500 7,500
Elaine Rich Gelston Mother of Arthur Gelston 262,680 262,680 1.18%
Irving Gelston Jr. Father of Arthur Gelston 262,680 262,680 1.18%
Philippe Panzini 1,080,215 1,080,215 4.84%
Innovatech Grand Montreal 2,511,946 2,511,946 11.25%
Richard Le Hir CEO 582,850 582,850 2.61%
Gundyco "In Trust" for 34,722 34,722
Richard Le Hir
Robert Chafetz Director of Systems 153,929 153,929
Development
Joseph Mah CFO 92,357 92,357
Barry Scharf VP Client Services 35,357 35,357
Guillaume Metayer Employee 44,734 44,734
Linda McHarg Director 356,572 356,572 1.60%
Richard Borenstein Director 287,100 287,100 1.29%
Jayne Greer Employee 23,679 23,679
Claude Michel Morin 30,000 30,000
Catherine Demars 15,000 15,000
Yonne Rosa 40,020 40,020
Vexpan Enterprises Inc. 4,500 4,500
Marina Mendeleva 10,500 10,500
Fred Berlin 4,500 4,500
Louis Dorion 900 900
Alexei Guevara 1,800 1,800
Linda Snell Director 3,000 3,000
Catherine Anne Kierans 600 600
Louis P. Desmarais 4,500 4,500
Jacques Dubuc Employee 1,500 1,500
Francine Constantineau 1,500 1,500
Allen Huang 600 600
Christiane Jacques Employee 12,153 12,153
Michel Felix Employee 7,293 7,293
Vitaliano Torchia Employee 45,000 45,000
Dino Tagliabracci Employee 12,675 12,675
Catherine Morin Former Employee 8,499 8,499
Cyril Hebuterne Employee 2,778 2,778
Francine Dagenais Former Employee 750 750
Benoit Courchesne Employee 17,594 17,594
Martin Berube Employee 5,208 5,208
Michel Waskiewicz Employee 867 867
ReJeanne Couture 10,416 10,416
Viviane Racicot 6,944 6,944
Pierre Roy 11,100 11,100
Joyce Pickering 3,471 3,471
Kenneth Flegel 437 437
Robert Salasidis 30,000 30,000
Suzanne LeBlanc Sterzi 6,249 6,249
Claudette Dion Prevost 1,736 1,736
Alice Tremblay 1,736 1,736
Louise Craig 1,041 1,041
Francois Bertrand 5,468 5,468
Solomon Aboud 7,535 7,535
Alan Brox 8,681 8,681
Gloria Millett Stattner 17,264 17,264
George Szeben 1,736 1,736
795743 Ontario Limited 3,471 3,471
Dr. Walter Bloom 15,000 15,000
Michel Lemieux 3,000 3,000
Robert Dion 521 521
Hubert Ethier 8,681 8,681
Denyse Anderson 3,472 3,472
Francoise Couture 30,000 30,000
Gaarkeuken
Patrica Dawson 7,292 7,292
Claude Richard 25,233 25,233
Beverly Rowat 347 347
Morris Krymalowski 37,500 37,500
George Burger 37,239 37,239
Claret Asset Management 75,000 75,000
Fond Action CSN 41,250 41,250
Gerard Bozet 23,100 23,100
Sandro Spassatempo Employee 1,177 1,177
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
TOTAL: 19,002,785 19,002,785
--------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
DESCRIPTION OF SECURITIES
The following description is a summary and is qualified in its entirety
by the provisions of our Articles of Incorporation and by-laws, copies of which
have been filed as exhibits to the Registration Statement.
Common Stock:
Our Articles of Incorporation authorize the issuance of up to 50,000,000 common
shares with a par value of $0.001 per share. As of June 30, 2000, there were
13,330,000 common shares issued and outstanding. All outstanding common shares
are fully paid and non-assessable.
Liquidation Rights:
Upon our liquidation or dissolution, the holder of each outstanding
common share will be entitled to share on a pro rata basis our assets which are
legally available for distribution to shareholders, after the payment of all
debts and other liabilities.
Dividend Rights:
There are no limitations or restrictions upon the rights of our Board
of Directors to declare dividends. Dividends may be paid at any time in cash,
property or our shares, except when we are insolvent or when the payment thereof
would render us insolvent subject to the laws of the State of Nevada. We have
not paid dividends to date and it is not anticipated that any dividends will be
paid in the foreseeable future.
Voting Rights:
Holders of our common shares are entitled to cast one vote for each
share held at all shareholders' meetings for all purposes.
Other Rights:
Our common shares are not redeemable nor are they convertible. Further,
they carry no preemptive or other rights to subscribe to or purchase additional
common shares in the event of an offering of common shares by us. There are no
other material rights attaching to our common shares, which are not herein
described. There is no provision in our Articles of Incorporation nor our
by-laws that would delay, defer or prevent a change of our control. We have not
issued any preferred stock or debt securities.
Shares Eligible for Future Rights:
The 19,002,785 Shares registered in this offering will be freely
tradable without restrictions under the Securities Act, except for any shares
held by our "affiliates", which will be subject to the resale limitations of
Rule 144 under the Securities Act.
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 subject to certain limitations on manner of sale,
notice requirements and availability of current public information about us.
Non-affiliates who have held their restricted shares for one year 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 certain 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.
<PAGE>
PLAN OF DISTRIBUTION
The Selling Security Holders or their transferees may sell the
Securities offered by this Registration Statement from time to time. To our best
knowledge, no underwriting arrangements 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 ordinary broker's transactions, privately
negotiated transactions or through sales to one or more dealers for resale of
such Securities as principals at prevailing market prices at the time of sale
and prices related to prevailing market prices or negotiated prices.
The Selling Security Holders may pledge all or a portion of the
Securities owned as collateral for margin accounts or in loan transactions. Such
Securities may be resold pursuant to the terms of such pledges, accounts or loan
transactions. Upon default by such Selling Security Holders, the pledgee in such
loan transactions 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 hereunder. 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 transfer
without payment of consideration. Upon any such transfer the transferee would
have the same rights of sale as such Selling Security Holders under this
Prospectus.
Finally, 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. The commissions or discounts and other
compensation paid to such persons may be regarded as underwriters' compensation.
There can be no assurances that the Selling Security Holders will sell
any or all of the Securities. In order to comply with certain state securities
laws the Securities will be sold in such jurisdictions only through registered
or licensed brokers or dealers. In certain states the Securities may not be sold
unless such 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 (the "Exchange Act"), any person engaged in a distribution of
the Securities may not simultaneously engage in market making activities with
respect to such Securities for a period of one or five business days prior to
the commencement of such distribution.
In addition to, and without limiting the foregoing, each of the Selling
Security Holders and any other person participating in a distribution will be
subject to the applicable provisions of the Exchange Act and the rules and
regulations there under, including, without limitation, Regulation M, which
provisions may limit the timing of purchases and sales of any of the Securities
by the Selling Security Holders or any such other person.
All of the foregoing may affect the marketability of the Securities.
Pursuant to an understanding we have with the Selling Securities Holders, we
will pay the entire 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).
<PAGE>
FINANCIAL STATEMENTS
Statements included in this report that do not relate to present or
historical conditions are "forward looking statements" within the meaning of the
Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995
(the "1995 Reform Act"). Additional oral or written forward-looking statements
may be made by the Company from time to time and such statements may be included
in documents other than this Report that are filed with the Commission. Such
forward looking statements involve risks and uncertainties that could cause
results or outcomes to differ materially from those expressed in such forward
looking statements. Forward looking statements in this report and elsewhere may
include, without limitation, statements relating to our plans, strategies,
objectives, expectations, intentions and adequacy of resources and are intended
to be made pursuant to the Safe Harbor provisions of the 1995 Reform Act
Introduction.
<PAGE>
VisualMed Clinical Systems CORP.
Financial information
<PAGE>
Table of contents
--------------------------------------------------------------------------------
UNAUDITED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS OF
VISUALMED CLINICAL SYSTEMS CORP.
Consolidated statements of loss - nine months ended June 30, 2000............F-1
Consolidated balance sheet - September 30, 2000..............................F-2
Notes to the consolidated financial statements...............................F-4
AUDITED FINANCIAL STATEMENTS OF
VisualMed Clinical Systems INC.
Independent auditors' report.................................................F-8
Statements of loss...........................................................F-9
Balance sheets..............................................................F-10
Statements of shareholders' equity..........................................F-11
Statements of cash flows....................................................F-12
Notes to the financial statements...........................................F-13
<PAGE>
F-1
<TABLE>
<CAPTION>
VisualMed Clinical Systems CORP.
(a development stage company)
Consolidated statements of loss
(in Canadian dollars)
--------------------------------------------------------------------------------
(unaudited)
Cumulative
period from
December 1,
1997
(date of
Three-month period Nine-month period inception) to
ended June 30, ended June 30, June 30,
-------------------------- --------------------------- -------------
<S> <C> <C> <C> <C> <C>
2000 1999 2000 1999 2000
------------------------------------------------------------------------------------------------------------------------------------
$ $ $ $ $
Expenses
Research and
development 1,204,580 132,183 1,798,193 265,382 2,378,095
General and administrative 1,444,911 80,329 3,396,097 197,991 3,912,489
Interest on loans 2,401 3,115 44,076 12,272 64,339
Depreciation 51,005 14,271 100,626 22,920 135,011
------------------------------------------------------------------------------------------------------------------------------------
Loss before income taxes 2,702,897 229,898 5,338,992 498,565 6,489,934
Income tax recovery (358,246) (53,903) (608,000) (97,753) (819,983)
------------------------------------------------------------------------------------------------------------------------------------
Net loss 2,344,651 175,995 4,730,992 400,812 5,669,951
------------------------------------------------------------------------------------------------------------------------------------
Basic and diluted net loss
per common share 0.18 0.04 0.35 0.08
Weighted average number of
common shares outstanding 13,330,000 5,025,000 13,348,888 5,025,000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VisualMed Clinical Systems CORP.
(a development stage company)
Consolidated balance sheets
as at June 30, 2000 and September 30, 1999
(in Canadian dollars)
------------------------------------------------------------------------------------------------------------------------------------
(unaudited)
June 30 September 30
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
2000 1999
$ $
Assets
Current assets
Cash and cash equivalents 892 -
Research and development tax credits receivable 655,821 211,983
Goods and services taxes receivable 133,626 70,689
Advances to employees 50,522 -
Subsidies and other receivables 113,346 -
Prepaid expenses 16,277 500
------------------------------------------------------------------------------------------------------------------------------------
970,484 283,172
Fixed assets 555,835 176,306
------------------------------------------------------------------------------------------------------------------------------------
1,526,319 459,478
------------------------------------------------------------------------------------------------------------------------------------
Liabilities
Current liabilities
Bank indebtedness 25,047 30,491
Accounts payable and accrued liabilities 746,184 303,460
Notes payable (Note 4) 465,600 730,000
Advances payable (Note 5) 1,651,583 -
Convertible debenture 50,000 -
Accounts payable to shareholders - 35,386
Loans payable to shareholders - 149,000
Deposit on share subscription - 150,000
------------------------------------------------------------------------------------------------------------------------------------
2,938,414 1,398,337
Loan payable (Note 6) 211,364 -
Non-controlling interest (Note 7) 3,979,191 -
------------------------------------------------------------------------------------------------------------------------------------
7,128,969 1,398,337
------------------------------------------------------------------------------------------------------------------------------------
Shareholders' deficiency
Common stock 22,246 7,540
Additional paid-in capital (Note 8) 45,055 (7,440)
Deficit (5,669,951) (938,959)
------------------------------------------------------------------------------------------------------------------------------------
Total shareholders' deficiency (5,602,650) (938,859)
------------------------------------------------------------------------------------------------------------------------------------
1,526,319 459,478
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
VisualMed Clinical Systems CORP.
(a development stage company)
Consolidated statements of cash flows
(in Canadian dollars)
------------------------------------------------------------------------------------------------------------------------------------
(unaudited)
Cumulative
period from
December 1, 1997
(date of inception)
Nine months ended June 30, to June 30,
-------------------------------
2000 1999 2000
<S> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
$ $ $
Cash flows from operating activities
Net loss (4,730,992) (400,812) (5,669,951)
Adjustment to reconcile net loss to cash flows
from operating activities
Depreciation 100,626 22,920 135,011
Shares issued for services rendered 106,488 - 106,488
Stock compensation expense (Note 8) 632,495 - 632,495
Changes in non-cash operating working capital items
Increase in research and development tax credits
receivable (443,838) (97,753) (655,821)
Increase in prepaid expenses (15,777) - (16,277)
(Increase) in sales taxes receivable (62,937) (20,065) (133,626)
Increase in advances to employees (50,522) - (50,522)
Increase in accounts payable
and accrued liabilities 442,724 10,929 746,184
(Decrease) in accounts payable to shareholders (35,386) - -
Increase in income taxes payable - 13,550 -
Subsidies and other receivables (113,346) - (113,346)
------------------------------------------------------------------------------------------------------------------------------------
(4,170,465) (471,231) (5,019,365)
------------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
(Decrease) increase in bank indebtedness (5,444) 3,092 25,047
Issuance of notes payable 715,600 260,000 1,445,600
Repayment of notes payable (980,000) - (980,000)
(Decrease) increase in loans payable to shareholders (149,000) 149,000 -
Increase in advances payable 1,651,583 - 1,651,583
Payments for repurchase of shares (Note 8) (580,000) - (580,000)
Issuance of convertible debenture 50,000 - 50,000
Issuance of convertible notes payable 400,000 - 400,000
Issuance of loan payable 211,364 - 211,364
Deposit on share subscription - 150,000 150,000
Issuance of shares 14,706 - 14,906
Increase in non-controlling interest 3,322,703 - 3,322,603
------------------------------------------------------------------------------------------------------------------------------------
4,651,512 562,092 5,711,103
------------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Additions to fixed assets (480,155) (90,961) (690,846)
------------------------------------------------------------------------------------------------------------------------------------
Change in cash and cash equivalents 892 (100) 892
Cash and cash equivalents, beginning of period - 100 -
------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period 892 - 892
------------------------------------------------------------------------------------------------------------------------------------
See Note 9 for supplemental cash flow information.
</TABLE>
See accompanying notes to the consolidated financial statements
<PAGE>
VisualMed Clinical Systems CORP.
(a development stage company)
Notes to the consolidated financial statements
(in Canadian dollars)
--------------------------------------------------------------------------------
(unaudited)
--------------------------------------------------------------------------------
F-4
1. Basis of presentation
On May 9, 2000, VisualMed Clinical Systems Corp. (formerly Cherry Tree
Capital Corp.) (the "Company"), VisualMed Clinical Systems Inc.
("VisualMed Canada") and its shareholders, entered into a series of
agreements (the "transaction") whereby the shareholders of VisualMed
Canada acquired control of the Company by way of a reverse acquisition.
Prior to May 9, 2000, the Company was a non-operating shell corporation.
The transaction involves a restructuring of the share capital of
VisualMed Canada whereby existing common shares have, effective May 9,
2000, been converted into exchangeable preferred shares (the "preferred
shares") which are exchangeable into common shares of the Company.
Concurrently therewith, VisualMed Canada issued 100 common shares to the
Company for a nominal amount. The preferred shareholders will have a
controlling interest in the Company upon completion of the transaction
and following the exchange of their shares for common shares of the
Company, at the option of the holders, and, in a certain instances, at
the option of the Company, on the basis of 0.3 of a common share of the
Company for each preferred share of VisualMed Canada. Upon completion of
the transaction and exchange of the shares, the shareholders of
VisualMed Canada will own approximately 85% of the outstanding common
shares of the Company.
For accounting purposes, VisualMed Canada will be treated as the
acquiring entity, and therefore, the transaction will be accounted for
as if VisualMed Canada acquired the Company and then reorganized its
share capital. As a result, these consolidated financial statements
include the operations of the Company since May 9, 2000, with the
operations of VisualMed Canada presented as comparative figures for the
three and nine months ended June 30, 1999. The Company was non-operating
prior to May 9, 2000, and incurred operating expenses of US$800 and
US$1,040 in the period from October 1, 1999 to May 9, 2000, and the year
ended September 30, 1999 respectively. At May 9, 2000, the Company had
US$10,000 in assets, liabilities of US$1,840 and stockholders' equity of
US$8,160.
2. Interim financial information
The financial statements of the Company as at June 30, 2000 and for the
three and nine month periods ended June 30, 2000 and 1999 and the
related footnote information are unaudited. All adjustments (consisting
only of normal recurring adjustments), which, in the opinion of
management, are necessary for a fair presentation, have been made. The
results for the interim period ended June 30, 2000, are not necessarily
indicative of the results to be expected for the full year.
3. Basic and diluted net loss per share
The Company follows the provisions of SFAS 128, "Earnings Per Share".
Basic net loss per common share is based on the weighted average number
of shares outstanding during each period. Stock options and the
convertible debenture are not included in the computation of the
weighted average number of shares outstanding for dilutive net loss per
common share during the period as the effect would be antidilutive.
4. Notes payable
Notes payable issued during the quarter all bear interest at 7.5% and
both principal and interest are due upon maturity as follows:
Amount Date of maturity
------ ----------------
$
291,000 July 29, 2000
116,400 August 6, 2000
58,200 August 11, 2000
---------------
465,600
5. Advances payable
Advances payable consist of amounts from investors who want to invest in
VisualMed Clinical Systems Corp. upon conclusion of the transaction
described in Note 1 and who have deposited their money with the Company
until that time.
Advances payable are non-interest bearing, with no fixed terms of
repayment and are payable upon demand.
6. Loan payable
The Company has entered into an agreement with an agency of the
Government of Canada under which it can borrow up to $494,500 related to
specified research expenditures made in the period from February 1, 2000
to December 31, 2000. The loan is non-interest bearing and has the
following terms of repayment.
a) On each October 1, from 2002 to 2006 inclusively, a royalty is due
equal to 2% of the Company's gross revenues for the preceding year.
<PAGE>
F-6
6. Loan payable (continued)
b) If, after October 1, 2006, the total amount repaid is less than the
initial borrowings, the Company will continue to repay on the same
basis until the earlier of the full repayment of the initial
borrowings or October 1, 2012 and, in any event, repayment is not
to exceed 150% of the initial borrowings.
As at June 30, 2000, $211,364 had been drawn under this agreement.
7. Non-controlling interest
As described in Note 1, the former shareholders of VisualMed Canada have
the right to exchange their preferred shares of VisualMed Canada into
19,002,785 common shares of the Company. As at June 30, 2000, none of
these preferred shares had been exchanged.
8. Shareholders' deficiency
Prior to May 9, 2000, the Company cancelled 1,695,000 common shares
bringing the number issued and outstanding as at June 30, 2000 down to
13,330,000.
Compensation expense of $632,495 has been accrued for services rendered
during the nine-month period ended June 30, 2000 that will be settled
upon completion of the transaction described in Note 1.
In order to conclude the transaction described in Note 1, a group with a
controlling interest in the Company prior to the transaction agreed to
have the Company repurchase a portion of its shares for US$400,000
coincidentally with the reissuance of such shares to new investors who
wish to invest as described in Note 5. This amount has been recorded as
a reduction of additional paid-in capital.
9. Supplemental cash flow information
<TABLE>
<CAPTION>
Cumulative
period from
December 1, 1997
(date of inception)
Nine months ended June 30, to June 30,
-----------------------------
2000 1999 2000
<S> <C> <C> <C>
---------------------------------------------------------
$ $ $
Non-cash financing activities
Increase in non-controlling interest
upon conversion of note payable 400,000 - 400,000
Increase in non-controlling interest
upon conversion of deposit on share
subscription 150,000 - 150,000
Cash paid (recovered) during the year
Interest 45,772 3,505 49,277
Income taxes (156,163) - (156,163)
</TABLE>
<PAGE>
F-7
10. Subsequent event
On October 19, 2000, the Company signed a memorandum of understanding
with a venture capital firm to create a new entity that will market and
distribute its products in Spanish speaking America and the Caribbean.
The new entity will be 51% owned by the Company and 49% by the venture
capital firm. The venture capital firm will invest US$3 million upon
beginning of the operation, which is expected to be no later than
January 1, 2001. The Company will grant to the new entity an exclusive
right to license its products as well as provide technical training and
support as well as marketing advice and materials.
<PAGE>
F-8
Deloitte & Touche LLP
Chartered Accountants
1 Place Ville-Marie Telephone: (514) 393-7115
Suite 3000 Facsimile: (514) 390-4111
Montreal QC H3B 4T9
Independent auditors' report
To the Directors of
VisualMED Clinical Systems Inc.
(a development stage company)
We have audited the balance sheets of VisualMED Clinical Systems Inc. (a
development stage company) as at March 31, 2000 and September 30, 1999 and the
related statements of loss, shareholders' equity and cash flows for the
six-month and twelve-month periods then ended, respectively, and for the period
from December 1, 1997 (date of inception) to 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform an audit
to obtain reasonable assurance 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, these financial statements present fairly, in all material
respects, the financial position of the Company as at March 31, 2000 and
September 30, 1999 and the results of its operations and its cash flows for the
six-month and twelve-month periods then ended, respectively, and for the period
from December 1, 1997 (date of inception) to March 31, 2000 in conformity with
accounting principles generally accepted in the United States.
The Company is in the development stage at March 31, 2000. As discussed in Note
1 to the financial statements, successful completion of the Company's
development program and, ultimately, the attainment of profitable operations is
dependent upon future events, including achieving a level of sales adequate to
support the Company's cost structure.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Chartered Accountants
April 20, 2000
<PAGE>
<TABLE>
<CAPTION>
VisualMed Clinical Systems Inc.
(a development stage company)
Statements of loss
(in Canadian dollars)
------------------------------------------------------------------------------------------------------------------------------------
Cumulative
period from
Six-month Six month December 1, 1997
Period ended Year ended Period ended (date of inception)
March 31, September 30, March 31, to March 31,
2000 1999 1999 2000
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
$ $ $ $
(unaudited)
Expenses
Research and
development 593,613 579,902 133,199 1,173,515
General and administrative 1,951,366 516,392 117,662 2,467,758
Interest on loans 41,675 20,263 9,157 61,938
Depreciation 49,621 34,385 8,649 84,006
------------------------------------------------------------------------------------------------------------------------------------
Loss before income taxes 2,636,275 1,150,942 268,667 3,787,217
Income tax recovery (249,754) (211,983) (43,850) (461,737)
------------------------------------------------------------------------------------------------------------------------------------
Net loss 2,386,521 938,959 224,817 3,325,480
------------------------------------------------------------------------------------------------------------------------------------
Basic and diluted net loss
per common share 0.05 0.02 0.01
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VisualMed Clinical Systems Inc.
(a development stage company)
Balance sheets
as at March 31, 2000 and September 30, 1999
(in Canadian dollars)
------------------------------------------------------------------------------------------------------------------------------------
March 31 September 30
<S> <C> <C>
------------------------------------------------------------------------------------------------------------------------------------
2000 1999
$ $
Assets
Current assets
Cash and cash equivalents 1,207,062 -
Research and development tax credits receivable 305,574 211,983
Goods and services taxes receivable 63,666 70,689
Advances to employees (Note 3) 174,744 -
Prepaid expenses 49,945 500
------------------------------------------------------------------------------------------------------------------------------------
1,800,991 283,172
Fixed assets (Note 4) 309,622 176,306
------------------------------------------------------------------------------------------------------------------------------------
2,110,613 459,478
------------------------------------------------------------------------------------------------------------------------------------
Liabilities
Current liabilities
Bank indebtedness - 30,491
Accounts payable and accrued liabilities 298,631 303,460
Convertible debenture (Note 5) 50,000 -
Advances payable (Note 6) 1,644,188 -
Accounts payable to shareholders - 35,386
Notes payable (Note 7) - 730,000
Loans payable to shareholders (Note 8) - 149,000
Deposit on share subscription - 150,000
------------------------------------------------------------------------------------------------------------------------------------
1,992,819 1,398,337
------------------------------------------------------------------------------------------------------------------------------------
Shareholders' equity (deficiency)
Common stock subscribed 3,957,195 100
Less subscriptions receivable (513,921) -
------------------------------------------------------------------------------------------------------------------------------------
Common stock, net (Note 9) 3,443,274 100
Deficit (3,325,480) (938,959)
------------------------------------------------------------------------------------------------------------------------------------
Total shareholder's equity 117,794 (938,859)
------------------------------------------------------------------------------------------------------------------------------------
2,110,613 459,478
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
VisualMed Clinical Systems Inc.
(a development stage company)
Statements of shareholders' equity
(in Canadian dollars, except for share amounts)
------------------------------------------------------------------------------------------------------------------------------------
Common Stock Accumulated
Shares* Amount Deficit Total
------------ ------------- ---------------- ------------
<S> <C> <C> <C> <C>
$ $ $
Balance - December 1, 1997
(Date of inception) - - - -
Common stock issued July 6, 1998
For cash 43,780,000 100 - 100
------------------------------------------------------------------------------------------------------------------------------------
Balance - September 30,1998 43,780,000 100 - 100
Net loss - - (938,959) (938,959)
------------------------------------------------------------------------------------------------------------------------------------
Balance - September 30, 1999 43,780,000 100 (938,959) (938,859)
Common stock issued January 15, 2000
For services rendered 350,000 29,700 - 29,700
For cash 4,363,073 370,200 - 370,200
Under employment agreements 905,000 76,788 - 76,788
Common stock issued March 2, 2000
For cash 1,767,857 150,000 - 150,000
For deposit on share
subscription 5,303,572 450,000 - 450,000
Common stock issued upon
conversion of notes payable
on March 2, 2000 4,714,286 400,000 - 400,000
Common stock issued March 14, 2000
For cash 1,592,380 1,375,816 - 1,375,816
For cash not yet received 7,431 6,421 - 6,421
Common stock issued March 23, 2000
For cash 42,445 61,545 - 61,545
Common stock issued March 27, 2000
For cash 137,500 279,125 - 279,125
Common stock issued March 29, 2000
For cash not yet received 250,000 507,500 - 507,500
Common stock issued March 30, 2000
For cash 123,153 250,000 - 250,000
------------------------------------------------------------------------------------------------------------------------------------
63,336,697 3,957,195 (938,959) 3,018,236
Less subscriptions receivable (257,431) (513,921) - (513,921)
Net loss - - (2,386,521) (2,386,521)
------------------------------------------------------------------------------------------------------------------------------------
Balance March 31, 2000 63,079,266 3,443,274 (3,325,480) 117,794
------------------------------------------------------------------------------------------------------------------------------------
* Prior period share amounts restated to reflect a share split of 437,800-for-1 on January 14, 2000
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
VisualMed Clinical Systems Inc.
(a development stage company)
Statements of cash flows
(in Canadian dollars)
------------------------------------------------------------------------------------------------------------------------------------
Cumulative
period from
Six-month Six month December 1, 1997
Period ended Year ended Period ended (date of inception)
March 31, September 30, March 31, to March 31,
2000 1999 1999 2000
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ $ $ $
(unaudited)
Cash flows from
operating activities
Net loss (2,386,521) (938,959) (224,817) (3,325,480)
Adjustment to reconcile
net loss to cash flows
from operating activities
Depreciation 49,621 34,385 8,649 84,006
Shares issued for
services rendered 106,488 - - 106,488
Changes in non-cash
operating working
capital items
Increase in research
and development
tax credits
receivable (93,591) (211,983) (43,850) (305,574)
Increase in prepaid
expenses (49,445) (500) - (49,945)
Decrease (increase)
in sales taxes
receivable 7,023 (70,689) (16,160) (63,666)
Increase in advances
to employees (174,744) - - (174,744)
(Decrease) increase
in accounts
payable and
accrued liabilities (4,829) 303,460 - 298,631
(Decrease) increase
in accounts payable
to shareholders (35,386) 35,386 - -
------------------------------------------------------------------------------------------------------------------------------------
(2,581,384) (848,900) (276,178) (3,430,284)
------------------------------------------------------------------------------------------------------------------------------------
Cash flows from
financing activities
(Decrease) increase in
bank indebtedness (30,491) 30,491 30,071 -
Issuance of notes payable 250,000 730,000 - 980,000
Repayment of notes payable (980,000) - - (980,000)
(Decrease) increase in loans
payable to shareholders (149,000) 149,000 149,000 -
Issuance of convertible
debenture 50,000 - - 50,000
Issuance of convertible
notes payable 400,000 - - 400,000
Deposit on share
subscription - 150,000 150,000 150,000
Issuance of shares 2,786,686 - - 2,786,786
Increase in advances
payable 1,644,188 - - 1,644,188
------------------------------------------------------------------------------------------------------------------------------------
3,971,383 1,059,491 329,071 5,030,974
------------------------------------------------------------------------------------------------------------------------------------
Cash flows from
investing activities
Additions to fixed assets (182,937) (210,691) (52,993) (393,628)
------------------------------------------------------------------------------------------------------------------------------------
Change in cash and cash
equivalents 1,207,062 (100) (100) 1,207,062
Cash and cash equivalents,
beginning of period - 100 100 -
------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents,
end of period 1,207,062 - - 1,207,062
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Note 9 for supplemental cash flow information
See accompanying notes to financial statements
<PAGE>
VisualMed Clinical Systems CORP.
(a development stage company)
Notes to the consolidated financial statements
(in Canadian dollars)
--------------------------------------------------------------------------------
(unaudited)
--------------------------------------------------------------------------------
1. Description of business
On December 1, 1997 (date of inception), VisualMED Clinical Systems Inc.
(the "Company" or "VisualMED") was incorporated under the name 3440231
Canada Inc. under the Canada Business Corporations Act. Effective June
30, 1998, the Company changed its name to Systemes Cliniques VisualMED
Inc. / VisualMED Clinical Systems Inc. On October 1, 1998, the Company
began its activities. As at March 31, 2000, the Company was still in the
development stage. The Company will not complete its development program
until the software under development has been completed and tested and
the necessary financing to perform these activities is obtained. The
Company conceives and develops software solutions targeting clinical
medicine and related areas of the healthcare market.
2. Significant accounting policies
These financial statements have been prepared in accordance with
accounting principles generally accepted in the United States.
Use of estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States require management to
make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses, and disclosure of contingent
liabilities in these financial statements. Actual results could differ
from those estimates.
Significant areas requiring the use of estimates and assumptions relate
to the assessment of the useful life of assets for purposes of
depreciation and amortization and their net realizable values; the
recoverability of research and development tax credits receivable; and
the assessment of the technological feasibility of the Company's
software under development.
Unaudited interim information
The financial information with respect to the six-month period ended
March 31, 1999 is unaudited. In the opinion of management, such
information contains all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the results
of such period.
Fixed assets
Fixed assets are recorded at cost and are depreciated over their
estimated useful lives using the straight-line method over the following
periods:
Computer equipment 3 years
Software 3 years
Furniture and fixtures 5 years
Research and development
Research and development costs are charged to expenses when incurred.
2. Significant accounting policies (continued)
Software under development
In accordance with Statement of Financial Accounting Standards ("SFAS")
86, "Accounting for the Costs of Computer Software to be Sold, Leased,
or Otherwise Marketed", costs related to the creation of software are to
be expensed as incurred as research and development until technological
feasibility has been established for the product. As at March 31, 2000,
the technological feasibility of the Company's software under
development had not been established.
Costs of start-up activities
The Company has adopted Statement of Position ("SOP") 98-5,"Reporting on
the Costs of Start-Up Activities," issued by the American Institute of
Certified Public Accountants' Accounting Standards Executive Committee.
In accordance with this standard, the costs of start-up activities and
organization costs are expensed as incurred.
Income taxes
The Company accounts for income taxes in accordance SFAS 109,
"Accounting for Income Taxes". The provision for income taxes consists
of tax credits related to research and development.
Comprehensive income
The Company has adopted SFAS 130, "Reporting Comprehensive Income".
There are no differences between the Company's net earnings as reported
and its comprehensive income as defined by SFAS 130. Accordingly, a
separate statement of comprehensive income has not been presented.
Cash and cash equivalents
The Company considers investments in highly-liquid investment
instruments with maturities of 90 days or less at the date of purchase
to be cash equivalents. The carrying amount reported in the balance
sheets for cash and cash equivalents approximates their fair value. Cash
equivalents consist principally of investments in certificates of
deposit with financial institutions.
Derivative instruments and hedging activities
In June 1998, the Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities," which
will be effective for the Company's 2001 fiscal year. Under the new
standard, companies will be required to record derivatives on the
balance sheet as assets or liabilities measured at fair value. For those
derivatives representing effective hedges of risks and exposures,
unrealized gains or losses resulting from changes in the fair values
will be presented as a component of comprehensive income as defined by
SFAS 130. The Company currently does not use any derivative instruments.
Management is currently evaluating the expected impact of implementing
this policy.
2. Significant accounting policies (continued)
Basic and diluted net loss per share
The Company follows the provisions of SFAS 128, "Earnings Per Share".
Basic net loss per common share is based on the weighted average number
of shares outstanding during each period. Stock options and the
convertible debenture are not included in the computation of the
weighted average number of shares outstanding for dilutive net loss per
common share during the period as the effect would be antidilutive. The
weighted average number of shares outstanding for the six-month period
ended March 31, 2000 was 48,137,753 (43,780,000 for the year ended
September 30, 1999, and for the six-month period ended March 31, 1999).
3. Advances to employees
The advances to employees are non-interest bearing with no fixed terms
of repayment, however they are short-term in nature.
4. Fixed assets
<TABLE>
<CAPTION>
March 31, 2000
Accumulated Net Book
Cost Depreciation Value
---------------- ----------------- -----------------
<S> <C> <C> <C>
$ $ $
Computer equipment 228,692 49,857 178,835
Software 112,371 29,930 82,441
Furniture and fixtures 52,565 4,219 48,346
------------------------------------------------------------------------------------------------------------------------------------
393,628 84,006 309,622
------------------------------------------------------------------------------------------------------------------------------------
September 30, 1999
------------------------------------------------------------
Accumulated Net Book
Cost Depreciation Value
---------------- ------------ -----------------
$ $ $
Computer equipment 118,152 19,692 98,460
Software 81,587 13,598 67,989
Furniture and fixtures 10,952 1,095 9,857
------------------------------------------------------------------------------------------------------------------------------------
210,691 34,385 176,306
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5. Convertible debenture
The debenture bears interest at 12% and is due March 3, 2001. The
debenture is convertible at the option of the holder into common shares
at the lesser of $7 US or the share subscription price of the initial
public offering of the Company.
6. Advances payable
Advances payable consist of amounts from investors who want to invest in
VisualMed Corp. upon conclusion of the transaction described in Note 10
and who have deposited their money with the Company until that time.
Advances payable are non-interest bearing, with no fixed terms of
repayment and are payable upon demand.
7. Notes payable
The notes payable bore interest at 8%. In documents dated December 14,
1999 and January 21, 2000, the Company completed an agreement with the
holders of these notes whereby the Company had until March 31, 2000 to
repay the full amount of the notes plus accrued interest or the Company
would have been required to convert the notes into 26,268,000 common
shares of the Company. The face value of these notes as at September 30,
1999 was $730,000 and had increased to $980,000 by December 14, 1999.
The amounts due were fully repaid in March 2000.
8. Loans payable to shareholders
The original terms of the loans payable to shareholders were that they
bore interest at the US prime rate plus 5% and were due October 21,
1999. Effective April 22, 1999, the loans became non-interest bearing,
without fixed terms of repayment. They were repaid during the period
ended March 31, 2000.
9. Capital stock
Authorized
An unlimited number of common shares
Class A shares, voting and participating
Class B shares, voting, participating and convertible at the
option of the holder on a one-for-one basis into Class E shares
Class C shares, voting, non-participating, redeemable
automatically upon death of the holder at the amount of the
paid-up capital
Class D shares, voting, with a preferential non-cumulative annual
dividend equal to the bank's prime commercial lending rate less
1%, retractable at the amount of paid-up capital
Class E shares, non-voting, with a preferential and
non-cumulative monthly dividend equal to 1% multiplied by the
redemption value, retractable at the fair market value of the
Class B shares at the time of their conversion
9. Capital stock (continued)
Authorized (continued)
An unlimited number of common shares (continued)
Class F shares, non-voting, with a preferential and
non-cumulative monthly dividend equal to 1% multiplied by the
redemption value, retractable at the fair market value of the
consideration received at the time of their issuance
Class G shares, non-voting, with a preferential and
non-cumulative annual dividend equal to the bank's prime
commercial lending rate plus 1% multiplied by the redemption
value, retractable at the fair market value of the consideration
received at the time of their issuance
Class H shares, non-voting, with a preferential and
non-cumulative annual dividend equal to 8% multiplied by the
amount of paid-up capital, retractable at the amount of paid-up
capital
Class I shares, non-voting, with a preferential and
non-cumulative annual dividend equal to 8% multiplied by the
amount of paid-up capital, redeemable at the amount of paid-up
capital
<TABLE>
<CAPTION>
March 31, September 30,
2000 1999
--------------------------------
<S> <C> <C> <C>
$ $
Subscribed
63,079,266 Class A shares
------------------------------------------------------------------------------------------------------------------------------------
(43,780,000 as at
------------------------------------------------------------------------------------------------------------------------------------
September 30, 1999, post split) 3,443,274 100
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
On July 6, 1998, the Company issued 100 Class A shares for a cash
consideration of $100.
On January 14, 2000, the board of directors approved a share split of
437,800-for-1 for all Class A shares issued and outstanding. Accordingly
all share and per share amounts have been retroactively restated to
reflect the stock split.
On January 15, 2000, the following share issuances were approved under
resolutions of the board of directors: the issuance of 350,000 Class A
shares to third party investors in return for services rendered at a
stated capital amount of $29,700 ($0.085 per share), the issuance of
4,363,073 Class A shares to investors, directors and employees for a
cash consideration of $370,200 ($0.085 per share), and the issuance of
905,000 Class A shares to employees in virtue of employment agreements
at a stated capital amount of $76,788 ($0.085 per share).
The shares issued in virtue of employment contracts were valued at the
fair value of the shares of the Company as at the dates on which the
employment contracts were entered. The shares issued in return for
services rendered were valued at the fair value of the shares of the
Company as at the date the board resolved to issue such shares. The fair
value of shares is determined by the price used in negotiations or
actual transactions concluded with third party investors. The same basis
was used for the issuance of shares to directors and employees.
9. Capital stock (continued)
On March 2, 2000, the Company issued 7,071,429 Class A shares to
investors for a cash consideration of $600,000 ($0.085 per share),
including the $150,000 deposit on share subscription existing as at
September 30, 1999, on the basis of the fair value of the shares at the
time of the actual investment of the funds or the date of the signing of
investment documents.
On March 2, 2000, the Company issued 4,714,286 Class A shares to
investors upon conversion of $400,000 of notes payable issued in
November and December 1999 at $0.085 per share.
On March 14, 2000, the Company issued 1,599,811 Class A shares to
investors and employees for a cash consideration of $1,382,237 ($0.864
per share) of which $6,421 had not been received as at March 31, 2000.
On March 23, 2000, the Company issued 42,445 Class A shares to investors
for a cash consideration of $61,545 ($1.45 per share).
On March 27, 2000, the Company issued 137,500 Class A shares to an
investor for a cash consideration of $279,125 ($2.03 per share).
On March 29, 2000, the Company issued 250,000 Class A shares to an
investor for which cash consideration of $507,500 ($2.03 per share) had
not been received as at March 31, 2000.
On March 30, 2000, the Company issued 123,153 Class A shares to an
investor for a cash consideration of $250,000 ($2.03 per share).
Stock option plan
The Company continues to follow Accounting Principles Board Option
No. 25 "Accounting for Stock Issued to Employees" (APB 25) and
related interpretations in accounting for its employee stock options.
The exercise price of the Company's employee stock options equals or
is greater than the fair value of the underlying stock on the date
the options were granted, and accordingly no compensation expense has
been recognized in the accompanying financial statements in any of
the periods presented.
The Company has fixed stock options granted to specified employees by
resolution of the board of directors. An aggregate of 4,400,000 Class
A common shares has been reserved for the granting of such options.
On January 15, 2000, the Company established a stock option plan for
its officers, directors, employees and service providers. In
accordance with the plan, an aggregate of 4,400,000 Class A common
shares has been reserved for the granting of such options. The
exercise price of each option is to be determined by the board of
directors. All options issued under the plan will expire ten years
after the date of granting.
The following table presents information concerning all stock options
granted to the Company's employees (the number of options presented
in comparative amounts reflects a share split of 437,800 for 1 on
January 14, 2000):
9. Capital stock (continued)
<TABLE>
<CAPTION>
Six-month period ended Year ended
March 31, September 30,
2000 1999
-------------------------- ----------------------------
<S> <C> <C> <C> <C>
Weighted Weighted
average average
exercise exercise
Number of price per Number of price per
options share options share
------------- ----------- ------------ -----------
$ $
Outstanding, beginning of period 4,600,000 0.15 440,000 0.15
Granted during the period 2,606,746 0.34 4,160,000 0.15
Outstanding, end of period 7,206,746 0.22 4,600,000 0.15
Exercisable, end of period 1,760,000 0.15 880,000 0.15
</TABLE>
All stock options outstanding at the beginning of the period had an
exercise price of $0.15. The range of exercise prices for stock
options granted during the period was from nil to $0.86. The weighted
average contractual life remaining on stock options outstanding as at
March 31, 2000 was 8.71 years.
Stock option plan
Had compensation cost for the Corporation's stock-based compensation
been determined based on the fair value at the grant dates consistent
with SFAS 123, "Accounting for Stock-Based Compensation," the
Company's pro-forma net loss would have been as follows:
<TABLE>
<CAPTION>
March 31, September 30,
2000 1999
----------------------------------
<S> <C> <C>
$ $
Net loss
As reported 2,386,521 938,959
Pro-forma 2,473,390 938,959
Weighted-average fair value of options granted 0.13 -
The fair value of each option calculated under SFAS 123 is estimated at
the date of grant using the Black-Scholes option pricing model with the
following weighted average assumptions used for grants as follows:
March 31, September 30,
2000 1999
----------------------------------
Dividend yield - -
Expected volatility - -
Risk-free interest rates 6.46% 5.09%
Expected life 5 years 5 years
</TABLE>
10. Income taxes
As at March 31, 2000, the Company has net operating loss carry-forwards
which may be applied against future taxable income of approximately
$497,000 and $2,000,000 which will expire in 2006 and 2007 respectively.
Deferred tax assets and liabilities reflect the future income tax
effects of temporary differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases and are measured using enacted tax rates that apply to taxable
income in the years in which those temporary differences are expected to
be recovered or settled. As at March 31, 2000, the deferred income tax
balance was comprised of the following:
<TABLE>
<CAPTION>
March 31, September 30,
2000 1999
----------------------------------
<S> <C> <C>
$ $
Deferred tax assets
Loss carry-forwards 766,677 190,464
Research and development expenditures
carried forward 329,079 235,637
Less valuation adjustment (911,690) (290,564)
------------------------------------------------------------------------------------------------------------------------------------
Total deferred tax assets 184,066 135,537
------------------------------------------------------------------------------------------------------------------------------------
Deferred tax liabilities
Depreciation of fixed assets 56,457 45,005
Research and development tax credits 127,609 90,532
------------------------------------------------------------------------------------------------------------------------------------
Total deferred tax liabilities 184,066 135,537
------------------------------------------------------------------------------------------------------------------------------------
Net deferred tax assets - -
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
11. Commitments
As at March 31, 2000, commitments for space rental and other operating
leases due in each of the next fiscal years are as follows:
$
2000 65,355
2001 121,656
2002 95,168
2003 34,800
Rent expense amounted to $20,803 for the six-month period ended March
31, 2000 ($14,400 for the year-ended September 30, 1999).
12. Supplemental cash flow information
<TABLE>
<CAPTION>
Cumulative
period from
Six-month Six month December 1, 1997
Period ended Year ended Period ended (date of inception)
March 31, September 30, March 31, to March 31,
2000 1999 1999 2000
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ $ $ $
(unaudited)
Non-cash financing activities:
Issuance of common
stock in conversion
of notes payable 400,000 - - 400,000
Issuance of common stock
for deposit on share
subscription 150,000 - - 150,000
Cash paid (recovered) during the year for:
Interest 45,772 16,166 9,157 61,938
Income taxes (156,163) - - (156,163)
</TABLE>
13. Subsequent events
On May 9, 2000, the Company, its shareholders and VisualMed Clinical
Systems Corp. ("VisualMed Corp."), formerly Cherry Tree Capital Corp.,
entered a series of agreements (the "transaction") whereby the
shareholders of the Company will acquire control of VisualMed Corp. by
way of a reverse acquisition. VisualMed Corp. is a non-operating shell
corporation.
The transaction involves a restructuring of the share capital of the
Company whereby existing common shares have, effective May 9, 2000, been
converted into exchangeable preferred shares (the "preferred shares")
which shares are exchangeable into common shares of VisualMed Corp.
Concurrently therewith, the Company issued 100 common shares to
VisualMed Corp. for a nominal amount. The preferred shareholders will
have a controlling interest in VisualMed Corp. upon completion of the
transaction and following the exchange of their shares for common shares
of VisualMed Corp. at the option of the holders, and, in a certain
instances, at the option of VisualMed Corp., on the basis of 0.3 of a
common share of VisualMed Corp. for each preferred share of the Company.
Upon completion of the transaction and exchange of the shares, the
shareholders of the Company will own approximately 85% of the
outstanding common shares of VisualMed Corp. For accounting purposes,
the acquisition will be treated as a recapitalization of the Company
with the Company as the acquirer.
14. Comparative figures
Certain figures for the period ended September 30, 1999 have been
reclassified in order to conform with the presentation adopted in the
current period.
LEGAL MATTERS
The validity of the issuance of the Shares will be passed upon us by
Eric P. Littman, P.A. As of June 30, 2000, Mr. Littman was the owner of 300,000
shares of Common Stock.
REPORTS TO SECURITY HOLDERS
After the effective date of this document, we will be subject to the
reporting requirements of the Exchange Act and will file reports and other
information with the Securities and Exchange Commission (the "SEC"). Our annual
report will contain 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. Such 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 SEC 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 SEC
maintains an Internet site at http://www.sec.gov that contains reports, proxy
and information statements and other information regarding registrants that file
electronically with the SEC.
<PAGE>
PART II
<PAGE>
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Articles of Incorporation provide that, to the fullest extent
permitted by law, none of our directors or officers shall be personally liable
for damages or for breach of any duty to our shareholders or us. Nevada law
provides that a director shall have no personal liability for any statement,
vote, decision or failure to act, regarding corporate management or policy by a
director, unless the director breached or failed to perform the duties of a
director. A company may also protect its officers and directors from expenses
associated with litigation arising from or related to their duties, except for
violations of criminal law, transactions involving improper benefit or willful
misconduct. In addition, we shall have the power, by our by-laws or in any
resolution of our stockholders or directors, to undertake to indemnify the
officers and directors of ours against any contingency or peril as may be
determined to be in our best interest and in conjunction therewith, to procure,
at our expense, policies of insurance. At this time, no statute or provision of
the by-laws, any contract or other arrangement provides for insurance or
indemnification of any of our controlling persons, directors or officers that
would affect his or her liability in that capacity.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons, the
Company has been advised that in the opinion of the SEC, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by it 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, the
Company 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 and will be governed by the final adjudication
of such issues.
<PAGE>
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table is an itemization of all expenses (subject to
future contingencies), which the Company has incurred or expects to incur in
connection with the issuance and distribution of the securities being offered
hereby. Items marked with an asterisk (*) represent estimated expenses. The
Company has agreed to pay all the costs and expenses of this offering. The
Selling Security Holders will pay no offering expenses.
------------------------------- --------------------------------
Expense Amount
(In U.S. $)
------------------------------- --------------------------------
------------------------------- --------------------------------
SEC Registration Fee 20,000
Legal Fees and Expenses* 200,000
Accounting Fees and Expenses* 100,000
Miscellaneous* 50,000
------------------------------- --------------------------------
------------------------------- --------------------------------
Total* 370,000
------------------------------- --------------------------------
* Estimated Figure
<PAGE>
RECENT SALES OF UNREGISTERED SECURITIES
In addition to the shares being offered herein, the only other shares,
which were issued and outstanding within the last three years, are:
(1) The 10,000,000 shares currently held in trust by Richard Le Hir.
(2) Mr. Gerard Dab has previously been granted fixed options for 575,000
common shares of which 359,375 are vested and exercisable. None of
the options have been exercised. Mr. Dab has conditional options that
could lead to ownership of another 125,000 common shares of the
Company if certain conditions are met.
(3) Dr. Arthur Gelston has previously been granted fixed options for
575,000 common shares of which 359,375 are vested and exercisable. None
of the options have been exercised. Dr. Gelston has conditional
options that could lead to ownership of another 125,000 common shares
of the Company if certain conditions are met.
(4) Mr. Richard Le Hir has previously been granted fixed options for
420,000 common shares of which 210,000 are vested and exercisable. Mr.
Le Hir has previously been granted fixed options for 125,000 common
shares, all of which are vested and exercisable upon completion of this
registration statement. None of the options have been exercised. Mr. Le
Hir has conditional options that could lead to ownership of another
249,000 common shares of the Company if certain conditions are met.
(5) Mr. Joseph Mah has previously been granted fixed options for 125,000
common shares, all of which are vested and exercisable upon completion
of this registration statement. None of the options have been
exercised.
(6) Mr. Robert Cohen has previously been granted conditional options that
could lead to ownership of 60,000 common shares of the Company if
certain conditions are met.
(7) Mr. Barry Scharf has previously been granted fixed options for 125,000
common shares, all of which are vested and exercisable upon completion
of this registration statement. None of the options have been
exercised.
(8) Mr. Robert Chafetz has previously been granted fixed options for
396,000 common shares, all of which are vested and exercisable. None
of the options have been exercised.
(9) Mr. Richard Blouin, a consultant with the Company, has previously been
granted fixed options for 132,000 common shares, all of which are
vested and exercisable. None of the options have been exercised.
<PAGE>
EXHIBITS
Exhibit Number Exhibit Description
3.1 Articles of Incorporation
3.2 By-laws
5 Legal Opinion
9 Voting Trust Agreement
10.1 Employment Agreement of Dr. Arthur Gelston
10.2 Employment Agreement of Robert Chafetz
10.3 Employment Agreement of Barry Scharf
10.4 Employment Agreement of Gerard Dab
10.5 Employment Agreement of Joseph Mah
10.6 Employment Agreement of Robert H. Cohen
10.7 Employment Agreement of Richard Le Hir
10.8 Option Agreements
23 Consent of Expert
27 Financial Data Schedule
<PAGE>
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, 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 (the "Act") may be 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
SEC 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 and will be governed by the final
adjudication of such issue.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
the requirements of filing of Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, on October 30, 2000.
VISUALMED Clinical Systems Corp.
/s/ Richard Le Hir
------------------------------------------------------
By: Richard Le Hir, Senior Vice President and C.E.O.
Date: October 30, 2000
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.
<TABLE>
<CAPTION>
<S> <C> <C>
Name Position Date
/s/ Gerard Dab October 30, 2000
----------------------------------------- -----------------------------
----------------------------------------- -----------------------------
Gerard Dab Chairman and Director
/s/ Arthur Gelston October 30, 2000
----------------------------------------- -----------------------------
----------------------------------------- -----------------------------
Arthur Gelston President and Director
/s. Linda McHarg October 30, 2000
----------------------------------------- -----------------------------
----------------------------------------- -----------------------------
Linda McHarg Director
/s/ Linda Snell October 30, 2000
----------------------------------------- -----------------------------
----------------------------------------- -----------------------------
Linda Snell Director
/s/ Richard Le Hir October 30, 2000
----------------------------------------- -----------------------------
----------------------------------------- -----------------------------
Richard Le Hir Senior Vice President, C.E.O.
and Director
/s/ Richard Borenstein October 30, 2000
----------------------------------------- -----------------------------
----------------------------------------- -----------------------------
Richard Borenstein Director
/s/ Caroline Singleton October 30, 2000
----------------------------------------- -----------------------------
----------------------------------------- -----------------------------
Caroline Singleton Director
/s. Joseph Mah October 30, 2000
----------------------------------------- -----------------------------
----------------------------------------- -----------------------------
Joseph Mah Chief Financial Officer
<PAGE>
/s/ Paul D. McNelis October 30, 2000
----------------------------------------- -----------------------------
----------------------------------------- -----------------------------
Paul D. McNelis Director
/s/ Louis J. Lombardo October 30, 2000
----------------------------------------- -----------------------------
----------------------------------------- -----------------------------
Louis J. Lombardo Director
</TABLE>
