As filed with the Securities and Exchange Commission on
May 28, 2010
Registration
No. 333-
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form S-1
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
VICOR TECHNOLOGIES,
INC.
(Exact name of registrant as
specified in its charter)
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Delaware
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3841
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20-2903491
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(State or other jurisdiction
of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification Number)
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2300 NW Corporate
Boulevard
Suite 123
Boca Raton, Florida
33431
(561) 995-7313
(Address, including zip code,
and telephone number, including area code, of registrants
principal executive offices)
David H. Fater
Chief Executive
Officer
Vicor Technologies,
Inc.
2300 NW Corporate
Boulevard
Suite 123
Boca Raton, Florida
33431
(561) 995-7313
(Name, address, including zip
code, and telephone number, including area code, of agent for
service)
Copies
To:
Leonard
H. Bloom, Esq.
Laura M. Holm, Esq.
Esther L. Moreno, Esq.
Akerman Senterfitt
One Southeast Third Avenue,
25th
Floor
Miami, Florida 33131
(305) 374-5600
Approximate date of commencement of proposed sale to
public: As soon as practicable after this
registration statement becomes effective.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933 check the
following
box: o
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering: o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering: o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering: o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the
Exchange Act. (Check one):
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Large
accelerated
filer o
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller reporting
company þ
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(Do not check if a smaller
reporting company)
CALCULATION
OF REGISTRATION FEE
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Proposed Maximum
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Proposed Maximum
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Amount of
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Title of Each Class of
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Amount to be
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Offering Price
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Aggregate
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Registration
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Securities to be Registered
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Registered
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per Unit
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Offering Price(1)
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Fee(2)
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Common Stock, par value $0.001 per share
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Warrants to purchase Common Stock
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Common Stock, issuable upon exercise of Warrants(3)
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Total
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$
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10,000,000
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$
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713.00
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(1)
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Estimated solely for the purpose of
calculating the amount of the registration fee pursuant to
Rule 457(o) under the Securities Act of 1933, as amended.
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(2)
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Calculated pursuant to
Rule 457(o) under the Securities Act based on an estimate
of the proposed maximum aggregate offering price.
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(3)
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Pursuant to Rule 416, the
securities being registered hereunder include such indeterminant
number of additional shares of common stock as may be issuable
upon exercise of warrants registered hereunder as a result of
stock splits, stock dividends, or similar transactions.
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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.
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.
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SUBJECT TO COMPLETION, DATED MAY
28, 2010
PROSPECTUS
UNITS,
EACH CONSISTING OF
SHARE(S) OF COMMON STOCK AND
WARRANT(S) TO
PURCHASE
SHARE(S) OF COMMON STOCK
We are offering up
to
units, each consisting
of share(s)
of our common stock
and
warrant(s) to
purchase share(s)
of our common stock at an exercise price of
$ per share, subject to
adjustment. The warrants will be exercisable on or after the
closing date of this offering through and including the close of
business
on ,
20 .
There may be one or more closings of the offering. The units
will not be certificated and upon a closing of the offering, all
common stock and warrants sold as units will separate and the
common stock and the warrants will be separately transferable.
Our common stock is presently quoted on the
Over-the-Counter
Bulletin Board, or OTC Bulletin Board, under the
symbol VCRT.OB. We do not intend to apply for
listing of the warrants on any securities exchange. On
May 25, 2010, the last reported sale price of our common
stock on the OTC Bulletin Board was $0.80.
Investing in the offered securities involves risks, including
those set forth in the Risk Factors section of this
prospectus beginning on page 4 as well as those set forth
in any prospectus supplement.
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Per Unit
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Total
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Offering Price per unit
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$
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$
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Placement Agents fees
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$
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$
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Offering Proceeds before expenses
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$
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$
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and
have agreed to act as our placement agents in connection with
this offering. In
addition, may
engage one or more
sub-placement
agents or selected dealers. The placement agents are not
purchasing the securities offered by us, and are not required to
sell any specific number or dollar amount of units, but will
assist us in this offering on a reasonable best
efforts basis to sell the securities offered. We have
agreed to pay the placement agents a cash fee equal
to % of the gross proceeds of the
offering of units by us and to issue to the placement agents
warrants to purchase shares of our common stock equal
to % of the aggregate number of
shares of common stock included in units sold in the offering.
The placement agent warrants will have terms substantially
similar to the warrants included in units offered hereby, except
that the placement agent warrants will have a term
of
years from a closing of the sale of units and will otherwise
comply with FINRA Rule 5110 (g)(1). We estimate the total
expenses of this offering, excluding the placement agent fees,
will be approximately $ . Because
there is no minimum offering amount required as a condition to
closing in this offering, the actual public offering amount,
placement agent fees, and proceeds to us, if any, are not
presently determinable and may be substantially less than the
total maximum offering amounts set forth above. See Plan
of Distribution beginning on page of
this prospectus for more information on this offering and the
placement agent arrangements.
This offering will terminate
on ,
unless the offering is fully subscribed before that date or we
decide to terminate the offering prior to that date. In either
event, the offering may be closed without further notice to you.
All costs associated with the registration will be borne by us.
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.
As Placement
Agents
The date of this prospectus
is ,
2010
TABLE OF
CONTENTS
ABOUT
THIS PROSPECTUS
You should rely only on the information contained in this
prospectus and any free writing prospectus prepared by or on
behalf of us or to which we have referred you. We and the
placement agents have not authorized anyone to provide you with
information that is different. This document may only be used
where it is legal to offer or sell these securities. This
prospectus does not constitute an offer to sell or the
solicitation of an offer to buy these securities in any
jurisdiction in which such offer or solicitation may not be
legally made. If any other information or representation is
given or made, such information or representation may not be
relied upon as having been authorized by us or the placement
agents, and neither we nor the placement agents accept any
liability in relation thereto.
The information contained in this prospectus is accurate only as
of the date of this prospectus, regardless of the time of
delivery of this prospectus or of any sale of our units. Neither
the delivery of this prospectus nor any distribution of
securities in accordance with this prospectus shall, under any
circumstances, imply that there has been no change in our
affairs since the date of this prospectus.
FORWARD-LOOKING
STATEMENTS
Some of the statements included in this prospectus and any
prospectus supplement contain forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. All statements other than
statements of historical facts contained in this prospectus and
any prospectus supplement, including statements regarding our
plans, objectives, goals, strategies, future events, capital
expenditures, future results, our competitive strengths, our
business strategy and the trends in our industry are
forward-looking statements. The words believe,
may, could, estimate,
continue, anticipate,
intend, should, plan,
expect, appear, future,
likely, probably, suggest,
goal, potential and similar expressions,
as they relate to us, are intended to identify forward-looking
statements.
Forward-looking statements reflect only our current
expectations. In any forward-looking statement, where we express
an expectation or belief as to future results or events, such
expectation or belief is expressed in good faith as of the date
of such statement and believed to have a reasonable basis, but
the statement of expectation or belief may not be achieved or
accomplished. Our actual results, performance or achievements
could differ materially from those expressed in, or implied by,
the forward-looking statements due to a number of factors, many
of which may be unforeseen, including:
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our history of operating losses and relatively low cash position
relative to our anticipated cash needs;
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our ability to obtain additional funds to sustain our business
on acceptable terms or at all;
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our ability to obtain FDA approval for specific medical claims
for our products;
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our ability to achieve broad market acceptance of our technology;
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our ability to manufacture, market and sell our products
effectively;
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our ability to protect our proprietary technology;
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the ability of others to develop, obtain approval of and
commercialize products quicker or more successfully than us;
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technological changes impacting our industry that may lead to
our technologies becoming obsolete;
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any future litigation regarding our business, including
intellectual property and product liability claims;
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legal and regulatory changes affecting the medical device
industry, including changes impacting reimbursement for medical
devices; and
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general economic and business conditions.
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In addition, you should refer to the Risk Factors
section of this prospectus beginning on page 4 for a
discussion of other factors that may cause our actual results to
differ materially from those implied by our forward-looking
statements. As a result of these factors, the forward-looking
statements in this prospectus and any prospectus supplement may
not prove to be accurate. Furthermore, if our forward-looking
statements prove to be inaccurate, the inaccuracy may be
material. In light of the significant uncertainties in these
forward-looking statements, you should not regard any
forward-looking statement as a representation or warranty by us
or any other person that we will achieve our objectives and
plans in any specified time frame, if at all. Accordingly, you
should not place undue reliance on these forward-looking
statements. We undertake no obligation to update any of these
forward looking statements, whether as a result of new
information, future events or otherwise, except as required by
applicable law or regulation.
ii
PROSPECTUS
SUMMARY
This summary highlights information contained elsewhere in
this prospectus. Individuals who participate in this offering
are urged to read this entire prospectus carefully. An
investment in the units offered hereby involves a high degree of
risk. This prospectus contains forward-looking statements that
involve risks and uncertainties. Our actual results may differ
significantly from the projected results discussed in these
forward-looking statements. Factors that may cause such a
difference include, but are not limited to, those discussed in
Risk Factors. We, our,
ours, or us, when used herein, refer to
Vicor Technologies, Inc., including subsidiaries and
predecessors, except where it is clear that the term refers only
to Vicor Technologies, Inc.
Overview
Our
Business
We are a medical diagnostics company, originally incorporated in
the State of Delaware on May 24, 2005 as SRKP 6, Inc.,
focused on commercializing noninvasive diagnostic technology
products based on our patented, proprietary point correlation
dimension algorithm (the
PD2i®
Algorithm). The
PD2i®
Algorithm and software facilitates the ability to accurately
risk stratify a specific target population to predict future
pathological events, such as cardiac death (which includes
arrhythmic death and congestive heart failure death), imminent
death from trauma and autonomic nervous system dysfunction. We
believe that the
PD2i®
Algorithm and software represents a noninvasive monitoring
technology that physicians and other members of the medical
community can use as a new and accurate vital sign. We are
currently commercializing two proprietary diagnostic medical
products which employ software utilizing the
PD2i®
Algorithim: the PD2i
Analyzertm
(sometimes referred to as the PD2i Cardiac
Analyzertm)
and the
PD2i-VSTM
(Vital Sign). It is also anticipated that the
PD2i®
Algorithm and software applications will allow for the early
detection of Alzheimers Disease and other disorders and
diseases.
Our first product, the PD2i
Analyzertm,
received 510(k) marketing clearance from the Food and Drug
Administration or FDA on December 29, 2008. It displays and
analyzes electrocardiographic (ECG) information and measures
heart rate variability, or HRV, in patients at rest and in
response to controlled exercise and paced respiration. The PD2i
Analyzertm
applies patented and proprietary technology to analyze a high
resolution electrocardiograph (ECG) signal, and measure R-wave
intervals. The clinical significance of HRV and other parameters
must be determined by a physician. We commenced sales of the
PD2i
Analyzertm
in January 2010. We also entered into an exclusive distribution
agreement with VF Medical, LLC, a medical products distribution
company which we refer to as VF Medical, for South Carolina,
North Carolina, and the cities of Savannah and Augusta, Georgia.
VF Medical will utilize a
25-person
medical products distribution team consisting of agents who have
long-term relationships with cardiologists,
electrophysiologists, and family practice and internal medicine
physicians within the designated territory. We are seeking other
distributors and have begun hiring sales personnel in selected
geographic areas.
The PD2i
Analyzertm
consists of a private-label digital electrocardiograph device
that incorporates automated blood pressure recording and a
laptop computer which utilizes proprietary collection software.
The PD2i
Analyzertm
accesses the internet and sends recorded electrocardiograph
files to our remote server where the files are analyzed by our
proprietary algorithm and software. The analyzed results are
then provided to the physician in an electronic health record
together with a report and information which the physician can
use to bill both public and private insurers utilizing
established Current Procedural Terminology Codes, known as CPT
Codes. Vicor bills the physician monthly for the number of tests
performed, thus enabling us to realize revenue from the
recurring use of the PD2i
Analyzertm
in addition to revenue realized from the sale of the device. We
anticipate making various submissions to the FDA for marketing
clearance for the PD2i
Analyzertm
for additional medical claims related to cardiology, imminent
death from trauma and possibly the diagnosis of diseases related
to autonomic nervous system dysfunction. Approval from the FDA
would allow us to expand and accelerate our marketing efforts.
1
SUMMARY
FINANCIAL DATA
Because this is only a summary of our financial information, it
does not contain all of the financial information that may be
important to you. Therefore, you should carefully read all of
the information in this prospectus, including the financial
statements and their explanatory notes and the section entitled,
Managements Discussion and Analysis of Financial
Condition and Results of Operations, before making a
decision to invest in the units. The consolidated statement of
operations data for the two years ended December 31, 2009
and 2008 and consolidated balance sheet data as of
December 31, 2009 and 2008 is derived from our audited
consolidated financial statements and related notes thereto
included elsewhere in this prospectus. The consolidated
statement of operations data for the three months ended
March 31, 2010 and 2009 and for the period from
August 4, 2000 (inception) to March 31, 2010 and
consolidated balance sheet data as of March 31, 2010 and
2009 is derived from our unaudited consolidated financial
statements and related notes included elsewhere in this
prospectus. Our historical results presented below are not
necessarily indicative of results to be expected in future
periods.
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Period from
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August 4, 2000
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Three Months Ended
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(Inception)
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Years Ended December 31,
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March 31,
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to March 31,
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2009
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2008
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2010
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2009
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2010
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Statement of Operations Data:
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Revenues
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$
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$
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$
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100,000
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$
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$
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944,000
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Operating expenses
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7,321,000
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6,727,000
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2,056,000
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852,000
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55,571,000
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Net loss
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(5,164,000
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(6,727,000
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(2,073,000
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(1,146,000
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(52,587,000
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)
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Balance Sheet Data:
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Cash
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$
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544,000
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$
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182,000
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$
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308,000
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$
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268,000
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Total assets
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1,048,000
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476,000
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946,000
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589,000
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Total liabilities
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7,658,000
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2,434,000
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8,900,000
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5,730,000
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Net capital deficiency
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(6,610,000
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(1,958,000
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(7,954,000
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(1,951,000
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)
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Recent
Developments
On May 19, 2010, we announced the initial results of a
study designed to analyze data from the Merte Subita en
Insufficiencia Cardiaca (MUSIC) Trial using our
PD2i®
algorithm and software. The study, titled Prognostic
Significance of Point Correlation Dimension Algorithm (PD2i) in
Chronic Heart Failure, was conducted under a collaborative
agreement with the University of Rochester and the Catalan
Institute of Cardiovascular Sciences in Barcelona. The goal of
the study was to evaluate the ability of our
PD2i®
nonlinear algorithm to predict cardiac events in the 537 chronic
heart failure patients enrolled in the MUSIC Trial. MUSIC Trial
participants were followed for an average period of
44 months. The conclusion of the University of Rochester
researchers who conducted the study is that the
PD2i®
nonlinear algorithm and software is predictive of total
mortality, cardiac death, and heart failure death in patients
with left ventricular ejection fraction of less than or equal to
35%, which refers to the percentage of blood pumped out of the
left ventricle with each heart beat. With a P value of 0.004 the
study results are highly statistically significant. Researchers
from the University of Rochester and our scientists are studying
these initial results to determine whether the resulting data
will support a 510(k) submission to the FDA for a marketing
claim. We believe that the results from this trial may broaden
the market for the PD2i
Analyzertm
as a diagnostic tool that will significantly contribute to
cardiologists in their assessment of treatment options for heart
failure patients.
Our
Principal Executive Offices
Our executive offices are located at 2300 NW Corporate
Boulevard, Suite 123, Boca Raton, Florida 33431. Our
telephone number is
(561) 995-7313.
Our website is www.vicortech.com. Information on our website is
not part of this prospectus.
2
THE
OFFERING
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Securities Offered:
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Up to units. Each unit will consist of share(s) of our
common stock
and warrant(s)
to purchase share(s) of our common stock. The units will
not be certificated and the common stock and warrants will be
immediately separable and will be separately transferable
immediately upon issuance.
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Offering Price:
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$ per unit.
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Description of Warrants:
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The warrants will be exercisable on or after the applicable
closing date of this offering through and including the close of
business
on ,
20 at an exercise price of
$ per share.
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Common Stock Outstanding
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Before the Offering:
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45,552,834(1) shares
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Common Stock Outstanding
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After the Offering:
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shares(2)
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Use of Proceeds:
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We expect to use the proceeds received from the offering for the
following purposes: (i) the repayment of bank debt, (ii) to
increase staffing, including sales and marketing personnel,
(iii) to build-up our inventory, and (iv) for general corporate
purposes, including working capital needs. See Use of
Proceeds beginning on page 13 of this prospectus for
additional information.
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Risk Factors:
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See Risk Factors beginning on page 4 and the
other information in this prospectus for a discussion of the
factors you should consider before you decide to invest in the
units.
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(1) |
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Based on 45,552,834 shares outstanding on May 25, 2010
and excludes: |
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3,365,000 shares of common stock issuable
upon exercise of outstanding stock options; |
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15,521,842 shares of common stock
issuable upon exercise of outstanding warrants; |
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approximately 200,000 shares of common
stock reserved for issuance upon conversion of the Series A
Convertible Preferred Stock;
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approximately 6,000,000 shares of common
stock reserved for issuance upon conversion of the Series B
Junior Convertible Cumulative Preferred Stock;
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approximately 2,230,000 shares of common
stock reserved for issuance upon conversion of the
8% Subordinated Convertible Notes; and
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approximately 275,000 shares of common
stock reserved for issuance upon conversion of the
12% Convertible Notes.
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(2) |
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Based on 45,552,834 shares outstanding on May 25, 2010
and includes: |
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approximately 6,000,000 shares of common
stock issuable upon the mandatory conversion of the
Series B Junior Convertible Cumulative Preferred Stock
triggered by this offering;
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approximately 2,230,000 shares of common
stock issuable upon the mandatory conversion of the
8% Subordinated Convertible Notes triggered by this
offering; and
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approximately 275,000 shares of common
stock issuable upon the mandatory conversion of the
12% Convertible Notes triggered by this offering.
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This number excludes: |
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3,365,000 shares of common stock issuable
upon exercise of outstanding stock options;
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15,521,842 shares of common stock
issuable upon exercise of outstanding warrants;
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approximately 200,000 shares of common
stock reserved for issuance upon conversion of the Series A
Convertible Preferred Stock;
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shares
of common stock issuable upon exercise of the warrants included
in the offered units; and
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shares
of common stock issuable upon the exercise of the placement
agent warrants.
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Unless otherwise specifically stated, information throughout
this prospectus does not assume the exercise of outstanding
options or warrants to purchase shares of our common stock.
3
RISK
FACTORS
Any investment in our securities involves a high degree of
risk. You should carefully consider the risks and uncertainties
described below, and all information contained in this
prospectus, before you decide whether to purchase our
securities. Additional risks and uncertainties not currently
known to us that we currently do not deem material may also
become important factors that may materially and adversely
affect our business. The occurrence of any of the following
risks could cause our business, results of operations, financial
condition and prospects to materially suffer and the market
price of our stock to decline, and you may lose part or all of
your investment.
Risks
related to our business
We
have incurred significant operating losses since inception that
raise doubts about our ability to continue as a going
concern.
We have a history of operating losses. We are a developmental
stage company that is still in the process of developing new and
unproved technologies. We have incurred significant net losses
since our inception, including net losses of approximately
$7.3 million in 2002, $9.2 million in 2003,
$3.4 million in 2004, $4.2 million in 2005,
$4.6 million in 2006, $6.1 million in 2007,
$8.5 million in 2008, $6.6 million in 2009 and
$1.1 million for the three months ended March 31,
2010. As of March 31, 2010, we had an accumulated deficit
of approximately $55.9 million. The extent of our future
operating losses and the timing of our profitability are highly
uncertain, and we may never generate sufficient revenues to
achieve or sustain profitability. Based on funds available to us
as of December 31, 2009 our independent auditors expressed
doubt about our ability to continue as a going concern if we are
unable to raise additional funds. If we are unable to
successfully implement our financing strategy and develop
commercially successful products, we will not generate
sufficient revenues to achieve profitability and may be forced
to cease operations.
We are
a development stage company and we may be unable to successfully
commercialize any products.
Our prospects must be considered in light of the risks, expenses
and difficulties frequently encountered by companies engaged in
the development and commercialization of new technologies,
particularly companies targeting markets characterized by
complex regulatory issues. In particular, medical devices, such
as the PD2i
Analyzertm,
require CPT codes and
agreed-upon
reimbursement levels in order to achieve widespread physician
use and drive significant revenue. While established CPT codes
with adequate levels of reimbursement exist, we still may not
generate significant revenues or achieve and sustain
profitability because our products may not be accepted in the
marketplace. Our limited operating history in new product areas
makes the prediction of future results of operations extremely
difficult.
We
have never generated, and we may never generate, positive
operating cash flow.
Our business operations do not generate positive cash flow and
we do not currently receive revenues from other sources, such as
licensing fees, revenues from grants or consulting fees.
Depending upon the extent of revenue derived from these sources,
if any, as well as revenues generated from the sale of the PD2i
Analyzertm
and related test fees, we may not be able to generate sufficient
cash flow to cover operating expenses. We cannot predict or
guarantee when our products will generate sufficient revenue to
achieve positive operating cash flow.
Our
cash position is very low relative to our anticipated cash
needs.
As of March 31, 2010 we had a cash balance of approximately
$308,000. This is substantially less than our projected
short-term cash requirements (including fixed costs and
projected future costs). There can be no guaranty that we can
raise additional funds from sales of our equity or debt
securities on terms that are acceptable to us or otherwise
generate sufficient revenue to maintain our operations. Our
inability to obtain such funds would have a material adverse
effect on the Companys financial condition and operations.
4
We may
be unable to obtain additional funds necessary to sustain our
business on acceptable terms or at all, which would harm our
business and may require us to significantly curtail or cease
our operations.
We need substantial capital to fund our business operations and
finance our working capital requirements for the long-term. We
have experienced significant negative cash flow from operations
to date and expect to continue to experience significant
negative cash flow in the future. We need additional funds to
sustain and expand our research and development activities, our
collaborative arrangements and commence our sales and marketing
activities. Adequate funds for these and other purposes on
acceptable terms, whether through additional equity financing,
debt financing or other sources, may not be available when
needed, or may result in significant dilution to existing
stockholders. Our inability to obtain sufficient funds from
operations and external sources will have a material adverse
effect on our business, results of operations and financial
condition. If we are unable to raise additional funds, we will
be forced to significantly curtail or cease our operations. Our
ability to issue debt securities or to service any debt may also
be limited by our inability to generate cash flow.
We are
developing and attempting to commercialize new and unproven
technologies.
We primarily work with and develop new technologies that have
not been proven for commercial application. The validation of
these technologies for commercial application will require
substantial additional capital investment and a significant
amount of work. Additionally, many of the products and services
that we contemplate developing may prove unsuitable for
commercial application. We cannot be certain that any such
products or services will be able to be commercialized and sold
successfully, or at all.
The
results of clinical studies may not support the usefulness of
our technology.
Conducting clinical trials is a long, expensive and uncertain
process that is subject to delays and failure at any stage.
Clinical trials can take months or years. The commencement or
completion of any of our clinical trials may be delayed or
halted for numerous reasons, including, (1) the FDA may not
approve a clinical trial protocol or a clinical trial, or may
place a clinical trial on hold; (2) subjects may not enroll
in clinical trials at the rate we expect and subjects may not be
followed up at the rate we expect; (3) subjects may
experience events unrelated to our products;
(4) third-party clinical investigators may not perform our
clinical trials on our anticipated schedule or consistent with
the clinical trial protocol and good clinical practices, or
other third-party organizations may not perform data collection
and analysis in a timely or accurate manner; (5) interim
results of any of our clinical trials may be inconclusive or
negative; (6) regulatory inspections of our clinical trials
may require us to undertake corrective action or suspend or
terminate them if investigators find us not to be in compliance
with regulatory requirements; or (7) governmental
regulations or administrative actions may change and impose new
requirements, particularly on reimbursement.
Results of pre-clinical studies do not necessarily predict
future clinical trial results and previous clinical trial
results may not be repeated in subsequent medical trials. We may
experience delays, cost overruns and project terminations
despite achieving promising results in pre-clinical testing or
early clinical testing. In addition, the data obtained from
clinical trials may be inadequate to support approval or
clearance of a submission. The FDA may disagree with our
interpretation of the data from our clinical trials, or may find
the clinical trial design, conduct or results inadequate to
demonstrate the safety and effectiveness of the product
candidate. The FDA may also require us to conduct additional
pre-clinical studies or clinical trials which could further
delay approval of our products. If we are unsuccessful in
receiving FDA approval of a product, we would not be able to
sell or promote the product in the United States, which could
seriously harm our business. Moreover, we face similar risks in
other jurisdictions in which we may sell or propose to sell our
products.
If
third-party contract research organizations do not perform their
responsibilities in an acceptable and timely manner, our
pre-clinical testing or clinical trials could be delayed or
prove unsuccessful.
We do not have the ability to conduct all aspects of
pre-clinical testing or clinical trials ourselves. We rely and
will continue to rely on clinical investigators, third-party
contract research organizations and consultants to perform some
or all of the functions associated with pre-clinical testing or
clinical trials. The failure of any of these vendors to perform
in an acceptable and timely manner in the future, including in
accordance with any applicable regulatory
5
requirements, such as good clinical and laboratory practices, or
pre-clinical testing or clinical trial protocols, could cause a
delay or otherwise adversely affect our pre-clinical testing or
clinical trials and, ultimately, the timely advancement of our
development programs.
Our
ability to operate effectively could be impaired if we were to
lose the services of our key personnel, or if we were unable to
recruit key personnel in the future.
Our success will depend to a significant extent on the skills
and efforts of David H. Fater, Dr. Jerry M. Anchin,
Dr. James Skinner, Dr. Daniel Weiss and Lloyd Chesney.
We have entered into employment agreements with
Messrs. Fater and Chesney and Drs. Anchin, Skinner and
Weiss. Nevertheless, employment agreements do not assure the
services of such personnel. Despite employment and
noncompetition agreements, our employees may voluntarily
terminate their employment with us at any time. Our success also
depends on our ability to attract and retain additional
qualified employees in the future. Competition for such
personnel is intense and we will compete for qualified personnel
with numerous other employers, many of whom have greater
financial and other resources than we do. In addition, we may
incur significantly increased costs in order to attract and
retain skilled employees. The loss of one or more key employee
could have a material adverse effect on our business.
We are
subject to evolving and expensive corporate governance
regulations and requirements. Our failure to adequately adhere
to these requirements or the failure or circumvention of our
controls and procedures could seriously harm our
business.
As a publicly traded company, we are subject to certain federal,
state and other rules and regulations, including applicable
requirements of the Sarbanes-Oxley Act of 2002. Compliance with
these evolving regulations is costly and requires a significant
diversion of management time and attention, particularly with
regard to disclosure controls and procedures and internal
controls over financial reporting. Although we have reviewed our
disclosure controls and internal controls and procedures in
order to determine whether they are effective, our controls and
procedures may be unable to prevent errors or frauds in the
future. Faulty judgments, simple errors or mistakes, or the
failure of our personnel to adhere to established controls and
procedures, make it difficult for us to ensure that their
objectives are met. A failure of our controls and procedures to
detect material errors or fraud, could seriously harm our
business and results of operations.
We are
subject to risks in connection with the impact of changes in
international, national and local economic and market
conditions.
Our business is subject to risks in connection with the impact
of changes in international, national and local economic and
market conditions. Beyond the risks of doing business
internationally, there is also the potential impact of changes
in the international, national and local economic and market
conditions, including the effects of a global financial or
credit crisis, and the effects of terrorist acts and the war on
terrorism, which could impact customers ability to pay for
our products.
If we sell our products in international markets, we will
experience additional risks associated with these sales, which
include:
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political and economic instability;
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export controls;
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changes in legal and regulatory requirements;
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United States and foreign government policy changes affecting
the markets for our products; and
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changes in tax laws and tariffs.
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Any of these factors could have a material adverse effect on our
business, results of operations and financial condition. We may
choose to sell our products in international markets through
independent distributors. If a distributor fails to meet annual
sales goals, it may be difficult and costly to locate an
acceptable substitute distributor. If a change in our
distributors becomes necessary, we may experience increased
costs, as well as a substantial disruption in operations and a
resulting loss of revenue.
6
Risks
Related To Regulatory Matters
The
medical device and pharmaceutical industries are subject to
stringent regulation and failure to obtain regulatory approval
will prevent commercialization of our products.
Our Diagnostic Platform. Our PD2i
Analyzertm
received 510(k) marketing clearance from the FDA on
December 29, 2008. This clearance enables us to market this
product and generate revenue. Our products for specific medical
claims, however, can only be directly marketed to physicians by
submitting additional 510(k) applications to the FDA supported
by satisfactory clinical trial results. However, the results of
our clinical trials may not provide sufficient evidence to allow
the FDA to grant us such additional marketing clearances. The
failure to obtain FDA marketing clearance for these specific
medical claims would have a material adverse effect on our
business.
Medical devices are subject to extensive and rigorous regulation
by the FDA pursuant to the Federal Food, Drug, and Cosmetic Act
(FDCA), by comparable agencies in foreign countries and by other
regulatory agencies and governing bodies. Under the FDCA and
associated regulations, manufacturers of medical devices must
comply with certain regulations that cover the composition,
labeling, testing, clinical study, manufacturing, packaging and
distribution of medical devices. In addition, medical devices
must receive FDA clearance or approval before they can be
commercially marketed in the United States, and the FDA may
require testing and surveillance programs to monitor the effects
of approved products that have been commercialized and can
prevent or limit further marketing of a product based on the
results of these post-market evaluation programs. The process of
obtaining marketing clearance from the FDA for new products
could take a significant period of time, require the expenditure
of substantial resources, involve rigorous pre-clinical and
clinical testing, require changes to the products and result in
limitations on the indicated uses of the product.
Our Drug Platform. None of our drug product
candidates have been approved by any governmental regulatory
agency, including the FDA. Our research, development,
pre-clinical and, to the extent that we undertake the New Drug
Application process (NDA) itself, clinical trial
activities, are subject to an extensive regulatory approval
process by the FDA. The process of obtaining required regulatory
approvals for drugs is lengthy, expensive and uncertain, and any
regulatory approvals may contain limitations on the indicated
usage of a drug, distribution restrictions or may be conditioned
on burdensome post-approval study or other requirements,
including the requirement that we or our pharmaceutical
licensees institute and follow a special risk management plan to
monitor and manage potential safety issues, all of which may
eliminate or reduce the drugs market potential.
Post-market evaluation of a product could result in marketing
restrictions or withdrawal from the market. Any or all of our
drug product candidates may not receive FDA approval, even if we
resume research and development activities.
If we
seek to market our products in foreign jurisdictions, we may
need to obtain regulatory approval in these
jurisdictions.
In order to market our products in the European Union and many
other foreign jurisdictions, we may need to obtain separate
regulatory approvals and comply with numerous and varying
regulatory requirements. Approval procedures vary among
countries (except with respect to the countries that are part of
the European Economic Area) and can involve additional clinical
testing. The time required to obtain approval may differ from
that required to obtain FDA approval. Should we decide to market
our products abroad, we may fail to obtain foreign regulatory
approvals on a timely basis, if at all. Approval by the FDA does
not ensure approval by regulatory authorities in other
countries, and approval by one foreign regulatory authority does
not ensure approval by regulatory authorities in other foreign
countries or by the FDA. We may be unable to file for, and may
not receive, necessary regulatory approvals to commercialize our
products in any foreign market, which could adversely affect our
business prospects.
Changes
in healthcare reimbursement systems in the U.S. and abroad could
affect our revenues and profitability.
The Federal government is considering ways to change, and has
changed, the manner in which healthcare services are provided
and paid for in the U.S. Occasionally, the
U.S. Congress passes laws that impact reimbursement for
healthcare services, including reimbursement to hospitals and
physicians. States may also enact
7
legislation that impacts Medicaid payments to hospitals and
physicians. In addition, Centers For Medicare and Medicaid
Services, the federal agency responsible for administering the
Medicare program, establishes payment levels for hospitals and
physicians on an annual basis, which can increase or decrease
payments to such entities.
In particular, the recently passed health care reform
legislation and the American Recovery and Reinvestment Act of
2009 (also known as the Stimulus Package) affects funding for
and in many instances regulates healthcare treatment and
strategies. It is unclear what effect, if any, these pieces of
legislation or any other future legislation would have on our
business.
Internationally, medical reimbursement systems vary
significantly from country to country, with some countries
limiting medical centers spending through fixed budgets,
regardless of levels of patients and treatment, and other
countries requiring application for, and approval of, government
or third-party reimbursement. Even if we succeed in bringing our
products to market, uncertainties regarding future healthcare
policy, legislation and regulation, as well as private market
practices, could affect our ability to sell our products in
commercially acceptable quantities and at profitable prices.
If we
promote the off-label use of the PD2i
AnalyzerTM,
we could be subject to fines and penalties from the FDA or other
regulatory agencies.
If the FDA or another regulatory agency determines that we have
promoted off-label use of our products, we may be subject to
various penalties, including civil
and/or
criminal penalties. The FDA and other regulatory agencies
actively enforce regulations prohibiting promotion of off-label
uses and the promotion of products for which marketing clearance
has not been obtained. If the FDA or another regulatory agency
determines that our promotional materials or training
constitutes promotion of an unapproved use, it could request
that we modify our training or promotional materials or subject
us to regulatory enforcement actions, including the issuance of
a warning letter, injunction, seizure, civil fine and criminal
penalties. Although our policy is to refrain from statements
that could be considered off-labeled promotion of our products,
the FDA or another regulatory agency could disagree and conclude
that we have engaged in off-label promotion.
We
must comply with healthcare fraud and abuse laws,
and we could face substantial penalties for non-compliance and
be excluded from government healthcare programs, which would
adversely affect our business, financial condition and results
of operations.
Our business is regulated by laws pertaining to healthcare fraud
and abuse, including:
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the Federal Anti-Kickback Statute, which prohibits persons from
knowingly and willfully soliciting, offering, receiving or
providing remuneration directly or indirectly, in cash or in
kind, in exchange for or to induce either the referral of an
individual for, or the furnishing, recommending, or arranging
for, a good or service for which payment may be made under a
federal healthcare program such as Medicare and
Medicaid; and
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state law equivalents to the Anti-Kickback Statute, which may
not be limited to government-reimbursed items.
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If our operations are found to be in violation of any of these
or similar laws or regulations, we or our officers may face
significant civil and criminal penalties, damages, fines,
imprisonment and exclusions from the Medicare and Medicaid
programs. Any violations may lead to curtailment or
restructuring of our operations which could adversely affect our
ability to operate our business and our financial results. The
risk of being found in violation of these laws, is increased by
the fact that many of these laws are open to a variety of
interpretations. Any action against us for violation of these
laws, even if we successfully defend against it, could cause us
to incur significant legal expenses, divert our
managements attention from the operation of our business
and damage our reputation. If enforcement action were to occur,
our reputation and our business and financial condition may be
harmed, even if we were to prevail or settle the action.
Similarly, if the physicians or other providers or entities with
whom we do business are found not to comply with applicable
laws, they may be subject to sanctions, which could also have a
negative impact on our business.
8
Risks
Related to the Market for Our Products
Our
ability to compete successfully and achieve future revenue will
depend on our ability to protect our proprietary
technology.
It is possible that no further patents will be issued for our
potential applications and that any issued patent, may not
provide any competitive advantage to us or will be successfully
challenged, invalidated or circumvented in the future. In
addition, our competitors, many of which have substantial
resources and have made significant investments in competing
technologies, may seek to apply for and obtain patents that will
prevent, limit or interfere with our ability to make, use or
sell our products either in the United States or in
international markets.
In addition to patents, we rely on trade secrets and proprietary
know-how, which we seek to protect in part through
confidentiality and proprietary information agreements and limit
access to and distribution of our proprietary information. Such
measures may not provide adequate protection for our trade
secrets or other proprietary information. In addition, our trade
secrets or proprietary technology may become known or be
independently developed by competitors. Our failure to protect
our proprietary technology could have a material adverse effect
on our business, financial condition and results of operations.
Any
future litigation over intellectual property rights would likely
involve significant expense on our part and distract our
management.
Our ability to compete successfully and achieve future revenue
will depend in part on our ability to operate without infringing
on the rights of others and our ability to enforce our own
intellectual property rights. Litigation or claims could result
in substantial costs and diversion of resources and could have a
material adverse effect on our business, financial condition,
and results of operations. Although there are no pending
lawsuits against us regarding our technology or notices that we
are infringing on the intellectual property rights of others,
litigation or infringement claims may arise in the future.
The
success of our various products will depend on our ability to
obtain and maintain adequate levels of third-party reimbursement
for our products.
Our ability to sell our various products will depend on our
ability to maintain adequate levels of third-party reimbursement
for use of these products by our customers. The amount of
reimbursement in the United States that is available for
clinical use of these products is expected to vary. In the
United States, the cost of medical care is funded in substantial
part by government insurance programs such as Medicare and
Medicaid, and by private and corporate health care plans.
Third-party payors may seek to deny reimbursement if they
determine that a prescribed device is not used in accordance
with cost-effective treatment methods as determined by the
payors, or is experimental, unnecessary or inappropriate.
Difficulties in obtaining reimbursement for each of our
products, or the inadequacy of the reimbursement obtained could
materially decrease any demand for our products.
The
commercial viability of our products is uncertain.
To date we have sold only a limited number of one of our
products. It is therefore possible that products developed by us
may not achieve widespread market acceptance. The degree of
market acceptance will depend upon a number of factors,
including the receipt and timing of regulatory approvals and the
establishment and demonstration in the medical community of the
clinical safety, efficacy and cost-effectiveness of our products
and their advantages over existing technologies, as well as
approved reimbursement for physicians. We may be unable to
successfully manufacture and market our products even if they
perform successfully in clinical applications. Furthermore,
physicians and the medical community in general may not accept
and utilize any products that we develop.
We
will depend on third parties to manufacture our products and the
unavailability of qualified manufacturers could restrict our
ability to obtain and sell our products.
We do not manufacture our products and we anticipate that we
will not manufacture any of our products at any time. Products
will be manufactured by either unrelated parties or strategic
partners. We may be unable to locate a
9
suitable source to manufacture our products, and even if one is
found, we will be dependent upon its performance. Delays in the
manufacture of our products or defects arising from
manufacturing could have a material adverse effect on our
business.
We
will depend on third parties to market and sell our
products.
We do not plan on establishing a large in-house sales force and
we intend to primarily enter into co-marketing, sales
and/or
licensing agreements with medical device, biotechnology and
pharmaceutical companies to take advantage of their marketing
and sales expertise and to utilize their personnel. Accordingly,
we may become dependent on the efforts of others to obtain
widespread acceptance of our products. No assurances can be
given that such parties will perform satisfactorily.
We may
be unable to keep pace with the rapid technological changes in
the biotechnology/medical device industry and as a result, our
technologies may become obsolete.
The field of biotechnology/medical devices is characterized by
significant and extremely rapid technological change. Companies
with significantly greater resources than us may compete with
our technology and products. Research and discoveries by others
may result in medical insights or breakthroughs, which may
render our technologies obsolete even before they generate any
revenue. These factors could have a material adverse effect on
our business.
Product
liability claims may have a material adverse effect on our
financial condition and results of operations.
We may be held liable if any product we develop or any product
that is made with the use of any of our technologies causes
injury or is found otherwise unsuitable. We currently have
limited product liability insurance that may not fully cover our
potential liabilities. If we attempt to obtain additional
product liability insurance coverage, this additional insurance
may be prohibitively expensive, or may not fully cover our
potential liabilities. The inability to obtain sufficient
insurance coverage at an acceptable cost or otherwise to protect
against potential product liability claims could prevent or
inhibit the commercialization of products developed by us or our
collaborative partners. Any adverse judgments against us which
exceed our insurance coverage would have a material adverse
effect on our financial condition and results of operations.
We
face competition in the market for diagnostic devices, including
from substantially larger companies with greater resources,
which may result in others discovering, developing or
commercializing competing products quicker or more successfully
than us.
Although our direct competition in the area of noninvasive
diagnostic tools for cardiology and the autonomic nervous system
is currently limited, we face competition from companies who
develop medical devices or screening tests that diagnose cardiac
disease and this competition is likely to increase. Our success
will depend on our ability to establish and maintain a market
for our products as well as keep pace with technological changes
affecting our industry. Many of our current as well as
prospective competitors have substantially greater capital
resources, name recognition, research and development,
regulatory, manufacturing and marketing capabilities which may
lead to their discovering, developing or commercializing
competing products faster or more effectively than us. Many of
these competitors offer broad, well-established product lines
and ancillary services not offered by us. Some of our
competitors or prospective competitors also enjoy long-term or
preferential supply arrangements with physicians and hospitals
which may act as a barrier to our market entry.
Risks
Related to our Common Stock
The
trading of our common stock on the OTCBB and the designation of
our common stock as a penny stock could impact the
trading market for our common stock.
Our securities, traded on the
Over-the-Counter
Bulletin Board (OTC Bulletin Board), are
subject to SEC rules that impose special sales practice
requirements on broker-dealers who sell these securities to
persons other than established customers or accredited
investors. For the purposes of the rule, the phrase
accredited investors
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means, in general terms, institutions with assets in excess of
$5,000,000, or individuals having a net worth in excess of
$1,000,000 or having an annual income that exceeds $200,000 (or
that exceeds $300,000 when combined with a spouses
income). For transactions covered by the rule, the broker-dealer
must make a special suitability determination for the purchaser
and receive the purchasers written agreement to the
transaction before the sale. Consequently, the rule may affect
the ability of broker-dealers to sell our securities and also
may affect the ability of purchasers to sell their securities in
any market that might develop.
In addition, the SEC has adopted a number of rules to regulate
penny stock that restrict transactions involving
these securities, including
Rules 3a51-1,
15g-1,
15g-2,
15g-3,
15g-4,
15g-5,
15g-6,
15g-7, and
15g-9 under
the Exchange Act. These rules may have the effect of reducing
the liquidity of penny stocks. Penny stocks
generally are equity securities with a price of less than $5.00
per share (other than securities registered on certain national
securities exchanges, including the NASDAQ Stock Exchange) if
current price and volume information with respect to
transactions in such securities is provided by the exchange.
Because our common stock may constitute penny stock
within the meaning of the rules, the rules would apply to us and
to our securities. If our securities are subject to the penny
stock rules, stockholders may find it more difficult to sell
their securities. Stockholders should be aware that, according
to the SEC, the market for penny stocks has suffered from
patterns of fraud and abuse. Such patterns include
(i) control of the market for the security by one or a few
broker-dealers that are often related to the promoter or issuer;
(ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases;
(iii) boiler room practices involving
high-pressure sales tactics and unrealistic price projections by
inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker- dealers;
and (v) the wholesale dumping of the same securities by
promoters and broker-dealers after prices have been manipulated
to a desired level, resulting in investor losses.
Our
shares of common stock are thinly traded, and the price may not
reflect our value; there can be no assurance that there will be
an active market for our shares now or in the
future.
We have a trading symbol for our common stock
(VCRT.OB), which permits our shares to be quoted on
the
Over-the-Counter
Bulletin Board (OTCBB), which is a quotation
medium for subscribing members, not an issuer listing service.
However, our shares of common stock are thinly traded, and the
price, if traded, may not reflect our value. There can be no
assurance that there will be an active market for our shares of
common stock either now or in the future. The market liquidity
will be dependent on the perception of our operating business
and any steps that our management might take to bring us to the
awareness of investors. There can be no assurance given that
there will be any awareness generated.
Consequently, investors may not be able to liquidate their
investment or liquidate it at a price that reflects the value of
the business. If a more active market should develop, the price
may be highly volatile. Because there may be a low price for our
shares of common stock, many brokerage firms may not be willing
to effect transactions in the securities. Even if an investor
finds a broker willing to effect a transaction in the shares of
our common stock, the combination of brokerage commissions,
transfer fees, taxes, if any, and any other selling costs may
exceed or greatly reduce the selling price. Further, many
lending institutions will not permit the use of such shares of
common stock as collateral for any loans.
Substantial
future sales of shares of our common stock in the public market
could cause our stock price to fall.
If our stockholders sell substantial amounts of our common stock
or the public market perceives that stockholders might sell
substantial amounts of our common stock, the market price of our
common stock could decline significantly. Such sales also might
make it more difficult for us to sell equity or equity-related
securities in the future at a time and price that our management
deems appropriate. As of May 25, 2010 we have outstanding
45,552,834 shares of common stock and we are required to
issue additional shares upon (i) the exercise of
outstanding options and warrants, and (ii) the conversion
of outstanding Series A Convertible Preferred Stock,
Series B Junior Convertible Cumulative Preferred Stock,
8% Subordinated Convertible Notes and the
12% Convertible Notes into shares of our common stock,
which could exceed 25,000,000 shares depending upon the
price of our common stock.
11
We do
not pay cash dividends to our stockholders and have no plans to
pay cash dividends in the future.
We plan to retain earnings, if any, to finance future growth and
have no plans to pay cash dividends to stockholders. Because we
do not pay cash dividends, holders of our securities will
experience a gain on their investment in our securities only in
the case of an appreciation of value of our securities.
Our
officers, directors and principal stockholders controlling
approximately 20% of our outstanding common stock can exert
significant influence over us and may make decisions that are
not in the best interests of all stockholders.
Our officers, directors and principal stockholders (greater than
5% stockholders) collectively control approximately 20% of our
outstanding common stock, exclusive of outstanding options and
warrants. As a result, these stockholders will be able to affect
the outcome of or exert significant influence over all matters
requiring stockholder approval, including the election and
removal of directors and any change in control. In particular,
this concentration of ownership of our common stock could have
the effect of delaying or preventing a change of control or
otherwise discouraging or preventing a potential acquirer from
attempting to obtain control of the Company. This in turn could
have a negative effect on the market price of our common stock.
It could also prevent our stockholders from realizing a premium
over the market prices for their shares of common stock.
Moreover, the interests of this concentration of ownership may
not always coincide with our interests or the interests of other
stockholders and, accordingly, they could cause us to enter into
transactions or agreements that we would not otherwise consider.
Anti-takeover
provisions may limit the ability of another party to acquire us,
which could negatively affect our stock price.
Provisions of our certificate of incorporation and bylaws could
make it more difficult for a third party to acquire us, even if
doing so would be perceived to be beneficial to our
stockholders. The combination of these provisions, as well as
Delaware law, effectively inhibits a non-negotiated merger or
other business combination, which in turn could adversely affect
the market price of our common stock. In addition, these
provisions could limit the price investors would be willing to
pay in the future for shares of our common stock.
The
market of our common stock could vary significantly based on
market perceptions of the status of our development
efforts.
The perception of the investing public and securities analysts
regarding our product development efforts could significantly
affect our stock price. As a result, the market price of our
common stock has and could in the future change substantially
when we or our competitors make product announcements. Many
factors affecting our stock price are industry related and
beyond our control.
Risks
Related to this Offering
Our
management team will have immediate and broad discretion over
the use of the net proceeds from this offering.
There is no minimum offering amount required as a condition to
closing this offering and therefore net proceeds from this
offering will be immediately available to our management to use
at their discretion. We intend to use the net proceeds for
general corporate purposes, including our working capital needs.
Their judgments may not result in positive returns on your
investment and you will not have an opportunity to evaluate the
economic, financial or other information upon which our
management bases its decisions.
You
will experience immediate and substantial dilution as a result
of this offering and may experience additional dilution in the
future.
You will incur immediate and substantial dilution as a result of
this offering. After giving effect to the sale by us of up
to
units offered in this offering at a public offering price of
$ per unit, and after deducting
the placement agency fees and commissions and estimated offering
expenses payable by us, investors in this offering
12
can expect an immediate dilution of
$ per share,
or %, at the public offering price,
assuming no exercise of the warrants. In addition, in the past,
we issued options and warrants to acquire shares of common stock
and Series A Convertible Preferred Stock, Series B
Junior Convertible Cumulative Preferred Stock,
8% Subordinated Convertible Notes and the
12% Convertible Notes which are convertible into shares of
common stock. To the extent these options are ultimately
exercised or the conversion right of these convertible
securities is exercised, you may sustain future dilution. We may
also acquire or license other technologies or finance strategic
alliances by issuing equity, which may result in additional
dilution to our stockholders.
There
is no public market for the warrants to purchase common stock in
this offering.
There is no established public trading market for the warrants
being offered in this offering, and we do not expect a market to
develop. In addition, we do not intend to apply for listing the
warrants on any securities exchange. Without an active market,
the liquidity of the warrants will be limited.
The
offering may not be fully subscribed, and, even if the offering
is fully subscribed, we may need additional capital in the
future. If additional capital is not available, we may not be
able to continue to operate our business pursuant to our
business plan or we may have to discontinue our operations
entirely.
The placement agents in this offering will offer the units on a
reasonable best-efforts basis, meaning that we may
raise substantially less than the total maximum offering
amounts. No refund will be made available to investors if less
than all of the units are sold. Further, during 2008, 2009 and
the three months ended March 31, 2010, we used a
significant amount of cash to finance the continued development
of our products, and obtain regulatory approvals and clearances.
If after this offering we still need significant additional
financing, we may seek to raise such funds through, among other
things, public and private equity offerings and debt financings.
Any equity financings may be dilutive to existing stockholders,
and any debt financings will likely involve covenants
restricting our business activities. Finally, such additional
financing may not be available on acceptable terms, or at all.
USE OF
PROCEEDS
We estimate that the net proceeds to us from the sale of units
in this offering, assuming gross proceeds of
$ million (which is the
amount of gross proceeds received if the offering is fully
subscribed), will be approximately
$ million, after deducting
the placement agent fees and estimated expenses of this
offering. In addition, if all of the warrants included in the
units offered pursuant to this prospectus are exercised in full
for cash, we will receive approximately an additional
$ million in cash. We may not
be successful in selling any or all of the securities offered
hereby. Because there is no minimum offering amount required as
a condition to closing in this offering, we may sell less than
all of the securities offered hereby, which may significantly
reduce the amount of proceeds received by us. In addition, the
warrants included in the units offered pursuant to this
prospectus may not be exercised at all, or if they are
exercised, may be exercised on a cash-less basis.
We expect to use any proceeds received from the offering for the
following purposes: (i) the repayment of approximately
$300,000 in bank debt, (ii) to increase staffing, including
sales and marketing personnel, (iii) to
build-up our
inventory, and (iv) for general corporate purposes,
including working capital needs. Our bank debt currently
consists of unsecured loans of $200,000 and $100,000 made by
Branch Banking and Trust Company (BB&T) as the lender
under a loan agreement. The $200,000 loan matures in January
2011 and bears interest at 3.54%, and the $100,000 loan matures
in October 2010 and bears interest at 4.83%. Our management will
have broad discretion in the application of the net proceeds of
this offering. Investors will be relying on the judgment of our
management regarding the application of the proceeds of any sale
of the securities. We reserve the right to change the use of
proceeds as a result of certain contingencies such as
competitive developments, opportunities to acquire technologies
or products and other factors.
We may invest the net proceeds received from this offering
temporarily until we use them for general corporate purposes.
13
DILUTION
Our reported net tangible book value as of March 31, 2010
was $ , or
$ per share of common stock, based
upon shares outstanding as of that date. Net tangible book value
per share is determined by dividing such number of outstanding
shares of common stock into our net tangible book value, which
is our total tangible assets less total liabilities. After
giving effect to the sale of the units offered in this offering
at the offering price of $ per
unit, at March 31, 2010 (and excluding shares of common
stock issued and any proceeds received upon exercise of the
warrants), after deducting placement agent fees and other
estimated offering expenses payable by us, and the mandatory
conversion of the shares of Series B Junior Convertible
Cumulative Preferred Stock at a conversion price of
$ per share, the
8% Subordinated Convertible Notes at a conversion price of
$ per share and the
12% Convertible Notes at a conversion price of
$ per share into shares of our
common stock as a result of the offering, our net tangible book
value at March 31, 2010 would have been approximately
$ , or
$ per share. This represents an
immediate increase in net tangible book value of approximately
$ per share to our existing
stockholders, and an immediate dilution of
$ per share to investors
purchasing units in the offering.
The following table illustrates the per share dilution to
investors purchasing units in the offering:
|
|
|
Public offering price per unit
|
|
|
Net tangible book value per share as of March 31, 2010
|
|
|
Increase per share attributable to sale of units to investors
|
|
|
Increase per share attributable to mandatory conversion of
Series B Junior Convertible Cumulative Preferred Stock
|
|
|
Increase per share attributable to mandatory conversion of
8% Subordinated Convertible Notes
|
|
|
Increase per share attributable to mandatory conversion of the
12% Convertible Notes
|
|
|
As adjusted net tangible book value per share after the offering
and mandatory conversions
|
|
|
Dilution per share to investors
|
|
|
Dilution as a percentage of the offering price
|
|
|
The foregoing illustration does not reflect potential dilution
from the exercise of outstanding options or warrants to purchase
shares of our common stock, from the conversion of the
Series A Convertible Preferred Stock, and from the exercise
of the warrants included in the offered units and the placement
agent warrants.
14
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock has been quoted on the OTC Bulletin Board
under the symbol VCRT.OB since July 9, 2007.
The market for our common stock is limited and volatile. The
following table sets forth the range of high and low bid
quotations for our common stock for each of the periods
indicated as reported by the OTC Bulletin Board. The prices
quoted on the OTC Bulletin Board reflect inter-dealer
prices, without retail
mark-up or
markdown or commissions. The OTC Bulletin Board prices
listed below may not represent actual transaction prices.
|
|
|
|
|
|
|
|
|
|
|
High
|
|
Low
|
|
First Quarter 2010
|
|
$
|
0.90
|
|
|
$
|
0.52
|
|
Second Quarter 2010 (through May 25, 2010)
|
|
$
|
0.88
|
|
|
$
|
0.50
|
|
First Quarter 2009
|
|
$
|
1.06
|
|
|
$
|
0.36
|
|
Second Quarter 2009
|
|
$
|
0.90
|
|
|
$
|
0.55
|
|
Third Quarter 2009
|
|
$
|
1.00
|
|
|
$
|
0.69
|
|
Fourth Quarter 2009
|
|
$
|
0.95
|
|
|
$
|
0.55
|
|
First Quarter 2008
|
|
$
|
1.49
|
|
|
$
|
.052
|
|
Second Quarter 2008
|
|
$
|
1.00
|
|
|
$
|
.051
|
|
Third Quarter 2008
|
|
$
|
0.71
|
|
|
$
|
.025
|
|
Fourth Quarter 2008
|
|
$
|
0.70
|
|
|
$
|
0.25
|
|
On May 25, 2010 the closing sales price of our common stock
as reported on the OTC Bulletin Board was $0.80 per share.
As of May 25, 2010 there were 629 record holders of our
common stock. Our transfer agent is Continental Stock
Transfer & Trust Company.
DIVIDEND
POLICY
We have not in the past and do not intend in the foreseeable
future to pay or declare any cash dividends. We are prohibited
from paying any cash dividends to our common stockholders until
all accrued and unpaid dividends on our Series A
Convertible Preferred Stock and Series B Junior Convertible
Cumulative Preferred Stock have been paid in full and all
principal amounts due and payable under our 8% Subordinated
Convertible Notes have been paid in full. The declaration of any
dividends on our common stock in the future is subject to the
discretion of our board of directors and will depend on various
factors, including our results of operations, financial
condition, future prospects and any other factors, including
contractual obligations, deemed relevant by our board of
directors.
15
CAPITALIZATION
The following table sets forth our actual capitalization at
March 31, 2010 and our capitalization as adjusted to
reflect (i) the estimated net proceeds we will receive from
the sale
of
units offered by this prospectus at an assumed offering price of
$ per unit, after deducting the
placement agency fees and estimated offering expenses payable by
us; (ii) the mandatory conversion of shares of
Series B Junior Convertible Cumulative Preferred Stock,
8% Subordinated Convertible Notes and the
12% Convertible Notes into shares of common stock. You
should read this table together with our consolidated financial
statements and the accompanying notes, and
Managements Discussion and Analysis of Financial
Condition and Results of Operations and Use of
Proceeds included elsewhere in this prospectus.
|
|
|
|
|
|
|
|
|
|
|
At March 31, 2010
|
|
|
|
Actual
|
|
|
As Adjusted
|
|
|
Cash
|
|
$
|
308,000
|
|
|
|
|
|
Current debt
|
|
|
660,000
|
|
|
|
|
|
Long-term debt
|
|
|
1,172,000
|
|
|
|
|
|
Net capital deficiency:
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value; 10,000,000 shares
authorized:
|
|
|
|
|
|
|
|
|
Series A Convertible Cumulative, 157,592 shares issued
and outstanding at March 31, 2010 and on an as adjusted
basis
|
|
|
|
|
|
|
|
|
Series B Voting Junior Convertible Cumulative,
5,210,101 shares issued and outstanding at March 31,
2010 and 0 shares issued and outstanding on an as adjusted
basis
|
|
|
|
|
|
|
|
|
Common stock, $0.0001 par value; 100,000,000 shares
authorized; 42,933,973 shares issued and outstanding at
March 31, 2010
and shares
issued and outstanding on an as adjusted basis
|
|
|
4,000
|
|
|
|
|
|
Additional paid-in capital
|
|
|
47,952,000
|
|
|
|
|
|
Deficit accumulated during the development stage
|
|
|
(55,910,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net capital deficiency
|
|
|
(7,954,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
946,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
OUR
BUSINESS
Business
History
We were originally incorporated in the State of Delaware on
May 24, 2005 as SRKP 6, Inc., which we refer to as SRKP. On
August 3, 2005 we filed a registration statement on
Form 10-SB,
subsequently amended on August 29, 2005, to register our
common stock under the Securities Exchange Act of 1934, as
amended (the Exchange Act). The registration
statement became effective on October 3, 2005, after which
time we became a reporting company under the Exchange Act. We
were formed to pursue a business combination with one or more
operating companies.
On March 30, 2007 we acquired Vicor Technologies, Inc., a
Delaware corporation, which we refer to as Old Vicor, formed in
August 2000, through the merger of Old Vicor with a wholly-owned
subsidiary formed for the purpose of facilitating that
transaction, which we refer to as the Merger. Upon the closing
of the Merger on March 30, 2007, Old Vicor became our
wholly-owned subsidiary. Effective March 31, 2007 we merged
Old Vicor into our company and changed our name to Vicor
Technologies, Inc. At the closing each outstanding share of Old
Vicor common stock was cancelled and automatically converted
into the right to receive two shares of our common stock. We
also assumed all outstanding options and warrants to purchase
Old Vicor common stock which were not exercised, cancelled,
exchanged, terminated, or expired. Upon the consummation of the
Merger, we were obligated to issue an aggregate of
22,993,723 shares of our common stock to Old Vicors
former common stockholders and 157,592 shares of our
Series A Convertible Cumulative Preferred Stock to Old
Vicors former preferred stockholder. In addition, all
securities convertible or exercisable into shares of Old
Vicors capital stock outstanding immediately prior to the
Merger (excluding Old Vicors preferred stock and
convertible debt) were cancelled, and the holders thereof
received similar securities for the purchase of an aggregate of
800,250 shares of our common stock.
The Merger was accounted for as a reverse acquisition, to be
applied as an equity recapitalization in accordance with
U.S. generally accepted accounting principles for
accounting and financial reporting purposes. Under this method
of accounting, SRKP was treated as the acquired
company for financial reporting purposes. In accordance with
guidance applicable to these circumstances, the Merger was
considered to be a capital transaction in substance.
Accordingly, for accounting purposes, the Merger was treated as
the equivalent of Old Vicor issuing stock for the net monetary
assets of SRKP, accompanied by a recapitalization. The net
monetary assets of SRKP were stated at their fair value,
essentially equivalent to historical costs, with no goodwill or
other intangible assets recorded. The accumulated deficit of Old
Vicor was carried forward after the Merger. Operations prior to
the Merger are those of Old Vicor.
Overview
We are a medical diagnostics company focused on commercializing
noninvasive diagnostic technology products based on our
patented, proprietary point correlation dimension algorithm (the
PD2i®
Algorithm). The
PD2i®
Algorithm and software facilitates the ability to accurately
risk stratify a specific target population to predict future
pathological events, such as cardiac death (which includes
arrhythmic death and congestive heart failure death), imminent
death from trauma and autonomic nervous system dysfunction. We
believe that the
PD2i®
Algorithm and software represents a noninvasive monitoring
technology that physicians and other members of the medical
community can use as a new and accurate vital sign. We are
currently commercializing two proprietary diagnostic medical
products which employ software utilizing the
PD2i®
Algorithim: the PD2i
Analyzertm
(sometimes referred to as the PD2i Cardiac
Analyzertm)
and the
PD2i-VSTM
(Vital Sign). It is also anticipated that the
PD2i®
Algorithm and software applications will allow for the early
detection of Alzheimers Disease and other disorders and
diseases.
We own all of the outstanding common stock of Nonlinear
Medicine, Inc., a Delaware corporation (NMI), and
Stasys Technologies, Inc., a Delaware corporation
(STI). NMI owns all of our intellectual property
related to our diagnostic products, and STI owns all of our
intellectual property related to our therapeutic products.
Our first product, the PD2i
Analyzertm,
received 510(k) marketing clearance to measure heart rate
variability from the FDA on December 29, 2008. It displays
and analyzes electrocardiographic (ECG) information and measures
heart rate variability (HRV) in patients at rest and
in response to controlled exercise and paced respiration. The
PD2i
Analyzertm
applies patented and proprietary technology to analyze a high
resolution
17
electrocardiograph (ECG) signal, and measure R-wave intervals .
The clinical significance of HRV and other parameters must be
determined by a physician. We commenced sales of the PD2i
Analyzertm
in January 2010. We also entered into an exclusive distribution
agreement with VF Medical, a medical products distribution
company, for South Carolina, North Carolina, and the cities of
Savannah and Augusta, Georgia. VF Medical will utilize a
25-person
medical products distribution team consisting of agents who have
long-term relationships with cardiologists,
electrophysiologists, and family practice and internal medicine
physicians within the designated territory. We are seeking other
distributors and have begun hiring sales personnel in selected
geographic areas.
The PD2i
Analyzertm
consists of a private-label digital electrocardiograph device
that incorporates automated blood pressure recording and a
laptop computer which utilizes proprietary collection software.
The PD2i
Analyzertm
accesses the internet and sends recorded electrocardiograph
files to our remote server where the files are analyzed by our
proprietary algorithm and software. The analyzed results are
then provided to the physician in an electronic health record
together with a report and information which the physician can
use to bill both public and private insurers. Established CPT
codes allow the physician to currently bill and collect from
both public and private insurers. Vicor bills the physician
monthly for the number of tests performed, thus enabling us to
realize revenue from the recurring use of the PD2i
Analyzertm
in addition to revenue realized from the sale of the device. We
anticipate making various submissions to the FDA for marketing
clearance for the PD2i
Analyzertm
for additional medical claims, related to cardiology, imminent
death from trauma and possibly the diagnosis of diseases related
to autonomic nervous system dysfunction. Approval from the FDA
would allow us to expand and accelerate our marketing efforts.
Technology
Background
The
PD2i®
Algorithm provides a method for evaluating heart rate
variability electrophysiological potentials (from
electrocardiograms) with a high sensitivity and high specificity
which can be used to predict future pathological events, such as
cardiac death, including arrhythmic death, and congestive heart
failure death, imminent death from trauma and autonomic nervous
system dysfunction. The
PD2i®
Algorithm is designed to detect deterministic, low-dimensional
excursions in nonstationary heartbeat intervals. We believe the
PD2i®
Algorithm is superior because it uses an analytic measure that
is deterministic and nonlinear; it actually tracks nonstationary
changes in the data and does not require stationarity. It is
sensitive to chaotic, as well as nonchaotic linear data.
The PD2i
Analyzertm
works as follows. The patient is connected using either the four
leads required for the PD2i
Analyzertm
testing or the full 12 leads, if desired. Once started, the
device will prompt the operator and patient through each test.
Subtle changes in HRV are detected and ratios are automatically
calculated. The PD2i
Analyzertm
ensures excellent quality and reliability of results and
automatic internal quality editing.
The PD2i
Analyzertm
applies patented and proprietary technology to analyze a high
resolution electrocardiograph (ECG) signal, and measure R-wave
intervals. The PD2i
Analyzertm
ratios that result are compared to an age-specific normal range
automatically. The test can be performed in an office in about
20 minutes. It requires the recumbent patient to perform:
(i) a deep breathing exercise, (ii) a Valsalva
maneuver, and then (iii) to stand for two minutes. A report
is automatically generated at the end of the test. The test data
is relayed via Internet, between the physicians office and
a secure data processing site. The report (which is EHR
compliant) is then returned to the PD2i
Analyzertm
in under one minute, where it can be printed, faxed, or emailed.
Additionally, a physician or technician can access their patient
files for viewing from any web browser allowing for true
portability. The report from the PD2i
Analyzertm
includes the
PD2i®
score, the Ewing ratios and a 12 second ECG rhythm strip.
Our technology provides novel solutions to recognized problems
associated with HRV analysis. The results are easily interpreted
against a device-specific normal range, are automated and
computerized. Quality assurance of the integrity of the results
obtained comes from the fact that the algorithm used for the HRV
analysis is not affected by irregularities in heart rhythm or
intrinsic heart disease. The PD2i
Analyzertm
also provides a noise-filtering and
noise-correcting feature that further ensures the
quality of its measurements.
18
Diagnosis
of Diseases
Cardiovascular
Disease
Statistics from 2006 (which are the most current statistics
published by the American Heart Association) estimate that
81,100,000 people in the United States have one or more
forms of cardiovascular disease including high blood pressure,
coronary heart disease and heart failure. Cardiovascular disease
claimed an estimated 831,272 lives in 2006 which represented 1
out of every 2.9 deaths or approximately 33%. The majority of
patients with cardiovascular disease fall into two categories,
congestive heart failure patients and cardiac ischemia patients.
Congestive
Heart Failure
Congestive heart failure or heart failure, which we refer to as
CHF, is a condition in which the heart cannot pump enough blood
to the bodys other organs. This can result from any of the
following conditions:
|
|
|
|
|
narrowed arteries that supply blood to the heart muscle, which
is referred to as coronary artery disease;
|
|
|
|
past heart attack, or myocardial infarction, with scar tissue
that interferes with the heart muscles normal work;
|
|
|
|
high blood pressure;
|
|
|
|
heart valve disease due to past rheumatic fever or other causes;
|
|
|
|
primary disease of the heart muscle itself, called
cardiomyopathy;
|
|
|
|
heart defects present at birth, which is referred to as
congenital heart defects; and
|
|
|
|
infection of the heart valves
and/or heart
muscle itself, which is referred to as endocarditis
and/or
myocarditis.
|
The failing heart continues working but not as
efficiently as it should. People with congestive heart failure
become short of breath and tired when they exert themselves.
As blood flow out of the heart slows, blood returning to the
heart through the veins backs up, causing congestion in the
tissues. Often swelling, or edema, results typically
in the legs and ankles, but swelling may occur in other parts of
the body too. Fluid may also collect in the lungs and interfere
with breathing, causing shortness of breath, especially when a
person is lying down. Congestive heart failure also affects the
kidneys ability to dispose of water and sodium. The
retained water in turn increases the swelling.
The most common signs of congestive heart failure are swollen
legs or ankles or difficulty breathing. Another symptom is
weight gain as a result of fluid build up.
A doctor needs to properly tailor a treatment program to an
individual patient. Depending on the severity of the disease,
most people with mild and moderate congestive heart failure can
be treated. A treatment program can consist of:
|
|
|
|
|
rest;
|
|
|
|
proper diet;
|
|
|
|
modified daily activities; and
|
|
|
|
drugs such as:
|
|
|
|
|
|
ACE (angiotensin-converting enzyme) inhibitors;
|
|
|
|
beta blockers;
|
|
|
|
digitalis;
|
|
|
|
diuretics; and
|
|
|
|
vasodilators.
|
19
ACE inhibitors and vasodilators expand blood vessels and
decrease resistance. This allows blood to flow more easily and
makes the hearts work more efficient or easier. Beta
blockers can improve how well the hearts left ventricle
pumps. Digitalis increases the pumping action of the heart,
while diuretics help the body eliminate excess water and sodium.
When a specific cause of congestive heart failure is discovered,
it should be treated or, if possible, corrected through the use
of medications or implantable devices, such as a Cardiac
Resynchronization Therapy-Defibrillator (CRT-D) or Left
Ventricular Assist Devices (LVAD). For example, certain cases of
congestive heart failure can be treated by treating high blood
pressure and in other instances if the heart failure is caused
by an abnormal heart valve, the abnormal heart valve can be
surgically replaced. If the heart becomes so damaged that it
cannot be repaired, a more drastic approach, such as a heart
transplant, may need to be considered as an option.
Cardiac
Ischemia
Ischemia is a condition that occurs when blood flow and oxygen
are restricted from a particular part of the body. Cardiac
ischemia is the name for the condition of lack of blood flow and
oxygen to the heart. Ischemic heart disease is a term that
covers heart problems caused by a narrowing of the arteries.
Less blood and oxygen are able to reach the heart muscle when
arteries are narrowed. This is also referred to as coronary
artery disease or coronary heart disease and this condition may
ultimately lead to a heart attack.
Ischemia often causes chest pain or discomfort known as angina
pectoris. The American Heart Association estimates however that
as many as 3 to 4 million Americans may have ischemic
episodes and not even know they are suffering these episodes.
These people have ischemia without pain, or silent ischemia, and
they may have a heart attack without prior warning. People with
angina also may have undiagnosed episodes of silent ischemia.
Additionally, people who have suffered previous heart attacks or
have diabetes are at a higher risk for developing silent
ischemia. An exercise test or wearing a
24-hour
portable monitor, which is referred to as the Holter monitor,
that measures and records your electrocardiogram continuously
during a
24-48 hour
period are two tests that are often used to diagnose this
problem, although other tests may also be used.
Arrhythmic
Death
Arrhythmic death (sometimes referred to as sudden cardiac death
or SCD) is a sudden, unexpected death caused by loss of heart
function. It is the largest cause of natural death in the United
States (in excess of 300,000 adult deaths). Arrhythmic death is
caused by arrhythmias (abnormal heart rhythms). The most common
life-threatening arrhythmia is ventricular fibrillation, an
erratic, disorganized firing of impulses from the ventricles.
When this occurs, the heart is unable to pump blood, and death
will occur within minutes if left untreated.
Arrhythmic death is not a heart attack. A heart attack occurs
due to blockage in one or more of the coronary arteries that
feed the heart muscle, resulting in lack of blood flow to the
heart muscle and consequential heart muscle damage. In contrast,
during arrhythmic death, the electrical system to the heart
suddenly becomes irregular. The ventricles may flutter or quiver
(ventricular fibrillation), and blood is not delivered to the
body. Of greatest concern in the first few minutes is that blood
flow to the brain will be reduced so drastically that a person
will lose consciousness. Death follows unless emergency
treatment is begun immediately.
Survival can be as high as approximately 90% if treatment is
initiated within the first few minutes after symptoms develop.
The survival rate decreases by about 10% each minute treatment
is delayed. Proper evaluation by a physician can prevent
arrhythmic death through an implantable cardiac defibrillator
(ICD). There are approximately 13 million
people who currently meet the criteria to receive an insurance
paid ICD. The risk stratification criteria to include patients
for ICD implantation was established by three clinical trials:
the Multicenter Unsustained Tachycardia Trial (MUSTT), the
Multicenter Automatic Defibrillation Trial (MADIT-II) and Sudden
Cardiac Death Heart Failure Trial (SCD-HeFT).
The principal causes of death for cardiovascular patients is
either arrhythmic death or congestive heart failure death (pump
failure).
20
Diagnostic
Tools for Pump Failure Death and Arrhythmic Death
There presently are no readily available diagnostic tools that
enable the easy identification of patients at elevated risk of
pump failure death.
In early 2009, Vicor signed a Research Agreement with the
University of Rochester and the Catalan Institute of
Cardiovascular Sciences in Barcelona to collaborate on the
PD2i®
analysis of data collected for the Merte Subita en
Insufficiencia Cardiaca (MUSIC) Trial. The collaboration is
entitled Prognostic Significance of Point Correlation
Dimension Algorithm (PD2i) in Chronic Heart Failure. The
goal of the study was to evaluate the ability of our
PD2i®
nonlinear algorithm to predict cardiac events in the 537 chronic
heart failure patients enrolled in the MUSIC Trial; MUSIC Trial
participants were followed for an average period of
44 months. The conclusion of the University of Rochester
researchers who conducted the study is that the
PD2i®
nonlinear algorithm and software is predictive of total
mortality, cardiac death, and heart failure death in patients
with left ventricular ejection fraction of less than or equal to
35%, which refers to the percentage of blood pumped out of the
left ventricle with each heart beat. With a P value of 0.004 the
study results are highly statistically significant. Researchers
from the University of Rochester and our scientists are studying
these initial results to determine whether the resulting data
will support a 510(k) submission to the FDA for a marketing
claim that in congestive heart failure patients with left
ventricular ejection fraction of less than or equal to 35% who
have a
PD2i®
score less than or equal to 1.4, there is a substantially
elevated risk of total mortality, cardiac mortality and pump
failure mortality. We believe that the results from this trial
may broaden the market for the PD2i
Analyzertm
as a diagnostic tool that will significantly contribute to
cardiologists in their assessment of treatment options for heart
failure patients.
Current diagnostic tests to determine patients at risk of
arrhythmic death include noninvasive diagnostic tools such as an
electrocardiogram or ECG, ambulatory monitoring,
echocardiography, cardiac stress test and invasive diagnostic
tools, such as cardiac catheterization or an electrophysiology
study.
The current invasive diagnostic tools to determine patients at
risk of arrhythmic death have all of the risks that accompany
any major surgery. Additionally, we believe that existing
noninvasive tools suffer from three significant drawbacks.
First, the current noninvasive diagnostic tools are inaccurate
because (a) they are insensitive to nonlinearities in the
data, (b) they assume random variation in the data
(stochastic) and (c) the system generating the data cannot
change during the recording. Second, the current noninvasive
diagnostic tools require a stress test, which involves risk for
patients.
Background
of Autonomic Nervous System Testing
Autonomic Nervous System Dysfunction is among the least
recognized and understood serious complications of diabetes. It
often manifests itself as diabetic autonomic neuropathy (DAN),
which impacts the entire autonomic nervous system. It causes
substantial morbidity and increased mortality, particularly if
cardiovascular autonomic neuropathy (CAN) is present. The
American Diabetes Association recommends annual screening of the
24+ million diabetics for DAN. The most common non-invasive
method of diagnosis is heart rate variability testing in
patients at rest and in response to three maneuvers (commonly
referred to as the Ewing maneuvers). Those maneuvers include
metronomic breathing, the Valsalva maneuver and rising from a
recumbent position to standing, all of which stress components
of the autonomic nervous system.
Clinical tests employing HRV analysis have been extensively
studied and published by medical researchers over the last forty
years in the United States and internationally. This research
has demonstrated the potential for the application of HRV tests
to include cardiac and cardiovascular risk stratification and
for identifying the presence of autonomic neuropathy, a
condition which is particularly prevalent among people with
diabetes. Several HRV-measuring devices are now used as tools
for evaluating patients for the presence of autonomic
neuropathy. Many such devices have been designed with a focus on
the diabetic population, but despite the growing incidence of
diabetes, these devices have not yet been widely adopted by
clinicians.
The diabetes market still represents a largely untapped market
for technology able to facilitate objective identification of
autonomic nervous system dysfunction and autonomic neuropathy.
If not diagnosed prior to the manifestation of autonomic
neuropathic symptoms, diabetics are at significantly greater
risk of developing debilitating or fatal end-organ damage, which
is more difficult and more expensive to treat than in its early
stages.
21
Diagnostic
Tools for Autonomic Nervous System
In 1996, specific measurement of HRV was recognized by the
European Society of Cardiology and the North American Society of
Pacing and Electrophysiology (now known as the Heart Rhythm
Society) as a predictor of risk after acute myocardial
infarction (MI) and as an early warning sign of diabetic
neuropathy. Since that time, a vast amount of research and
experience has been collected and reviewed by medical societies
and researchers worldwide. Now, HRV measurement is a standard of
care for the management of people with diabetes, and in
objectively diagnosing autonomic neuropathy.
Autonomic neuropathy is highly prevalent among patients with
diabetes, and is associated with markedly heightened cardiac
risk. About 25% of diabetic adults have clinically significant
autonomic neuropathy. Since the condition is a degenerative one,
it can be graded in degrees of severity for any given patient
population. Treatment is most effective in the earlier stages of
neuropathy prior to end-organ damage, so making an early
diagnosis is important.
Even if diabetic patients are already being screened for
peripheral sensory (somatic) neuropathy, as many as 46% of them
could have autonomic neuropathy without having sensory
neuropathy. It has been demonstrated in various studies that,
for individuals with either type 1 or type 2 diabetes, a
positive test for (i) vibration perception threshold, or
(ii) the presence of peripheral neuropathy or chronic
painful neuropathy, or (iii) abnormal nerve conduction
studies, is not necessarily associated with the presence of
autonomic neuropathy.
Furthermore, looking for autonomic symptoms is not an adequate
approach to managing autonomic neuropathy; a patients
history and physical examination are ineffective for early
detection of cardiac autonomic neuropathy (CAN); the symptoms of
autonomic neuropathy tend to occur when its development is
advanced and difficult to treat. HRV testing may also facilitate
differential diagnosis and the attribution of symptoms (e.g.,
erectile dysfunction, dyspepsia, dizziness) to autonomic
dysfunction.
Products
and Markets
PD2i
Analyzertm
The PD2i
Analyzertm
received 510(k) marketing clearance from the FDA on
December 29, 2008. The PD2i
Analyzertm
displays and analyzes electrocardiographic (ECG) information and
measures heart rate variability (HRV) in patients at
rest and in response to controlled exercise and paced
respiration. The clinical significance of HRV and other
parameters must be determined by a physician.
On January 14, 2010 we announced our first commercial sale
of the PD2i
Analyzertm
to a physician practice in South Carolina and simultaneously
announced that we had entered into an exclusive distribution
agreement with VF Medical, a medical products distribution
company. VF Medical will serve as the exclusive distributor for
the PD2i
Analyzertm
in South Carolina, North Carolina, and the cities of Savannah
and Augusta, Georgia. VF Medical will utilize a
25-person
medical products distribution team consisting of agents who have
long-term relationships with cardiologists,
electrophysiologists, family practice and internal medicine
physicians within the designated territory.
The PD2i
Analyzertm
consists of a private-label digital electrocardiograph device
that incorporates automated blood pressure recording and a
laptop computer which utilizes proprietary collection software.
This device accesses the internet and sends recorded
electrocardiograph files to our remote secure server where the
files are analyzed by our proprietary algorithm and software.
The analyzed results are then provided to the physician in an
electronic health record together with a report and information
which the physician can use to bill both public and private
insurers. Established CPT codes allow the physician to currently
bill and collect from both public and private insurers. Vicor
bills the physician monthly for the number of tests performed,
thus enabling us to realize revenue from the recurring use of
the PD2i
Analyzertm
in addition to revenue realized from the sale of the device.
PD2i-VS
We also plan on commercializing the
PD2i-VS
product. This product is being developed in collaboration
with the United States Army and is used to assess the severity
of critically injured combat casualties to determine the
22
need for immediate life saving intervention in those trauma
victims who are at high risk of imminent death. The
PD2i-VS
is anticipated to be used for civilian triage and trauma
emergency response.
In January 2008 we executed a Collaborative Research and
Development Agreement (Research and Development
Agreement) with the U.S. Army Institute of Surgical
Research (U.S. Army) for Prediction of
Injury Severity and Outcome in the Critically Ill Using the
Point Correlation Dimension Algorithm, or PD2i. The
U.S. Army is exploring ways to assess the severity of
injury and probability of survival of critically injured combat
casualties and critically ill civilian patients. The
U.S. Army, in conjunction with Vicor, is testing the PD2i
-VS Algorithm in several diverse cohorts, including human
trauma, patients in the intensive care units (ICU
Patients) and combat casualties. Various experiments have
been performed under the Research and Development Agreement and
the US Army has presented the findings at several conferences in
the United States and Europe. Manuscripts and abstracts have
also been published by leading journals with Vicor and the US
Army as co-authors.
The
PD2i-VS
has been tested through this collaboration with the US Army
in a variety of ways. The most recent data set, consisting of
325 civilian trauma files, is expected to be finalized and
submitted to the FDA in the second half of 2010 for 510(k)
marketing approval. If cleared, we can begin marketing the
PD2i-VS
for a claim of trauma triage.
Additionally, at the request of the U.S. Army, we have
substantially completed the programming necessary for the PD2i
VSTM
to operate as a continuous vital sign monitor. In this mode, the
PD2i
VSTM
provides an initial result with three minutes of collected data
and an updated result every minute thereafter. Each result is
accompanied by an audible tone, and a green, yellow, or red
light to indicate the patients change in status and alert
the emergency response team of a need for aggressive and
immediate lifesaving intervention. We have completed a
modification of the R-R detector in our software to improve its
already high sensitivity and accuracy. The accuracy of the time
intervals between each heart beat the R-R interval
is critical to the calculation of a
PD2i®
value. The enhanced version of the continuous PD2i
VSTM,
together with the improved R-R-detector should enable the US
Army to utilize our technology in an important prospective human
trial, which we believe could be the last clinical test required
before deployment.
In summary, upon receipt of expanded 510(k) marketing clearance
from the FDA, the PD2i
Analyzertm
will be marketed with specific claims for (a) a diagnostic
claim for those patients at elevated risk for cardiac mortality,
(b) normal ranges for the
PD2i®
values to facilitate physician interpretation of test results of
the PD2i
Analyzertm
and (c) a diagnostic claim for those patients at imminent
risk of death in trauma.
Regulatory
Approval Process
United States. The FDA classifies medical
devices into Class I, II and III. The amount of
regulatory control increases from Class I to
Class III. The device classification regulation defines the
regulatory requirements for a general device type. A full
premarket notification process for a Class III device is
the most detailed process, requiring the submission of clinical
data to support claims made for the device. Class II
devices require premarket notification on a 510(k) application.
A 510(k) application is a premarketing submission made to the
FDA to demonstrate that the device to be marketed is safe,
effective and substantially equivalent to a legally marketed
device (i.e. a predicate device) and is therefore not subject to
premarket approval. The FDA has advised us that the predicate
device for the PD2i
Analyzertm
is a Class II device (pursuant to 21 C.F.R.
§ 870.2340 Cardiovascular
Devices Cardiovascular Monitoring
Devices Electrocardiograph); thus the PD2i
Analyzertm
is subject to the less onerous premarket notification for a
510(k) application.
Investigational Device Exemption (IDE). In
certain cases, including ours, the 510(k) application requires
the submission of clinical data to support claims made for the
device. For the FDA to permit applicants to undertake a clinical
trial using unapproved medical devices on human subjects,
applicants are required to seek an Investigational Device
Exemption (IDE). Clinical studies with devices of significant
risk must be approved by the FDA and by an Institutional Review
Board or IRB before the study can begin. Studies with devices of
nonsignificant risk only need IRB approval before the clinical
trails can begin. The FDA has advised us that the PD2i
Analyzertm
is a nonsignificant risk device. Thus, we are not required to
obtain FDA approval before we conduct any clinical trials.
23
510(k) Application. Once the 510(k)
application is received by the FDA, a preliminary screening is
undertaken. If the 510(k) application is found to contain all
the required elements, it will be assigned to a reviewer. When
the reviewer needs additional information to complete the
review, the applicant is contacted with a request or deficiency
letter that will detail the information needed. The 510(k)
applications are reviewed in order, according to the original or
additional information receipt date. After the technical review
is completed, the reviewers recommendation is forwarded to
the division director for concurrence. If the division director
concurs, then the FDA will issue the decision letter to the
applicant. Generally, an FDA decision takes 90 to 180 days
after receipt of the 510(k) application. However, certain items,
including the amount of time it takes an applicant to respond to
any FDA requests for additional information, may delay the FDA
decision.
We received 510(k) marketing clearance for the PD2i
Analyzertm
in December 2008. We are in the process of completing or
analyzing the data from three clinical trials. We plan on using
the data from these clinical trials for additional 510(k)
submissions with which to establish (a) a diagnostic claim
for those patients at elevated risk for cardiac mortality,
(b) normal ranges for the
PD2i®
values to facilitate physician interpretation of test results of
the PD2i
Analyzertm
and (c) a diagnostic claim for those patients at imminent
risk of death in trauma. These trials and the analysis of data
from these trials are expected to cost approximately $150,000,
in the aggregate, in 2010 and are described in the following
table:
Our
Products and Status of Clinical Trials
|
|
|
|
|
|
|
|
|
|
|
Status of
|
|
FDA
|
Product
|
|
Use
|
|
Clinical Trial
|
|
Submission
|
|
PD2i-Analyzertm
|
|
Diagnostic Tool to Risk Stratify Cardiac Death
|
|
University of Rochester comparing
PD2i®
values to patient outcomes has been completed
|
|
Expected in the second quarter of 2010 (Marketing clearance
anticipated in the second half of 2010)
|
PD2i
Analyzertm
|
|
Normal Range Values for
PD2i®
|
|
Awaiting Institutional Review Board Approval at the University
of Mississippi Medical Center
|
|
Expected in the third quarter of 2010
|
PD2i VS
|
|
Diagnostic tool to Triage Trauma
|
|
U.S. Army Data Analysis being completed
|
|
Expected in the second half of 2010 (Marketing clearance
anticipated in the second half of 2010)
|
These additional claims will permit the acceleration of
marketing and sales activities and facilitate the direct
marketing to physicians of the PD2i
Analyzertm
for different medical uses.
As the PD2i
Analyzertm
and our other products become commercially available, it is
anticipated that independent researchers will conduct their own
independent research on areas of interest to them without
financial support from Vicor which should reduce our research
and development expenses in the future. However, as we explore
other applications for the technology, the related research may
require us to sponsor clinical trials which could require
substantial expenditures.
24
Current trials underway at various institutions, some of which
are sponsored by Vicor and some of which are being independently
conducted, include:
|
|
|
|
|
Trial Name
|
|
Market Indication
|
|
Independent or Vicor Sponsored
|
|
Cardiac Risk in the Youth (CRY)
|
|
Sudden Cardiac Death in the Young
|
|
Independent Inherited Cardiovascular Disease and
Sports Cardiology Centre at St. Georges Healthcare NHS
Trust-United Kingdom
|
Brain Injury Risk Stratification Trial (BIRST)
|
|
Neuro-ICU
|
|
Vicor Sponsored University of Mississippi Medical
Center
|
Cardiac Arrhythmia Assessment and Safety in Athletes (CAASA)
|
|
Sudden Cardiac Death-Student Athletes
|
|
Vicor Sponsored University of Mississippi
|
Complexity Analysis During Renal Dialysis (CARD)
|
|
Sudden Cardiac Death-Dialysis Patients
|
|
Vicor Sponsored University of Mississippi Medical
Center
|
Cardiac Autonomic Regulation Enhancement Through Exercise
(CARE-E)
|
|
Cardiac Rehabilitation
|
|
Independent Brown University
|
Cardiac Autonomic Regulation Enhancement Through Therapy
(CARE-T)
|
|
Cardiac Rehabilitation
|
|
Independent Brown University
|
Complexity Analysis Studies of Trauma in the Emergency
Department (CASTED)
|
|
ICU/Mobile Triage
|
|
Vicor Sponsored University of Mississippi Medical
Center
|
Complexity Analysis During Blood Donation (CABLD)
|
|
Internal Bleeding
|
|
Vicor Sponsored University of Mississippi Medical
Center and Mississippi Blood Bank
|
Massachusetts General Hospital Trauma
|
|
Trauma Triage
|
|
Independent Massachusetts General Hospital
|
European
Regulatory Requirements
We may be required to receive CE Mark Certification, an
international symbol of quality and compliance with applicable
European community medical device directives, prior to marketing
our products in Europe. If such certification is required, we
must comply with the Essential Requirements of the Medical
Devices Directive, which primarily relate to safety and
performance and have our products undergo conformity assessment
certification by a notified body. If we are required to obtain
the CE Mark Certification, we plan to begin this process in the
later half of 2010 for our products.
Sales and
Marketing
On January 14, 2010 we announced our first commercial sale
of the PD2i
Analyzertm
to a physician practice in South Carolina and simultaneously
announced that we had entered into an exclusive distribution
agreement with VF Medical, a medical products distribution
company. VF Medical, LLC will serve as the exclusive distributor
for the PD2i
Analyzertm
in South Carolina, North Carolina, and the cities of Savannah
and Augusta, Georgia. VF Medical, LLC will utilize a
25-person
medical products distribution team consisting of agents who have
long-term relationships with cardiologists,
electrophysiologists, and family practice and internal medicine
physicians within the designated territory.
Additionally, we plan on marketing the PD2i
Analyzertm
to our physician base 350 stockholders and
450 members of our National Cardiac Panel as
early adopters of our technology to ensure that (a) the
product is well received by physicians interested in
Vicors success and (b) product enhancement
suggestions provided by these early adopters can be incorporated
into the technology before a national roll-out. The PD2i
Analyzertm
can be used as a diagnostic tool under 60 international
classification of disease (ICD-9) codes.
25
Once FDA 510(k) marketing clearance is obtained for cardiac
mortality, our sales and marketing will be directed towards
physicians who identify individuals at risk of arrhythmic death
and pump failure death from those cardiac patients who may not
be at risk. Our target patient populations will include those
individuals with underlying cardiac disease. In the United
States, those populations include more than 7 million
patients who have suffered a myocardial infarction (heart
attack), 5 million patients suffering from congestive heart
failure (poor pumping function), and more than 1 million
other patients suffering from conditions including syncope
(fainting and dizziness) and non-ischemic dilated cardiomyopathy
(damaged and enlarged heart). Therefore, we believe that the
aggregate at-risk patient population in the United States that
are candidates for our PD2i
Analyzertm
diagnostic test exceeds 13 million. MUSTT, MADIT-II and
SCD-HeFT type patients represent a major and important subset of
this at-risk patient population as evidenced by the results of
the MUSIC Trial.
The main target customers for our PD2i
Analyzertm
are (i) physicians who specialize in family practice and
internal medicine and (ii) clinical cardiologists and
electrophysiologists.
Our marketing strategy is to segment the internal medicine,
family practice and cardiologist market and target
technology-friendly early adopters. We anticipate primarily
utilizing independent distributors complemented by an in-house
sale force which we will establish. The United States market
although significant, represents only a fraction of the total
potential worldwide market for the products. Therefore, we
anticipate marketing the products in Europe primarily through
distribution partners; discussions with potential partners are
ongoing.
Our
PD2i-VS
product is in its early stages. Assuming successful
completion of the product, we plan on marketing it to hospitals
and emergency response providers. We will consider licensing the
technology to existing monitor companies as well as developing
our own proprietary monitor for sale.
Reimbursement
Reimbursement to healthcare providers by third party insurers is
critical to the long-term success of our efforts to make the
PD2i
Analyzertm
the standard of care for patients being screened for autonomic
nervous system dysfunction, as well as being evaluated in the
future for risk of cardiac death. There are 60 ICD-9 diagnosis
codes for which the performance of the test as a diagnostic tool
can be justified. There are established Current Procedural
Terminology Codes, known as CPT codes, that provide a national
level of reimbursement of approximately $80-$160 per test to the
physicians for using the PD2i
Analyzertm.
CPT codes provide a uniform language used by healthcare
providers to describe medical services and tests. Coding is used
to communicate to third party insurers the services that have
been performed for billing purposes and affect both the coverage
decision and amount paid by such insurers. Physicians are
currently being reimbursed for the use of the PD2i
Analyzertm
from insurance companies, Medicare and Medicaid.
Competition
Congestive
Heart Failure Death
We believe there are presently no known diagnostic tools used
for the identification of congestive heart failure patients at
elevated risk of death.
Arrhythmic
Death
Noninvasive diagnostic tools for arrhythmic death are relatively
new in the cardiac diagnostic field, thus the current market
competition for this type of product is limited. The major
direct competitor of the PD2i
Analyzertm
is Cambridge Heart, Inc. (Cambridge Heart).
According to its filings with the SEC, Cambridge Heart has
several products, including the Heartwave System, CH 2000
Cardiac Stress Test System, and Micro-V Alternans Sensors. All
of these products have received 510(k) clearance from the FDA
for sale in the United States. They have also received the CE
mark for sale in Europe and have been approved for sale by the
Japanese Ministry of Health, Labor and Welfare. These products
have been sold since 2000.
We believe our PD2i
Analyzertm
will deliver a more accurate prediction of arrhythmic death, is
substantially less expensive and is a procedure that is more
patient friendly than the CH 2000 Cardiac Stress Test System.
The key disadvantages of the Cambridge Heart products are that
(i) they require a stress test to capture the T-wave
alternans,
26
(ii) the stress test itself is not without risk; it could
induce cardiac arrest, (iii) the procedure requires costly
electrodes for which physicians are not separately reimbursed,
and (iv) most importantly, the procedure cannot be
performed on patients exhibiting ectopic or irregular heartbeats
or taking beta-blockers used to treat coronary artery disease.
The key competitive advantages of the PD2i
Analyzertm
are that (i) it avoids risks associated with a cardiac
stress test, (ii) it can be performed on a resting patient
in any environment, (iii) it can be performed without
specialized equipment, (iv) costly electrodes are not
required, (v) it is not affected by ectopic or irregular
heartbeats, (vi) it is not affected by common cardiac
drugs, and (vii) there is no significant up-front equipment
cost to the physician.
At our expected price of approximately $7,500 per unit and
$25-$50 per test, the PD2i
Analyzertm
will offer clinicians an affordable product that will
appropriately pay them and us based on usage.
Autonomic
Nervous System
Our principal competitor of the PD2i
Analyzertm
is Ansar Group, Inc. (Ansar). According to its
website, Ansar has developed the ANX 3.0, a noninvasive, real
time digital monitor of autonomic nervous system functioning.
The ANX 3.0 monitor costs approximately $40,000. We believe the
PD2i
Analyzertm
is more cost effective and offers a superior solution for
physicians based on our business model and the increased utility
of our
PD2i®
measure of HRV.
Indirect competition for the PD2i
Analyzertm
is traditional clinical screening tests, which are performed by
physicians. However, a patients history and physical
examination are ineffective for early detection of cardiac
autonomic neuropathy, the symptoms of autonomic neuropathy tend
to occur when its development is advanced and difficult to
treat. HRV testing may also facilitate differential diagnosis
and the attribution of symptoms (e.g., erectile dysfunction,
dyspepsia, dizziness) to autonomic dysfunction.
Manufacturing
We are in the process of finalizing our manufacturing agreements
with third parties. We intend to acquire both the digital ECG
and laptop computers from third parties and Vicor will install
the appropriate proprietary software and test for quality
assurance before re-packaging for shipment.
Trademarks
We pursue and maintain trademark protection in the United States
and worldwide. As of May 15, 2010 we have three United
States registered trademarks for PD2i for use on our products.
Research
and Development
Our research and development expenses for December 31, 2008
and 2009 and for the three months ended March 31, 2010 were
approximately $993,000, $964,000 and $157,000, respectively.
These research and development expenses included, but were not
limited to laboratory supplies, hardware costs, programming and
software costs, sponsored research activities and salary and
fringe benefit costs for employees who were engaged in research,
development, clinical and regulatory activities. In addition,
all clinical trial costs, clinical and regulatory consulting and
contract manufacturing costs are included.
Employees
As of May 15, 2010 we employed twelve individuals, and
engaged the services of several consultants. All of our
employees are leased under a Professional Employer Organization
(PEO) arrangement pursuant to a Service Agreement with
ALDA & Associates International, Inc., a consulting
company owned and controlled by David H. Fater, our Chief
Executive and Financial Officer. Of our employees, nine are
engaged in executive, administrative, business development,
sales, marketing and intellectual property functions, and three
are engaged in research and development and clinical/regulatory
activities. We anticipate that we will need to recruit
additional personnel to manage our expanded selling and
administrative functions as well as our research and product
development programs.
27
Drug
Discovery Platform (Therapeutic Products)
The mission of our drug discovery platform was to focus on the
pre-clinical and early clinical development of products for the
treatment of an array of human diseases, such as cerebral
ischemia (stroke), cardiac ischemia, kidney failure, organ
transplantation and preservation, hypertension, obesity, and
thrombolytic diseases. At the present time, our drug discovery
platform is not active. Since 2003 to conserve cash and focus on
FDA marketing clearance for the PD2i
Analyzertm,
we halted all research related to our drug platform.
Certain naturally occurring peptides and proteins are derived
from state-dependent physiologies, a naturally
occurring process under which certain mammals engage in
altered physiologic states, such as hibernation, REM
sleep and pregnancy. We believe that these molecules lead to
altered physiological states, such as blood pressure reduction,
loss of appetite and thirst, diminished cancerous cell growth
and reproduction, urea recycling and tissue and organ
preservation.
Our initial drug discovery efforts related to those
state-dependent peptides and proteins released during
hibernation. Hibernation is a complex grouping of individual
physiologies that are spread out over time. Cessation of
appetite occurs many weeks before the animal goes into the
sleep-like state in which blood pressure and metabolism are
reduced. It is the separate and specific individual physiologies
that are of interest to us for pharmaceutical development, not
the complex event of hibernation itself. It has been
demonstrated, for example, that blood-pressure elevations can be
reduced to normal in awake, non-hibernating animals without
inducing all of the other hibernation-related physiologies
(i.e., appetite suppression). We believe that similar results
can be achieved with other physiologies.
We developed a strategy which we believe will enable us to
isolate the naturally occurring, state- dependent, nontoxic,
bioactive molecules that are produced during hibernation of
certain mammals, such as the woodchuck. We anticipate using
these molecules, as well as their derivatives, to treat major
human diseases, such as stroke and cardiac ischemia. Through the
execution of this strategy in
2000-2003,
we identified the amino acid sequence of several peptides
discovered in the blood of hibernating mammals (some of which
are also found in humans), which have been successfully tested
for efficacy in pre-clinical animal studies of cerebral
ischemia. This animal model replicates human stroke. These
ischemia-preventing molecules have also been shown to be
nontoxic in animal toxicology studies.
We also conducted a pre-IND briefing meeting with the FDA in
March 2003 to develop the Clinical Development Plan for our lead
stroke compound as part of the Investigational New Drug (IND)
process. We filed our United States Utility and Foreign Patent
Application in February 2003. The United States Patent and
Trademark Office (the PTO) advised us that certain
important claims relating to the drug discovery platform (the
Anti-infarction patent) and its applicability for
stroke would be allowed, thus permitting the issuance of one or
more patents. On May 4, 2010, we announced that we received
a Notice of Allowance from the PTO for our United States Utility
and Foreign Patent Application for a method of treating ischemia
through administration of a biologic identified through our
state dependent drug discovery platform. Upon issuance, the
patent will provide us with patent protection for methods of
using a peptide to treat infarctions, such as cardiac or
cerebral infarctions.
Patent
and Proprietary Rights
As of March 31, 2010 we have four issued United States
patents, three patents issued by foreign countries (South
Africa, Eurasia and New Zealand) and two United States pending
patent applications relating to our PD2i technology. We also
have two foreign patents issued (Eurasia and South Africa) and
one United States pending patent application relating to our
drug discovery program. Our issued patents expire in 2024. In
addition, we currently have 31 foreign pending patent
applications. We have filed patents with Australia, Brazil,
Canada, China (Peoples Republic), European Patent Office, Hong
Kong, India, Israel, Japan, Malaysia, Mexico, New Zealand, South
Africa, South Korea, Taiwan, and Thailand. We have also filed
patents pursuant to the Eurasian Patent Convention and the
Patent Cooperation Treaty.
The following U.S. patents related to our
PD2i®
technology have been issued to us or are in prosecution:
1. PD2i Electrophysiological Analyzer. United States Number
5,709,214. Patent issued January 20, 1998.
28
2. PD2i Electrophysiological Analyzer. United States Number
5,720,294. Patent issued February 24, 1998.
3. Improved Method and System for Detecting
and/or
Predicting Biological Anomalies. United States Number 7,076,288.
Patent issued July 11, 2006.
4. Use of PD2i Algorithm to Predict
and/or
Diagnose Cerebral Disorders. United States Number 7,276,026.
Patent issued October 2, 2007.
5. Knowledge Determination System. Patent applied for
January 14, 2005. Number 11/332,066.
6. PD2i Cardiac Analyzer V2.0. Patent applied for
August 31, 2006. Number 60/824,170.
DESCRIPTION
OF PROPERTY
We have leased facilities in Boca Raton, Florida, including a
corporate office and a facility used for assembly, testing and
shipping of our products. Our corporate office is located at
2300 NW Corporate Boulevard, Suite 123, Boca Raton, Florida
33431.
LEGAL
PROCEEDINGS
To our knowledge, we are not a party to any pending or
threatened material legal proceedings. To our knowledge, no
governmental authority is contemplating commencing a legal
proceeding in which we would be named as a party.
29
OUR
MANAGEMENT
Officers
and Directors
The following table sets forth the names, positions and ages of
our current executive officers, directors and significant
employees. Class I directors serve until the 2011 annual
meeting of stockholders or until their successors are elected
and qualified. Class II directors serve until the 2012
annual meeting of stockholders or until their successors are
elected and qualified. Class III directors serve until the
2010 annual meeting of stockholders or until their successors
are elected and qualified. Officers are appointed by our board
of directors and their terms of office are, except to the extent
governed by an employment contract, at the discretion of our
board of directors.
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
David H. Fater
|
|
|
63
|
|
|
President, Chief Executive and Chief Financial Officer; Class I
Director
|
Thomas J. Bohannon
|
|
|
65
|
|
|
Chief Accounting Officer
|
James E. Skinner, Ph.D.
|
|
|
70
|
|
|
Vice President Research and Science; Class I Director
|
Jerry M. Anchin, Ph.D.
|
|
|
51
|
|
|
Vice President Product Development and Physician Training;
Class II Director
|
Daniel N. Weiss, M.D., F.A.C.C.
|
|
|
48
|
|
|
Chief Medical Officer
|
Lloyd C. Chesney
|
|
|
62
|
|
|
Chief Technology Officer
|
Edward Wiesmeier, M.D.
|
|
|
71
|
|
|
Class III Director
|
Frederick M. Hudson
|
|
|
64
|
|
|
Class II Director
|
Joseph A. Franchetti
|
|
|
70
|
|
|
Class III Director
|
David H. Fater joined us as President, Chief Executive,
Chief Financial Officer, and a director in June 2002.
Mr. Fater was the founder and from January 1993 through the
present, has been the chief executive officer of
ALDA & Associates International, Inc., a business and
financial consulting firm specializing in healthcare and life
sciences. Prior to his founding ALDA, Mr. Fater served as a
senior executive with three public health care companies,
including two in which he led the initial public offering
process (BMJ Medical Management, Inc. and Community Care of
America) and one which he led to a NYSE listing and a
$1 billion market capitalization (Coastal Physician Group,
Inc.). Mr. Fater was employed by Coastal Physician Group
from January 1993 to June 1995; Community Care of America from
July 1995 to December 1996; and BMJ Medical from January 1997 to
July 1999. From June 2000 through July 2001 Mr. Fater
was the chief financial officer of Vector Medical Technologies,
Inc. Prior to his corporate experience, Mr. Fater was an
international business advisor to senior management and boards
of directors as a senior international partner during a
24-year
career with Ernst & Young from January 1969 to
December 1992. He holds a B.S. in Accounting from the University
of North Carolina. He is a Certified Public Accountant licensed
in Georgia and North Carolina.
Thomas J. Bohannon was appointed to serve as the Chief
Accounting Officer of the Company effective as of
December 28, 2008. Mr. Bohannon has been in the
accounting and financial field for more than 40 years.
Mr. Bohannon worked as a senior manager at
Ernst & Young in Atlanta from 1968 until 1978 where he
specialized in financial and SEC reporting before becoming the
partner in charge of audit and review services for Pappadakis,
Nelson & Bohannon from
1978-1991.
Since 1992, he has focused on his own consulting practice,
serving as the financial officer for a variety of companies in
the Southeast United States. He holds a B.S. from Auburn
University and a Masters in Business Administration,
Concentration in Accounting from Tulane University. He is a
Certified Public Accountant licensed in Georgia.
James E. Skinner, Ph.D., has been our Vice President
Research and Science and a director since August 2000.
Dr. Skinner was our President from August 2000 through July
2002. Dr. Skinner has experience both as a scientist and
manager of large research and development projects. From
December 1969 to February 1993 Dr. Skinner was a Professor
at Baylor College of Medicine in Houston, where he was the
recipient of many research grants from the National Institutes
of Health. During his tenure at Baylor College of Medicine, he
was the principal investigator of a Program Project Grant that
operated five laboratories and three core facilities. From March
1993 to July 1997
30
Dr. Skinner was the Associate Director of the Totts Gap
Medical Research Laboratories, Inc. In August 1997 he founded
the Delaware Water Gap Science Institute, a nonprofit medical
research organization devoted to the development of medical
devices and pharmaceuticals, and has served as its director
since its inception. Dr. Skinner is a graduate of Pomona
College and received his Ph.D. from the University of California
at Los Angeles.
Jerry M. Anchin, Ph.D., has been our Vice President
Product Development and Physician Training since October 2000
and a director since September 2003. Dr. Anchin has
extensive experience in the biotechnology business sector. He
has been actively involved in the fields of immunology,
molecular biology, drug discovery and protein chemistry since
1978. Dr. Anchin worked in biotechnology at International
Immunoassay Labs from September 1981 to July 1988 as head of
assay development and manufacturing, where he was instrumental
in designing a novel assay for the detection of the protein
creatine kinase that is released as a result of acute myocardial
infarction. He received two patents for his work in this area.
Dr. Anchin then worked for Immuno Pharmaceuticals from
August 1993 to February 1996 and Prism Pharmaceuticals from
February 1996 to June 1998. Dr. Anchin was employed by
Ciblex Pharmaceuticals from June 1998 through August 2000, where
he became group leader of the drug discovery program involving
novel small molecules that will be entering clinical trials for
the prevention of asthma. He has been granted five patents in
the field of immunoassay and drug discovery and has four patents
pending. Dr. Anchin holds a B.A. in Cell Biology from
University of California at Santa Barbara and received his
Ph.D. in Immunology from Texas A&M University.
Daniel N. Weiss, M.D., F.A.C.C., joined us as our
Chief Medical Officer in April 2004. Dr. Weiss has
extensive experience as a practicing cardiologist and
electrophysiologist. He has been a partner in Florida Arrhythmia
Consultants and a director of the Jim Moran Heart and Vascular
Center since 1994. He is also a consultant to Fortune 500
Medical Device companies including Medtronics, St. Jude Medical
and Guidant. He has been a clinical investigator in the MADIT II
(MultiCenter Automatic Defibrillator Implantation Trial)
and SCDHeFT (Sudden Cardiac Death Heart Failure Trial)
clinical trials. He is a cum laude graduate of Princeton
University with a BSE in Electrical Engineering and Computer
Science. He received his Medical Degree with Distinction in
Research from the Mount Sinai School of Medicine where he also
received the Nathan A. Setz Award for Research in Cardiovascular
and Renal Disease.
Lloyd C. Chesney joined Vicor as Chief Technology Officer
(CTO) on January 1, 2010. Immediately prior to joining
Vicor, he was chief technology officer of MDVIP, a concierge
physician organization providing personalized preventive
medicine. During his tenure, he integrated MDTablets
electronic medical record into MDVIPs portal to provide
bi-directional information exchange creating a dynamic patient
health record, and integrated MDVIPs patient instant
medical history into MDVIPs portal and MDTablets
electronic medical record for patient health risk assessments,
which formed the foundation for individualized patient wellness
plans. Previously, Mr. Chesney has served as CTO for Health
Star Communications, a meeting logistics company as well as CTO
for EHealth Latin America, a facilitator of hospital-centric,
Web-based medical communication and education in Central and
South America, Cybear Inc., a then development-stage internet
healthcare portal, CIO for Phymatrix Corp., a medical practice
management company and CIO for the Palm Beach County Health Care
District. He holds a B.S. in chemistry from the University of
Florida.
Edward Wiesmeier, M.D., has been a director since
October 2004. From
1989-2006
Dr. Wiesmeier was a Clinical Professor of Obstetrics and
Gynecology and Assistant Vice Chancellor for Student Development
and Health at the UCLA School of Medicine. From 2008 to the
present, he has been a volunteer clinical professor of
reproductive medicine at the University of California at
San Diego. He serves as Chairman of our Scientific Advisory
Board and Chair of the Compensation Committee. He is a graduate
of Rutgers University and received his M.D. from Georgetown
University.
Frederick M. Hudson has served as a director since July
2008. Mr. Hudson retired as a partner in charge of the
health care audit practice for the Washington-Baltimore business
unit of the accounting firm of KPMG, LLP on January 1, 2006
after a
37-year
career with the firm. He is a graduate of Loyola College and
currently serves in a board capacity with the Board of Financial
Administration of the Catholic Archdiocese of Baltimore, Board
of Sponsors, Loyola College Sellinger School of Business and
Management and the Board of Trustees of the Maryland Historical
Society. He chairs the audit committee of the board of directors
of Paradigm Management Services LLC (a provider of catastrophic
care services), Woodhaven Holding Corporation, d/b/a Remedi
Health Services. (an institutional pharmacy service provider)
and is a member of the audit and finance committee of the board
of directors for GBMC Healthcare, Inc and its affiliate, the
Greater Baltimore Medical Center. He serves as Chairman of our
Audit Committee.
Joseph C. Franchetti has served as a director since July
2008. He is a consultant, director and advisor to several health
care/medical device companies in the cardiology/cardiovascular
and life sciences arenas, including
start-up
31
companies. He now serves as vice -chairman of CVAC Health
Systems Inc. and was president and CEO of Colin Medical
Instruments Corp. (now Omron), a Japanese-owned worldwide leader
for noninvasive blood pressure and
physiological / vital signs monitoring and diagnosis
from 1989 to 1996. His executive experience also includes being
co-founder and CEO of Bio-Chem Laboratory Systems Inc. and a
corporate and international vice-president and general manager
for Technicon (now Siemens) and Narco Scientific (now
Respirionics). He is a graduate of the Wharton School of the
University of Pennsylvania and a trustee emeritus of Southwest
Research Institute of Texas, and a commissioned US Army Infantry
Officer.
Board
Independence
The Board of Directors has determined that the following three
individuals currently serving as directors are independent as
that term is defined in the Marketplace Rules of The NASDAQ
Stock Market: Mr. Franchetti, Mr. Hudson and
Dr. Wiesmeier.
SCIENTIFIC
ADVISORY BOARD
The Company has assembled a Scientific Advisory Board consisting
of medical doctors and other professionals with experience in
relevant scientific and medical fields. Members, in addition to
Drs. Anchin, Skinner, Weiss and Wiesmeier, who serves as
the Chairman of the Committee, include:
|
|
|
|
|
Mark E. Josephson, M.D., Chief of Cardiology at Beth
Israel Deaconess Medical Center, a major patient care, research
and teaching affiliate of Harvard Medical School, the author of
Clinical Cardiac Electrophysiology, the fundamental
textbook in the field.
|
|
|
|
Hein J. J. Wellens, M.D., Professor and Chairman of
the Department of Cardiology at Academisch Ziekenhuis Maastricht
in Amsterdam, the Netherlands. He is a director of the
Interuniversity Cardiology Institute of the Netherlands and is a
member of the Netherlands Academy of Arts and Sciences. He also
has an appointment of visiting lecturer at Harvard Medical
School.
|
|
|
|
Richard M. Luceri, M.D., F.A.C.C., recently retired
director, Interventional Arrhythmia Center Holy Cross Hospital,
Fort Lauderdale, FL as well as a clinical investigator in
the MADIT II (MultiCenter Automatic Defibrillator
Implantation Trial) and author SCDHeFT (Sudden Cardiac
Death Heart Failure Trial).
|
|
|
|
Robert G. Hauser, MD, F.A.C.C., FHRS, Chairman of the
Cardiovascular Services Division at Abbott Northwestern Hospital
and former CEO of Cardiac Pacemakers, Inc., acquired by Guidant
Corporation.
|
|
|
|
Jonathan Kaplan, M.D., M.P.H., Medical director for
Fidelis Care New York and formerly the corporate medical
director for Excellus Blue Cross Blue Shield.
|
|
|
|
David Chazanovitz, President and CEO of Alveolus, Inc.,
the former chief executive officer of Cambridge Heart, Inc.
(our only FDA-approved competitor).
|
|
|
|
Edward F. Lundy, M.D., Ph.D., Chief of
Cardiothoracic Surgery at the Active International
Cardiovascular Institute at Good Samaritan Hospital in Suffern,
New York. In addition to his M.D. from the University of
Michigan, Dr. Lundy also received a Ph.D. from that
institution in Physiology with a primary focus on altered-state
physiologies such as hibernation.
|
|
|
|
Jules T. Mitchel, M.B.A., Ph.D., Founder of Target
Health, Inc., a full-service contract research organization
supporting all aspects of pharmaceutical drug and device
development.
|
|
|
|
Ariel D. Soffer, M.D., F.A.C.C, Chief of Medicine at
Hollywood Medical Center, Hollywood, FL. President and CEO of
Florida Institute for Cardiovascular Care (Healthworx).
|
|
|
|
Hank Lubin, M.D., practicing physician with
Hightstown Medical Associates, PA, (formerly affiliated with the
University of Pennsylvania Health System) and currently a
Clinical Associate Professor at The University of Pennsylvania
School of Medicine.
|
|
|
|
David Fertel, D.O., Clinical Professor of Surgery at
Michigan State University and a practicing board certified
thoracic and cardiovascular surgeon in Michigan.
|
32
DIRECTOR
COMPENSATION
On June 25, 2008, the board of directors approved a
compensation package for nonemployee directors providing a
combination of retainer fees and option awards for their service
to the Company. Each nonemployee director will receive a basic
annual retainer of $24,000, paid quarterly in shares of our
common stock. The director serving as the Chairman of the Audit
Committee will receive an annual fee of $12,000 and the Director
serving as Chairman of the Compensation Committee will receive
an annual fee of $6,000 for the additional duties as Chairmen of
these committees. Such fees will be paid quarterly in shares of
the Companys common stock. Nonemployee directors will
receive fees of $1,000 per meeting (paid in shares of the
Companys common stock) not to exceed six board meetings
per year and four Audit Committee meetings per year. Each
nonemployee director will also receive an annual grant of
100,000 stock options. The options will have an exercise price
equal to the fair market value of the Companys common
stock on the date of grant and will be for a term of up to ten
years. The options will vest monthly on a pro-rata basis over a
twenty four month period.
Director
Compensation Table
The following table sets forth a summary of the compensation we
paid to our nonemployee directors in 2009. We do not provide any
compensation to our directors who also are serving as executive
officers of the Company.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or
|
|
Stock
|
|
Option
|
|
|
Name
|
|
Paid in Cash($)
|
|
Awards(1)($)
|
|
Awards(1)($)
|
|
Total ($)
|
|
Edward Wiesmeier, M.D.
|
|
|
|
|
|
|
40,000
|
|
|
|
295,000
|
|
|
|
335,000
|
|
Frederick M. Hudson
|
|
|
|
|
|
|
46,000
|
|
|
|
67,000
|
|
|
|
113,000
|
|
Joseph A. Franchetti
|
|
|
|
|
|
|
34,000
|
|
|
|
67,000
|
|
|
|
101,000
|
|
|
|
|
|
|
|
|
(1) |
|
The amounts reflect the aggregate grant date fair value computed
in accordance with FASB ASC Topic 718. For information regarding
the assumptions used in the calculation of these amounts, please
refer to footnote 8 of the Companys financial statements
for the fiscal year ended December 31, 2009. |
EXECUTIVE
COMPENSATION
The following table sets forth compensation awarded to, earned
by or paid to (i) David H. Fater, our Chief Executive
Officer and Chief Financial Officer, (ii) James. E.
Skinner, our Vice President, Research and Science,
(iii) Jerry M. Anchin, our Vice President, Product
Development and Physician Training, and (iv) Daniel N.
Weiss, our Chief Medical Officer. No other executive officers
received total compensation in excess of $100,000 for the fiscal
year ended December 31, 2009.
Summary
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option/Warrant
|
|
All Other
|
|
|
Name and Principal Position
|
|
Year
|
|
Salary ($)
|
|
Bonus ($)
|
|
Award(1)($)
|
|
Awards(1)($)
|
|
Compensation ($)
|
|
Total ($)
|
|
David H. Fater
|
|
|
2009
|
|
|
|
183,000
|
|
|
|
|
|
|
|
|
|
|
|
228,000
|
|
|
|
|
|
|
|
411,000
|
|
Chief Executive and Chief Financial Officer(2)
|
|
|
2008
|
|
|
|
165,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
165,000
|
|
James E. Skinner
|
|
|
2009
|
|
|
|
177,000
|
|
|
|
|
|
|
|
|
|
|
|
228,000
|
|
|
|
|
|
|
|
405,000
|
|
Vice President, Research and Science(2)
|
|
|
2008
|
|
|
|
174,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
174,000
|
|
Jerry M. Anchin
|
|
|
2009
|
|
|
|
168,000
|
|
|
|
|
|
|
|
|
|
|
|
228,000
|
|
|
|
|
|
|
|
396,000
|
|
Vice President, Product Development and Physician Training(2)
|
|
|
2008
|
|
|
|
156,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
156,000
|
|
Daniel N. Weiss
|
|
|
2009
|
|
|
|
180,000
|
|
|
|
|
|
|
|
|
|
|
|
152,000
|
|
|
|
78,900
|
|
|
|
410,900
|
|
Chief Medical Officer(2)
|
|
|
2008
|
|
|
|
180,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
180,000
|
|
33
|
|
|
(1) |
|
The amounts reflect the aggregate grant date fair value computed
in accordance with FASB ASC Topic 718. For information regarding
the assumptions used in the calculation of the amounts, please
refer to footnote 8 of the Companys financial statements
for the fiscal year ended December 31, 2009. |
|
(2) |
|
All of our Named Executive Officers except Dr. Weiss
commenced employment with the Company on March 30, 2007,
the date of the Merger closing. Dr. Weiss commenced
employment with us in April 2008. |
|
(3) |
|
Mr. Fater, Dr. Skinner, Dr. Anchin and
Dr. Weiss elected to forego 50% of their 2008 salary in
cash compensation and instead elected to receive shares of our
common stock. The cash amounts related thereto totaled
approximately $82,500 for Mr. Fater, $87,000 for
Dr. Skinner, $66,000 for Dr Weiss and $78,000 for
Dr. Anchin in fiscal 2008. In January 2009 we issued
869,295 shares of our common stock in satisfaction of the
cash compensation. |
Employment
Agreements
We have entered into employment agreements with David H. Fater,
James E. Skinner, Ph.D., Dr. Daniel N. Weiss and Jerry
M. Anchin, Ph.D.
David H. Fater. Our employment agreement with
Mr. Fater, dated June 1, 2002, as amended, is for a
three-year term; provided, however, that on June 1 of each year
the term is automatically extended for an additional one-year
period. The employment agreement provides for an annual base
salary of $150,000, subject to annual increases (currently at
$201,000), plus reimbursement of reasonable expenses and
entitles Mr. Fater to participate in the employee benefit
plans made available to our other executives. Upon the first to
occur of (1) our receipt of $3 million in funding;
(2) consummation of a significant liquidity event; or
(3) significant enhancement of our value,
Mr. Faters annual increases to base compensation will
be 10% and Mr. Fater will be entitled to an annual bonus of
20% of his base salary. The agreement contains customary
confidentiality and noncompete provisions.
If we terminate Mr. Faters employment without cause
or if Mr. Fater terminates the agreement for good reason
(as defined in the agreement), or if either event occurs during
the two years after a change of control, then Mr. Fater
will receive an amount equal to 300% of the sum of his current
base salary and any bonuses paid during the previous
12-month
period, and he will receive accelerated vesting under any
long-term incentive plans including stock options and warrants
and other benefits for the remainder of the term of the
agreement, or in the case of a change of control for the next
three years. We have also agreed to pay to Mr. Fater any
excise taxes to the extent any amount paid to Mr. Fater is
deemed parachute payments.
James E. Skinner. Our employment agreement
with Dr. Skinner dated January 1, 2009 expires on
December 31, 2011. It provides for an annual base salary of
$180,000 subject to annual increases plus reimbursement of
reasonable expenses, and entitles Dr. Skinner to
participate in the employee benefit plans made available to our
other executives. This agreement contains customary
confidentiality and noncompete provisions. In addition,
Dr. Skinner agrees that all intellectual property developed
by him shall be our property. If Dr. Skinners
employment is terminated without cause or if Dr. Skinner
terminates the agreement for good reason, he is entitled to
twelve months of his base salary plus a sum equal to any bonuses
paid to him in the preceding twelve months.
Jerry M. Anchin. Our employment agreement with
Dr. Anchin dated January 1, 2009 expires on
January 1, 2012. It provides for an annual base salary of
$180,000 subject to annual increases plus reimbursement of
reasonable expenses, and entitles Dr. Anchin to participate
in the employee benefit plans made available to our other
executives. This agreement contains customary confidentiality
and noncompete provisions. In addition, Dr. Anchin agrees
that all intellectual property developed by him shall be our
property. If Dr. Anchins employment is terminated
without cause or if Dr. Anchin terminates the agreement for
good reason, he is entitled to twelve months of his base salary
plus a sum equal to any bonuses paid to him in the preceding
twelve months.
Daniel N. Weiss. Our employment agreement with
Dr. Weiss dated April 15, 2008 with an effective date
of January 1, 2010 expires on January 1, 2013. It
provides for an annual base salary of $180,000 subject to annual
increases plus reimbursement of reasonable expenses, and
entitles Dr. Weiss to participate in the employee benefit
plans made available to our other executives. This agreement
contains customary confidentiality and noncompete provisions. In
addition, Dr. Weiss agrees that all intellectual property
developed by him shall be our property. If Dr. Weiss
employment is terminated without cause or if Dr. Weiss
terminates the agreement for good reason, he is
34
entitled to twelve months of his base salary plus a sum equal to
any bonuses paid to him in the preceding twelve months.
Compensation
Accruals
As a development stage entity, we must carefully monitor our
cash flow. In recognition of the importance of this process and
to help conserve cash for other purposes, Mr. Fater,
Dr. Skinner, Dr. Weiss and Dr. Anchin elected to
forego certain cash compensation amounts due to them in fiscal
2008. These amounts totaled approximately $82,500 for
Mr. Fater, $87,000 for Dr. Skinner, $66,000 for
Dr. Weiss and $78,000 for Dr. Anchin. On
December 16, 2008 the board of directors approved the
satisfaction of both the 2008 cash amounts and 2007 cash amounts
that the named executive officers elected to forego during 2008
and 2007 by issuing on January 5, 2009 shares of
common stock as follows: 433,333 to Dr. Anchin, 483,333 to
Dr. Skinner, 458,333 to Mr. Fater and 183,333 to
Dr. Weiss.
Outstanding
Equity Awards at Fiscal Year-End Table
The following table presents information regarding outstanding
options and warrants held by our Named Executive Officers as of
our fiscal year end December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Number of Securities
|
|
Securities
|
|
|
|
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
|
|
|
|
|
Options/Warrants
|
|
Options/Warrants
|
|
Option/Warrant
|
|
Option/Warrant
|
Name
|
|
(#) Exercisable
|
|
(#) Unexercisable
|
|
Exercise Price ($)
|
|
Expiration Date
|
|
David H. Fater
|
|
|
300,000
|
(4)
|
|
|
|
|
|
$
|
0.78
|
|
|
|
01/05/2016
|
|
|
|
|
12,500
|
(3)
|
|
|
|
|
|
$
|
1.00
|
|
|
|
04/09/2013
|
|
James E. Skinner
|
|
|
300,000
|
(4)
|
|
|
|
|
|
$
|
0.78
|
|
|
|
01/05/2016
|
|
|
|
|
255,000
|
(1)
|
|
|
|
|
|
$
|
1.00
|
|
|
|
08/08/2017
|
|
|
|
|
12,500
|
(3)
|
|
|
|
|
|
$
|
1.00
|
|
|
|
06/10/2013
|
|
Jerry M. Anchin
|
|
|
100,000
|
(1)
|
|
|
|
|
|
$
|
1.00
|
|
|
|
08/08/2017
|
|
|
|
|
12,500
|
(3)
|
|
|
|
|
|
$
|
1.00
|
|
|
|
02/19/2013
|
|
|
|
|
300,000
|
(4)
|
|
|
|
|
|
$
|
0.78
|
|
|
|
01/05/2016
|
|
Daniel N. Weiss(2)
|
|
|
50,000
|
(2)
|
|
|
|
|
|
$
|
1.00
|
|
|
|
08/08/2017
|
|
|
|
|
200,000
|
|
|
|
|
|
|
$
|
0.78
|
|
|
|
01/05/2016
|
|
|
|
|
(1) |
|
We granted these warrants to Dr. Skinner and
Dr. Anchin on August 8, 2007. These warrants are fully
vested and immediately exercisable as of the grant date. |
|
(2) |
|
We granted these options to Dr. Weiss under our 2002 Stock
Option Plan on August 8, 2007. The options were fully
vested and immediately exercisable as of the grant date. |
|
(3) |
|
We granted these warrants to Mr. Fater, Dr. Skinner
and Dr. Anchin in exchange for converting their $10,000 12%
convertible promissory notes into 12,500 shares of
Series B Junior Convertible Cumulative Preferred Stock and
12,500 warrants. |
|
(4) |
|
We granted these options under our 2008 Stock Option Plan on
January 5, 2009. The options vest 50% immediately and 12.5%
per quarter thereafter. |
35
MANAGEMENTS
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in
conjunction with our financial statements and the related notes
thereto appearing elsewhere in this prospectus. This discussion
and analysis may contain forward-looking statements based upon
current expectations that involve risks and uncertainties. Our
actual results may differ materially as a result of various
factors, including those set forth in Risk Factors
or elsewhere in this prospectus.
Plan of
Operations
At March 31, 2010 our cash balance was $308,000. From
April 1, 2010 through May 10, 2010 we received
proceeds of $840,000 from the sale of units consisting of
8% Subordinated Convertible Notes and warrants to purchase
shares of our common stock The warrants are exercisable at $1.00
per share and expire five years after date of grant. Based on
our cash balance as of May 10, 2010, management believes
that we have sufficient funds to continue current operations
through at least July 31, 2010.
Our plan of operations includes:
1. Continued and increased sales of the PD2i
Analyzertm
to physicians in the United States through the use of
independent distributors and direct sales personnel.
2. Raising additional capital with which to expand the
sales and administrative infrastructure and fund ongoing
operations until our operations generate positive cash flow.
3. Completing various clinical trials and 510(k)
submission(s) to secure additional marketing claims for the PD2i
Analyzertm
to enhance and accelerate marketing efforts.
4. Initiating international sales of the PD2i
Analyzertm
and
PD2i-VStm
(Vital Sign), including securing CE Mark Clearance, if
required.
However, we may not be successful in raising additional capital
or in generating revenue. Furthermore, even if we raise
additional capital and generate revenue, we may never achieve
profitability or positive cash flow. If we are not able to
timely and successfully raise additional capital
and/or
achieve profitability or positive cash flow, our operating
business, financial condition, cash flows and results of
operations may be materially and adversely affected.
Critical
Accounting Policies and Estimates
The following are deemed to be the most significant accounting
policies affecting our results of operations:
Research
and Development Costs
Research and development costs include payments to collaborative
research partners and costs incurred in performing research and
development activities, including wages and associated employee
benefits, facilities and overhead costs. These are expensed as
incurred.
Intellectual
Property
Intellectual property, consisting of patents and other
proprietary technology, are stated at cost and amortized on the
straight-line basis over their estimated useful economic lives.
Costs and expenses incurred in creating intellectual property
are expensed as incurred. The cost of purchased intellectual
property is capitalized. Software development costs are expensed
as incurred.
Revenue
Recognition
Operating revenues commenced in January 2010 and are the result
of product sales and fees for analysis of ECG data collected by
physicians. Revenues are recognized at the time of product
shipment or upon the performance of tests. The Company also
plans on generating revenues from licensing fees which will be
recognized in accordance with the contract terms.
Accounting
for Stock-Based Compensation
We recorded equity-based compensation expense for employees and
nonemployees in accordance with the fair-value provisions of
Accounting Standards Codification (ASC) 718,
principally the result of granting stock options and warrants to
employees with an exercise price below the fair value of the
shares on the date of grant.
36
Accounting
for Derivative Financial Instruments
We evaluate financial instruments using the guidance provided by
ASC 815 and apply the provisions thereof to the accounting
of items identified as derivative financial instruments not
indexed to our stock.
Fair
Value of Financial Instruments
The Company follows the provisions of ASC 820. This Topic
defines fair value, establishes a measurement framework and
expands disclosures about fair value measurements.
The Company uses fair value measurements for determining the
valuation of derivative financial instruments payable in shares
of its common stock. This primarily involves option pricing
models that incorporate certain assumptions and projections to
determine fair value. These require management judgment.
Results
of Operations
Three
months ended March 31, 2010 compared to the three months
ended March 31, 2009
The following table sets forth the amounts and percentages of
total expenses represented by certain items reflected in our
condensed consolidated statements of operations for each of the
three months ended March 31, 2010 and 2009 and for the
period from August 4, 2000 (inception) to March 31,
2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
Inception to March 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
Revenues
|
|
$
|
100,000
|
|
|
|
4.9
|
%
|
|
$
|
|
|
|
|
0.0
|
%
|
|
$
|
944,000
|
|
|
|
1.7
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
85,000
|
|
|
|
4.1
|
%
|
|
|
|
|
|
|
0.0
|
%
|
|
|
85,000
|
|
|
|
0.2
|
%
|
Research and development
|
|
|
157,000
|
|
|
|
7.6
|
%
|
|
|
199,000
|
|
|
|
23.4
|
%
|
|
|
15,184,000
|
|
|
|
27.3
|
%
|
General and administrative expenses
|
|
|
1,457,000
|
|
|
|
70.9
|
%
|
|
|
590,000
|
|
|
|
69.2
|
%
|
|
|
31,259,000
|
|
|
|
56.2
|
%
|
Interest expense
|
|
|
357,000
|
|
|
|
17.4
|
%
|
|
|
63,000
|
|
|
|
7.4
|
%
|
|
|
9,043,000
|
|
|
|
16.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
2,056,000
|
|
|
|
100.0
|
%
|
|
|
852,000
|
|
|
|
100.0
|
%
|
|
|
55,571,000
|
|
|
|
100.0
|
%
|
Unrealized gain (loss) on derivative financial instruments
|
|
|
(117,000
|
)
|
|
|
(5.7
|
)%
|
|
|
(294,000
|
)
|
|
|
(34.5
|
)%
|
|
|
2,040,000
|
|
|
|
3.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(2,073,000
|
)
|
|
|
(100.8
|
)%
|
|
|
(1,146,000
|
)
|
|
|
(134.5
|
)%
|
|
|
(52,587,000
|
)
|
|
|
(94.6
|
)%
|
Cumulative effect of change in accounting principal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
480,000
|
|
|
|
0.9
|
%
|
Dividends for the benefit of preferred stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable on Series A and Series B preferred stock
|
|
|
(126,000
|
)
|
|
|
(6.1
|
)%
|
|
|
(101,000
|
)
|
|
|
(11.9
|
)%
|
|
|
(1,039,000
|
)
|
|
|
(1.9
|
)%
|
Amortization of derivative discount on Series B preferred
stock
|
|
|
(249,000
|
)
|
|
|
(12.1
|
)%
|
|
|
(228,000
|
)
|
|
|
(26.8
|
)%
|
|
|
(249,000
|
)
|
|
|
(0.4
|
)%
|
Value of warrants issued in connection with sales of
Series B preferred stock
|
|
|
|
|
|
|
0.0
|
%
|
|
|
|
|
|
|
0.0
|
%
|
|
|
(1,536,000
|
)
|
|
|
(2.8
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends for the benefit of preferred stock holders
|
|
|
(375,000
|
)
|
|
|
(18.2
|
)%
|
|
|
(329,000
|
)
|
|
|
(38.7
|
)%
|
|
|
(3,803,000
|
)
|
|
|
(5.1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss applicable to common stock
|
|
$
|
(2,448,000
|
)
|
|
|
(119.0
|
)%
|
|
$
|
(1,475,000
|
)
|
|
|
(173.2
|
)%
|
|
$
|
(55,910,000
|
)
|
|
|
(98.8
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share basic and diluted
|
|
$
|
(0.06
|
)
|
|
|
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares of common shares outstanding
|
|
|
42,425,945
|
|
|
|
|
|
|
|
35,010,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
Revenues
We had revenues of $100,000 in the three months ended
March 31, 2010 compared with no revenues in the first
quarter of 2009. Our revenues consisted of $88,000 in fees
generated from the sale of PD2i
Analyzerstm
to physicians and our independent distributor and $12,000
related to fees for analysis of ECG data collected by
physicians. The independent distributor is using these devices
primarily for demonstration purposes.
Cost
of Sales
Cost of sales were $85,000, or 4.1% of total expenses, in the
three months ended March 31, 2010 compared with no cost of
sales in the first quarter of 2009.
Research
and Development
Research and development costs were $157,000 or 7.6% of total
expenses, for the three months ended March 31, 2010
compared to $199,000 or 23.4% of total expenses, for the three
months ended March 31, 2009. The principal reason for the
decrease of $42,000 in 2010 was related to the different
clinical trials conducted in 2010 compared to 2009. It is
anticipated that research and development expenses will continue
in 2010 at approximately the same level as 2009.
Selling,
General and Administrative Expenses
Selling, general and administrative costs were $1,457,000, or
70.9% of total expenses, for the three months ended
March 31, 2010 compared to $590,000, or 69.2% of total
expenses, for the three months ended March 31 2009. The increase
in expenses of $867,000 in the three months ended March 31,
2010 compared to the same period in 2009 was principally
attributable to: a) $432,000 for increased infrastructure
and personnel to support the sales and information technology
functions, b) $87,000 from amortization of offering
expenses related to the 2009 sale of 8% Convertible Notes,
c) $77,000 related to our increased investor relations
activities, and d) $203,000 related to equity-based
compensation arising from issuance of common stock and stock
options to new employees. It is anticipated that our selling,
general and administrative expenses will continue to increase
throughout the year in response to increased sales and related
infrastructure requirements.
Interest
Expense
Interest expense was $357,000, or 17.4% of total expenses, for
the quarter ended March 31, 2010, compared to $63,000, or
7.4% of total expenses, for the quarter ended March 31,
2009. The principal reason for the increase was due to increased
indebtedness because of the issuance of 8% Convertible
Notes and 8% Subordinated Convertible Notes.
38
Year
Ended December 31, 2009 Compared to Year Ended
December 31, 2008
The following table sets forth expenses and percentages of total
expenses represented by certain items reflected in the
Companys consolidated statements of operations for each of
the years ended December 31, 2009 and 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31
|
|
|
|
2009
|
|
|
2008
|
|
|
Revenues
|
|
$
|
|
|
|
|
0.0
|
%
|
|
$
|
|
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
964,000
|
|
|
|
13.2
|
%
|
|
|
993,000
|
|
|
|
14.8
|
%
|
General and administrative expenses
|
|
|
4,372,000
|
|
|
|
59.7
|
%
|
|
|
2,433,000
|
|
|
|
36.2
|
%
|
Depreciation and amortization
|
|
|
41,000
|
|
|
|
0.6
|
%
|
|
|
41,000
|
|
|
|
0.6
|
%
|
Interest expense
|
|
|
1,944,000
|
|
|
|
26.6
|
%
|
|
|
3,260,000
|
|
|
|
48.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
7,321,000
|
|
|
|
100.0
|
%
|
|
|
6,727,000
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized/unrealized gain on derivative financial instruments
|
|
|
2,157,000
|
|
|
|
29.5
|
%
|
|
|
|
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(5,164,000
|
)
|
|
|
70.5
|
%
|
|
|
(6,727,000
|
)
|
|
|
100.0
|
%
|
Cumulative effect of change in accounting principal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends for the benefit of preferred stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable on Series A and Series B preferred stock
|
|
|
(479,000
|
)
|
|
|
6.5
|
%
|
|
|
(246,000
|
)
|
|
|
3.7
|
%
|
Amortization of derivative discount on Series B preferred
stock
|
|
|
(979,000
|
)
|
|
|
13.4
|
%
|
|
|
|
|
|
|
0.0
|
%
|
Value of warrants issued in connection with sales of
Series B preferred stock
|
|
|
|
|
|
|
0.0
|
%
|
|
|
(1,536,000
|
)
|
|
|
22.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends for the benefit of preferred stockholders
|
|
|
(1,458,000
|
)
|
|
|
19.9
|
%
|
|
|
(1,782,000
|
)
|
|
|
26.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss applicable to common stock
|
|
$
|
(6,622,000
|
)
|
|
|
90.4
|
%
|
|
$
|
(8,509,000
|
)
|
|
|
126.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and Development
For the year ended December 31, 2009, research and
development costs were $964,000, or 13.2% of total expenses,
compared to $993,000, or 14.8% of total expenses, for the year
ended December 31, 2008. The decrease in expenses was
primarily attributable to a decrease in the VITAL Trial costs
due to its suspension and commencement of a collaboration with
the University of Rochester for data analysis of the MUSIC Trial
data for SCD, a less costly process.
We anticipate that research and development costs will continue
in the future, but at levels more closely approximating those of
2009. As our products become commercially available in the
marketplace, we expect more collaborative research efforts from
third parties to take place, reducing the extent to which
Vicor-sponsored and funded research and development will be
required.
Selling,
General and Administrative
For the year ended December 31, 2009, selling, general and
administrative costs were $4,372,000, or 59.7% of total
expenses, compared to $2,433,000, or 36.2% of total expenses,
for the year ended December 31, 2008. The $1,939,000
increase was due to increases of $572,000 of costs associated
with convertible note offerings, $474,000 in legal and
accounting fees resulting from advisory services to develop
derivatives accounting procedures and legal fees related to
various note offerings, $594,000 in consulting and computer
programming fees incurred in readying our product for commercial
launch, and in building the information technology
infrastructure required to support the anticipated demands of
our products and operations.
39
Interest
Expense
For the year ended December 31, 2009, interest costs were
$1,944,000, or 26.6% of total expenses, compared to $3,260,000,
or 48.4% of total expenses, for the year ended December 31,
2008. Interest expense in 2009 included $1,665,000 recognized
when debt securities containing embedded derivative features
were converted into our common stock and amortization of the
derivative discounts arising from sales of such debt securities.
Interest expense in 2008 was unusually high because of
incentives related to conversions of various notes payable into
Series B Junior Convertible Cumulative Preferred Stock and
common stock.
Liquidity
and Capital Resources
We generated revenues of $100,000 in the first quarter of 2010.
However, our revenues are not sufficient to execute our business
plan and continue development of our products. Accordingly, we
continue to look to outside sources to raise capital.
At March 31, 2010 we had a working capital deficiency of
$1,113,000 and $308,000 in cash. From April 1, 2010 through
May 10, 2010 we received proceeds of $840,000 from the sale
of units consisting of 8% Subordinated Convertible Notes
and warrants to purchase shares of our common stock. Based on
our cash balance as of May 10, 2010, management believes
that we have sufficient funds to continue current operations
through at least July 31, 2010.
Management recognizes that we must generate additional funds to
successfully continue operations. Management plans include the
sale of additional equity and debt securities. We have raised
approximately $23,900,000 since our inception in 2000 in a
series of private placements of our common stock, convertible
preferred stock and convertible notes to accredited investors, a
number of which are physicians.
However, we may not be successful in raising additional capital.
Further, assuming that we raise additional funds, we may not
achieve profitability or positive cash flow. If we are not able
to timely and successfully raise additional capital
and/or
achieve profitability or positive cash flow, our operating
business, financial condition, cash flows and results of
operations may be materially and adversely affected.
Going
Concern
Our financial statements as of and for the three months ended
March 31, 2010 have been prepared on a going concern basis,
which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business.
We incurred a net loss applicable to common stockholders of
$1,475,000 and $2,448,000 for the three months ended
March 31, 2009 and 2010, respectively, and at
March 31, 2010 had negative working capital of $1,113,000,
an accumulated deficit of $55,910,000 and a net capital
deficiency of $7,954,000. Although sales commenced in January
2010, we anticipate operating losses over the next
12 months (and likely longer) as we continue to incur
expenditures necessary to further the commercial development of
our products. These matters raise substantial doubt about our
ability to continue as a going concern. The financial statements
do not include any adjustments that might result from the
outcome of this uncertainty.
Management recognizes that we must generate additional funds to
successfully commercialize our products. Management plans
include the sale of additional equity or debt securities,
alliances or other partnerships with entities interested in and
having the resources to support the further development of our
products as well as other business transactions to assure
continuation of our development and operations. We are executing
our plan to secure additional capital through a multi-part
funding strategy. We believe that the amount of capital
generated by this plan will be sufficient to permit completion
of various clinical trials and provide sufficient working
capital for the next 24-30 months, by which time it is
expected that we will generate positive cash flow through the
sales of our products.
However, no assurances can be given that we will be successful
in raising additional capital or entering into business
alliances. Further, there can be no assurance, assuming we
successfully raise additional funds or enter into a business
alliance, that we will achieve profitability or positive cash
flow. If we are not able to timely and successfully raise
additional capital
and/or
achieve positive cash flow, our business, financial condition,
cash flows and results of operations will be materially and
adversely affected.
40
Off-Balance
Sheet Arrangements
We have not entered into any transaction, agreement or other
contractual arrangement with an unconsolidated entity under
which we have:
|
|
|
|
|
A retained or contingent interest in assets transferred to the
unconsolidated entity or similar arrangement that serves as
credit;
|
|
|
|
Liquidity or market risk support to such entity for such
assets; or
|
|
|
|
An obligation, including a contingent obligation, arising out of
a variable interest in an unconsolidated entity that is held by,
and material to us, where such entity provides financing,
liquidity, market risk or credit risk support to, or engages in
leasing, hedging, or research and development services with us.
|
Recent
Accounting Pronouncements
Accounting Standards Codification The
Financial Accounting Standards Board, which we refer to as the
FASB, issued Accounting Standards Update, which we refer to as
ASU, 105, Generally Accepted Accounting Principles, which
establishes the FASB Accounting Standards Codification, which we
refer to as ASC, as the source of authoritative
U.S. generally accepted accounting principles recognized by
the FASB to be applied by nongovernmental entities. Rules and
interpretive releases of the Securities and Exchange Commission,
which we refer to as the SEC, under authority of federal
securities laws are also sources of authoritative guidance for
SEC registrants. All guidance contained in the Codification
carries an equal level of authority. All nongrandfathered,
non-SEC accounting literature not included in the Codification
is superseded and deemed nonauthoritative. ASC 105 is effective
for financial statements issued for interim and annual periods
ending after September 15, 2009. The adoption of
ASC 105 had no impact on the Companys financial
condition, results of operations or cash flows.
Fair Value Measurements and Disclosures In
January 2010 the FASB issued ASU
2010-06,
Fair Value Measurements and Disclosures (Topic 820)
Improving Disclosures about Fair Value Measurements, which
provides additional guidance relating to fair value measurement
disclosures. Specifically, companies will be required to
separately disclose significant transfers into and out of
Level 1 and Level 2 measurements in the fair value
hierarchy and the reasons for those transfers. For Level 3
fair value measurements, the new guidance requires a gross
presentation of activities within the Level 3 roll forward.
Additionally, the FASB also clarified existing fair value
measurement disclosure requirements relating to the level of
disaggregation, inputs, and valuation techniques. This ASU is
effective for interim or annual reporting periods beginning
after December 15, 2009, except for the detailed
Level 3 disclosures, which are effective for interim or
annual reporting periods beginning after December 15, 2010.
Since ASU
2010-06 only
affects disclosure requirements, the adoption of these
provisions will have no impact on our financial condition,
results of operations, or cash flows.
Fair Value of Financial Instruments ASC
825-10-65
updates ASC 825, Financial Instruments, to increase the
frequency of fair value disclosures from an annual basis to a
quarterly basis. The guidance relates to fair value disclosures
for any financial instruments that are not currently reflected
on the balance sheet at fair value. These provisions of
ASC 825 are effective for interim and annual periods ending
after June 15, 2009. Since these provisions only affect
disclosure requirements, the adoption of these provisions under
ASC 825 had no impact on our financial condition, results
of operations, or cash flows.
Other new accounting pronouncements issued but not effective
until after March 31, 2010, are not expected to have a
significant effect on our financial condition, results of
operations, or cash flows.
41
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table presents information regarding the
beneficial ownership of our common stock by the following
persons as of May 25, 2010:
|
|
|
|
|
each of the named executive officers;
|
|
|
|
each of our directors;
|
|
|
|
all of our directors and executive officers as a group; and
|
|
|
|
each stockholder known by us to be the beneficial owner of more
than 5% of our common stock.
|
Beneficial ownership is determined in accordance with the rules
of the SEC and generally includes voting or investment power
with respect to securities. Unless otherwise indicated below, to
our knowledge the persons and entities named in the table have
sole voting and sole investment power with respect to all shares
beneficially owned, subject to community property laws where
applicable. Shares of our common stock that are issuable
pursuant to options, warrants or rights that are currently
exercisable or exercisable within 60 days of May 25,
2010 are deemed to be outstanding and to be beneficially owned
by the person holding the options for the purpose of computing
the percentage ownership of that person, but are not treated as
outstanding for the purpose of computing the percentage
ownership of any other person. Unless otherwise indicated, the
address of each of the executive officers and directors and 5%
or more stockholders named below is
c/o Vicor
Technologies, Inc., 2300 N.W. Corporate Boulevard,
Suite 123, Boca Raton, Florida 33431.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
Percent of
|
Name of Beneficial Owner
|
|
Beneficially Owned(1)
|
|
Shares
|
|
David H. Fater(2)
|
|
|
1,689,101
|
|
|
|
3.30
|
%
|
James E. Skinner(3)
|
|
|
4,233,781
|
|
|
|
8.22
|
%
|
Jerry M. Anchin(4)
|
|
|
2,296,392
|
|
|
|
4.47
|
%
|
Daniel N. Weiss, M.D.(5)
|
|
|
801,158
|
|
|
|
1.57
|
%
|
Edward Wiesmeier, M.D.(6)
|
|
|
1,591,946
|
|
|
|
3.10
|
%
|
Frederick M. Hudson(7)
|
|
|
224,145
|
|
|
|
*
|
|
Joseph A. Franchetti(8)
|
|
|
212,514
|
|
|
|
*
|
|
All 7 directors and executive officers as a group
|
|
|
11,049,037
|
(9)
|
|
|
20.76
|
%
|
|
|
|
* |
|
Less than 1%. |
|
(1) |
|
For purposes of calculating beneficial ownership percentages,
50,920,527 shares of the Companys common stock were
deemed outstanding as of May 25, 2010 and includes
(a) 45,552,834 shares of the Companys common
stock issued and outstanding, (b) 157,592 shares of
the Companys common stock issuable upon conversion of
157,592 shares of Series A Convertible Preferred
Stock, and (c) 5,210,101 shares of the Companys
common stock issuable upon conversion of 5,210,101 shares
of Series B Junior Convertible Cumulative Preferred Stock.
As of May 25, 2010, each share of Series A Convertible
Preferred Stock and Series B Junior Convertible Cumulative
Preferred Stock is convertible into one share of the
Companys common stock. |
|
(2) |
|
Includes (a) immediately exercisable warrants to purchase
12,500 shares of the Companys common stock, (b)
3,276 shares of the Companys common stock to be
issued as compensation in connection with the guarantee of bank
loans within 60 days of May 25, 2010,
(c) immediately exercisable options or options exercisable
within 60 days of May 25, 2010 to purchase
300,000 shares of the Companys common stock, and
(d) 12,500 shares of Series B Junior Convertible
Cumulative Preferred Stock as though converted into
12,500 shares of the Companys common stock. |
|
(3) |
|
Includes (a) immediately exercisable warrants to purchase
267,500 shares of the Companys common stock,
(b) immediately exercisable options or options exercisable
within 60 days of May 25, 2010 to purchase
300,000 shares of the Companys common stock, and
(c) 12,500 shares of Series B Junior Convertible
Cumulative Preferred Stock as though converted into
12,500 shares of the Companys common stock. |
42
|
|
|
(4) |
|
Includes (a) immediately exercisable warrants to purchase
112,500 shares of the Companys common stock,
(b) immediately exercisable options or options exercisable
within 60 days of May 25, 2010 to purchase
300,000 shares of the Companys common stock, and
(c) 12,500 shares of Series B Junior Convertible
Cumulative Preferred Stock as though converted into
12,500 shares of the Companys common stock. |
|
(5) |
|
Includes immediately exercisable options or options exercisable
within 60 days of May 25, 2010 to purchase
250,000 shares of the Companys common stock. |
|
(6) |
|
Includes immediately exercisable (a) warrants to purchase
12,500 shares of the Companys common stock,
(b) options or options exercisable within 60 days of
May 25, 2010 to purchase 441,666 shares of the
Companys common stock and (c) 12,500 shares of
the Companys Series B Junior Convertible Cumulative
Preferred Stock as though converted into 12,500 shares of
the Companys common stock. |
|
(7) |
|
Includes options or options exercisable within 60 days of
May 25, 2010 to purchase 141,666 shares of the
Companys common stock. |
|
(8) |
|
Includes (a) immediately exercisable warrants to purchase
10,000 shares of the Companys common stock, and
(b) options or options exercisable within 60 days of
May 25, 2010 to purchase 141,666 shares of the
Companys common stock. |
|
(9) |
|
Includes (a) immediately exercisable warrants to purchase
415,000 shares of the Companys common stock,
(b) 3,276 shares of the Companys common stock to
be issued as compensation in connection with the guarantee of
bank loans within 60 days of May 25, 2010,
(c) immediately exercisable options or options exercisable
within 60 days of May 25, 2010 to purchase
1,874,998 shares of the Companys common stock, and
(d) 60,000 shares of Series B Junior Convertible
Cumulative Preferred Stock as though converted into
60,000 shares of the Companys common stock. |
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Other than the transactions described below since January 2007
there has not been nor is there currently proposed any
transaction or series of similar transactions to which we were
or will be a party:
|
|
|
|
|
in which the amount involved exceeds $120,000; and
|
|
|
|
in which any director, executive officer, or stockholder owning
more than 5% of our common stock, or any member of their
immediate family had or will have a direct or indirect material
interest.
|
Transactions
with Management
On January 1, 2007 we entered into a Service Agreement,
which we refer to as the Service Agreement, with
ALDA & Associates International, Inc., which we refer
to as ALDA, a consulting company owned and controlled by
Mr. Fater, whereby our employees became employees of ALDA
under a Professional Employer Organization (PEO) arrangement.
The Service Agreement is a cost-reimbursement-only contract and
provides for our reimbursement of all of ALDAs actual
payroll and insurance-related costs for these employees. The
arrangement was entered into because of the substantial cost
savings that could be obtained for us due to the higher number
of employees employed by ALDA.
In 2007, we borrowed $200,000 from Colonial Bank, N.A., which we
refer to as Colonial Bank, on an unsecured basis under a loan
agreement with a due date in August 2007 and an interest rate of
6.65%. As a condition to making the loan, Colonial Bank received
a $200,000 certificate of deposit from our Chief Executive and
Financial Officer, David H. Fater, as standby collateral. As
consideration for this standby collateral, our board of
directors authorized (i) the reimbursement of
Mr. Faters
out-of-pocket
cash costs associated with this transaction, and (ii) the
monthly issuance of 728 shares of our common stock. In 2009
Branch Banking and Trust Company acquired Colonial Bank,
and this loan has been extended until January 10, 2011 at
an interest rate of 3.54%.
Also in 2007, we borrowed $100,000 from Colonial Bank on an
unsecured basis under a loan agreement with a due date in August
2007 and an interest rate of 6.13%. As a condition to making the
loan, Colonial Bank received a $100,000 certificate of deposit
from Mr. Fater as standby collateral. As consideration for
this standby collateral, our board of directors authorized
(i) the reimbursement of Mr. Faters
out-of-pocket
cash costs associated with this
43
transaction, and (ii) the monthly issuance of
364 shares of our common stock. In 2009 Branch Banking and
Trust Company acquired Colonial Bank, and this loan has
been extended until October 2010 at an interest rate of 4.83%.
For the years ended December 31, 2007, 2008 and 2009 and
the three months ended March 31, 2010, respectively,
Mr. Fater received 8,328, 13,104, 14,196 and
3,276 shares of our common stock related to these bank
loans.
In October 2002 we entered into a Purchase and Royalty
Agreement, as amended in July and September 2003, which we refer
to as the Royalty Agreement, with Dr. James E. Skinner, our
Vice President and Director of Research and Development and a
director of our company, to acquire the software related to the
PD2i
Analyzertm.
The total purchase price for the software was $200,000. To date
we have paid $100,000, and we are required to pay the remaining
$100,000 from 10% of any revenues that we receive from the sale,
licensing, distribution or other use of the PD2i
Analyzertm.
The Royalty Agreement further provides for an additional ongoing
royalty to be paid to Dr. Skinner of 10% of revenues
received by us from any activities that utilize the PD2i
Analyzertm
including, without limitation, licensing and sales of the PD2i
Analyzertm
for the life of the patents. For the years ended
December 31, 2007, 2008 and 2009 and the three months ended
March 31, 2010, respectively, Dr. Skinner did not
receive any royalty payments. These royalty payments will
commence after we have recovered our development costs in full.
On June 11, 2007, Dr. Jerry M. Anchin, our Vice
President, Associate Director of Research and Development and a
director, sold 100,000 shares of our common stock in a
privately-negotiated sale at a price of $0.50 per share and
contributed to our capital the $50,000 proceeds he received. On
July 27, 2007 Dr. James E. Skinner, our Vice
President, Director of Research and Development and a director,
sold 255,000 shares of our common stock in a
privately-negotiated sale at a price of $0.50 per share and
contributed to capital the $127,500 proceeds he received.
DESCRIPTION
OF SECURITIES
Capital
Stock
We are authorized to issue 100,000,000 shares of common
stock, par value $0.0001 per share, of which
45,552,834 shares were issued and outstanding as of
May 25, 2010, and 10,000,000 shares of preferred
stock, par value $0.0001 per share, of which 160,000 shares
have been designated Series A 8% Convertible Preferred
Stock (Series A Preferred Stock),
5,500,000 shares have been designated Series B 8%
Junior Convertible Cumulative Preferred Stock
(Series B Preferred Stock) and
4,340,000 shares are blank check preferred stock, of which
157,592 shares of Series A Preferred Stock were issued
and outstanding as of May 25, 2010 and
5,210,101 shares of Series B Preferred Stock were
issued and outstanding as of May 25, 2010.
Pursuant to our Certificate of Incorporation and Bylaws, our
board of directors is classified into three classes of
directors, denoted as Class I, Class II and
Class III. Messrs. Fater and Skinner are Class I
directors, Messrs. Anchin and Hudson are Class II
directors and Messrs. Wiesmeier and Franchetti are
Class III directors.
Our Certificate of Incorporation and Bylaws include provisions
specifying the vote required by stockholders to take action. Our
Certificate of Incorporation provides that the affirmative vote
of the holders of at least two thirds (2/3) of our then
outstanding shares of capital stock entitled to vote on the
proposed amendment will be required to amend or revise our
Certificate of Incorporation. Our Bylaws provide that the Bylaws
may be amended, repealed or new Bylaws adopted by the board of
directors; however the affirmative vote of the holders of at
least two thirds (2/3) of the then outstanding shares of capital
stock entitled to vote on the election of directors will be
required in order for the stockholders to alter, repeal or adopt
new Bylaws. Our Certificate of Incorporation provides that
special meetings of stockholders may be called by the board of
directors at any time, but stockholders may only call special
meetings upon the affirmative vote of the holders of at least
two thirds (2/3) of our then outstanding shares of capital stock
entitled to vote on the election of directors.
44
Units
Each unit will consist
of share(s)
of common stock
and
warrant(s) to
purchase share(s)
of common stock. The units will not be certificated and the
common stock and warrants will be immediately separable and will
be separately transferable immediately upon issuance.
Common
Stock
Holders of common stock are entitled to one vote per share on
all matters to be voted upon by the stockholders and are not
entitled to cumulative voting for the election of directors.
Holders of common stock are entitled to receive ratably such
dividends, if any, as may be declared from time to time by the
board of directors out of funds legally available therefore
subject to the rights of any preferred stockholders, and also
subject to any dividend restrictions in our debt instruments or
under our bank loans. We do not intend to pay any cash dividends
to the holders of common stock and anticipate reinvesting our
earnings. In the event of our liquidation, dissolution or
winding up, the holders of common stock are entitled to share
ratably and equally in all assets remaining after payment of
liabilities and the preferences of preferred stockholders.
Shares of common stock have no preemptive, conversion or other
subscription rights. There are no redemption or sinking fund
provisions applicable to common stock.
Warrants
to be Issued as Part of this Offering
The warrants offered in this offering will be issued in the form
that will be filed as an exhibit to the registration statement
of which this prospectus is a part. You should review a copy of
the form of warrant for a complete description of the terms and
conditions applicable to the warrants. The following is a brief
summary of the warrants and is subject in all respects to the
provisions contained in the form of warrant.
Each warrant represents the right to
purchase share(s)
of common stock at an exercise price equal to
$ per share, subject to adjustment
as described below. Each warrant may be exercised on or after
the closing date of this offering through and including the
close of business
on .
The warrant will have a cashless exercise right in the event
that the common stock underlying the warrants are not covered by
an effective registration statement at the time of such exercise.
The exercise price and the number of shares underlying the
warrants are subject to appropriate adjustment in the event of
stock splits, stock dividends on our common stock, stock
combinations or similar events affecting our common stock. In
addition, in the event we consummate any merger, consolidation,
sale or other reorganization event in which our common stock is
converted into or exchanged for securities, cash or other
property or we consummate a sale of substantially all of our
assets, then following such event, the holders of the warrants
will be entitled to receive upon exercise of the warrants the
kind and amount of securities, cash or other property which the
holders would have received had they exercised the warrants
immediately prior to such reorganization event.
We may call the warrants, in whole or in part, if, at any time
during the exercise period, the volume weighted average price of
our common stock for ten consecutive trading days exceeds
percent of the exercise price of the warrants. Any warrants
which are subject to a call notice and not exercised by the date
that
is
trading days after the date of the call notice will be cancelled
without any consideration paid to the holder.
No fractional shares of common stock will be issued in
connection with the exercise of a warrant. In lieu of fractional
shares, we will pay the holder an amount in cash equal to the
fractional amount multiplied by the market value of a share of
common stock. A warrant may be transferred by a holder without
our consent, upon surrender of the warrant, properly endorsed
(by the holder executing an assignment in the form attached to
the warrant). The warrants will not be listed on any securities
exchange or automated quotation system and we do not intend to
arrange for any exchange or quotation system to list or quote
the warrants.
The placement agent warrants will have terms substantially
similar to the warrants included in units offered hereby, except
that placement agent warrants will have a term
of
years from the effective date of the registration statement of
which this prospectus is a part and will otherwise comply with
FINRA Rule 5110 (g)(1).
45
Preferred
Stock
Series A
Preferred Stock
Each holder of Series A Preferred Stock is entitled to one
vote for each share of common stock into which each share of
Series A Preferred Stock held is convertible, on all
matters submitted to a vote of stockholders. Subject to
preferences that may apply to shares of preferred stock
outstanding at the time and ranking senior to the Series A
Preferred Stock, each share of Series A Preferred Stock
yields cumulative annual dividends at an annual rate of 8%.
Dividends on the Series A Preferred Stock will begin to
accrue from their issuance date. Shares of Series A
Preferred Stock have no preemptive rights or other subscription
rights. The Series A Preferred Stock is senior to all other
outstanding capital stock and is entitled to a liquidation
preference equal to the greater of (i) the initial purchase
price for the Series A Preferred Stock plus accrued and
unpaid dividends or (ii) any accrued and unpaid dividends
plus the amount such holder would have received if prior to such
liquidation the Series A Preferred Stock had been converted
into common stock.
Each share of Series A Preferred Stock is convertible at
the option of the holder into shares of the Companys
common stock without the payment of any additional consideration
by the holder into such number of fully paid and nonassessable
shares of common stock as is determined by dividing $6.35 by the
conversion price. The conversion price shall initially be $6.35,
plus the amount of all accrued and unpaid dividends on such
shares, whether or not declared. The conversion price of the
Series A Preferred Stock is subject to adjustment in the
case of dilutive issuances and the issuance of additional shares
of common stock. The Series A will automatically be
converted into shares of common stock upon the consummation of a
Liquidation Event, as defined in the Certificate of Designation.
The Company may, at its option, require all holders of
Series A Preferred Stock then outstanding to convert their
shares of Series A Preferred Stock into shares of common
stock at any time on or after: (i) the closing of the sale
of shares of our common stock, at a price per share greater than
or equal to $5.00, in an underwritten public offering pursuant
to an effective registration statement under the Securities Act
resulting in at least $10,000,000 of gross proceeds to us or
(ii) the consummation of a Liquidation Event, as defined in
the Certificate of Designation.
Series B
Preferred Stock
Each holder of Series B Preferred Stock is entitled to one
vote for each share of common stock into which each share of
Series B Preferred Stock held is convertible, on all
matters submitted to a vote of stockholders. Subject to
preferences that may apply to shares of preferred stock
outstanding at the time and ranking senior to the Series B
Preferred Stock, each share of Series B Preferred Stock
yields cumulative annual dividends at an annual rate of 8%.
Dividends on the Series B Preferred Stock will begin to
accrue from their issuance date. Shares of Series B
Preferred Stock have no preemptive rights or other subscription
rights. The Series B Preferred Stock is junior to the
Series A Preferred Stock and is entitled to a liquidation
preference equal to the greater of (i) the initial purchase
price for the Series B Preferred Stock plus accrued and
unpaid dividends or (ii) any accrued and unpaid dividends
plus the amount such holder would have received if prior to such
liquidation the Series B Preferred Stock had been converted
into common stock.
Each share of Series B Preferred Stock is convertible at
the option of the holder into shares of the Companys
common stock without the payment of any additional consideration
by the holder into such number of fully paid and nonassessable
shares of common stock as is determined by dividing $.80 by the
conversion price. The conversion price shall initially be the
lesser of $0.80 or 80% of the price per share of any common
stock sold in the qualified financing plus the amount of all
accrued and unpaid dividends on such shares, whether or not
declared. The conversion price of the Series B Preferred
Stock is subject to adjustment in the case of dilutive issuances
and the issuance of additional shares of common stock. The
Series B will automatically be converted into shares of
common stock upon the consummation of a Liquidation Event, as
defined in the Certificate of Designation. The Company may, at
its option, require all holders of Series B Preferred Stock
then outstanding to convert their shares of Series B
Preferred Stock into shares of common stock at any time on or
after: (i) the closing of the sale of debt or equity in a
registered offering or pursuant to a private placement,
resulting in at least $3,000,000 of gross proceeds to the
Company or (ii) the consummation of a Liquidation Event, as
defined in the Certificate of Designation.
46
Blank
Check Preferred Stock
Our board of directors is authorized, without further
stockholder action, to divide any or all shares of the
authorized but undesignated preferred stock into series and fix
and determine the designations, preferences and relative rights
and qualifications, limitations, or restrictions thereon of any
series so established, including voting powers, dividend rights,
liquidation preferences, redemption rights and conversion
privileges.
Options
and Warrants
As of May 25, 2010, we have outstanding options and
warrants to purchase an aggregate of 18,886,842 shares of
our common stock at exercise prices ranging from $0.01 to $1.00,
per share, which expire on various dates from 2011 to 2016.
Anti-Takeover
Effects of Delaware Law, our Certificate of Incorporation and
our Bylaws
We are subject to Section 203 of the General Corporation
Law of the State of Delaware. Subject to certain exceptions,
Section 203 prevents a publicly held Delaware corporation
from engaging in a business combination with any interested
stockholder for three years following the date that the person
became an interested stockholder, unless the interested
stockholder attained such status with the approval of our board
of directors or unless the business combination is approved in a
prescribed manner. A business combination includes, among other
things, a merger or consolidation involving us and the
interested stockholder and the sale of more than 10% of our
assets. In general, an interested stockholder is any entity or
person beneficially owning 15% or more of our outstanding voting
stock and any entity or person affiliated with or controlling or
controlled by such entity or person.
In addition, our certificate of incorporation and our bylaws
provide for a classified board of directors, which makes it more
difficult for a stockholder or group of stockholders to
radically change the character or composition of the board at
any one time. Directors may only be removed for cause and by a
vote of the holders of two-thirds
(2/3) of the
then outstanding shares of capital stock entitled to vote
generally in the election of directors.
Our certificate of incorporation and our bylaws provide that any
action required or permitted to be taken by our stockholders at
an annual meeting or special meeting of stockholders may only be
taken if it is properly brought before such meeting. Our
stockholders may also take any action by written consent in lieu
of a meeting. However, our stockholders may only call a special
meeting of stockholders with the affirmative vote of the holders
of at least two thirds (2/3) of our then outstanding shares of
capital stock entitled to vote on the election of directors.
This provision could have the effect of delaying until the next
stockholder meeting stockholder actions that are favored by the
holders of a majority of our outstanding voting securities.
Pursuant to our certificate of incorporation and our bylaws, the
affirmative vote of the holders of at least two thirds (2/3) of
our then outstanding shares of capital stock entitled to vote on
the proposed amendment, in the case of the certificate of
incorporation, or entitled to vote on the election of directors,
in the case of the Bylaws, will be required to amend or revise
our Certificate of Incorporation or Bylaws.
Transfer
Agent
The transfer agent for our common stock is Continental Stock
Transfer & Trust Company, 17 Battery Place,
8th Floor, New York, New York 10004. Continental Stock
Transfer & Trust Company can be reached at
(202) 509-4000.
47
PLAN OF
DISTRIBUTION
We have entered into a placement agency agreement
with
and in
connection with this offering. Among other things, the placement
agents will assist us in identifying and evaluating prospective
investors and approach prospective investors regarding the
offering. The placement agents will assist us on a reasonable
best efforts basis. The placement agents will have
no obligation to buy any of the units from us, nor are they
required to arrange the purchase or sale of any specific number
or dollar amount of units. We will enter into subscription
agreements directly with investors in connection with this
offering. All funds we receive from investors will be placed in
a non-interest-bearing escrow account
with ,
which we refer to as the escrow agent.
The placement agency agreement provides that the obligations of
the placement agents are subject to certain conditions
precedent, including the absence of any material adverse change
in our business and the receipt of certain certificates,
opinions and letters from us, our officers, our counsel, and our
independent auditors. If the closing conditions are not
satisfied
by ,
2010, we will return your subscription amount to you without
interest and without any other offset or deduction within two
days.
There may be one or more closings of the offering. On each
closing date, we will issue the securities for which
subscriptions have been received and accepted to the subscribers
and we will receive funds in the amount of the aggregate
purchase price for those securities. We currently anticipate a
first closing of a sale of the securities
on ,
2010.
On each closing date, the following will occur:
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we will receive funds in the amount of the aggregate purchase
price of the securities being sold by us on such closing date,
less the amount of fees we are paying to the placement agents;
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we will cause common stock sold on such closing date to be
delivered in book-entry form through the facilities of the
Depository Trust Company and issue the warrants to the
subscribers; and
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the escrow agent will pay the placement agent fees in accordance
with the terms of the placement agency agreement.
|
We have agreed to pay the placement agents a cash fee equal
to % of the gross proceeds of this
offering and to issue to the placement agents warrants to
purchase a number of shares of our common stock equal
to % of the aggregate number of
shares of common stock included in units sold in the offering.
The placement agent warrants will have terms substantially
similar to the terms of the warrants included in the units
offered hereby, except that the placement agent warrants will
comply with FINRA Rule 5110(g)(1) in that for a period of
180 days after the issuance date of the placement agent
warrants (which shall not be earlier than the applicable closing
date of this offering), neither the placement agent warrants nor
any shares of our common stock issued upon exercise of the
placement agent warrants shall be sold, transferred, assigned,
pledged, or hypothecated, or be the subject of any hedging,
short sale, derivative, put, or call transaction that would
result in the effective economic disposition of such securities
by any person for a period of 180 days immediately
following the date of effectiveness or commencement of sales of
the offering pursuant to which the placement agent warrants are
being issued, except the transfer of any security:
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by operation of law or by reason of reorganization of the
Company;
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to any FINRA member firm participating in this offering and the
officers or partners thereof, if all securities so transferred
remain subject to the
lock-up
restriction described above for the remainder of the time period;
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if the aggregate amount of securities of the Company held by
either placement agent or related person do not exceed 1% of the
securities being offered;
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that is beneficially owned on a pro-rata basis by all equity
owners of an investment fund, provided that no participating
member manages or otherwise directs investments by the fund, and
participating members in the aggregate do not own more than 10%
of the equity in the fund; or
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the exercise or conversion of any security, if all securities
received remain subject to the
lock-up
restriction set forth above for the remainder of the time period.
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48
The placement agents will have piggyback registration rights
with respect to the shares of common stock underlying the
placement agent warrants. In addition, the warrants will have a
cashless exercise right in the event that an effective
registration statement is not available for the resale of the
shares of common stock underlying the placement agent warrants.
The following table shows the
per-unit and
total placement agent fee to be paid by us to the placement
agents. This amount is shown assuming all of the units offered
pursuant to this prospectus are sold and issued by us.
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Placement Agent
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Fee per Unit
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Total
|
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$
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|
$
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We are offering pursuant to this prospectus up
to
of our units, but there can be no assurance that the offering
will be fully subscribed. Accordingly, we may sell substantially
less
than
of our units, in which case our net proceeds would be
substantially reduced and the total placement agent fees may be
substantially less than the maximum total set forth above.
We have also agreed to reimburse the placement agents for
reasonable, customary and documented
out-of-pocket
expenses, including, but not limited to, all legal expenses
incurred by the placement agents for services provided by
outside counsel; provided, however, that
out-of-pocket
expenses (excluding legal expenses) in excess of
$ and legal expenses in excess of
$ will require our approval, such
approval not to be unreasonably withheld. We estimate that the
total expenses of the offering by us, excluding the placement
agent fees, will be approximately
$ . In the event the offering of
securities is not completed, reimbursable expenses will be
limited to
out-of-pocket
accountable expenses actually incurred by the placement agents
in accordance with FINRA Rule 5110(f)(2)(D).
We have agreed to indemnify the placement agents against certain
liabilities, including liabilities under the Securities Act of
1933, as amended, and liabilities related to the performance by
the placement agents of the services contemplated by the
placement agency agreement. We have also agreed to contribute to
payments the placement agents may be required to make in respect
of such liabilities.
The placement agency agreement will be filed as an exhibit to
the registration statement of which this prospectus is a part.
The placement agents have informed us that they will not engage
in over-allotment, stabilizing transactions or syndicate
covering transactions in connection with this offering.
LEGAL
MATTERS
Our counsel, Akerman Senterfitt, in Miami, Florida, will pass on
the validity of the units offered by this prospectus.
EXPERTS
The consolidated balance sheets as of December 31, 2009 and
2008, and the related consolidated statements of operations,
changes in shareholders equity (net capital deficiency)
and cash flows for the years then ended and the period from
August 4, 2000 (inception) through December 31, 2009
included in this prospectus have been audited by Daszkal Bolton,
LLP, an independent registered public accounting firm, as stated
in their report appearing herein. Such consolidated financial
statements have been so included in reliance upon the report of
such firm given upon their authority as experts in accounting
and auditing.
49
WHERE YOU
CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on
Form S-1
under the Securities Act that registers the securities to be
sold in this offering. This prospectus does not contain all of
the information set forth in the registration statement with the
exhibits and schedules filed as part of the registration
statement. For further information with respect to us and our
securities, we refer you to the registration statement and the
exhibits and schedules filed as a part of the registration
statement. Statements contained in this prospectus concerning
the contents of any contract or any other document are not
necessarily complete. If a contract or document has been filed
as an exhibit to the registration statement, we refer you to the
copy of the contract or document that has been filed with the
SEC. Each statement in this prospectus relating to a contract or
document filed as an exhibit is qualified in all respects by the
filed exhibit.
The reports and other information we file with the SEC can be
read and copied at the SECs Public Reference Room at 100
F. Street, N.E., Washington, D.C. 20549. Copies of these
materials can be obtained at prescribed rates from the
SECs Public Reference Room at such address. You may obtain
information regarding the operation of the public reference room
by calling
1-800-SEC-0330.
The SEC also maintains a website
(http://www.sec.gov)
that contains reports, proxy and information statements and
other information regarding issuers that file electronically
with the SEC. The registration statement and the periodic
reports, proxy statements and other information that we file
will be available for inspecting and copying at the SECs
public reference room and the website of the SEC referred to
above.
50
VICOR
TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2010 AND
FOR THE QUARTERS ENDED MARCH 31, 2009 AND 2010
AND FOR THE PERIOD
AUGUST 4, 2000 (INCEPTION) THROUGH MARCH 31, 2010
CONTENTS
F-1
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December 31,
|
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March 31,
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2009
|
|
|
2010
|
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|
(Unaudited)
|
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ASSETS
|
Current assets:
|
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|
|
|
|
|
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|
Cash
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|
$
|
544,000
|
|
|
$
|
308,000
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|
Accounts receivable
|
|
|
|
|
|
|
92,000
|
|
Inventory
|
|
|
|
|
|
|
40,000
|
|
Prepaid expenses
|
|
|
74,000
|
|
|
|
81,000
|
|
|
|
|
|
|
|
|
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|
Total current assets
|
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|
618,000
|
|
|
|
521,000
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|
Property and equipment:
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Equipment
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35,000
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|
129,000
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|
Furniture and fixtures
|
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|
24,000
|
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|
24,000
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|
Less accumulated depreciation
|
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|
(38,000
|
)
|
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|
(42,000
|
)
|
|
|
|
|
|
|
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|
Net property and equipment
|
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|
21,000
|
|
|
|
111,000
|
|
|
|
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Other assets
|
|
|
|
|
|
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|
Deposits
|
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|
12,000
|
|
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|
16,000
|
|
Deferred charges
|
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|
168,000
|
|
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|
80,000
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|
Intellectual property, net of accumulated amortization of
$223,000 and $234,000 at December 31, 2009 and
March 31, 2010, respectively
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229,000
|
|
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|
218,000
|
|
|
|
|
|
|
|
|
|
|
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|
$
|
1,048,000
|
|
|
$
|
946,000
|
|
|
|
|
|
|
|
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|
LIABILITIES AND NET CAPITAL DEFICIENCY
|
Current liabilities:
|
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|
|
|
|
|
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|
Accounts payable and accrued expenses
|
|
$
|
600,000
|
|
|
$
|
874,000
|
|
Current debt
|
|
|
460,000
|
|
|
|
660,000
|
|
Due to related parties
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
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|
Total current liabilities
|
|
|
1,160,000
|
|
|
|
1,634,000
|
|
|
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|
Long-term liabilities:
|
|
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|
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Long-term debt
|
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|
1,251,000
|
|
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|
1,172,000
|
|
Accrued dividends
|
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|
833,000
|
|
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|
959,000
|
|
Derivative financial instruments payable in shares of common
stock
|
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|
4,414,000
|
|
|
|
5,135,000
|
|
|
|
|
|
|
|
|
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Total long-term liabilities
|
|
|
6,498,000
|
|
|
|
7,266,000
|
|
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Commitments and contingencies
|
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Net capital deficiency:
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Preferred stock, $.0001 par value; 10,000,000 shares
authorized:
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Series A Convertible Cumulative, 157,592 shares issued
and outstanding at December 31, 2009 and March 31,
2010, respectively
|
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Series B Voting Junior Convertible Cumulative,
5,210,101 shares issued and outstanding at
December 31, 2009 and March 31, 2010, respectively
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|
|
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Common stock, $.0001 par value; 100,000,000 shares
authorized; 41,813,959 and 42,933,973 shares issued and
outstanding at December 31, 2009 and March 31, 2010,
respectively
|
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|
4,000
|
|
|
|
4,000
|
|
Additional paid-in capital
|
|
|
46,848,000
|
|
|
|
47,952,000
|
|
Deficit accumulated during the development stage
|
|
|
(53,462,000
|
)
|
|
|
(55,910,000
|
)
|
|
|
|
|
|
|
|
|
|
Net capital deficiency
|
|
|
(6,610,000
|
)
|
|
|
(7,954,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,048,000
|
|
|
$
|
946,000
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
F-2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from
|
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|
|
|
|
|
|
|
|
August 4, 2000
|
|
|
|
Three Months
|
|
|
Three Months
|
|
|
(Inception) to
|
|
|
|
Ended March 31,
|
|
|
Ended March 31,
|
|
|
March 31,
|
|
|
|
2009
|
|
|
2010
|
|
|
2010
|
|
|
|
(Unaudited)
|
|
|
Revenues
|
|
$
|
|
|
|
$
|
100,000
|
|
|
$
|
944,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
|
|
|
85,000
|
|
|
|
85,000
|
|
Research and development
|
|
|
199,000
|
|
|
|
157,000
|
|
|
|
15,184,000
|
|
Selling, general and administrative expenses
|
|
|
590,000
|
|
|
|
1,457,000
|
|
|
|
31,259,000
|
|
Interest expense
|
|
|
63,000
|
|
|
|
357,000
|
|
|
|
9,043,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
852,000
|
|
|
|
2,056,000
|
|
|
|
55,571,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on derivative financial instruments
|
|
|
(294,000
|
)
|
|
|
(117,000
|
)
|
|
|
2,040,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(1,146,000
|
)
|
|
|
(2,073,000
|
)
|
|
|
(52,587,000
|
)
|
Cumulative effect of a change in accounting principle
|
|
|
|
|
|
|
|
|
|
|
480,000
|
|
Dividends for the benefit of preferred stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable on Series A and Series B preferred stock
|
|
|
(101,000
|
)
|
|
|
(126,000
|
)
|
|
|
(1,039,000
|
)
|
Amortization of derivative discount on Series B preferred
stock
|
|
|
(228,000
|
)
|
|
|
(249,000
|
)
|
|
|
(1,228,000
|
)
|
Value of warrants issued in connection with sales of
Series B preferred stock
|
|
|
|
|
|
|
|
|
|
|
(1,536,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends for the benefit of preferred stockholders
|
|
|
(329,000
|
)
|
|
|
(375,000
|
)
|
|
|
(3,803,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss applicable to common stock
|
|
$
|
(1,475,000
|
)
|
|
$
|
(2,448,000
|
)
|
|
$
|
(55,910,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share basic and diluted
|
|
$
|
(0.04
|
)
|
|
$
|
(0.06
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares of common shares outstanding
|
|
|
35,010,142
|
|
|
|
42,425,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
F-3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from
|
|
|
|
Three Months
|
|
|
Three Months
|
|
|
August 4, 2000
|
|
|
|
Ended
|
|
|
Ended
|
|
|
(Inception) to
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2009
|
|
|
2010
|
|
|
2010
|
|
|
|
(Unaudited)
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,146,000
|
)
|
|
$
|
(2,073,000
|
)
|
|
$
|
(52,587,000
|
)
|
Adjustment to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
12,000
|
|
|
|
15,000
|
|
|
|
338,000
|
|
Noncash interest imputed upon conversion of debt to equity
|
|
|
32,000
|
|
|
|
|
|
|
|
5,620,000
|
|
Noncash interest from deferred financing costs and debt-based
derivative liabilities
|
|
|
|
|
|
|
371,000
|
|
|
|
2,692,000
|
|
Gain (loss) on derivative financial instruments
|
|
|
294,000
|
|
|
|
117,000
|
|
|
|
(2,040,000
|
)
|
Loss from sale of assets
|
|
|
|
|
|
|
|
|
|
|
48,000
|
|
Securities issued for services
|
|
|
7,000
|
|
|
|
29,000
|
|
|
|
1,170,000
|
|
Beneficial conversion feature of notes payable
|
|
|
|
|
|
|
10,000
|
|
|
|
211,000
|
|
Contributed research and development services
|
|
|
|
|
|
|
|
|
|
|
95,000
|
|
Merger-related costs
|
|
|
|
|
|
|
|
|
|
|
523,000
|
|
Shares in lieu of interest payments
|
|
|
6,000
|
|
|
|
1,000
|
|
|
|
381,000
|
|
Equity-based compensation
|
|
|
142,000
|
|
|
|
286,000
|
|
|
|
18,951,000
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
|
|
|
(92,000
|
)
|
|
|
(92,000
|
)
|
Inventory
|
|
|
|
|
|
|
(40,000
|
)
|
|
|
(40,000
|
)
|
Prepaid expenses and other assets
|
|
|
(20,000
|
)
|
|
|
(11,000
|
)
|
|
|
(434,000
|
)
|
Accounts payable and accrued expenses
|
|
|
170,000
|
|
|
|
274,000
|
|
|
|
1,847,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(503,000
|
)
|
|
|
(1,113,000
|
)
|
|
|
(23,317,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of intellectual property
|
|
|
|
|
|
|
|
|
|
|
(237,000
|
)
|
Net proceeds from sale of equipment
|
|
|
|
|
|
|
|
|
|
|
59,000
|
|
Purchase of property and equipment
|
|
|
|
|
|
|
(93,000
|
)
|
|
|
(270,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
|
|
|
|
(93,000
|
)
|
|
|
(448,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Due to related parties
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
Proceeds from bank loans
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
Proceeds from sale of preferred stock
|
|
|
261,000
|
|
|
|
|
|
|
|
2,915,000
|
|
Proceeds from sale of common stock
|
|
|
128,000
|
|
|
|
|
|
|
|
11,268,000
|
|
Repayment of notes
|
|
|
|
|
|
|
|
|
|
|
(905,000
|
)
|
Proceeds from bridge loan
|
|
|
200,000
|
|
|
|
|
|
|
|
300,000
|
|
Proceeds from sale of notes
|
|
|
|
|
|
|
970,000
|
|
|
|
9,901,000
|
|
Proceeds for stock to be issued
|
|
|
|
|
|
|
|
|
|
|
16,000
|
|
Contributed capital
|
|
|
|
|
|
|
|
|
|
|
178,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
589,000
|
|
|
|
970,000
|
|
|
|
24,073,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
86,000
|
|
|
|
(236,000
|
)
|
|
|
308,000
|
|
Cash at beginning of period
|
|
|
182,000
|
|
|
|
544,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at end of period
|
|
$
|
268,000
|
|
|
$
|
308,000
|
|
|
$
|
308,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
F-4
Vicor
Technologies, Inc.
(A Development Stage Company)
Condensed Consolidated Statements of Cash Flows
For the three months ended March 31, 2009 and 2010 and
From August 4, 2000 (inception) to March 31,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from
|
|
|
|
Three Months
|
|
|
Three Months
|
|
|
August 4, 2000
|
|
|
|
Ended
|
|
|
Ended
|
|
|
(Inception) to
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2009
|
|
|
2010
|
|
|
2010
|
|
|
|
(Unaudited)
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of previously-subscribed common stock
|
|
$
|
16,000
|
|
|
$
|
|
|
|
$
|
16,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of accounts payable to note payable
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of common stock for cancellation of subscription note
receivable
|
|
|
|
|
|
|
|
|
|
|
750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed research and development
|
|
|
|
|
|
|
|
|
|
|
95,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of intellectual property from related party
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion features for promissory notes
|
|
|
|
|
|
|
|
|
|
|
912,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued in connection with 15% promissory notes
|
|
|
|
|
|
|
|
|
|
|
261,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued in connection with 8% Subordinated
Convertible Notes
|
|
|
|
|
|
|
134,000
|
|
|
|
251,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest expense
|
|
|
23,000
|
|
|
|
18,000
|
|
|
|
977,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued equity-based compensation
|
|
|
|
|
|
|
|
|
|
|
41,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued dividends
|
|
|
101,000
|
|
|
|
126,000
|
|
|
|
2,509,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on promissory notes paid in common stock
|
|
|
|
|
|
|
|
|
|
|
520,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related-party accrual converted to common stock
|
|
|
|
|
|
|
|
|
|
|
561,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of debt to Series B Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
1,567,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of notes to common stock
|
|
|
40,000
|
|
|
|
404,000
|
|
|
|
5,013,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses paid with preferred stock
|
|
|
108,000
|
|
|
|
|
|
|
|
108,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses paid with common stock
|
|
|
772,000
|
|
|
|
|
|
|
|
772,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of equity-based derivative financial instruments
issued
|
|
|
366,000
|
|
|
|
|
|
|
|
816,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of debt-based derivative financial instruments issued
|
|
|
|
|
|
|
|
|
|
|
1,046,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred costs paid with common stock
|
|
|
|
|
|
|
|
|
|
|
358,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative discount on Series B preferred stock
|
|
|
|
|
|
|
|
|
|
|
341,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Series B preferred stock and accrued
dividends to common stock
|
|
|
|
|
|
|
|
|
|
|
82,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to condensed consolidated financial
statements.
F-5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock
|
|
|
Additional
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Class A
|
|
|
Class B
|
|
|
Paid-in
|
|
|
Subscriptions
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
in Process
|
|
|
Deficit
|
|
|
Total
|
|
|
|
(Unaudited)
|
|
|
Balance at December 31, 2009
|
|
|
41,813,959
|
|
|
$
|
4,000
|
|
|
|
157,592
|
|
|
$
|
|
|
|
|
5,210,101
|
|
|
$
|
|
|
|
$
|
46,848,000
|
|
|
$
|
|
|
|
$
|
(53,462,000
|
)
|
|
$
|
(6,610,000
|
)
|
Accrued dividends on preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(126,000
|
)
|
|
|
(126,000
|
)
|
Issuance of stock for interest payments
|
|
|
1,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
Issuance of stock for services
|
|
|
193,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
136,000
|
|
|
|
|
|
|
|
|
|
|
|
136,000
|
|
Issuance of stock options for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
179,000
|
|
|
|
|
|
|
|
|
|
|
|
179,000
|
|
Issuance of stock for conversion of notes payable
|
|
|
899,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
404,000
|
|
|
|
|
|
|
|
|
|
|
|
404,000
|
|
Warrants issued related to notes payable transactions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
135,000
|
|
|
|
|
|
|
|
|
|
|
|
135,000
|
|
Issuance of common stock for exercise of warrants
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of discounts related to derivative financial
instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
249,000
|
|
|
|
|
|
|
|
(249,000
|
)
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,073,000
|
)
|
|
|
(2,073,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2010
|
|
|
42,933,973
|
|
|
$
|
4,000
|
|
|
|
157,592
|
|
|
$
|
|
|
|
|
5,210,101
|
|
|
$
|
|
|
|
$
|
47,952,000
|
|
|
$
|
|
|
|
$
|
(55,910,000
|
)
|
|
$
|
(7,954,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
See accompanying notes to condensed consolidated financial
statements.
F-6
NOTE 1
ORGANIZATION AND NATURE OF BUSINESS
Organization
Vicor Technologies, Inc. (Vicor) is a development-stage company.
As discussed in Note 3 Vicor generated operating revenues
in the first quarter of 2010, but management does not believe
these were significant enough for Vicor to be an operating
enterprise at March 31, 2010.
The accompanying condensed consolidated financial statements
include Vicor Technologies, Inc. and its wholly-owned
subsidiaries, Nonlinear Medicine, Inc. (NMI) and
Stasys Technologies, Inc (STI). Vicor has no
operations independent of its wholly-owned subsidiaries. NMI
owns all intellectual property related to Vicors
diagnostic products, and STI owns all intellectual property
related to the Companys therapeutic products.
Nature
of the business
Vicor is a medical diagnostics company focused on
commercializing noninvasive diagnostic technology products based
on its patented, proprietary point correlation dimension
algorithm (the
PD2i®
Algorithm). The
PD2i®
Algorithm and software facilitates the ability to accurately
risk stratify a specific target population to predict future
pathological events, such as fatal cardiac arrhythmias (which
are related to sudden cardiac death), imminent death from trauma
and autonomic nervous system dysfunction. Vicor believes that
the
PD2i®
Algorithm and software represents a noninvasive monitoring
technology that physicians and other members of the medical
community can use as a new and accurate vital sign. Vicor is
currently commercializing two proprietary diagnostic medical
products which employ software utilizing the
PD2i®
Algorithm: the PD2i
Analyzertm
(sometimes referred to as the PD2i Cardiac
Analyzertm)
and the
PD2i-VStm
(Vital Sign). It is also anticipated that the
PD2i®
Algorithm and software applications will allow for the early
detection of Alzheimers Disease and other disorders and
diseases.
Vicors first product, the PD2i
Analyzertm,
received 510(k) marketing clearance from the Food and Drug
Administration or FDA on December 29, 2008. It displays and
analyzes electrocardiographic (ECG) information and
measures heart rate variability (HRV), in patients
at rest and in response to controlled exercise and paced
respiration. The PD2i
Analyzertm
applies patented and proprietary technology to analyze a high
resolution electrocardiograph signal, and measure R-wave
intervals. The clinical significance of HRV and other parameters
must be determined by a physician. On January 14, 2010
Vicor announced its first commercial sale of the PD2i
Analyzertm
to a physician practice in South Carolina and simultaneously
announced that it had entered into an exclusive distribution
agreement with VF Medical, LLC, a medical products distribution
company. VF Medical, LLC will serve as the exclusive distributor
for the PD2i
Analyzertm
in South Carolina, North Carolina, and the cities of Savannah
and Augusta, Georgia. VF Medical will utilize a
25-person
medical products distribution team consisting of agents who have
long-term relationships with cardiologists,
electrophysiologists, and family practice and internal medicine
physicians within the designated territory. Vicor is seeking
other distributors and has begun hiring sales personnel in
selected geographic areas.
The PD2i
Analyzertm
consists of a private-label digital electrocardiograph device
that incorporates automated blood pressure recording and a
laptop computer which utilizes proprietary collection software.
The PD2i
Analyzertm
accesses the internet and sends recorded electrocardiograph
files to Vicors remote server where the files are analyzed
by the Companys proprietary algorithm and software. The
analyzed results are then provided to the physician in an
electronic health record together with a report and information
which the physician can use to bill both public and private
insurers utilizing established Current Procedural Terminology
Codes (CPT Codes). Vicor bills the physician monthly
for the number of tests performed, thus enabling it to realize
revenue from the recurring use of the PD2i
Analyzertm
in addition to revenue realized from the sale of the device.
Vicor anticipates making various submissions to the FDA for
marketing clearance for the PD2i
Analyzertm
for additional medical claims, such as sudden cardiac death,
trauma and, possibly, the diagnosis of diseases related to
autonomic nervous system dysfunction. Approval from the FDA
would allow Vicor to expand and accelerate its marketing efforts.
Risks
The Company is subject to all the risks inherent in an early
stage company in the medical device industry, which is subject
to rapid technological change. The Company has numerous
competitors, including major
F-7
pharmaceutical and chemical companies, medical device
manufacturers, specialized biotechnology firms, universities and
other research institutions. These competitors may succeed in
developing technologies and products that are more effective
than any that are being developed by the Company or that would
render the Companys technology and products obsolete and
noncompetitive. Many of these competitors have substantially
greater financial and technical resources and production and
marketing capabilities than the Company. In addition, many of
the Companys competitors have significantly greater
experience than the Company in pre-clinical testing and human
clinical trials of new or improved pharmaceutical products and
in obtaining FDA and other regulatory approvals on products for
use in health care. The Company is aware of various products
under development or manufactured by competitors, which may use
therapeutic approaches that compete directly with certain of the
Companys products.
The Company has limited experience in conducting and managing
pre-clinical testing necessary to enter clinical trials required
to obtain government approvals and has limited experience in
conducting clinical trials. Accordingly, the Companys
competitors may succeed in obtaining FDA approval for products
more rapidly than the Company, which could adversely affect the
Companys ability to further develop and market its
products. If the Company commences significant commercial sales
of its products, it will also be competing with respect to
manufacturing efficiency and marketing capabilities, areas in
which the Company has limited or no current experience.
NOTE 2
LIQUIDITY
The Companys financial statements as of and for the three
months ended March 31, 2010 have been prepared on a going
concern basis, which contemplates the realization of assets and
the settlement of liabilities and commitments in the normal
course of business. The Company incurred a net loss applicable
to common stockholders of $1,475,000 and $2,448,000 for the
three months ended March 31, 2009 and 2010, respectively,
and at March 31, 2010 had negative working capital of
$1,113,000, an accumulated deficit of $55,910,000 and a net
capital deficiency of $7,954,000. Although sales commenced in
January 2010, the Company anticipates operating losses over the
next 12 months (and likely longer) as it continues to incur
expenditures necessary to further the commercial development of
its products. These matters raise substantial doubt about the
Companys ability to continue as a going concern. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Management recognizes that the Company must generate additional
funds to successfully commercialize its products. Management
plans include the sale of additional equity or debt securities,
alliances or other partnerships with entities interested in and
having the resources to support the further development of its
products as well as other business transactions to assure
continuation of the Companys development and operations.
The Company is executing its plan to secure additional capital
through a multi-part funding strategy. The Company believes that
the amount of capital generated by this plan will be sufficient
to permit completion of various clinical trials and provide
sufficient working capital for the next 24
30 months, by which time it is expected that the Company
will generate positive cash flow through the sales of its
products.
However, no assurances can be given that the Company will be
successful in raising additional capital or entering into
business alliances. Further, there can be no assurance, assuming
the Company successfully raises additional funds or enters into
a business alliance, that the Company will achieve profitability
or positive cash flow. If the Company is not able to timely and
successfully raise additional capital
and/or
achieve positive cash flow, its business, financial condition,
cash flows and results of operations will be materially and
adversely affected.
NOTE 3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF
PRESENTATION
Basis
of Presentation
The accompanying unaudited condensed consolidated financial
statements of the Company and the notes thereto have been
prepared in accordance with the instructions for
Form 10-Q
and Article 10 of
Regulation S-X
of the Securities and Exchange Commission (SEC). The
December 31, 2009 condensed consolidated balance sheet data
was derived from audited financial statements but does not
include all disclosures required by accounting principles
generally accepted in the United States of America. The
unaudited condensed consolidated financial
F-8
statements included herein should be read in conjunction with
the audited consolidated financial statements and the notes
thereto that are included in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2009.
The accompanying condensed consolidated financial statements
include the accounts of the Company and its wholly-owned
subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation. The
Companys condensed consolidated financial statement
amounts have been rounded to the nearest thousand dollars.
The information presented as of March 31, 2010 and for the
three months ended March 31, 2009 and 2010 has not been
audited. In the opinion of management, the unaudited interim
financial statements include all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly the
Companys consolidated financial position as of
March 31, 2010 and the consolidated results of its
operations for the three months ended March 31, 2009 and
2010 and its consolidated cash flows and net capital deficiency
for the three months ended March 31, 2009 and 2010. The
results of operations for the three months ended March 31,
2009 and 2010 are not necessarily indicative of the results for
the full year.
Cumulative
Effect of a Change in Accounting Principle
On June 25, 2008, the Financial Accounting Standards Board
ratified the consensus reached by the Emerging Issues Task Force
in Accounting Standards Codification (ASC) 815,
Determining Whether an Instrument (or Embedded Feature) Is
Indexed to an Entitys Own Stock. This Issue provides
guidance for determining whether an equity-linked financial
instrument (or embedded feature) is indexed to an entitys
own stock. If an embedded feature (for example, the conversion
option embedded in a convertible debt instrument) does not meet
the scope exception in ASC 815, it would be separated from
the host contract (the debt instrument) and be separately
accounted for as a derivative by the issuer. ASC 815 is
effective for financial statements issued for fiscal years
beginning after December 15, 2008, and interim periods
within those fiscal years, to be applied to outstanding
instruments as of the effective date.
The Companys Series B preferred stock and related
warrants contain terms in which the conversion or exercise price
may be reduced if the company issues or sells shares of its
common stock at a price less than the conversion price of the
Series B Preferred Stock or the exercise price of the
warrants. Under the consensus reached in ASC 815, the
conversion option is not considered indexed to the
Companys own stock because the conversion rate can be
affected by future equity offerings undertaken by the Company at
the then-current market price of the related shares. Therefore,
such embedded features are now accounted for as derivatives,
which are presented as liabilities under generally accepted
accounting principles. As a change in accounting principle, this
resulted in adjustments on January 1, 2009 to decrease
beginning additional paid-in capital by $4,049,000, to decrease
accumulated deficit by $480,000 and to record derivative
financial instruments payable in shares of common stock of
$3,569,000.
Concentration
of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash and
cash equivalents and short-term investments. Management believes
the financial risks associated with these financial instruments
are minimal. The Company places its cash with high credit
quality financial institutions and makes short-term investments
in high credit quality money market instruments of short-term
duration. The Company maintains its cash in bank deposit
accounts which, at times, may exceed federally insured limits.
Accounts are guaranteed by the Federal Deposit Insurance
Corporation (FDIC) up to $250,000. At March 31,
2010 the Company had no accounts with balances in excess of FDIC
insured limits.
Inventory
Inventory is stated at the lower of cost or market using the
first-in,
first-out method of accounting.
F-9
Property
and Equipment
Property and equipment are stated at cost. Depreciation is
calculated using the straight-line method over the estimated
useful lives of the assets, which range from three to five
years. Leasehold improvements are stated at cost and amortized
over the shorter of the estimated useful lives of the assets or
the lease term. Routine maintenance and repairs are charged to
expense as incurred and major renovations or improvements are
capitalized.
Research
and Development Costs
Research and development expenditures, are comprised of costs
incurred in performing research and development activities.
These include payments to collaborative research partners,
including wages and associated employee benefits, facilities and
overhead costs. These are expensed as incurred.
Revenue
Recognition
The Company generated operating revenues in January 2010 which
consisted of product sales and fees for analysis of ECG data
collected by physicians. Revenues are recognized at the time of
product shipment or upon performance of tests. The Company also
plans on generating revenues from licensing fees which will be
recognized in accordance with the contract terms.
The Company obtained Phase I and II Small Business
Innovation Research (SBIR) Grants in
2003-2005
amounting to a total of $844,000. The funds received were
utilized to develop software for the PD2i Cardiac
Analyzertm
and to conduct a study of 700 patients with chest pain
presenting at emergency rooms in six (6) tertiary care
facilities. The aim of the grant was to test and establish
good medical practice through wide experimental use
of the PD2i
Analyzertm
at different emergency room sites with high risk patients.
The funds received for this Grant have been treated as revenues
by the Company in its condensed consolidated financial
statements and were recorded when costs to perform such research
and development activities were incurred.
Cash
and Cash Equivalents
The Company considers all investments purchased with original
maturities of three months or less to be cash and cash
equivalents.
Intellectual
Property
Intellectual property, consisting of patents and other
proprietary technology acquired by the Company is stated at cost
and amortized on a straight-line basis over the estimated useful
lives of the assets.
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
March 31,
|
|
|
|
2009
|
|
|
2010
|
|
|
Patents
|
|
$
|
252,000
|
|
|
$
|
252,000
|
|
Purchased software
|
|
|
200,000
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
452,000
|
|
|
|
452,000
|
|
Less accumulated amortization
|
|
|
(223,000
|
)
|
|
|
(234,000
|
)
|
|
|
|
|
|
|
|
|
|
Net intellectual property
|
|
$
|
229,000
|
|
|
$
|
218,000
|
|
|
|
|
|
|
|
|
|
|
Amortization expense for the three months ended March 31,
2009 and 2010 was $11,000 in each period. Legal fees related to
the prosecution of new patents and intellectual property are
expensed as incurred and amounted to $63,000 in each period.
Use of
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amount of
F-10
revenues and expenses during the reporting period. Actual
results could differ from those estimates and the differences
could be material.
Accounting
for Stock-Based Compensation
The Company uses the fair value-based method of accounting for
stock-based employee compensation arrangements under which
compensation cost is determined using the fair value of
stock-based compensation determined as of the grant date and is
recognized over the periods in which the related services are
rendered.
The Company has also granted stock purchase warrants to
independent consultants and contractors and values these
warrants using the fair value-based method described in the
preceding paragraph. The compensation cost so determined is
recognized over the period the services are provided which
usually results in compensation cost being recognized at the
date of the grant.
Financial
Instruments
The carrying amount of financial instruments, including cash and
cash equivalents, accounts payable and notes payable
approximates fair value as of December 31, 2009 and
March 31, 2010.
Long-Lived
Assets
The Company reviews long-lived assets and certain identifiable
intangibles held and used for possible impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. In evaluating the
fair value and future benefits of its intangible assets,
management performs an analysis of the anticipated undiscounted
future net cash flow of the individual assets over the remaining
amortization period. The Company recognizes an impairment loss
if the carrying value of the asset exceeds the expected future
cash flows. During the three months ended March 31, 2009
and 2010 there were no deemed impairments of long-lived assets.
Recent
Accounting Pronouncements
New accounting pronouncements issued but not yet effective are
not expected to have a significant effect on the Companys
financial condition, results of operations, or cash flows.
NOTE 4
CURRENT DEBT
At December 31, 2009 and March 31, 2010 current debt
consists of:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
March 31,
|
|
|
|
2009
|
|
|
2010
|
|
|
2004 Notes
|
|
$
|
250,000
|
|
|
$
|
250,000
|
|
12% Convertible Promissory Notes
|
|
|
110,000
|
|
|
|
110,000
|
|
Bank loans
|
|
|
100,000
|
|
|
|
300,000
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
460,000
|
|
|
$
|
660,000
|
|
|
|
|
|
|
|
|
|
|
2004
Notes
The 2004 Notes consist of a 12% convertible promissory note
payable to a stockholder and is convertible to common stock at
$2.25 per share.
12%
Convertible Promissory Notes
The 12% Convertible Promissory Notes bear interest at 12%
per annum, payable monthly and the maturity dates have been
extended on a
month-by-month
basis.
F-11
Bank
Loans
The Company has unsecured loans of $200,000 and $100,000 from
Branch Banking and Trust Company (BB&T)
(formerly Colonial Bank, N.A.) under a loan agreement. The
$200,000 loan is due January 2011, resulting in its being
classified as long term at December 31, 2009 and short-term
at March 31, 2010, and bears interest at 3.54%. The
$100,000 loan is classified as current, has a due date of
October 2010 and bears interest at 4.83%. As a condition to
making the loans, the bank received certificates of deposit for
$100,000 and $200,000 from the Companys Chief Executive
and Financial Officer, David H. Fater, as standby collateral. As
consideration for this standby collateral, the Companys
Board of Directors authorized (i) the reimbursement of
Mr. Faters
out-of-pocket
cash costs associated with this transaction, (ii) the
Companys receipt of interest from the certificates of
deposit as an offset to the Companys interest expense, and
(iii) the monthly issuance of 1,092 shares of common
stock.
NOTE 5
LONG-TERM DEBT
Long-term debt consists of:
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
March 31,
|
|
|
|
2009
|
|
|
2010
|
|
|
8% Convertible Notes
|
|
$
|
773,000
|
|
|
$
|
560,000
|
|
8% Subordinated Convertible Notes
|
|
|
278,000
|
|
|
|
612,000
|
|
Bank loans
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
|
|
$
|
1,251,000
|
|
|
$
|
1,172,000
|
|
|
|
|
|
|
|
|
|
|
8%
Convertible Notes
During the period from May 1, 2009 through
September 17, 2009 the Company sold 8% Convertible
Notes (8% Notes). The 8% Notes are due two
years from date of issue and are convertible into common stock
at the option of the holder any time prior to maturity. The
conversion price is equal to the lesser of 75% of the weighted
average common stock price, as defined, for the three days
immediately prior to the date of the conversion notice or $1.07
per share of common stock.
The conversion rights embedded in the 8% Notes are
accounted for as derivative financial instruments because of the
static conversion terms embedded therein. The fair values of the
derivative financial instruments at their issue dates were
$1,966,000.
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
March 31,
|
|
|
|
2009
|
|
|
2010
|
|
|
8% Notes sold
|
|
$
|
2,671,000
|
|
|
$
|
2,671,000
|
|
8% Notes converted
|
|
|
(1,574,000
|
)
|
|
|
(1,978,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
1,097,000
|
|
|
|
693,000
|
|
Unamortized discount
|
|
|
(324,000
|
)
|
|
|
(133,000
|
)
|
|
|
|
|
|
|
|
|
|
Balance
|
|
$
|
773,000
|
|
|
$
|
560,000
|
|
|
|
|
|
|
|
|
|
|
8%
Subordinated Convertible Notes
Beginning in the fourth quarter of 2009 the Company sold
8% Subordinated Convertible Notes
(8% Subordinated Notes). The
8% Subordinated Notes are due on October 7, 2012 and
are subordinated to 8% Notes sold between May 1, 2009
and September 17, 2009. They are subject to mandatory
conversion into shares of common stock at a conversion price
equal to the lesser of $.80 per share of common stock or 80% of
the price per share of common stock sold in a qualified funding
event, defined as the sale of debt or equity in a registered
offering resulting in a least $3,000,000 of gross proceeds to
the Company.
F-12
Until the 8% Notes have been converted by the holders or
have been repaid (which shall be no later than
September 16, 2011) the holders of the
8% Subordinated Notes have no voluntary conversion rights.
Thereafter, the holders may voluntarily convert the
8% Subordinated Notes.
The conversion rights embedded in the 8% Subordinated Notes
are accounted for as derivative financial instruments because of
the static conversion terms embedded therein. The fair values of
the derivative financial instruments at their issue dates were
$1,164,000.
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
March 31,
|
|
|
|
2009
|
|
|
2010
|
|
|
8% Subordinated Notes sold
|
|
$
|
903,000
|
|
|
$
|
1,873,000
|
|
Unamortized discount
|
|
|
(625,000
|
)
|
|
|
(1,261,000
|
)
|
|
|
|
|
|
|
|
|
|
Balance
|
|
$
|
278,000
|
|
|
$
|
612,000
|
|
|
|
|
|
|
|
|
|
|
NOTE 6
OUTSTANDING COMMON STOCK PURCHASE WARRANTS AND OPTIONS
At March 31, 2010 the Company had 13,860,842 warrants
outstanding with an average exercise price of $0.98, 122,500
stock options outstanding with an average exercise price of
$0.78 under the 2002 Stock Option Plan and 3,042,500 options
outstanding with an average exercise price of $0.67 under the
2008 Stock Option Plan.
During the three months ended March 31, 2010:
|
|
|
|
|
25,000 shares of common stock were issued upon the exercise
of 25,000 warrants at an exercise price of $0.01 per share.
|
|
|
|
475,000 options were issued to employees and consultants at
exercise prices ranging from $.65 per share to $.71 per share
pursuant to the 2008 Stock Option Plan. The options vest ratably
over a
12-month
period and expire 7 years after the grant date.
|
|
|
|
1,462,500 warrants to purchase common stock were issued in
connection with the sale of 8% Subordinated Notes. The
warrants are immediately exercisable at $1.00 per share and have
a five-year term.
|
NOTE 7
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows the provisions of ASC Topic 820, Fair
Value Measurements and Disclosures. This Topic defines
fair value, establishes a measurement framework and expands
disclosures about fair value measurements.
The Company measures financial assets in three levels, based on
the markets in which the assets and liabilities are traded and
the reliability of the assumptions used to determine fair value.
These levels are:
|
|
|
|
|
Level 1 Valuations for assets and
liabilities traded in active exchange markets, or interest in
open-end mutual funds that allow a company to sell its ownership
interest back at net asset value (NAV) on a daily
basis. Valuations are obtained from readily available pricing
sources for market transactions involving identical assets,
liabilities or funds.
|
|
|
|
Level 2 Valuations for assets and
liabilities traded in less active dealer, or broker markets,
such as quoted prices for similar assets or liabilities or
quoted prices in markets that are not active.
|
|
|
|
Level 3 Valuations for assets and
liabilities that are derived from other valuation methodologies,
such as option pricing models, discounted cash flow models and
similar techniques, and not based on market exchange, dealer, or
broker traded transactions. Level 3 valuations incorporate
certain assumptions and projections in determining the fair
value assigned to such assets or liabilities.
|
The availability of observable inputs can vary from instrument
to instrument and in certain cases the inputs used to measure
fair value may fall into different levels of the fair value
hierarchy. In such cases, an instruments level within the
fair value hierarchy is based on the lowest level of input that
is significant to the fair value measurement. The Companys
assessment of the significance of a particular input to the fair
value measurement of an instrument requires judgment and
consideration of factors specific to the instrument.
F-13
Recurring
Fair Value Measurement Valuation Techniques
The fair value for certain financial instruments is derived
using pricing models and other valuation techniques that involve
significant management judgment. The price transparency of
financial instruments is a key determinant of the degree of
judgment involved in determining the fair value of the
Companys financial instruments. Financial instruments for
which actively quoted prices or pricing parameters are available
will generally have a higher degree of price transparency than
financial instruments that are thinly traded or not quoted. In
accordance with ASC Topic 820, the criteria used to determine
whether the market for a financial instrument is active or
inactive is based on the particular asset or liability. As a
result, the valuation of these financial instruments included
significant management judgment in determining the relevance and
reliability of market information available. The Company
considered the inactivity of the market to be evidenced by
several factors, including limited trading of the Companys
stock since the commencement of trading in July 2007.
Derivative
Financial Instruments
The Companys derivative financial instruments consist of
conversion options embedded in 8% Notes,
8% Subordinated Notes, Series B Preferred Stock and
warrants to purchase common stock issued with preferred stock.
These instruments are valued with pricing models commonly used
by the financial services industry using inputs generally
observable in the financial services industry. These models
require significant judgment on the part of management,
including the inputs utilized in its pricing models. The
Companys derivative financial instruments are categorized
in Level 3 of the fair value hierarchy. The Company
estimates the fair value of derivatives utilizing the
Black-Scholes option pricing model and the following assumptions:
|
|
|
|
|
|
|
December 31,
|
|
March 31,
|
|
|
2009
|
|
2010
|
|
Conversion feature:
|
|
|
|
|
Risk-free interest rate
|
|
1.4% - 3.0%
|
|
0.84% - 2.55%
|
Expected volatility
|
|
63%
|
|
63%
|
Expected life (in years)
|
|
2 - 5
|
|
2 - 5
|
Expected dividend yield
|
|
0%
|
|
0%
|
|
|
|
|
|
Warrants:
|
|
|
|
|
Risk-free interest rate
|
|
1.4% - 3.0%
|
|
2.55%
|
Expected volatility
|
|
63%
|
|
63%
|
Expected life (in years)
|
|
5
|
|
5
|
Expected dividend yield
|
|
0%
|
|
0%
|
|
|
|
|
|
Fair value:
|
|
|
|
|
Conversion feature
|
|
$2,550,000
|
|
$3,093,000
|
Warrants
|
|
$1,864,000
|
|
$2,042,000
|
The Companys methodology to estimate volatility of its
common stock is based on an average of published volatilities
contained in the most recent audited financial statements of
other publicly-reporting companies in industries similar to that
of the Company.
Level 3
Assets and Liabilities
Level 3 liabilities include instruments whose value is
determined using pricing models and for which the determination
of fair value requires significant management judgment or
estimation. As of March 31, 2010 instruments measured at
fair value on a recurring basis categorized as Level 3
represented approximately 58% of the Companys total
liabilities.
F-14
Fair values of liabilities measured on a recurring basis at
March 31, 2010 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
|
|
|
|
|
|
Active Markets
|
|
Significant Other
|
|
Significant
|
|
|
|
|
for Identical
|
|
Observable
|
|
Unobservable
|
|
|
|
|
Liabilities
|
|
Inputs
|
|
Inputs
|
|
|
Fair Value
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
$
|
5,135,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
5,135,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Both observable and unobservable inputs may be used to determine
the fair value of positions that the Company has classified
within the Level 3 category. As a result the gains for
liabilities within the Level 3 category presented in the
tables below may include changes in fair value that were
attributable to both observable and unobservable inputs. The
following table presents additional information about
Level 3 assets and liabilities measured at fair value on a
recurring basis for the year ended March 31, 2010:
|
|
|
|
|
Balance, January 1, 2010
|
|
$
|
(4,414,000
|
)
|
Included in earnings as gain (loss)(1):
|
|
|
|
|
Realized
|
|
|
112,000
|
|
Unrealized(2)
|
|
|
(229,000
|
)
|
Purchases, sales, and other
|
|
|
(604,000
|
)
|
Settlements and issuances net
|
|
|
|
|
Net transfers in and/or out of Level 3
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2010
|
|
$
|
(5,135,000
|
)
|
|
|
|
|
|
|
|
|
(1) |
|
Gain included in earnings is reported as gain (loss) on
derivative financial instruments. |
|
(2) |
|
Total unrealized loss related to Level 3 instruments held
at March 31, 2010. |
NOTE 8
RELATED PARTY TRANSACTIONS
In 2003 the Company purchased the software related to the PD2i
Cardiac
Analyzertm
from one of its founding scientists, who is now an employee and
a director. Terms of the Purchase and Royalty Agreement provide
that $100,000 of the purchase price be deferred until the
Company begins receiving revenue from the PD2i Cardiac
Analyzertm
Accordingly, this amount is included in the accompanying
Consolidated Balance Sheet as Due to Related Parties. The
Agreement further provides for an ongoing royalty to be paid to
the scientist amounting to 10% of amounts received by the
Company from any activities relating to the PD2i Cardiac
Analyzertm
for the life of the patents. Royalty payments will commence
after the Company has recovered its development costs in full.
Additionally, on January 1, 2007 the Company entered into a
Service Agreement (Service Agreement) with
ALDA & Associates International, Inc.
(ALDA), a consulting company owned and controlled by
the Companys Chief Executive and Financial Officer whereby
three of the Companys employees became employees of ALDA
under a Professional Employer Organization (PEO)
arrangement. This was subsequently increased to seven employees.
The Service Agreement, which is a cost reimbursement only
contract, provides for reimbursement of all of ALDAs
actual payroll and insurance related costs for these employees.
Costs associated with the contract amounted to $187,000 and
$380,000 for the three months ended March 31, 2009 and
2010, respectively.
As discussed in Note 4 the Company has certain bank loans.
As a condition to making the loans, the bank received two
certificates of deposit valued at $300,000 from the
Companys Chief Executive and Financial Officer, David H.
Fater, as standby collateral.
NOTE 9
RETIREMENT PLAN
In December 2009 the Company established a defined contribution
plan (Plan) to provide retirement benefits in return
for services rendered. The Plan provides an individual account
for each participant and has terms that specify how
contributions to participant accounts are determined. Employees
are eligible to participate in the
F-15
Plan at time of hire as well as certain independent contractors
at the discretion of management. The Plan provides for the
Company to match employee contributions up to 4% of the
employees salary and also provides for Company
discretionary contributions of up to 6% of employee
compensation. As of March 31, 2010 no contributions had
been made by the Company.
NOTE 10
SUBSEQUENT EVENTS
In the period from April 1, 2010 through May 10, 2010,
the Company received proceeds of $949,000 from the sale of
8% Subordinated Notes and warrants to purchase
1,380,000 shares of common stock at an exercise price of
$1.00 per share. The warrants expire 5 years after grant
date.
Through May 11, 2010 the holders of all the remaining
outstanding 8% Notes had notified the Company of their
intent to convert all such notes held by them into
2,484,717 shares of the Companys common stock.
Issuance of the stock will satisfy the Companys
obligations under the 8% Notes.
F-16
VICOR
TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2008 AND 2009 AND
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2009
AND FOR THE PERIOD
AUGUST 4, 2000 (INCEPTION) THROUGH DECEMBER 31, 2009
CONTENTS
|
|
|
|
|
Page
|
|
Report of Independent Registered Public Accounting Firm
|
|
F-18
|
|
|
F-19
|
|
|
F-20
|
|
|
F-21
|
|
|
F-24
|
|
|
F-26
|
F-17
Report
of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders
VICOR Technologies, Inc.
We have audited the accompanying consolidated balance sheets of
VICOR Technologies, Inc. (the Company) a Delaware
Corporation as of December 31, 2008 and 2009, and the
related consolidated statements of operations, changes in
shareholders equity (net capital deficiency) and cash
flows for the years then ended and the period from
August 4, 2000 (inception) through December 31, 2009.
These consolidated financial statements are the responsibility
of the Companys management. Our responsibility is to
express an opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards as established by the Auditing Standards
Board (United States) and in accordance with the auditing
standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Companys internal control over
financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of VICOR Technologies, Inc. at December 31, 2008
and 2009, and the results of its operations and its cash flows
for the years then ended and the period from August 4, 2000
(inception) through December 31, 2009, in conformity with
accounting principles generally accepted in the United States of
America.
The accompanying consolidated financial statements have been
prepared assuming the Company will continue as a going concern.
However, the Company has suffered recurring losses from
operations and had negative cash flows from operations that
raise substantial doubt about the Companys ability to
continue as a going concern. Managements plans regarding
those matters are also described in Note 2. The
consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/ Daszkal Bolton LLP
Boca Raton, Florida
March 31, 2010
F-18
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2009
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
182,000
|
|
|
$
|
544,000
|
|
Prepaid expenses
|
|
|
14,000
|
|
|
|
74,000
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
196,000
|
|
|
|
618,000
|
|
|
|
|
|
|
|
|
|
|
Furniture and fixtures, net of accumulated depreciation of
$62,000 and $38,000 at December 31, 2008 and 2009,
respectively
|
|
|
2,000
|
|
|
|
21,000
|
|
Other assets
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
12,000
|
|
|
|
12,000
|
|
Deferred charges
|
|
|
|
|
|
|
168,000
|
|
Intellectual property, net of accumulated amortization of
$186,000 and and $223,000 at December 31, 2008 and 2009,
respectively
|
|
|
266,000
|
|
|
|
229,000
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
476,000
|
|
|
$
|
1,048,000
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND NET CAPITAL DEFICIENCY
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
1,000,000
|
|
|
$
|
600,000
|
|
Current debt
|
|
|
900,000
|
|
|
|
460,000
|
|
Due to related parties
|
|
|
100,000
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
2,000,000
|
|
|
|
1,160,000
|
|
|
|
|
|
|
|
|
|
|
Long-term liabilities:
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
|
|
|
|
|
1,251,000
|
|
Accrued dividends
|
|
|
434,000
|
|
|
|
833,000
|
|
Derivative financial instruments payable in shares of common
stock
|
|
|
|
|
|
|
4,414,000
|
|
|
|
|
|
|
|
|
|
|
Total long-term liabilities
|
|
|
434,000
|
|
|
|
6,498,000
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
Net capital deficiency:
|
|
|
|
|
|
|
|
|
Preferred stock, $.0001 par value; 10,000,000 shares
authorized:
|
|
|
|
|
|
|
|
|
Series A Convertible Cumulative, 157,592 shares issued
and outstanding at December 31, 2008 and 2009, respectively
|
|
|
|
|
|
|
|
|
Series B Voting Junior Convertible Cumulative, 4,781,295
and 5,210,101 shares issued and outstanding at
December 31, 2008 and 2009, respectively
|
|
|
|
|
|
|
|
|
Common stock, $.0001 par value; 100,000,000 shares
authorized; 32,971,619 and 41,813,959 shares issued and
outstanding at December 31, 2008 and 2009, respectively
|
|
|
3,000
|
|
|
|
4,000
|
|
Additional paid-in capital
|
|
|
44,782,000
|
|
|
|
46,848,000
|
|
Stock subscriptions in process
|
|
|
577,000
|
|
|
|
|
|
Deficit accumulated during the development stage
|
|
|
(47,320,000
|
)
|
|
|
(53,462,000
|
)
|
|
|
|
|
|
|
|
|
|
Net capital deficiency
|
|
|
(1,958,000
|
)
|
|
|
(6,610,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
476,000
|
|
|
$
|
1,048,000
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
F-19
Vicor
Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
For the Years Ended December 31, 2008 and 2009, and
For the Period from August 4, 2000 (Inception) Through
December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from
|
|
|
|
|
|
|
August 4, 2000
|
|
|
|
|
|
|
(Inception) to
|
|
|
|
Years Ended December 31,
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
Revenues
|
|
$
|
|
|
|
$
|
|
|
|
$
|
844,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
993,000
|
|
|
|
964,000
|
|
|
|
15,027,000
|
|
General and administrative expenses
|
|
|
2,433,000
|
|
|
|
4,372,000
|
|
|
|
29,479,000
|
|
Depreciation and amortization
|
|
|
41,000
|
|
|
|
41,000
|
|
|
|
323,000
|
|
Interest expense
|
|
|
3,260,000
|
|
|
|
1,944,000
|
|
|
|
8,686,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
6,727,000
|
|
|
|
7,321,000
|
|
|
|
53,515,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on derivative financial instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
|
|
|
|
|
|
|
1,083,000
|
|
|
|
1,083,000
|
|
Unrealized
|
|
|
|
|
|
|
1,074,000
|
|
|
|
1,074,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,157,000
|
|
|
|
2,157,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(6,727,000
|
)
|
|
|
(5,164,000
|
)
|
|
|
(50,514,000
|
)
|
Cumulative effect of change in accounting principle
|
|
|
|
|
|
|
|
|
|
|
480,000
|
|
Dividends for the benefit of preferred stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Payable on Series A and Series B preferred stock
|
|
|
(246,000
|
)
|
|
|
(479,000
|
)
|
|
|
(913,000
|
)
|
Amortization of derivative discount on Series B preferred
stock
|
|
|
|
|
|
|
(979,000
|
)
|
|
|
(979,000
|
)
|
Value of warrants issued in connection with sales of
Series B preferred stock
|
|
|
(1,536,000
|
)
|
|
|
|
|
|
|
(1,536,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends for the benefit of preferred stockholders
|
|
|
(1,782,000
|
)
|
|
|
(1,458,000
|
)
|
|
|
(3,428,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss applicable to common stock
|
|
$
|
(8,509,000
|
)
|
|
$
|
(6,622,000
|
)
|
|
$
|
(53,462,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share basic and diluted
|
|
$
|
(0.29
|
)
|
|
$
|
(0.18
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
29,485,339
|
|
|
|
37,513,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
F-20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Class A
|
|
|
Class B
|
|
|
Additional
|
|
|
Subscription
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Paid-In Capital
|
|
|
Notes Receivable
|
|
|
Deficit
|
|
|
Total
|
|
|
Balance at August 4, 2000 (inception)
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Issuance of common stock to founders
|
|
|
7,400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed research and development services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
|
|
|
|
|
|
|
|
|
|
24,000
|
|
Issuance of common stock for cash
|
|
|
194,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
194,000
|
|
|
|
|
|
|
|
|
|
|
|
194,000
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(657,000
|
)
|
|
|
(657,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2000
|
|
|
7,594,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
218,000
|
|
|
|
|
|
|
|
(657,000
|
)
|
|
|
(439,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for services
|
|
|
280,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
280,000
|
|
|
|
|
|
|
|
|
|
|
|
280,000
|
|
Issuance of warrants for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,252,000
|
|
|
|
|
|
|
|
|
|
|
|
1,252,000
|
|
Contributed research and development services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,000
|
|
|
|
|
|
|
|
|
|
|
|
71,000
|
|
Issuance of common stock for cash
|
|
|
1,362,826
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,363,000
|
|
|
|
|
|
|
|
|
|
|
|
1,363,000
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,181,000
|
)
|
|
|
(3,181,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2001
|
|
|
9,237,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,184,000
|
|
|
|
|
|
|
|
(3,838,000
|
)
|
|
|
(654,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for services
|
|
|
360,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of warrants and stock options for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,722,000
|
|
|
|
|
|
|
|
|
|
|
|
4,722,000
|
|
Subscription note receivable
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
750,000
|
|
|
|
(750,000
|
)
|
|
|
|
|
|
|
|
|
Contributed research and development services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for cash
|
|
|
1,725,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,492,000
|
|
|
|
|
|
|
|
|
|
|
|
3,492,000
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,306,000
|
)
|
|
|
(7,306,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2002
|
|
|
11,822,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,148,000
|
|
|
|
(750,000
|
)
|
|
|
(11,144,000
|
)
|
|
|
254,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for services
|
|
|
27,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of warrants and stock options for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,365,000
|
|
|
|
|
|
|
|
|
|
|
|
6,365,000
|
|
Issuance of common stock for cash
|
|
|
870,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,718,000
|
|
|
|
|
|
|
|
|
|
|
|
2,718,000
|
|
Issuance of preferred stock for cash
|
|
|
|
|
|
|
|
|
|
|
157,592
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
448,000
|
|
|
|
|
|
|
|
|
|
|
|
448,000
|
|
Accrued dividends on preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8,000
|
)
|
|
|
(8,000
|
)
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9,247,000
|
)
|
|
|
(9,247,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2003
|
|
|
12,720,968
|
|
|
|
|
|
|
|
157,592
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,679,000
|
|
|
|
(750,000
|
)
|
|
|
(20,399,000
|
)
|
|
|
530,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for services
|
|
|
217,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
205,000
|
|
|
|
|
|
|
|
|
|
|
|
205,000
|
|
Issuance of warrants and stock options for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,033,000
|
|
|
|
|
|
|
|
|
|
|
|
1,033,000
|
|
Issuance of common stock for cash
|
|
|
308,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
889,000
|
|
|
|
|
|
|
|
|
|
|
|
889,000
|
|
Accretion of beneficial conversion feature on 10% convertible
promissory notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
201,000
|
|
|
|
|
|
|
|
|
|
|
|
201,000
|
|
Accrued dividends on preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(39,000
|
)
|
|
|
(39,000
|
)
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,372,000
|
)
|
|
|
(3,372,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2004
|
|
|
13,246,708
|
|
|
$
|
|
|
|
|
157,592
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
24,007,000
|
|
|
$
|
(750,000
|
)
|
|
$
|
(23,810,000
|
)
|
|
$
|
(553,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
F-21
Vicor
Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Changes in Stockholders Equity
(Net Capital Deficiency) Continued
For the Period from August 4, 2000 (Inception) through
December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock
|
|
|
|
|
|
Subscription
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Class A
|
|
|
Class B
|
|
|
Additional
|
|
|
Notes
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Paid-In Capital
|
|
|
Receivable
|
|
|
Deficit
|
|
|
Total
|
|
|
Balance at December 31, 2004
|
|
|
13,246,708
|
|
|
$
|
|
|
|
|
157,592
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
24,007,000
|
|
|
$
|
(750,000
|
)
|
|
$
|
(23,810,000
|
)
|
|
$
|
(553,000
|
)
|
Issuance of common stock for services
|
|
|
83,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
209,000
|
|
|
|
|
|
|
|
|
|
|
|
209,000
|
|
Issuance of warrants and stock options for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,817,000
|
|
|
|
|
|
|
|
|
|
|
|
1,817,000
|
|
Issuance of warrants to note holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,000
|
|
|
|
|
|
|
|
|
|
|
|
17,000
|
|
Issuance of common stock for cash
|
|
|
1,329,302
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,167,000
|
|
|
|
|
|
|
|
|
|
|
|
2,167,000
|
|
Accrued dividends on preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(43,000
|
)
|
|
|
(43,000
|
)
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,212,000
|
)
|
|
|
(4,212,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2005
|
|
|
14,659,510
|
|
|
|
2,000
|
|
|
|
157,592
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,215,000
|
|
|
|
(750,000
|
)
|
|
|
(28,065,000
|
)
|
|
|
(598,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for services
|
|
|
67,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
169,000
|
|
|
|
|
|
|
|
|
|
|
|
169,000
|
|
Issuance of common stock for debt
|
|
|
43,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110,000
|
|
|
|
|
|
|
|
|
|
|
|
110,000
|
|
Issuance of warrants and stock options for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
392,000
|
|
|
|
|
|
|
|
|
|
|
|
392,000
|
|
Cancellation of subscription notes receivable
|
|
|
(300,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(750,000
|
)
|
|
|
750,000
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for notes receivable
|
|
|
796,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
398,000
|
|
|
|
(398,000
|
)
|
|
|
|
|
|
|
|
|
Beneficial conversion feature for 12% convertible promissory
notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
912,000
|
|
|
|
|
|
|
|
|
|
|
|
912,000
|
|
Issuance of warrants in connection with 15%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
139,000
|
|
|
|
|
|
|
|
|
|
|
|
139,000
|
|
promissory notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued dividends on preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(47,000
|
)
|
|
|
(47,000
|
)
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,580,000
|
)
|
|
|
(4,580,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2006
|
|
|
15,266,830
|
|
|
|
2,000
|
|
|
|
157,592
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,585,000
|
|
|
|
(398,000
|
)
|
|
|
(32,692,000
|
)
|
|
|
(3,503,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for services
|
|
|
177,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
663,000
|
|
|
|
|
|
|
|
|
|
|
|
663,000
|
|
Common stock issued in merger transaction
|
|
|
677,579
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,140,000
|
|
|
|
|
|
|
|
|
|
|
|
1,141,000
|
|
Stock issued upon conversion of Convertible Notes
|
|
|
1,137,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
632,000
|
|
|
|
|
|
|
|
|
|
|
|
632,000
|
|
Acquisition of SKRP, 6 Inc. net assets
|
|
|
2,700,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for warrants in merger transaction
|
|
|
5,423,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for options in merger transaction
|
|
|
329,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment of subscription notes receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(415,000
|
)
|
|
|
398,000
|
|
|
|
|
|
|
|
(17,000
|
)
|
Stock issued related to notes payable transactions
|
|
|
241,583
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
473,000
|
|
|
|
|
|
|
|
|
|
|
|
473,000
|
|
Issuance of common stock for interest payments
|
|
|
26,129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,000
|
|
|
|
|
|
|
|
|
|
|
|
47,000
|
|
Accrued dividends on preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(51,000
|
)
|
|
|
(51,000
|
)
|
Issuance of warrants in connection with 15%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122,000
|
|
|
|
|
|
|
|
|
|
|
|
122,000
|
|
Issuance of warrants and stock options for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
885,000
|
|
|
|
|
|
|
|
|
|
|
|
885,000
|
|
Contributed capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
178,000
|
|
|
|
|
|
|
|
|
|
|
|
178,000
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,068,000
|
)
|
|
|
(6,068,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
|
25,980,883
|
|
|
$
|
3,000
|
|
|
|
157,592
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
33,310,000
|
|
|
$
|
|
|
|
$
|
(38,811,000
|
)
|
|
$
|
(5,498,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
F-22
Vicor
Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Changes in Stockholders Equity
(Net Capital Deficiency), Continued
For the Period from August 4, 2000 (Inception) through
December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock
|
|
|
|
|
|
Stock
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Class A
|
|
|
Class B
|
|
|
Additional Paid-In
|
|
|
Subscriptions in
|
|
|
Accumulated
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Process
|
|
|
Deficit
|
|
|
Total
|
|
|
Balance at December 31, 2007
|
|
|
25,980,883
|
|
|
$
|
3,000
|
|
|
|
157,592
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
33,310,000
|
|
|
$
|
|
|
|
$
|
(38,811,000
|
)
|
|
$
|
(5,498,000
|
)
|
Issuance of stock for services
|
|
|
690,117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
177,250
|
|
|
|
|
|
|
|
837,000
|
|
|
|
|
|
|
|
|
|
|
|
837,000
|
|
Issuance of stock for cash
|
|
|
1,215,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,645,000
|
|
|
|
|
|
|
|
2,420,000
|
|
|
|
|
|
|
|
|
|
|
|
2,420,000
|
|
Stock issued related to notes payable transactions
|
|
|
4,748,880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,959,045
|
|
|
|
|
|
|
|
5,883,000
|
|
|
|
|
|
|
|
|
|
|
|
5,883,000
|
|
Issuance of stock for interest payments
|
|
|
336,739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
376,000
|
|
|
|
|
|
|
|
|
|
|
|
376,000
|
|
Accrued dividends on preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,071,000
|
|
|
|
|
|
|
|
(1,782,000
|
)
|
|
|
(711,000
|
)
|
Issuance of warrants in connection with preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
633,000
|
|
|
|
|
|
|
|
|
|
|
|
633,000
|
|
Issuance of warrants and stock options for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
252,000
|
|
|
|
|
|
|
|
|
|
|
|
252,000
|
|
Stock subscriptions in process:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To be issued in payment of accrued compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
561,000
|
|
|
|
|
|
|
|
561,000
|
|
Cash received, stock to be issued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
|
|
|
|
|
|
|
16,000
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,727,000
|
)
|
|
|
(6,727,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2008
|
|
|
32,971,619
|
|
|
|
3,000
|
|
|
|
157,592
|
|
|
|
|
|
|
|
4,781,295
|
|
|
|
|
|
|
|
44,782,000
|
|
|
|
577,000
|
|
|
|
(47,320,000
|
)
|
|
|
(1,958,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative effect of change in accounting principle
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,049,000
|
)
|
|
|
|
|
|
|
480,000
|
|
|
|
(3,569,000
|
)
|
Issuance of stock for services
|
|
|
2,244,684
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
154,096
|
|
|
|
|
|
|
|
1,581,000
|
|
|
|
|
|
|
|
|
|
|
|
1,582,000
|
|
Issuance of stock for cash
|
|
|
366,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
438,460
|
|
|
|
|
|
|
|
479,000
|
|
|
|
|
|
|
|
|
|
|
|
479,000
|
|
Conversion of Series B preferred stock to common stock
|
|
|
182,341
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(163,750
|
)
|
|
|
|
|
|
|
149,000
|
|
|
|
|
|
|
|
(66,000
|
)
|
|
|
83,000
|
|
Stock issued related to notes payable conversions
|
|
|
3,812,769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,101,000
|
|
|
|
|
|
|
|
|
|
|
|
2,101,000
|
|
Warrants issued related to notes payable transactions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
117,000
|
|
|
|
|
|
|
|
|
|
|
|
117,000
|
|
Issuance of stock for interest payments
|
|
|
51,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
119,000
|
|
|
|
|
|
|
|
|
|
|
|
119,000
|
|
Accrued dividends on preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(413,000
|
)
|
|
|
(413,000
|
)
|
Exercise of warrants
|
|
|
562,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of warrants for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
133,000
|
|
|
|
|
|
|
|
|
|
|
|
133,000
|
|
Issuance of stock options for services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
362,000
|
|
|
|
|
|
|
|
|
|
|
|
362,000
|
|
Fair value of derivative financial instruments issued in
connection with Series B preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(482,000
|
)
|
|
|
|
|
|
|
|
|
|
|
(482,000
|
)
|
Amortization of discounts related to derivative financial
instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
979,000
|
|
|
|
|
|
|
|
(979,000
|
)
|
|
|
|
|
Stock subscriptions in process shares issued in
payment of accrued compensation
|
|
|
1,621,932
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
577,000
|
|
|
|
(577,000
|
)
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,164,000
|
)
|
|
|
(5,164,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2009
|
|
|
41,813,959
|
|
|
$
|
4,000
|
|
|
|
157,592
|
|
|
$
|
|
|
|
|
5,210,101
|
|
|
$
|
|
|
|
$
|
46,848,000
|
|
|
$
|
|
|
|
$
|
(53,462,000
|
)
|
|
$
|
(6,610,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
F-23
Vicor
Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2008 and 2009 and
For the Period from August 4, 2000 (Inception) through
December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from
|
|
|
|
|
|
|
|
|
|
August 4, 2000
|
|
|
|
|
|
|
|
|
|
(Inception) to
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(6,727,000
|
)
|
|
$
|
(5,164,000
|
)
|
|
$
|
(50,514,000
|
)
|
Adjustment to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
41,000
|
|
|
|
41,000
|
|
|
|
323,000
|
|
Noncash interest imputed upon conversion of debt to equity
|
|
|
2,791,000
|
|
|
|
331,000
|
|
|
|
5,620,000
|
|
Noncash interest from deferred financing costs and debt-based
derivative liabilities
|
|
|
|
|
|
|
2,321,000
|
|
|
|
2,321,000
|
|
Gain on derivative financial instruments
|
|
|
|
|
|
|
(2,157,000
|
)
|
|
|
(2,157,000
|
)
|
Gain from sale of assets
|
|
|
51,000
|
|
|
|
|
|
|
|
48,000
|
|
Securities issued for services
|
|
|
204,000
|
|
|
|
937,000
|
|
|
|
1,141,000
|
|
Beneficial conversion feature of notes payable
|
|
|
|
|
|
|
|
|
|
|
201,000
|
|
Contributed research and development services
|
|
|
|
|
|
|
|
|
|
|
95,000
|
|
Merger-related costs
|
|
|
|
|
|
|
|
|
|
|
523,000
|
|
Shares in lieu of interest payments
|
|
|
214,000
|
|
|
|
119,000
|
|
|
|
380,000
|
|
Equity-based compensation
|
|
|
437,000
|
|
|
|
620,000
|
|
|
|
18,665,000
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses and other assets
|
|
|
62,000
|
|
|
|
(311,000
|
)
|
|
|
(423,000
|
)
|
Accounts payable and accrued expenses
|
|
|
734,000
|
|
|
|
(400,000
|
)
|
|
|
1,573,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(2,193,000
|
)
|
|
|
(3,663,000
|
)
|
|
|
(22,204,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of intellectual property
|
|
|
|
|
|
|
|
|
|
|
(237,000
|
)
|
Net proceeds from sale of equipment
|
|
|
|
|
|
|
|
|
|
|
59,000
|
|
Purchase of furniture and fixtures
|
|
|
|
|
|
|
(23,000
|
)
|
|
|
(177,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
|
|
|
|
(23,000
|
)
|
|
|
(355,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Due to related parties
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
Proceeds from bank loans
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
Proceeds from sale of preferred stock
|
|
|
2,116,000
|
|
|
|
351,000
|
|
|
|
2,915,000
|
|
Proceeds from sale of common stock
|
|
|
304,000
|
|
|
|
128,000
|
|
|
|
11,268,000
|
|
Repayment of notes
|
|
|
(365,000
|
)
|
|
|
(300,000
|
)
|
|
|
(905,000
|
)
|
Proceeds from bridge loan
|
|
|
|
|
|
|
300,000
|
|
|
|
300,000
|
|
Proceeds from sale of notes
|
|
|
300,000
|
|
|
|
3,569,000
|
|
|
|
8,931,000
|
|
Proceeds for stock to be issued
|
|
|
16,000
|
|
|
|
|
|
|
|
16,000
|
|
Contributed capital
|
|
|
|
|
|
|
|
|
|
|
178,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
2,371,000
|
|
|
|
4,048,000
|
|
|
|
23,103,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
|
|
|
178,000
|
|
|
|
362,000
|
|
|
|
544,000
|
|
Cash at beginning of period
|
|
|
4,000
|
|
|
|
182,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at end of period
|
|
$
|
182,000
|
|
|
$
|
544,000
|
|
|
$
|
544,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
F-24
Vicor
Technologies, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows, Continued
For the Years Ended December 31, 2008 and 2009 and
For the Period from August 4, 2000 (Inception) through
December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period from
|
|
|
|
|
|
|
|
|
|
August 4, 2000
|
|
|
|
|
|
|
|
|
|
(Inception) to
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
Supplemental cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of previously-subscribed common stock
|
|
$
|
|
|
|
$
|
16,000
|
|
|
$
|
16,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of accounts payable to note payable
|
|
|
100,000
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of common stock for cancellation of subscription note
receivable
|
|
|
|
|
|
|
|
|
|
|
750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed research and development
|
|
|
|
|
|
|
|
|
|
|
95,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of intellectual property from related party
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion features for promissory notes
|
|
|
|
|
|
|
|
|
|
|
912,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued in connection with 15% promissory notes
|
|
|
|
|
|
|
|
|
|
|
261,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued in connection with 8% Subordinated
Convertible Notes
|
|
|
|
|
|
|
117,000
|
|
|
|
117,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest expense
|
|
|
237,000
|
|
|
|
87,000
|
|
|
|
959,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued equity-based compensation
|
|
|
41,000
|
|
|
|
|
|
|
|
41,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued dividends
|
|
|
1,782,000
|
|
|
|
413,000
|
|
|
|
2,383,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on promissory notes paid in common stock
|
|
|
|
|
|
|
|
|
|
|
520,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related-party accrual converted to common stock
|
|
|
561,000
|
|
|
|
|
|
|
|
561,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of debt to Series B Preferred Stock
|
|
|
1,567,000
|
|
|
|
|
|
|
|
1,567,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of notes to common stock
|
|
|
2,691,000
|
|
|
|
1,918,000
|
|
|
|
4,609,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses paid with preferred stock
|
|
|
|
|
|
|
108,000
|
|
|
|
108,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses paid with common stock
|
|
|
|
|
|
|
772,000
|
|
|
|
772,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of equity-based derivative financial instruments
issued
|
|
|
|
|
|
|
816,000
|
|
|
|
816,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of debt-based derivative financial instruments issued
|
|
|
|
|
|
|
1,046,000
|
|
|
|
1,046,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred costs paid with common stock
|
|
|
|
|
|
|
358,000
|
|
|
|
358,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative discount on Series B preferred stock
|
|
|
|
|
|
|
341,000
|
|
|
|
341,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Series B preferred stock and accrued
dividends to common stock
|
|
|
|
|
|
|
82,000
|
|
|
|
82,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
F-25
|
|
Note 1
|
Organization
and Nature of Business
|
Organization
Vicor Technologies, Inc. (Vicor, the
Company) was incorporated in the State of Delaware
on May 24, 2005 as SRKP 6, Inc. (SRKP). On
August 3, 2005 SKRP filed a registration statement on
Form 10-SB,
subsequently amended on August 29, 2005, to register common
stock under the Securities Exchange Act of 1934, as amended (the
Exchange Act). The registration statement became
effective on October 3, 2005, after which time SKRP became
a reporting company under the Exchange Act. The Company was
formed to pursue a business combination with one or more
operating companies.
On March 30, 2007 SKRP acquired Vicor Technologies, Inc., a
Delaware corporation (Old Vicor) formed in August
2000, through the merger (Merger) of Old Vicor with
a wholly-owned subsidiary formed for the purpose of facilitating
that transaction. Upon the closing of the Merger on
March 30, 2007, Old Vicor became a wholly-owned subsidiary.
Effective March 31, 2007 Old Vicor was merged into SKRP and
changed its name to Vicor Technologies, Inc. At the closing each
outstanding share of Old Vicor common stock was cancelled and
automatically converted into the right to receive two shares of
Vicor common stock. The Company also assumed all outstanding
options and warrants to purchase Old Vicor common stock which
were not exercised, cancelled, exchanged, terminated, or
expired. Upon the consummation of the Merger, the Company was
obligated to issue an aggregate of 22,993,723 shares of its
common stock to Old Vicors former common stockholders and
157,592 shares of its Series A Convertible Cumulative
Preferred Stock (Preferred Stock) to Old
Vicors former preferred stockholder. In addition, all
securities convertible or exercisable into shares of Old
Vicors capital stock outstanding immediately prior to the
Merger (excluding Old Vicors preferred stock and
convertible debt) were cancelled, and the holders thereof
received similar securities for the purchase of an aggregate of
800,250 shares of Vicor common stock.
The Merger was accounted for as a reverse acquisition, to be
applied as an equity recapitalization in accordance with
U.S. generally accepted accounting principles for
accounting and financial reporting purposes. Under this method
of accounting, SRKP was treated as the acquired
company for financial reporting purposes. In accordance with
guidance applicable to these circumstances, the Merger was
considered to be a capital transaction in substance.
Accordingly, for accounting purposes, the Merger was treated as
the equivalent of Old Vicor issuing stock for the net monetary
assets of SRKP, accompanied by a recapitalization. The net
monetary assets of SRKP were stated at their fair value,
essentially equivalent to historical costs, with no goodwill or
other intangible assets recorded. The accumulated deficit of Old
Vicor was carried forward after the Merger. Operations prior to
the Merger are those of Old Vicor.
All share and per share amounts were restated to reflect the
recapitalization.
The Company owns all of the outstanding common stock of
Nonlinear Medicine, Inc., a Delaware corporation
(NMI), and Stasys Technologies, Inc., a Delaware
corporation (STI). NMI owns all intellectual
property related to Vicors diagnostic products, and STI
owns all intellectual property related to the Companys
therapeutic products.
Nature
of the business
Vicor is a medical diagnostics company focused on
commercializing noninvasive diagnostic technology products based
on its patented, proprietary point correlation dimension
algorithm (the
PD2i®
Algorithm). The
PD2i®
Algorithm facilitates the ability to accurately risk stratify a
specific target population to predict future pathological
events. The Company believes that the
PD2i®
Algorithm represents a noninvasive monitoring technology that
physicians and other members of the medical community can use as
a new and accurate vital sign and is currently commercializing
two proprietary diagnostic medical products which employ
software utilizing the
PD2i®
Algorithim: the PD2i
Analyzertm
(sometimes also referred to as the PD2i Cardiac
Analyzertm)
and the
F-26
Vicor
Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
PD2i-VStm
(Vital Sign). It is also anticipated that the
PD2i®
Algorithm applications will allow for the early detection of
Alzheimers disease and other disorders and diseases.
The Companys first product, the PD2i
Analyzertm,
received 510(k) marketing clearance from the Food and Drug
Administration (FDA) on December 29, 2008. The
PD2i
Analyzertm
displays and analyzes electrocardiographic (ECG) information and
measures heart rate variability (HRV) in patients at
rest and in response to controlled exercise and paced
respiration. The clinical significance of HRV and other
parameters must be determined by a physician. On
January 14, 2010 Vicor announced its first commercial sale
of the PD2i
Analyzertm
to a physician practice in South Carolina and simultaneously
announced that it had entered into an exclusive distribution
agreement with VF Medical, LLC, a medical products distribution
company. VF Medical, LLC will serve as the exclusive distributor
for the PD2i
Analyzertm
in South Carolina, North Carolina, and the cities of Savannah
and Augusta, Georgia. VF Medical, LLC will utilize a
25-person
medical products distribution team consisting of agents who have
long-term relationships with cardiologists,
electrophysiologists, and family practice and internal medicine
physicians within the designated territory. The Company is
seeking other distributors and has begun hiring sales personnel
in selected geographic areas.
In January 2008 Vicor executed a Collaborative Research and
Development Agreement (Research and Development
Agreement) with the U.S. Army Institute of Surgical
Research (US Army) for Prediction of Injury
Severity and Outcome in the Critically Ill Using the Point
Correlation Dimension Algorithm, or PD2i. The
U.S. Army is exploring ways to assess the severity of
injury, and probability of survival, of critically injured
combat casualties and critically ill civilian patients. The US
Army in conjunction with Vicor is testing the PD2i
VStm
in several diverse cohorts, including human trauma, patients in
the intensive care units (ICU Patients) and combat
casualties. Various experiments have been performed under the
Research and Development Agreement, and the U.S. Army has
presented the findings at several conferences in the United
States and Europe. Manuscripts and abstracts have also been
published by leading journals with Vicor and the US Army as
co-authors. The
PD2i-VStm
is anticipated to be used for civilian triage and trauma
emergency response.
In early 2009 Vicor signed a Research Agreement with the
University of Rochester and the Catalan Institute of
Cardiovascular Sciences in Barcelona to collaborate on the PD2i
analysis of data collected for the Merte Subita en
Insufficiencia Cardiaca (MUSIC) Trial. The collaboration is
entitled Prognostic Significance of Point Correlation
Dimension Algorithm (PD2i) in Chronic Heart Failure. The
Company is using the PD2i
Analyzertm
to retrospectively predict Sudden Cardiac Death
(SCD) in the 651 congestive heart failure patients
who participated in the MUSIC Trial (of which 52 actually died
from SCD). This analysis was completed in the first quarter of
2010, and Vicor believes it will yield a dataset sufficient to
support a 510(k) submission to include a claim for SCD.
Risks
The Company is subject to all the risks inherent in an early
stage company in the biotechnology industry. The biotechnology
industry is subject to rapid and technological change. The
Company has numerous competitors, including major pharmaceutical
and chemical companies, medical device manufacturers,
specialized biotechnology firms, universities and other research
institutions. These competitors may succeed in developing
technologies and products that are more effective than any that
are being developed by the Company or that would render the
Companys technology and products obsolete and
noncompetitive. Many of these competitors have substantially
greater financial and technical resources and production and
marketing capabilities than the Company. In addition, many of
the Companys competitors have significantly greater
experience than the Company in pre-clinical testing and human
clinical trials of new or improved pharmaceutical products and
in obtaining FDA and other regulatory approvals on products or
devices for use in health care.
The Company has limited experience in conducting and managing
pre-clinical testing necessary to enter clinical trials required
to obtain government approvals and has limited experience in
conducting clinical trials. Accordingly, the Companys
competitors may succeed in obtaining FDA approval for products
more rapidly than
F-27
Vicor
Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
the Company, which could adversely affect the Companys
ability to further develop and market its products. If the
Company commences significant commercial sales of its products,
it will also be competing with respect to manufacturing
efficiency and marketing capabilities, areas in which the
Company has limited or no experience.
The Companys financial statements as of and for the year
ended December 31, 2009 have been prepared on a going
concern basis, which contemplates the realization of assets and
the settlement of liabilities and commitments in the normal
course of business. The Company incurred a net loss applicable
to common stockholders of $8,509,000 and $6,622,000 for the
years ended December 31, 2008 and 2009, respectively, and
at December 31, 2009 had negative working capital of
$542,000, an accumulated deficit of $53,462,000 and a net
capital deficiency of $6,610,000. The Company expects to
continue to incur expenditures to further the commercial
development of its products. These matters raise substantial
doubt about the Companys ability to continue as a going
concern. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Management recognizes that the Company must generate additional
resources to successfully commercialize its products. Management
plans include the sale of additional equity or debt securities,
alliances or other partnerships with entities interested in and
having the resources to support the further development of its
products as well as other business transactions to assure
continuation of the Companys development and operations.
The Company is executing its plan to secure additional capital
through a multi-part funding strategy. The Company believes that
the amount of capital generated by this plan will be sufficient
to permit completion of various clinical trials and provide
sufficient working capital for the next 24
30 months, by which time it is expected that the Company
will generate positive cash flow through the sales of its
products.
However, no assurances can be given that the Company will be
successful in raising additional capital or entering into
business alliances. Further, there can be no assurance, assuming
the Company successfully raises additional funds or enters into
a business alliance, that the Company will achieve profitability
or positive cash flow. If the Company is not able to timely and
successfully raise additional capital
and/or
achieve positive cash flow, its business, financial condition,
cash flows and results of operations will be materially and
adversely affected.
|
|
Note 3
|
Summary
of Significant Accounting Policies and Basis of
Presentation
|
Basis
of Presentation
The accompanying consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been
eliminated in consolidation. The Companys consolidated
financial statement amounts have been rounded to the nearest
thousand.
Cumulative
Effect of a Change in Accounting Principle
On June 25, 2008, the Financial Accounting Standards Board
ratified the consensus reached by the Emerging Issues Task Force
in Accounting Standards Codification (ASC) 815,
Determining Whether an Instrument (or Embedded Feature) Is
Indexed to an Entitys Own Stock. This Issue provides
guidance for determining whether an equity-linked financial
instrument (or embedded feature) is indexed to an entitys
own stock, which is the first part of the scope exception in
paragraph 11(a) of Statement 133. If an embedded feature
(for example, the conversion option embedded in a convertible
debt instrument) does not meet the scope exception in
paragraph 11(a) of Statement 133, it would be separated
from the host contract (the debt instrument) and be separately
accounted for as a derivative by the issuer. ASC 815 is
effective for financial statements issued for fiscal years
beginning after December 15, 2008, and interim periods
within those fiscal years, to be applied to outstanding
instruments as of the effective date.
F-28
Vicor
Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
The Companys Series B preferred stock and related
warrants contain terms in which the conversion or exercise price
may be reduced if the company issues or sells shares of its
common stock at a price less than the conversion price of the
Series B Preferred Stock or the exercise price of the
warrants. Under the consensus reached in ASC 815, the conversion
option is not considered indexed to the Companys own stock
because the conversion rate can be affected by future equity
offerings undertaken by the Company at the then-current market
price of the related shares. Therefore, such embedded features
are now accounted for as derivatives, which are presented as
liabilities under generally accepted accounting principles. As a
change in accounting principle, this resulted in adjustments on
January 1, 2009 to decrease beginning additional paid-in
capital by $4,049,000, to decrease accumulated deficit by
$480,000 and to record derivative financial instruments payable
in shares of common stock of $3,569,000.
Concentration
of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash and
cash equivalents and short-term investments. Management believes
the financial risks associated with these financial instruments
are minimal. The Company places its cash with high credit
quality financial institutions and makes short-term investments
in high credit quality money market instruments of short-term
duration. The Company maintains its cash in bank deposit
accounts which, at times, may exceed federally insured limits.
Accounts are guaranteed by the Federal Deposit Insurance
Corporation (FDIC) up to $250,000. At
December 31, 2009 the Company had accounts with balances in
excess of FDIC insured limits by $257,164. The Company has not
experienced any losses in such accounts.
Property
and Equipment
Furniture, fixtures and equipment are stated at cost.
Depreciation is calculated using the straight-line method over
the estimated useful lives of the assets, which range from three
to five years. Leasehold improvements are stated at cost and
amortized over the shorter of the estimated useful lives of the
assets or the lease term. Routine maintenance and repairs are
charged to expense as incurred and major renovations or
improvements are capitalized.
Research
and Development Costs
Research and development expenditures, are comprised of costs
incurred in performing research and development activities.
These include payments to collaborative research partners,
including wages and associated employee benefits, facilities and
overhead costs. These are expensed as incurred.
Revenue
Recognition
As a development-stage enterprise, the Company had no
significant operating revenues through December 31, 2009.
As discussed in Note 1, operating revenues commenced in
January 2010. Revenues will be predominately the result of
product sales, fees for tests performed by physicians and
licensing fees. Revenues will be recognized at the time of
product shipment, performance of tests and execution of
licensing contracts.
The Company obtained Phase I and II Small Business
Innovation Research (SBIR) Grants in
2003-2005
amounting to a total of $850,000. The funds received were
utilized to develop software for the PD2i Cardiac Analyzer and
to conduct a study of 700 patients with chest pain
presenting at emergency rooms in six (6) tertiary care
facilities. The aim of the grant was to test and establish
good medical practice through wide experimental use
of the Analyzer at different emergency room sites with high risk
patients. The funds received for this Grant have been treated as
revenues by the Company in its consolidated financial statements
and were recorded when costs to perform such research and
development activities were incurred.
F-29
Vicor
Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Cash
and Cash Equivalents
The Company considers all investments purchased with original
maturities of three months or less to be cash and cash
equivalents.
Intellectual
Property
Intellectual property, consisting of patents and other
proprietary technology acquired by the Company is stated at cost
and amortized on a straight-line basis over the estimated useful
lives of the assets.
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
Patents
|
|
$
|
252,000
|
|
|
$
|
252,000
|
|
Purchased software
|
|
|
200,000
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
452,000
|
|
|
|
452,000
|
|
Less accumulated amortization
|
|
|
(186,000
|
)
|
|
|
(223,000
|
)
|
|
|
|
|
|
|
|
|
|
Net intellectual property
|
|
$
|
266,000
|
|
|
$
|
229,000
|
|
|
|
|
|
|
|
|
|
|
Amortization expense for the years ended December 31, 2008
and 2009 was $37,000 in each year. Legal fees related to the
prosecution of new patents and intellectual property are
expensed as incurred and amounted to $90,000 and $236,000 in
2008 and 2009, respectively.
Use
of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amount of revenues and expenses during the reporting
period. Actual results could differ from those estimates and the
differences could be material.
Accounting
for Stock-Based Compensation
The Company uses the fair value-based method of accounting for
stock-based employee compensation arrangements under which
compensation cost is determined using the fair value of
stock-based compensation determined as of the grant date and is
recognized over the periods in which the related services are
rendered.
The Company has also granted stock purchase warrants to
independent consultants and contractors and values these
warrants using the fair value-based method described in the
preceding paragraph. The compensation cost so determined is
recognized over the period the services are provided which
usually results in compensation cost being recognized at the
date of the grant.
Financial
Instruments
The carrying amount of financial instruments, including cash and
cash equivalents, accounts payable and notes payable
approximates fair value as of December 31, 2008 and 2009.
Long-Lived
Assets
The Company reviews long-lived assets and certain identifiable
intangibles held and used for possible impairment whenever
events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. In evaluating the
fair value and future benefits of its intangible assets,
management performs an analysis of the anticipated undiscounted
future net cash flow of the individual assets over the remaining
F-30
Vicor
Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
amortization period. The Company recognizes an impairment loss
if the carrying value of the asset exceeds the expected future
cash flows. During the years ended December 31, 2008 and
2009, there were no deemed impairments of long-lived assets.
Date
of Management Review
The Company evaluates events and transactions occurring
subsequent to the date of the financial statements for matters
requiring recognition or disclosure in the financial statements.
The accompanying consolidated financial statements consider
events through March 31, 2010, the date through which the
consolidated financial statements were available to be issued.
Recent
Accounting Developments
Accounting Standards Codification The Financial
Accounting Standards Board (FASB) issued Accounting
Standards Update (ASU) 105, Generally Accepted
Accounting Principles, which establishes the FASB Accounting
Standards Codification (ASC) as the source of
authoritative U.S. generally accepted accounting principles
recognized by the FASB to be applied by nongovernmental
entities. Rules and interpretive releases of the Securities and
Exchange Commission, (SEC) under authority of
federal securities laws are also sources of authoritative
guidance for SEC registrants. All guidance contained in the
Codification carries an equal level of authority. All
nongrandfathered, non-SEC accounting literature not included in
the Codification is superseded and deemed nonauthoritative. ASC
105 is effective for financial statements issued for interim and
annual periods ending after September 15, 2009. The
adoption of ASC 105 had no impact on the Companys
financial condition, results of operations or cash flows.
Subsequent Events In February 2010 the FASB issued
ASU 2010-09,
Subsequent Events (Topic 855), to remove the requirement for SEC
filers to disclose the date through which an entity has
evaluated subsequent events. This change removes potential
conflicts with current SEC guidance. ASU
2010-09 also
clarifies the intended scope of the reissuance disclosure
provisions, is effective upon issuance and had no impact on the
Companys financial condition, results of operations, or
cash flows. ASC 855 establishes general standards of accounting
for and disclosure of events that occur after the balance sheet
date but before financial statements are issued or available to
be issued. ASC 855 defines (1) the period after the balance
sheet date during which a reporting entitys management
should evaluate events or transactions that may occur for
potential recognition or disclosure in the financial statements,
(2) the circumstances under which an entity should
recognize events or transactions occurring after the balance
sheet date in its financial statements, and (3) the
disclosures an entity should make about events or transactions
that occurred after the balance sheet date. ASC 855 is effective
prospectively for interim and annual periods ending after
June 15, 2009. The adoption of ASC 855 had no impact on the
Companys financial condition, results of operations, or
cash flows.
Fair Value Measurements and Disclosures In January
2010 the FASB issued ASU
2010-06,
Fair Value Measurements and Disclosures (Topic 820)
Improving Disclosures about Fair Value Measurements, which
provides additional guidance relating to fair value measurement
disclosures. Specifically, companies will be required to
separately disclose significant transfers into and out of
Level 1 and Level 2 measurements in the fair value
hierarchy and the reasons for those transfers. For Level 3
fair value measurements, the new guidance requires a gross
presentation of activities within the Level 3 roll forward.
Additionally, the FASB also clarified existing fair value
measurement disclosure requirements relating to the level of
disaggregation, inputs, and valuation techniques. This ASU is
effective for interim or annual reporting periods beginning
after December 15, 2009, except for the detailed
Level 3 disclosures, which are effective for interim or
annual reporting periods beginning after December 15, 2010.
Since ASU
2010-06 only
affects disclosure requirements, the adoption of these
provisions will have no impact on the Companys financial
condition, results of operations, or cash flows.
F-31
Vicor
Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Fair Value of Financial Instruments ASC
825-10-65
updates ASC 825, Financial Instruments, to increase the
frequency of fair value disclosures from an annual basis to a
quarterly basis. The guidance relates to fair value disclosures
for any financial instruments that are not currently reflected
on the balance sheet at fair value. These provisions of ASC 825
are effective for interim and annual periods ending after
June 15, 2009. Since these provisions only affect
disclosure requirements, the adoption of these provisions under
ASC 825 had no impact on the Companys financial condition,
results of operations, or cash flows.
Other new accounting pronouncements issued but not effective
until after December 31, 2009, are not expected to have a
significant effect on the Companys financial condition,
results of operations, or cash flows.
At December 31, 2008 and 2009 current debt consists of:
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2009
|
|
|
2004 Notes
|
|
$
|
250,000
|
|
|
$
|
250,000
|
|
12% Convertible Promissory Notes
|
|
|
150,000
|
|
|
|
110,000
|
|
15% Promissory Notes
|
|
|
100,000
|
|
|
|
|
|
Bank loans
|
|
|
300,000
|
|
|
|
100,000
|
|
Other
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
900,000
|
|
|
$
|
460,000
|
|
|
|
|
|
|
|
|
|
|
2004
Notes
The 2004 Notes consist of a 12% convertible promissory note
payable to a stockholder and is convertible to common stock at
$2.25 per common share.
In 2006 the maturity of the 2004 Notes was extended, and
unamortized interest expense of $24,000 resulting from this
event was recognized in 2008. Also in 2008, $340,000 of the 2004
Notes were converted to 425,000 shares of Series B
Junior Convertible Preferred Stock at $0.80 per share and
noncash interest expense of $329,000 was recognized.
Subsequently, the stockholder holding $250,000 of the 2004 Notes
agreed to extend the maturity date on a
month-by-month
basis.
12% Convertible
Promissory Notes
The 12% Convertible Promissory Notes (12% Notes)
were originally due at varying dates in 2007 and bear interest
at 12% per annum, payable monthly. During 2007 the Company
negotiated extensions of maturity and modified the terms of the
conversion feature. During 2008 the Company converted $1,227,236
of the 12% Notes to 1,534,045 shares of Series B
Junior Convertible Preferred Stock at $0.80 per share and
$200,000 of the 12% Notes to 400,000 shares of
Series B Junior Convertible Preferred stock at $0.40 per
share. Noncash interest expense of $522,000 related to the debt
conversions was recognized. Four of the 12% Notes valued at
$72,000 were redeemed for cash and 11,719 immediately
exercisable penalty warrants, which expire five years after date
of issuance, were issued at an exercise price of $0.64 per
share. The Company recognized $10,000 in noncash interest
expense.
Subsequently, the maturity dates of the remaining $110,000 of
the 12% Notes have been extended on a
month-by-month
basis.
F-32
Vicor
Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
15%
Promissory Notes
Interest on the 15% Promissory Notes
(15% Notes) is payable monthly. In September
2009 the outstanding 15% Note was redeemed in a transaction
where an individual purchased it from its holder and converted
it into 200,000 shares of common stock. Noncash interest
expense of $88,000 was recognized in this transaction.
During 2008 the Company sold $300,000 of 15% Notes that
included 90,000 shares of common stock representing
$109,000 of interest expense. $400,000 of 15% Notes were
converted into 1,000,000 shares of common stock, and
$248,000 of interest expense was recognized.
Also during 2008 the Company negotiated extensions of various
15% Notes in exchange for 115,000 shares of common
stock representing $99,000 of interest expense. Noncash interest
expense of $92,000 and $9,000 was recognized in 2008 and 2009,
respectively.
Bank
Loans
At December 31, 2008 the Company had unsecured loans of
$200,000 and $100,000 from Branch Banking and Trust Company
(BB&T) (formerly Colonial Bank, N.A.) under a
loan agreement. In 2009 the maturity of the $200,000 loan was
extended, resulting in its being classified as long term at
December 31, 2009. The $100,000 loan is classified as
current, has a due date of October 26, 2010 and bears
interest at 4.83%. As a condition to making the loans, the bank
received Certificates of Deposit for $100,000 and $200,000 from
the Companys Chief Executive and Financial Officer, David
H. Fater, as standby collateral. As consideration for this
standby collateral, the Companys Board of Directors
authorized (i) the reimbursement of Mr. Faters
out-of-pocket
cash costs associated with this transaction, (ii) the
Companys receipt of interest from the Certificates of
Deposit as an offset to the Companys interest expense, and
(iii) the monthly issuance of 1,092 shares of the
Companys common stock.
Mr. Fater received 13,104 and 14,196 shares of the
Companys common stock in 2008 and 2009, respectively,
related to these bank loans.
Other
Notes Payable
In September 2008 the Company converted a $100,000 account
payable to an unsecured 10% promissory note due in September
2009. In September 2009 the note holder consented to an
arrangement whereby a third party purchased the note and
immediately converted it into 200,000 shares of the
Companys common stock. Noncash interest expense of $79,000
was recognized in this transaction.
Long-term debt consists of:
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2009
|
|
|
8% Convertible Notes
|
|
$
|
|
|
|
$
|
773,000
|
|
8% Subordinated Convertible Promissory Notes
|
|
|
|
|
|
|
278,000
|
|
Bank loans (see Note 4)
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
1,251,000
|
|
|
|
|
|
|
|
|
|
|
8% Convertible
Notes
At various times through September 17, 2009 the Company
sold 8% Convertible Notes (8% Notes). The
8% Notes are due two years from date of issue and are
convertible into common stock at the option of the holder any
time prior to maturity. The conversion price is equal to the
lesser of 75% of the weighted average common stock
F-33
Vicor
Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
price, as defined, for the three days immediately prior to the
date of the conversion notice or $1.07 per share of common stock.
The conversion rights embedded in the 8% Notes are
accounted for as derivative financial instruments because of the
static conversion terms embedded therein. The fair values of the
derivative financial instruments at their issue dates were
$1,966,000.
|
|
|
|
|
8% Notes sold
|
|
$
|
2,671,000
|
|
8% Notes converted in 2009
|
|
|
(1,574,000
|
)
|
|
|
|
|
|
|
|
|
1,097,000
|
|
Unamortized discount
|
|
|
(324,000
|
)
|
|
|
|
|
|
Balance at December 31, 2009
|
|
$
|
773,000
|
|
|
|
|
|
|
As 8% Notes were converted, debt discount of $1,059,000 was
recognized as noncash interest expense.
8% Subordinated
Convertible Promissory Notes
During the fourth quarter of 2009 the Company sold
8% Subordinated Convertible Promissory Notes
(8% Subordinated Notes). The
8% Subordinated Notes are due on October 7, 2012 and
are subordinated to certain 8% Notes sold between
May 1, 2009 and September 17, 2009 with a remaining
balance of $841,000 at December 31, 2009. They are
mandatorily convertible into shares of the Companys common
stock at a conversion price equal to the lesser of $.80 per
share of common stock (the Fixed Conversion Price)
or 80% of the price per share of common stock sold in a
qualified funding event, defined as the sale of debt or equity
in a registered offering resulting in a least $3,000,000 of
gross proceeds to the Company.
Until the 8% Notes have been converted by the holders or
have been repaid (which shall be no later than
September 16, 2011) the holders of the
8% Subordinated Notes have no voluntary conversion rights.
Thereafter, the holders may voluntarily convert the
8% Subordinated Notes.
The conversion rights embedded in the 8% Subordinated Notes
are accounted for as derivative financial instruments because of
the static conversion terms embedded therein. The fair values of
the derivative financial instruments at their issue dates are
$559,000.
|
|
|
|
|
8% Subordinated Notes sold
|
|
$
|
903,000
|
|
Unamortized discount
|
|
|
(625,000
|
)
|
|
|
|
|
|
Balance at December 31, 2009
|
|
$
|
278,000
|
|
|
|
|
|
|
The Company has two classes of preferred stock: Series A
Convertible Cumulative and Series B Voting Junior
Convertible Cumulative.
The Series A Convertible Cumulative Preferred Stock
(Series A) yields cumulative annual dividends
at an annual rate of 8%. Dividends will accrue and compound
annually on such amount from the date of issuance until paid in
full or at the option of the holder converted into additional
Series A Stock at $3.12 per share. At December 31,
2008 and 2009 accrued dividends payable were $243,000 and
$303,000, respectively. Each share of Series A is
convertible at the option of the owner into shares of common
stock at a conversion rate of 1:1. The conversion price of the
Series A is subject to adjustment to prevent dilution using
a weighted-average anti-dilution formula. The Series A will
automatically be converted into shares of common stock upon the
consummation of a Liquidity Event, as defined.
F-34
Vicor
Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
The Series A is senior to all other outstanding capital
stock and is entitled to a liquidation preference equal to the
greater of (i) the initial purchase price for the
Series A plus accrued or declared dividends or
(ii) the amount such holder would have received if prior to
such liquidation the Series A had been converted into
common stock.
The Company has the right of first refusal to acquire the
Series A and certain holders have entered into an Investor
Rights Agreement providing for customary drag-along and
tag-along rights in connection with a bona fide offer from a
third party to acquire the Company. Furthermore, pursuant to the
Investment Agreement, one of the holders has the right to
designate one nonvoting observer to the Board of Directors.
The Series B Voting Junior Convertible Cumulative Preferred
Stock (Series B) yields cumulative annual
dividends at an annual rate of 8% that are paid in kind and is
initially convertible into one share of common stock. At
December 31, 2008 and 2009, accrued dividends payable were
$191,000 and $530,000, respectively. Each share of Series B
plus accrued dividends will automatically convert into shares of
common stock upon the successful completion of a financing of at
least $3,000,000.
The consent of 2/3 of the holders of all series of Preferred
Stock will be required to (i) amend or repeal any provision
to the Companys Certificate of Incorporation or Bylaws,
(ii) authorize or reclassify existing shares of stock,
(iii) pay any dividend on or repurchase any shares under
certain conditions, (iv) merge or sell assets requiring
stockholder approval or declare bankruptcy, (v) liquidate
or dissolve the Company, (vi) borrow funds outside the
ordinary course of business or (vii) enter into any
transaction with related parties or affiliates of the Company.
|
|
Note 7
|
Stockholders
Equity
|
The Company has 10,000,000 shares of preferred stock
authorized with a par value of $0.0001. The Board has the
authority to issue the shares in one or more series and to fix
the designations, preferences, powers and other rights, as it
deems appropriate.
The Company has 100,000,000 shares of common stock
authorized with a par value of $0.0001. Each share of common
stock has one vote per share for the election of directors and
all other items submitted to a vote of stockholders. The common
stock does not have cumulative voting rights, preemptive,
redemption or conversion rights.
The Company has issued stock warrants to certain employees,
vendors and independent contractors. The warrants are
immediately exercisable for a period of three to ten years and
enable the holders to purchase shares of the Companys
common stock at exercise prices ranging from $0.01
$3.12. The fair value per warrant based on the Black-Scholes
valuation method ranges from $0.31 to $4.99. The cost of these
warrants was treated as compensation and, accordingly, the
Company recorded expense of $251,000 and $883,000 for 2008 and
2009, respectively.
F-35
Vicor
Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
The fair value for these warrants was estimated at the date of
grant using the Black-Scholes option pricing model with the
following weighted-average assumptions: risk-free interest rate
of 2.96% in 2008 and 1.87% -3.00% in 2009; dividend yield of 0%;
common stock fair market value of $0.84 in 2008 and $0.68 in
2009, respectively; a weighted average expected warrant life of
four years; and a volatility factor of 63% for both years.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
|
|
|
|
Shares Under
|
|
|
Average
|
|
|
|
Warrants
|
|
|
Exercise Price
|
|
|
Balance at inception
|
|
|
|
|
|
$
|
|
|
Granted in connection with stock sold
|
|
|
148,000
|
|
|
|
1.00
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2000
|
|
|
148,000
|
|
|
|
1.00
|
|
Granted to employees and others
|
|
|
900,000
|
|
|
|
0.67
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2001
|
|
|
1,048,000
|
|
|
|
0.72
|
|
Granted to employees and others
|
|
|
1,270,252
|
|
|
|
1.09
|
|
Exercised
|
|
|
(750
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2002
|
|
|
2,317,502
|
|
|
|
0.92
|
|
Granted to employees and others
|
|
|
1,520,332
|
|
|
|
1.14
|
|
Exercised
|
|
|
(750
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2003
|
|
|
3,837,084
|
|
|
|
1.01
|
|
Granted to employees and others
|
|
|
126,200
|
|
|
|
0.93
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2004
|
|
|
3,963,284
|
|
|
|
1.01
|
|
Granted to employees and others
|
|
|
595,180
|
|
|
|
1.21
|
|
Exercised
|
|
|
(101,750
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2005
|
|
|
4,456,714
|
|
|
|
1.06
|
|
Granted to employees and others
|
|
|
70,000
|
|
|
|
2.50
|
|
Exercised
|
|
|
(398,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2006
|
|
|
4,128,714
|
|
|
|
1.09
|
|
Granted to employees and others
|
|
|
470,500
|
|
|
|
1.00
|
|
Exercised
|
|
|
(3,469,908
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2007
|
|
|
1,129,306
|
|
|
|
1.96
|
|
Granted to employees and others
|
|
|
9,976,707
|
|
|
|
0.85
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2008
|
|
|
11,106,013
|
|
|
|
0.96
|
|
Granted to employees and others
|
|
|
1,941,823
|
|
|
|
0.90
|
|
Exercised
|
|
|
(624,494
|
)
|
|
|
0.09
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2009
|
|
|
12,423,342
|
|
|
$
|
1.00
|
|
|
|
|
|
|
|
|
|
|
The weighted-average grant date fair value of all warrants
granted during 2008 and 2009 was $1.03 and $0.90, respectively.
F-36
Vicor
Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
|
|
Note 8
|
Stock
Option Plan
|
In 2002 the Companys stockholders approved the Vicor
Technologies, Inc. 2002 Stock Option Plan (the 2002
Plan), which provides for the granting of options to
purchase up to 1,000,000 shares of the Companys
common stock. Both incentive stock options and nonqualified
stock options may be issued under the provisions of the 2002
Plan. Employees of the Company and its subsidiaries, members of
the Board of Directors, independent consultants and advisors are
eligible to participate in the 2002 Plan. The granting and
vesting of options under the 2002 Plan are authorized by the
Companys Board of Directors or a committee of the Board of
Directors.
During 2002 the Company granted stock options to employees at an
exercise price of $3.00 per share, which vested over a two year
period. In 2004 the Company granted 1,000 stock options to a new
Director at an exercise price of $3.25 per Share. During 2005
the Company granted a total of 269,000 options to employees and
directors with an exercise price of $2.50. Total compensation
expense related to the granting of options under the 2002 Plan
for the year ended December 31, 2007 based on a fair value
of $1.37 per share was approximately $110,000.
The fair value for these options was estimated at the date of
grant using the Black- Scholes option pricing model with the
following weighted-average assumptions: risk-free interest rate
of 5.24%, dividend yield of 0%, fair market value of $1.37 in
2007, a weighted-average expected option life of 10 years;
and a minimal volatility factor since the Companys stock
is not actively traded on an established public market.
Information regarding the 2002 Plan is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Weighted-Average
|
|
|
Options
|
|
|
Weighted-Average
|
|
|
|
Shares
|
|
|
Exercise Price
|
|
|
Excercisable
|
|
|
Exercise Price
|
|
|
Options outstanding at inception
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
50,000
|
|
|
$
|
3.00
|
|
|
|
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2002
|
|
|
50,000
|
|
|
$
|
3.00
|
|
|
|
10,000
|
|
|
$
|
3.00
|
|
Granted
|
|
|
|
|
|
$
|
0.00
|
|
|
|
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2003
|
|
|
50,000
|
|
|
$
|
3.00
|
|
|
|
30,000
|
|
|
$
|
3.00
|
|
Granted
|
|
|
1,000
|
|
|
$
|
3.25
|
|
|
|
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2004
|
|
|
51,000
|
|
|
$
|
3.01
|
|
|
|
51,000
|
|
|
$
|
3.01
|
|
Granted
|
|
|
269,000
|
|
|
$
|
2.50
|
|
|
|
|
|
|
$
|
0.00
|
|
Cancelled
|
|
|
(25,000
|
)
|
|
$
|
2.50
|
|
|
|
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2005
|
|
|
295,000
|
|
|
$
|
0.00
|
|
|
|
295,000
|
|
|
$
|
2.59
|
|
Granted
|
|
|
80,000
|
|
|
$
|
2.50
|
|
|
|
|
|
|
$
|
0.00
|
|
Cancelled
|
|
|
(35,000
|
)
|
|
$
|
0.00
|
|
|
|
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2006
|
|
|
340,000
|
|
|
|
|
|
|
|
340,000
|
|
|
$
|
2.58
|
|
Granted
|
|
|
122,500
|
|
|
$
|
0.78
|
|
|
|
|
|
|
$
|
0.78
|
|
Exercised in cashless exercise March 30, 2007
|
|
|
(340,000
|
)
|
|
$
|
2.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2007, 2008 and 2009
|
|
|
122,500
|
|
|
|
|
|
|
|
122,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserved for future option grants at December 31, 2008
|
|
|
477,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In 2008 the Companys stockholders approved the Vicor
Technologies, Inc. 2008 Stock Incentive Plan (the2008
Plan). This plan provides for the granting of options to
purchase up to 5,000,000 shares of the
F-37
Vicor
Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Companys common stock. Directors, officers and other
employees of the Company and its subsidiaries, and other persons
who provide services to the Company are eligible to participate
in the 2008 Plan, and both incentive stock options and
nonqualified stock options may be issued under the provisions of
the 2008 Plan. The 2008 Plan will be administered by the Board
of Directors and its Compensation Committee.
Information regarding the 2008 Plan is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Weighted-Average
|
|
|
Options
|
|
|
Weighted-Average
|
|
|
|
Shares
|
|
|
Exercise Price
|
|
|
Excercisable
|
|
|
Exercise Price
|
|
|
Options outstanding at inception
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
417,500
|
|
|
$
|
0.72
|
|
|
|
417,500
|
|
|
$
|
0.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2008
|
|
|
417,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
2,150,000
|
|
|
$
|
0.78
|
|
|
|
1,762,500
|
|
|
$
|
0.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2009
|
|
|
2,567,500
|
|
|
|
|
|
|
|
2,180,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserved for future option grants at December 31, 2009
|
|
|
2,432,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
There was a total of 2,690,000 options outstanding for both
plans at December 31, 2009. The fair value for these
options was estimated at the date of grant using the Black-
Scholes option pricing model with the following weighted-average
assumptions: risk-free interest rate of 3.97%, dividend yield of
0%, weighted-average expected option life of 10 years; and
a volatility factor of 56% in 2008; expected option lives of
7 10 years, risk-free interest rate ranging
from 2.51% 3.91%, dividend yield of 0%, and
volatility factors ranging from 63% to 172% in 2009.
Compensation expense related to the granting of options under
the 2008 Plan was approximately $176,000 and $1,559,000 in 2008
and 2009, respectively.
|
|
NOTE 9
|
Fair
Value of Financial Instruments
|
The Company follows the provisions of ASC Topic 820, Fair
Value Measurements and Disclosures. This Topic defines
fair value, establishes a measurement framework and expands
disclosures about fair value measurements.
The Company measures financial assets in three levels, based on
the markets in which the assets and liabilities are traded and
the reliability of the assumptions used to determine fair value.
These levels are:
|
|
|
|
|
Level 1 Valuations for assets and liabilities
traded in active exchange markets, or interest in open-end
mutual funds that allow a company to sell its ownership interest
back at net asset value (NAV) on a daily basis.
Valuations are obtained from readily available pricing sources
for market transactions involving identical assets, liabilities
or funds.
|
|
|
|
Level 2 Valuations for assets and liabilities
traded in less active dealer, or broker markets, such as quoted
prices for similar assets or liabilities or quoted prices in
markets that are not active.
|
|
|
|
Level 3 Valuations for assets and liabilities
that are derived from other valuation methodologies, such as
option pricing models, discounted cash flow models and similar
techniques, and not based on market exchange, dealer, or broker
traded transactions. Level 3 valuations incorporate certain
assumptions and projections in determining the fair value
assigned to such assets or liabilities.
|
The availability of observable inputs can vary from instrument
to instrument and in certain cases the inputs used to measure
fair value may fall into different levels of the fair value
hierarchy. In such cases, an instruments level within the
fair value hierarchy is based on the lowest level of input that
is significant to the fair value measurement. The Companys
assessment of the significance of a particular input to the fair
value measurement of an instrument requires judgment and
consideration of factors specific to the instrument.
F-38
Vicor
Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Recurring
Fair Value Measurement Valuation Techniques
The fair value for certain financial instruments is derived
using pricing models and other valuation techniques that involve
significant management judgment. The price transparency of
financial instruments is a key determinant of the degree of
judgment involved in determining the fair value of the
Companys financial instruments. Financial instruments for
which actively quoted prices or pricing parameters are available
will generally have a higher degree of price transparency than
financial instruments that are thinly traded or not quoted. In
accordance with ASC Topic 820, the criteria used to determine
whether the market for a financial instrument is active or
inactive is based on the particular asset or liability. As a
result, the valuation of these financial instruments included
significant management judgment in determining the relevance and
reliability of market information available. The Company
considered the inactivity of the market to be evidenced by
several factors, including limited trading of the Companys
stock since the commencement of trading in July 2007.
Derivative
Financial Instruments
The Companys derivative financial instruments consist of
conversion options embedded in 8% Convertible Notes,
8% Subordinated Convertible Promissory Notes, Series B
Preferred Stock and warrants to purchase common stock issued
with preferred stock. These instruments are valued with pricing
models commonly used by the financial services industry using
inputs generally observable in the financial services industry.
These models require significant judgment on the part of
management, including the inputs utilized in its pricing models.
The Companys derivative financial instruments are
categorized in Level 3 of the fair value hierarchy. The
Company estimates the fair value of derivatives utilizing the
Black-Scholes option pricing model and the following assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
January 1, 2009
|
|
|
2009
|
|
|
Conversion feature:
|
|
|
|
|
|
|
|
|
Risk-free interest rate
|
|
|
2.10
|
%
|
|
|
1.4% - 3.0
|
%
|
Expected volatility
|
|
|
63
|
%
|
|
|
63
|
%
|
Expected life (in years)
|
|
|
5
|
|
|
|
2-5
|
|
Expected dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
Warrants:
|
|
|
|
|
|
|
|
|
Risk-free interest rate
|
|
|
2.10
|
%
|
|
|
1.4% - 3.0
|
%
|
Expected volatility
|
|
|
63
|
%
|
|
|
63
|
%
|
Expected life (in years)
|
|
|
5
|
|
|
|
2-5
|
|
Expected dividend yield
|
|
|
0
|
%
|
|
|
0
|
%
|
Fair value:
|
|
|
|
|
|
|
|
|
Conversion feature
|
|
$
|
1,664,000
|
|
|
$
|
2,550,000
|
|
Warrants
|
|
$
|
1,905,000
|
|
|
$
|
1,864,000
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,569,000
|
|
|
$
|
4,414,000
|
|
|
|
|
|
|
|
|
|
|
Prior to January 1, 2009 the Company used the historical
prices of its common stock to determine its volatility.
Subsequently, the Company determined that the historical prices
of its common stock were not the best proxy to estimate such
volatility. Effective January 1, 2009 the Companys
methodology to estimate volatility of its common stock is based
on an average of published volatilities contained in the most
recent audited financial statements of other publicly-reporting
companies in industries similar to that of the Company.
F-39
Vicor
Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
Level 3
Assets and Liabilities
Level 3 liabilities include instruments whose value is
determined using pricing models and for which the determination
of fair value requires significant management judgment or
estimation. As of December 31, 2009 instruments measured at
fair value on a recurring basis categorized as Level 3
represented approximately 58% of the Companys total
liabilities.
Fair values of liabilities measured on a recurring basis at
December 31, 2009 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted
|
|
|
|
|
|
|
|
|
|
|
|
|
prices in
|
|
|
|
|
|
|
|
|
|
|
|
|
active
|
|
|
|
|
|
|
|
|
|
|
|
|
markets for
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
identical
|
|
|
other
|
|
|
Significant
|
|
|
|
|
|
|
liabilities
|
|
|
observable
|
|
|
unobservable
|
|
|
|
Fair Value
|
|
|
(Level 1)
|
|
|
inputs (Level 2)
|
|
|
inputs (Level 3)
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
$
|
4,414,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
4,414,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Both observable and unobservable inputs may be used to determine
the fair value of positions that the Company has classified
within the Level 3 category. As a result, the gains for
liabilities within the Level 3 category presented in the
tables below may include changes in fair value that were
attributable to both observable and unobservable inputs. The
following table presents additional information about
Level 3 assets and liabilities measured at fair value on a
recurring basis for the year ended December 31, 2009:
|
|
|
|
|
Balance, January 1, 2009
|
|
$
|
(3,569,000
|
)
|
Included in earnings(1):
|
|
|
|
|
Realized
|
|
|
1,083,000
|
|
Unrealized(2)
|
|
|
1,074,000
|
|
Purchases, sales, and other
|
|
|
(3,008,000
|
)
|
Settlements and issuances net
|
|
|
6,000
|
|
Net transfers in and/or out of Level 3
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2009
|
|
$
|
(4,414,000
|
)
|
|
|
|
|
|
|
|
|
(1) |
|
Gain included in earnings is reported as gain on derivative
financial instruments. |
|
(2) |
|
Total unrealized gain related to Level 3 instruments held
at December 31, 2009. |
|
|
Note 10
|
Related
Party Transactions
|
In 2003 the Company purchased the software related to the PD2i
Cardiac
Analyzertm
from one of its founding scientists, who is now an employee and
a director. Terms of the Purchase and Royalty Agreement provide
that $100,000 of the purchase price be deferred until the
Company begins receiving revenue from the Analyzer. Accordingly,
this amount is included in the accompanying Consolidated Balance
Sheet as Due to Related Parties. The Agreement further provides
for an ongoing royalty to be paid to the scientist amounting to
10% of amounts received by the Company from any activities
relating to the PD2i Cardiac Device for the life of the patents.
Royalty payments will commence after the Company has recovered
its development costs in full.
Additionally, on January 1, 2007 the Company entered into a
Service Agreement (Service Agreement) with
ALDA & Associates International, Inc.
(ALDA), a consulting company owned and controlled by
the Companys Chief Executive and Financial Officer whereby
three of the Companys employees became employees of ALDA
under a Professional Employer Organization (PEO)
arrangement. This was subsequently increased to seven employees.
The Service Agreement, which is a cost reimbursement only
contract, provides for reimbursement of all
F-40
Vicor
Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
of ALDAs actual payroll and insurance related costs for
these employees. Costs associated with the contract amounted to
$308,000 and $909,000 for the years ended December 31, 2008
and 2009, respectively.
As discussed in Notes 4 and 5 the Company has certain bank
loans. As a condition to making the loans, the bank received a
two Certificates of Deposit valued at $300,000 from the
Companys Chief Executive and Financial Officer, David H.
Fater, as standby collateral.
For income tax purposes the Company has capitalized its losses
(other than contract research and development) as start up
costs. The startup costs will be amortized over a five-year
period when operations commence. The tax loss carry forward at
December 31, 2009 amounts to $2,207,061 and begins to
expire in 2016.
Significant components of the Companys deferred tax assets
are shown below. A valuation allowance has been recognized to
offset the deferred tax assets as of December 31, 2008 and
2009 as realization of such assets is uncertain.
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2009
|
|
|
Deferred income tax assets:
|
|
|
|
|
|
|
|
|
Tax loss carry forward
|
|
$
|
414,000
|
|
|
$
|
830,000
|
|
Start up costs
|
|
|
13,695,000
|
|
|
|
15,071,000
|
|
Equity-based compensation expense
|
|
|
1,116,000
|
|
|
|
853,000
|
|
Deribative liability
|
|
|
260,000
|
|
|
|
1,661,000
|
|
General business credit carry forward
|
|
|
|
|
|
|
357,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,485,000
|
|
|
|
18,772,000
|
|
|
|
|
|
|
|
|
|
|
Deferred income tax liabilities:
|
|
|
|
|
|
|
|
|
Debt discount on derivative instruments
|
|
|
|
|
|
$
|
(357,109
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax asset
|
|
$
|
15,485,000
|
|
|
$
|
18,414,891
|
|
|
|
|
|
|
|
|
|
|
Valuation allowance:
|
|
|
|
|
|
|
|
|
Beginning of year
|
|
$
|
(14,594,000
|
)
|
|
$
|
(15,485,000
|
)
|
(Increase) during the year
|
|
|
(891,000
|
)
|
|
|
(2,929,891
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(15,485,000
|
)
|
|
$
|
(18,414,891
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets and liabilities
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Pursuant to Sections 382 and 383 of the Internal Revenue
Code, annual use of any of the Companys net operating loss
and credit carryforwards may be limited if cumulative changes in
ownership of more than 50% occur during any three year period.
F-41
Vicor
Technologies, Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
|
|
Note 12
|
Property
and Equipment
|
Property and equipment consist of the following
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2008
|
|
|
2009
|
|
|
Computers and equipment
|
|
$
|
40,000
|
|
|
$
|
35,000
|
|
Furniture and fixtures
|
|
|
24,000
|
|
|
|
24,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,000
|
|
|
|
59,000
|
|
Less accumulated depreciation
|
|
|
(62,000
|
)
|
|
|
(38,000
|
)
|
|
|
|
|
|
|
|
|
|
Net property and equipment
|
|
$
|
2,000
|
|
|
$
|
21,000
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense was $4,000 for both the years ended
December 31, 2008 and 2009.
The Company is obligated under an operating lease agreement for
its administrative offices and office equipment. The lease is
for a two-year term beginning August 2009. Annual future minimum
lease obligations as of December 31, 2009 are $89,000 in
2010 and $56,000 in 2011.
Rent expense for the years ended December 31, 2008 and 2009
was $92,000 and $95,000, respectively.
|
|
Note 14
|
Retirement
plan
|
In December 2009 the Company established a defined contribution
plan (Plan) to provide retirement benefits in return
for services rendered. The Plan provides an individual account
for each participant and has terms that specify how
contributions to participant accounts are determined. Employees
are eligible to participate in the Plan at time of hire as well
as certain independent contractors at the discretion of
management. The Plan provides for the Company to match employee
contributions up to 4% of the employees salary and also
provides for Company discretionary contributions of up to 6% of
employee compensation. The Company made an initial grant to the
Plan equal to 4% of each participants 2009 base
compensation, resulting in Plan expense of $54,000 for 2009.
|
|
Note 15
|
Commitments
and Contingencies
|
The Company may from time to time be subject to claims and suits
arising in the ordinary course of business. In the opinion of
management, the ultimate resolution of pending legal proceedings
will not have a material effect on the Companys
consolidated financial statements.
The Company has employment agreements with its Chief Executive
Officer, its Chief Medical Officer and its scientists. Such
agreements provide for minimum salary levels, adjusted annually
for
cost-of-living
changes.
|
|
Note 16
|
Subsequent
Events
|
On January 10, 2010 the Companys Board of Directors
authorized the issuance of an additional $1,500,000 of
8% Subordinated Convertible Notes.
In January through March 2010 the Company sold $975,000 of
8% Subordinated Convertible Promissory Notes.
On March 19, 2010 the Company leased additional office
space in the facility where its corporate office is located. The
lease is expected to commence in April 2010 at a rate of
approximately $2,000 per month and will expire in August 2011.
F-42
UNITS, EACH CONSISTING
OF
SHARE(S)
OF COMMON STOCK AND
WARRANT(S) TO
PURCHASE
SHARE(S) OF COMMON STOCK
The date of this Prospectus
is ,
2010
Until ,
2010, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required
to deliver a prospectus.
PART II
Information
Not Required In Prospectus
|
|
Item 13.
|
Other
Expenses of Issuance and Distribution
|
The following table sets forth the various costs and expenses to
be incurred in connection with the issuance and distribution of
the securities registered under this Registration Statement,
other than underwriting discounts and commissions. All such
expenses are estimates, except for the SEC registration fee and
the FINRA filing fee. The following expenses will be borne
solely by the Company.
|
|
|
|
|
SEC Registration Fee
|
|
$
|
713
|
|
Printing and Engraving Expenses
|
|
$
|
25,000
|
|
Legal Fees and Expenses
|
|
$
|
150,000
|
|
Accounting Fees and Expenses
|
|
$
|
50,000
|
|
Transfer Agent and Registrar Fees
|
|
$
|
10,000
|
|
Miscellaneous Expenses
|
|
$
|
15,000
|
|
Total
|
|
$
|
250,713
|
|
|
|
Item 14.
|
Indemnification
of Directors and Officers
|
Section 145 of the Delaware General Corporation Law
(DGCL) provides that a corporation may indemnify
directors and officers as well as other employees and
individuals against expenses (including attorneys fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with any
threatened, pending or completed actions, suits or proceedings
in which such person is made a party by reason of such person
being or having been a director, officer, employee or agent to
the corporation. The DGCL provides that Section 145 is not
exclusive of other rights to which those seeking indemnification
may be entitled under any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise. Section 1 of
Article VII of the Companys bylaws provide for
indemnification by the Company of its directors, officers,
employees and agents to the fullest extent permitted by the DGCL.
Section 8 of the Companys Amended and Restated
Certification of Incorporation eliminates the liability of a
director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, except to
the extent such exemption from liability or limitation thereof
is not permitted under Delaware law. Under
Section 102(b)(7) of the DGCL, a director shall not be
exempt from liability for monetary damages for any liabilities
arising (i) from any breach of the directors duty of
loyalty to the corporation or its stockholders, (ii) from
acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL, or (iv) for any transaction
from which the director derived an improper personal benefit.
The Company may purchase and maintain insurance on behalf of any
person who is or was a director or officer of the Company. Under
an insurance policy maintained by the Company, the directors and
officers of the Company are insured, within the limits and
subject to the limitations of the policy, against certain
expenses in connection with the defense of certain claims,
actions, suits or proceedings, and certain liabilities which
might be imposed as a result of such claims, actions, suits or
proceedings, which may be brought against them by reason of
being or having been such directors or officers.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or
persons controlling the Company pursuant to the foregoing
provisions, the Company has been advised that, in the opinion of
the Commission, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable
The Placement Agency Agreement (Exhibit 1.1) will provide
for indemnification by the Placement Agents, the Company, its
directors and officers, and by the Company, of the Placement
Agents, for certain liabilities, including liabilities arising
under the Securities Act of 1933, as amended (the
Act), and affords certain rights of contribution
with respect thereto.
II-1
|
|
Item 15.
|
Recent
Sales of Unregistered Securities
|
The following is information furnished with regard to all
securities sold by the Company within the past three years that
were not registered under the Act.
|
|
|
|
|
|
|
|
|
|
|
Total Offering Price/
|
|
|
Date of Sale
|
|
Securities/Transaction
|
|
Consideration
|
|
Purchasers
|
|
2007
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
May June 2007
|
|
155,400 shares
|
|
Cashless exercise of the Companys warrants
|
|
Two members of the Companys Scientific Advisory Board
(SAB) and one Member of the National Cardiac Panel.
|
|
|
|
|
|
|
|
July 2007
|
|
27,500 shares
|
|
Services rendered
|
|
Officer, Director and Members of the SAB.
|
|
|
|
|
|
|
|
November 2007
|
|
32,700 shares
|
|
Services rendered
|
|
Officer and Members of the SAB
|
|
|
|
|
|
|
|
December 2007
|
|
9,500 shares
|
|
Consulting services rendered
|
|
Consultant
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
October 2007
|
|
Sale of 10% Convertible Notes.
|
|
$1,215,000
|
|
Accredited Investors
|
|
|
|
|
|
|
|
|
|
The 10% Convertible Notes mature on December 31, 2007 and
bear interest at 10% per annum. West Park Capital and Aurora
Capital served as placement agents for the offering and received
compensation of $43,000 and warrants to purchase
205,840 shares of common stock at an exercise price of
$0.50 and warrants to purchase 267,592 shares of common
stock at an exercise price of $1.00.
|
|
|
|
|
|
|
|
|
|
|
|
May December 2007
|
|
$300,000 principal amount of 15% Notes and warrants to
purchase 300,000 shares of common stock at an exercise
price of $1.25 per share, which warrants expire five years after
the issue date.
|
|
$300,000
|
|
Accredited Investors
|
|
|
|
|
|
|
|
|
|
Options and Warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
II-2
|
|
|
|
|
|
|
|
|
|
|
Total Offering Price/
|
|
|
Date of Sale
|
|
Securities/Transaction
|
|
Consideration
|
|
Purchasers
|
|
|
|
|
|
|
|
|
August 2007
|
|
122,500 options and 375,000 warrants, which expire ten years
after the grant date. Options have an exercise price of $0.68
per share, (except for 37,500 options which have an exercise
price of $0.34) and all the warrants have an exercise price of
$1.00 per share.
|
|
Services rendered
|
|
Officers, directors and consultants
|
|
|
|
|
|
|
|
2008
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
January December 2008
|
|
336,739 shares
|
|
Payments on the Notes*, to extend the maturity date of the
Notes.
|
|
Accredited Investors
|
|
|
|
|
|
|
|
April 2008
|
|
2,948,880 shares and warrants to purchase
3,194,620 shares at an exercise price of $1.00 per share,
which warrants expire 5 years after the issue date.
|
|
Conversion of $1,228,000 principal amount of
10% Convertible Notes and a forbearance fee.
|
|
Accredited Investors
|
|
|
|
|
|
|
|
August 2008
|
|
30,000 shares
|
|
Services rendered
|
|
Employee
|
|
|
|
|
|
|
|
January December 2008
|
|
13,104 shares
|
|
Guaranty of a loan
|
|
CEO
|
|
|
|
|
|
|
|
|
|
Series B Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
March 2008
|
|
412,500 shares
|
|
Exchange of $330,000 principal amount of 2004 Notes
|
|
Accredited Investors
|
|
|
|
|
|
|
|
August 2008 January 2009
|
|
357,210 shares and warrants to purchase 357,210 shares
of common stock at an exercise price of $1.00 per share, which
expire five years after the issuance date.
|
|
$357,210
|
|
Accredited Investors
|
|
|
|
|
|
|
|
January August 2008
|
|
1,734,045 shares
|
|
Exchange of $1,227,326 principal amount of 12% Convertible
Notes and $200,000 principal amount of 12% Convertible
Notes
|
|
Accredited Investors
|
|
|
|
|
|
|
|
August 2008
|
|
115,000 shares and warrants to purchase 115,000 shares
of
|
|
Satisfaction of trade payables of $102,000
|
|
Accredited Investors
|
II-3
|
|
|
|
|
|
|
|
|
|
|
Total Offering Price/
|
|
|
Date of Sale
|
|
Securities/Transaction
|
|
Consideration
|
|
Purchasers
|
|
|
|
|
|
|
|
|
|
|
common stock at an exercise price of $1.00 per share, which
expire five years after the issuance date.
|
|
|
|
|
|
|
|
|
|
|
|
January December 2008
|
|
2,645,000 shares and warrants to purchase
2,645,000 shares of common stock at an exercise price of
$1.00 per share, which expire five years after the issue date.
|
|
$2,645,000
|
|
Accredited Investors
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
September 2008
|
|
Unsecured 10% Convertible Notes due on September 2008.
|
|
Satisfaction of $100,000 account payable
|
|
Vendor
|
|
|
|
|
|
|
|
|
|
Options and Warrants
|
|
|
|
|
|
|
|
|
|
|
|
June 2008
|
|
42,500 options, at an exercise price of $0.55 per share, which
expire ten years after the grant date.
|
|
Services rendered
|
|
Employees
|
|
|
|
|
|
|
|
August 2008
|
|
Warrants to purchase 11,719 shares of common stock at a
exercise price of $0.64 per share, which expire five years after
the date of issue.
|
|
Fee in connection with the payment of the 12%
Convertible Notes
|
|
Accredited Investors
|
|
|
|
|
|
|
|
2009
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
January 2009
|
|
1,558,332 shares
|
|
Services rendered
|
|
Four Executive Officers
|
|
|
|
|
|
|
|
January 2009
|
|
87,167 shares
|
|
Director fees
|
|
Three Directors
|
|
|
|
|
|
|
|
January 2009
|
|
100,000 shares and warrants to purchase 39,000 shares
of common stock at an exercise price at $1.00 per share, which
expire in five and a half years.
|
|
$25,000
|
|
Accredited Investors
|
|
|
|
|
|
|
|
January 2009
|
|
89,600 shares
|
|
$23,000
|
|
Accredited Investors
|
|
|
|
|
|
|
|
February 2009
|
|
240,000 shares and warrants to purchase
105,000 shares, which expire in five years. Exercise price
is $1.50
|
|
$96,000
|
|
Accredited Investors
|
II-4
|
|
|
|
|
|
|
|
|
|
|
Total Offering Price/
|
|
|
Date of Sale
|
|
Securities/Transaction
|
|
Consideration
|
|
Purchasers
|
|
|
|
|
|
|
|
|
|
|
per share for 52,500 warrants and $1.00 per share for 52,500
warrants.
|
|
|
|
|
|
|
|
|
|
|
|
March April 2009
|
|
544,632 shares
|
|
Services rendered
|
|
Consultants
|
|
|
|
|
|
|
|
March April 2009
|
|
45,000 shares
|
|
Extension of $300,000 Bridge Loans to the Company
|
|
Accredited Investor
|
|
|
|
|
|
|
|
April June 2009
|
|
562,918 shares
|
|
Services rendered and cashless exercise of warrants
|
|
Accredited Investors
|
|
|
|
|
|
|
|
June 2009
|
|
247,357 shares
|
|
Services rendered
|
|
Accredited Investors
|
|
|
|
|
|
|
|
June December 2009
|
|
2,285,002 shares
|
|
Conversion of $1,215,000 principal amount of 8% Convertible
Notes
|
|
Accredited Investors
|
|
|
|
|
|
|
|
January December 2009
|
|
14,196 shares
|
|
Guaranty of a Loan
|
|
CEO
|
|
|
|
|
|
|
|
June 2009
|
|
7,500 shares and warrants to purchase 7,500 shares of
common stock at an exercise price of $1.00 per share, which
expire in five years.
|
|
Services rendered
|
|
Consultant
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
May September 2009
|
|
8% Convertible Notes.
The
8% Convertible Notes are due two years after the issuance
date and are convertible into shares of common stock at any
time. Perrin Holden & Davenport Capital Corp.
(PHD) served as placement agent for this offering
and received compensation equal to $196,775 and
395,550 shares of common stock.
|
|
$2,670,500
|
|
Accredited Investors
|
|
|
|
|
|
|
|
September December 2009
|
|
Sale of 8% Subordinated Convertible Notes.
|
|
$903,103
|
|
Accredited Investors
|
|
|
|
|
|
|
|
|
|
The
8% Subordinated Convertible Notes are due on October 7,
2012 and are subordinated to the 8% Convertible Notes.
|
|
|
|
|
II-5
|
|
|
|
|
|
|
|
|
|
|
Total Offering Price/
|
|
|
Date of Sale
|
|
Securities/Transaction
|
|
Consideration
|
|
Purchasers
|
|
|
|
|
|
|
|
|
|
|
Options and Warrants
|
|
|
|
|
|
|
|
|
|
|
|
June 2009
|
|
300,000 options, with an exercise price of $0.90 per share.
Options expire ten years after the grant date.
|
|
Issued pursuant to the Companys 2009 Stock Option Plan.
|
|
Three Directors
|
|
|
|
|
|
|
|
June 2009
|
|
Repriced 120,000 warrants modifying their exercise price from
$2.50 to $0.50 per share and repriced 25,000 warrants modifying
their exercise price from $1.00 to $0.50 per share.
|
|
None
|
|
Accredited Investors
|
|
|
|
|
|
|
|
2010
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
January March 2010
|
|
295,753 shares
|
|
Services rendered
|
|
Employees
|
|
|
|
|
|
|
|
January March 2010
|
|
25,000 shares
|
|
Exercise of warrants at an exercise price of $0.01 per share
|
|
Accredited Investor
|
|
|
|
|
|
|
|
January March 2010
|
|
899,924 shares
|
|
Conversion of $404,194 principal amount of 8% Convertible
Notes
|
|
Accredited Investors
|
|
|
|
|
|
|
|
April May 2010
|
|
2,483,017 shares
|
|
Conversion of outstanding 8% Convertible Notes
|
|
Accredited Investors
|
|
|
|
|
|
|
|
|
|
Options and Warrants
|
|
|
|
|
|
|
|
|
|
|
|
January March 2010
|
|
475,000 options at exercise prices ranging from $.65 per share
to $.71 per share, which expire seven years after the grant
date.
|
|
Services rendered
|
|
Employees and Consultants
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
|
|
|
|
|
|
|
|
|
January March 2010
|
|
$970,000 principal amount of 8%
Subordinated Convertible Notes and 1,462,500 warrants to
purchase shares of common stock at an exercise price of $1.00
per share, which expire five years after the grant date.
|
|
$970,000
|
|
Accredited Investors
|
|
|
|
|
|
|
|
April May 2010
|
|
$1,174,000 principal amount of 8%
|
|
$1,174,000
|
|
Accredited Investors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
II-6
|
|
|
|
|
|
|
|
|
|
|
Total Offering Price/
|
|
|
Date of Sale
|
|
Securities/Transaction
|
|
Consideration
|
|
Purchasers
|
|
|
|
Subordinated Convertible Notes and 1,661,000 warrants to
purchase shares of common stock at an exercise price of $1.00
per share, which expire five years after the grant date.
|
|
|
|
|
|
|
|
* |
|
Notes refers to the 10% Convertible Notes, the
12% Convertible Notes, the 15% Notes and the 2004
Notes. |
The securities issued in the foregoing transactions were exempt
from registration under Section 4(2) of the Securities Act
of 1933, as amended (Securities Act)
and/or
Rule 506 promulgated thereunder as transactions by an
issuer not involving a public offering. All of the investors
were accredited investors or were sophisticated investors who
had access to comprehensive information about the Company and
represented their intention to acquire the securities for
investment only and not with a view to distribute or sell the
securities. The Company placed legends on the certificates
stating that the securities were not registered under the
Securities Act and set forth the restrictions on their
transferability and sale. No general advertising or solicitation
was used in selling the securities. Except as set forth in the
table above, no commissions or underwriting fees were paid to
any placement agents in connection with the sale or issuances of
the securities. Additionally, the exchange/conversion of the
8% Convertible Notes, the 10% Convertible Notes and
the 12% Convertible Notes into shares of common stock were
exempt from registration under the provisions of
Section 3(a)(9) of the Securities Act.
|
|
Item 16.
|
Exhibits
and Financial Statement Schedules
|
(a) Exhibits
|
|
|
|
|
No.
|
|
|
|
1
|
.1
|
|
Form of Placement Agency Agreement to be entered into among
Vicor Technologies, Inc. and the placement agents.**
|
|
2
|
.1
|
|
Purchase and Royalty Agreement, by and between Vicor
Technologies, Inc. and James E. Skinner, dated October 24,
2002 (incorporated by reference to Exhibit 2.1 to the
Companys Current Report on
Form 8-K
filed with the SEC on April 5, 2007, File
No. 000-51475).
|
|
2
|
.2
|
|
Asset Purchase Agreement, by and between Nonlinear Medicine,
Inc. and Enhanced Cardiology, Inc., dated May 29, 2003
(incorporated by reference to Exhibit 2.2 to the
Companys Current Report on
Form 8-K
filed with the SEC on April 5, 2007, File
No. 000-51475).
|
|
2
|
.3
|
|
First Amendment to the Purchase and Royalty Agreement, by and
between Vicor Technologies, Inc. and James E. Skinner, dated
July 24, 2003 (incorporated by reference to
Exhibit 2.3 to the Companys Current Report on
Form 8-K
filed with the SEC on April 5, 2007, File
No. 000-51475).
|
|
2
|
.4
|
|
Second Amendment to the Purchase and Royalty Agreement, by and
between Vicor Technologies, Inc. and James E. Skinner, dated
September 18, 2003 (incorporated by reference to
Exhibit 2.4 to the Companys Current Report on
Form 8-K
filed with the SEC on April 5, 2007, File
No. 000-51475).
|
|
2
|
.5
|
|
First Amendment to the Asset Purchase Agreement, by and between
Nonlinear Medicine, Inc. and Enhanced Cardiology, Inc., dated
September 18, 2003 (incorporated by reference to
Exhibit 2.5 to the Companys Current Report on
Form 8-K
filed with the SEC on April 5, 2007, File
No. 000-51475).
|
|
2
|
.6
|
|
Agreement and Plan of Merger, by and among SRKP 6, Inc., Vicor
Acquisition Corp., and Vicor Technologies, Inc., dated as of
July 28, 2006 (incorporated by reference to Annex A to
the Registration Statement on
Form S-4
filed with the SEC on December 6, 2006, File
No. 333-139141).
|
|
2
|
.7
|
|
First Amendment to the Agreement and Plan of Merger, by and
among SRKP 6, Inc., Vicor Acquisition Corp., and Vicor
Technologies, Inc., dated as of December 6, 2006
(incorporated by reference to Annex A to the Companys
Registration Statement on
Form S-4
filed with the SEC on December 6, 2006, File
No. 333-139141).
|
II-7
|
|
|
|
|
No.
|
|
|
|
3
|
.1.1
|
|
Amended and Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the
Companys Current Report on
Form 8-K
filed with the SEC on April 5, 2007, File
No. 000-51475).
|
|
3
|
.1.2
|
|
Certificate of Designations, Preferences and Rights of
Series A 8.0% Convertible Cumulative Preferred Stock
(incorporated by reference to Exhibit 3.3 to the
Companys Current Report on
Form 8-K
filed with the SEC on April 5, 2007, File
No. 000-51475).
|
|
3
|
.1.3
|
|
Certificate of Designations, Preferences and Rights of
Series B 8.0% Convertible Cumulative Preferred Stock
(incorporated by reference to Exhibit 3.1.1 to the
Companys Quarterly Report on
Form 10-Q
for the quarter ended March 30, 2008 filed with the SEC on
May 15, 2008 File
No. 000-51475).
|
|
3
|
.2
|
|
Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 to the Companys Current
Report on
Form 8-K
filed with the SEC on April 5, 2007, File
No. 000-51475).
|
|
4
|
.1
|
|
See Exhibits 3.1.1, 3.1.2 , 3.1.3 and 3.2 for provisions of
the Articles of Incorporation and Bylaws of the Company defining
rights of holders of the Companys outstanding securities.
|
|
4
|
.2
|
|
Form of common stock certificate.**
|
|
4
|
.3
|
|
Form of Purchase Agreement between Vicor Technologies, Inc. and
each investor signatory thereto.**
|
|
4
|
.4
|
|
Form of warrant to purchase common stock.**
|
|
5
|
.1
|
|
Opinion of Akerman Senterfitt.**
|
|
10
|
.1
|
|
Vicor Technologies, Inc. 2002 Stock Option Plan (incorporated by
reference to Exhibit 10.1 to the Companys Current
Report on
Form 8-K
filed with the SEC on April 5, 2007, File
No. 000-51475).+
|
|
10
|
.2
|
|
Form of Participant Agreement for the 2002 Stock Option Plan
(incorporated by reference to Exhibit 10.2 to the
Companys Current Report on
Form 8-K
filed with the SEC on April 5, 2007, File
No. 000-51475).+
|
|
10
|
.3
|
|
Executive Court Lease Agreement Boca Office, by and between RJL
Company Limited Partnership and Vicor Technologies, Inc., dated
July 6, 2006 (incorporated by reference to
Exhibit 10.3 to the Companys Current Report on
Form 8-K
filed with the SEC on April 5, 2007, File
No. 000-51475).
|
|
10
|
.4
|
|
Employment Agreement, by and between Vicor Technologies, Inc.
and David H. Fater, dated June 1, 2002 (incorporated by
reference to Exhibit 10.4 to the Companys Current
Report on
Form 8-K
filed with the SEC on April 5, 2007, File
No. 000-51475).+
|
|
10
|
.5
|
|
Amendment No. 1 to the Employment Agreement, by and between
Vicor Technologies, Inc. and David H. Fater, dated
October 24, 2003 (incorporated by reference to
Exhibit 10.5 to the Companys Current Report on
Form 8-K
filed with the SEC on April 5, 2007, File
No. 000-51475).+
|
|
10
|
.8
|
|
Employment Agreement dated January 1, 2010 between the
Company and Daniel Weiss (incorporated by reference to
Exhibit 10.8 of the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009).+
|
|
10
|
.9
|
|
Vicor Technologies, Inc. 2008 Stock Incentive Plan (incorporated
by reference to Appendix A in the Companys definitive
proxy statement filed with the SEC on May 15, 2008 (File
No. 000-51475).+
|
|
10
|
.10
|
|
Form of Registration Rights Agreement, between the Company and
certain stockholders, dated March 30, 2007 (incorporated by
reference to Exhibit 10.11 to the Companys
Registration Statement on
Form SB-2
filed with the SEC on May 14, 2007, File
No. 333-142948).
|
|
10
|
.11
|
|
Form of Registration Rights Agreement, between the Company,
certain stockholders and WestPark Capital, Inc., dated
March 30, 2007 (incorporated by reference to
Exhibit 10.12 to the Companys Registration Statement
on
Form SB-2
filed with the SEC on May 14, 2007, File
No. 333-142948).
|
|
10
|
.12
|
|
Consulting Agreement dated September 2003 between Vicor
Technologies, Inc. and Michael Greer (incorporated by reference
to Exhibit 10.1 in the Companys Amendment No. 1
to its Annual Report on
Form 10-K
for fiscal 2007 filed with the SEC on April 3, 2008).
|
|
10
|
.13
|
|
Service Agreement dated January 1, 2007 by and between
ALDA & Associates International, Inc. and Vicor
Technologies, Inc. (incorporated by reference to
Exhibit 10.2 in the Companys Quarterly Report on
Form 10-QSB
for the quarter ended March 30, 2007 filed with the SEC on
May 15, 2007).
|
|
10
|
.14
|
|
Form of 8% Convertible Note issued to investors
(incorporated by reference to Exhibit 10.1 in the
Companys
Form 10-Q
for the quarter ended June 30, 2009 filed with the SEC on
August 19, 2009).
|
II-8
|
|
|
|
|
No.
|
|
|
|
10
|
.15
|
|
Consulting Agreement dated January 1, 2010 between Vicor
Technologies Inc. and TJ Bohannon, Inc (incorporated by
reference to Exhibit 10.15 in the Companys Annual
Report on
Form 10-K
for the year ended December 31, 2009 filed with the SEC on
March 31, 2010).+
|
|
10
|
.16
|
|
Form of 8% Subordinated Convertible Note (incorporated by
reference to Ex. 10.1 in the Companys Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2010 filed with the SEC on
May 11, 2010).
|
|
10
|
.17
|
|
Employment Agreement dated January 1, 2009 between Vicor
Technologies, Inc. and Jerry Anchin (incorporated by reference
to Ex. 10.2 in the Companys Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2010 filed with the SEC on
May 11, 2010).
|
|
10
|
.18
|
|
Employment agreement dated January 1, 2009 between Vicor
Technologies, Inc. and James Skinner (incorporated by reference
to Ex. 10.3 in the Companys Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2010 filed with the SEC on
May 11, 2010).
|
|
10
|
.19
|
|
Lease Agreement, dated March 16, 2010, between Vicor
Technologies, Inc. and Beck Hospitality Inc. III*
|
|
10
|
.20
|
|
First Amendment to Lease Agreement, dated
April , 2010, between Vicor Technologies, Inc.
and Beck Hospitality Inc. III*
|
|
14
|
.1
|
|
Code of Ethics (incorporated by reference to Exhibit 14.1
in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2007 filed with the SEC on
March 31, 2008, as amended on April 3, 2008).
|
|
21
|
.1
|
|
List of Subsidiaries (incorporated by reference to
Exhibit 21.1 to the Companys Current Report on
Form 8-K
filed with the SEC on April 5, 2007, File
No. 000-51475).
|
|
23
|
.1
|
|
Consent of Daszkal Bolton, Independent Registered Public
Accounting Firm.*
|
|
|
|
+ |
|
Management Compensation Plan or Arrangement. |
|
* |
|
Filed herewith. |
|
** |
|
To be filed by amendment. |
(b) Financial Statement Schedules
None.
(1) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers, and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer,
or a controlling person of the registrant in the successful
defense of any action, suit, or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
(2) The undersigned registrant hereby undertakes that:
(a) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be a part of this registration statement
at the time it was declared effective.
(b) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in City of Boca Raton, State of Florida on
May 28, 2010.
VICOR TECHNOLOGIES, INC.
Name: David H. Fater
|
|
|
|
Title:
|
Chief Executive Officer and
|
Chief Financial Officer
(principal executive officer and principal
financial officer)
POWER OF
ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints David H. Fater and Thomas
J. Bohannon and each of them individually, as his or her true
and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities, to sign
any and all (1) amendments (including post-effective
amendments) to this registration statement and (2) any
subsequent registration statements, and any and all amendments
thereto (including post-effective amendments), relating to the
transactions contemplated by this registration statement filed
pursuant to 462(b) under the Securities Act of 1933, as amended,
and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, and hereby grants to such attorneys-in-fact
and agents, and each of them individually, full power and
authority to do and perform each and every act and thing
requisite or necessary to be done, as fully to all intents and
purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and
agents or each of their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
/s/ David
H. Fater
David
H. Fater
|
|
Chief Executive Officer, Chief Financial Officer and Director
(principal executive officer and principal financial officer)
|
|
May 28, 2010
|
|
|
|
|
|
/s/ Thomas
J. Bohannon
Thomas
J. Bohannon
|
|
Chief Accounting Officer (principal accounting officer)
|
|
May 28, 2010
|
|
|
|
|
|
/s/ James
E. Skinner, Ph.D.
James
E. Skinner, Ph.D.
|
|
Vice President Research and Science and Director
|
|
May 28, 2010
|
|
|
|
|
|
/s/ Jerry
M. Anchin, Ph.D.
Jerry
M. Anchin, Ph.D.
|
|
Vice President Product Development and Physician Training and
Director
|
|
May 28, 2010
|
|
|
|
|
|
/s/ Joseph
A. Franchetti
Joseph
A. Franchetti
|
|
Director
|
|
May 28, 2010
|
II-10
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
/s/ Frederick
M. Hudson
Frederick
M. Hudson
|
|
Director
|
|
May 28, 2010
|
|
|
|
|
|
/s/ Edward
Wiesmeier, M.D.
Edward
Wiesmeier, M.D.
|
|
Director
|
|
May 28, 2010
|
II-11